IDS NEW DIMENSIONS FUND INC, 485BPOS, 1997-09-26

IDS NEW DIMENSIONS FUND INC
485BPOS, 1997-09-26

Previous: IDS MONEY MARKET SERIES INC, 485BPOS, 1997-09-26

Next: FORTIS INCOME PORTFOLIOS INC, 24F-2NT, 1997-09-26

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. _____

Post-Effective Amendment No. 57 (File No. 2-28529) X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 32 (File No. 811-1629) X

IDS NEW DIMENSIONS FUND, INC.
IDS Tower 10, Minneapolis, Minnesota 55440-0010

Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810,
Minneapolis, MN 55402-3268
(612) 330-9283

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on Sept. 29, 1997 pursuant to paragraph (b) of rule 485
____60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i) of rule 485
____75 days after filing pursuant to paragraph (a)(ii) ____on (date)
pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:

This Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.

The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to section 24-f of the Investment Company
Act of 1940. Registrant's Rule 24f-2 Notice for the fiscal year ended July 31,
1997 will be filed on or about September 26, 1997.

IDS New Dimensions Fund, a series of the Registrant, has adopted a master/feeder
operating structure. This Post-Effective Amendment includes a signature page for
Growth Trust, the master fund.

<PAGE>

Cross reference sheet showing the location in the prospectus and the Statement
of Additional Information of the information called for by the items enumerated
in Parts A and B of Form N-1A.

Negative answers omitted from prospectus are so indicated.

PART A PART B
<S> <C> <C> <C>

Section Section in
Item No. in Prospectus Item No. Statement of Additional Information
1 Cover page of prospectus 10 Cover page of SAI
2(a) Sales charge and Fund expenses 11 Table of Contents
(b) The Fund in brief
(c) The Fund in brief 12 NA

3(a) Financial highlights 13(a) Additional Investment Policies; all
(b) NA appendices except Dollar-Cost Averaging
(c) Performance (b) Additional Investment Policies
(d) Financial highlights (c) Additional Investment Policies
(d) Security Transactions
4(a) The Fund in brief; Investment policies and
risks; How the Fund and Portfolio 14(a) Board members and officers of the Fund;**
are organized Board members and officers
(b) Investment policies and risks (b) Board members and Officers
(c) Investment policies and risks (c) Board members and Officers

5(a) Board members and officers; Board members 15(a) NA
and officers of the Fund (listing) (b) Principal Holders of Securities, if applicable
(b)(i) Investment manager; About American Express (c) Board members and Officers
Financial Corporation -- General
Information
(b)(ii) Investment manager 16(a)(i) How the Fund and Portfolio are organized; About
American Express Financial Corporation**
(b)(iii) Investment manager (a)(ii) Agreements: Investment Management Services
(c) Portfolio manager Agreement, Plan and Agreement of
(d) Administrator and transfer agent Distribution
(e) Administrator and transfer agent (a)(iii) Agreements: Investment Management Services Agreement
(f) Distributor (b) Agreements: Investment Management Services Agreement
(g) Investment manager; About American Express (c) NA
Financial Corporation -- General (d) Agreements: Administrative Services
Information Agreement, Shareholder Service Agreement
(e) NA
5A(a) * (f) Agreements: Distribution Agreement
(b) * (g) NA
(h) Custodian; Independent Auditors
6(a) Shares; Voting rights (i) Agreements: Transfer Agency Agreement; Custodian
(b) NA
(c) NA
(d) Voting rights 17(a) Security Transactions
(e) Cover page; Special shareholder services (b) Brokerage Commissions Paid to Brokers Affiliated
(f) Dividend and capital gains distributions; with American Express Financial Corporation
Reinvestments (c) Security Transactions
(g) Taxes (d) Security Transactions
(h) Alternative purchase arrangements; Special (e) Security Transactions
considerations regarding master/feeder
structure 18(a) Shares; Voting rights**
(b) NA
7(a) Distributor
(b) Valuing Fund shares 19(a) Investing in the Fund
(c) How to purchase, exchange or redeem shares (b) Valuing Fund Shares; Investing in the Fund
(d) How to purchase shares (c) Redeeming Shares
(e) NA
(f) Distributor 20 Taxes
(g) Alternative purchase arrangements;
Reductions and waivers of the sales charge
8(a) How to redeem shares 21(a) Agreements: Distribution Agreement
(b) NA (b) NA
(c) How to purchase shares: Three ways to invest (c) NA
(d) How to purchase, exchange or redeem shares:
Redemption policies -- "Important..." 22(a) Performance Information (for money market
funds only)
9 None (b) Performance Information (for all funds except
money market funds)

23 Financial Statements

*Designates information is located in annual report.
**Designates location in prospectus.
</TABLE>

<PAGE>

IDS New Dimensions Fund

Prospectus
Sept. 29, 1997

The goal of IDS New Dimensions Fund, Inc. is long-term growth of
capital.

The Fund seeks to achieve its goal by investing all of its assets in Growth
Trends Portfolio of Growth Trust. The Portfolio is managed by American Express
Financial Corporation and has the same goal as the Fund. This arrangement is
commonly known as a master/feeder structure.

This prospectus contains facts that can help you decide if the Fund is the right
investment for you. Read it before you invest and keep it for future reference.

Additional facts about the Fund are in a Statement of Additional Information
(SAI), filed with the Securities and Exchange Commission (SEC) and available for
reference, along with other related materials, on the SEC Internet web site
(http://www.sec.gov). The SAI is incorporated here by reference. For a free
copy, contact American Express Shareholder Service.

Like all mutual fund shares, these securities have not been approved or
disapproved by the Securities and Exchange Commission or any state securities
commission, nor has the Securities and Exchange Commission or any state
securities commission passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.

Please note that the Fund:

o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency
o is not guaranteed to achieve its goal

American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
800-862-7919
TTY: 800-846-4852
Web site address: http://www.americanexpress.com/advisors

<PAGE>

Table of contents

The Fund in brief
Goal
Investment policies and risks
Structure of the Fund
Manager and distributor
Portfolio manager
Alternative purchase arrangements

Sales charge and Fund expenses

Performance
Financial highlights
Total returns

Investment policies and risks
Facts about investments and their risks
Valuing Fund shares

How to purchase, exchange or redeem shares
Alternative purchase arrangements
How to purchase shares
How to exchange shares
How to redeem shares
Reductions and waivers of the sales charge

Special shareholder services
Services
Quick telephone reference

Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN

How the Fund and Portfolio are organized
Shares
Voting rights
Shareholder meetings
Special considerations regarding master/feeder structure
Board members and officers
Investment manager
Administrator and transfer agent
Distributor

About American Express Financial Corporation
General information

Appendix

Descriptions of derivative instruments

<PAGE>

The Fund in brief

Goal

IDS New Dimensions Fund (the Fund) seeks to provide shareholders with long-term
growth of capital. It does so by investing all of its assets in Growth Trends
Portfolio (the Portfolio) of Growth Trust (the Trust) rather than by directly
investing in and managing its own portfolio of securities. Both the Fund and the
Portfolio are diversified investment companies that have the same goal. Because
any investment involves risk, achieving this goal cannot be guaranteed. The goal
can be changed only by holders of a majority of outstanding securities.

The Fund may withdraw its assets from the Portfolio at any time if the board
determines that it is in the best interests of the Fund to do so. In that event,
the Fund would consider what action should be taken, including whether to retain
an investment advisor to manage the Fund's assets directly or to reinvest all of
the Fund's assets in another pooled investment entity.

Investment policies and risks

Both the Fund and the Portfolio have the same investment policies. Accordingly,
the Portfolio invests primarily in common stocks of U.S. and foreign companies
showing potential for significant growth. These companies usually operate in
areas where dynamic economic and technological changes are occurring. The
Portfolio also invests in preferred stocks, debt securities, derivative
instruments and money market instruments. Some of the Portfolio's investments
may be considered speculative and involve additional investment risks. For
further information, refer to the later section in the prospectus titled
"Investment policies and risks."

Structure of the Fund

This Fund uses what is commonly known as a master/feeder structure. This means
that the Fund (the feeder fund) invests all of its assets in the Portfolio (the
master fund). The Portfolio invests in and manages the securities and has the
same goal and investment policies as the Fund. This structure is described in
more detail in the section captioned "Special considerations regarding
master/feeder structure." Here is an illustration of the structure:

Investors buy
shares in the Fund

The Fund invests
in the Portfolio

The Portfolio invests
in securities, such
as stocks or bonds

<PAGE>

Manager and distributor

The Portfolio is managed by American Express Financial Corporation (AEFC), a
provider of financial services since 1894. AEFC currently manages more than $69
billion in assets for the IDS MUTUAL FUND GROUP. Shares of the Fund are sold
through American Express Financial Advisors Inc., a wholly-owned subsidiary of
AEFC.

Portfolio manager

Gordon Fines joined AEFC in 1981 and serves as vice president and senior
portfolio manager. He has managed the assets of the Fund since 1991 and serves
as portfolio manager of the Portfolio. He also serves as portfolio manager of
IDS Life Growth Dimensions Fund and leads the growth team for AEFC.

Alternative purchase arrangements

The Fund offers its shares in three classes. Class A shares are subject to a
sales charge at the time of purchase. Class B shares are subject to a contingent
deferred sales charge (CDSC) on redemptions made within six years of purchase
and an annual distribution (12b-1) fee. Class Y shares are sold without a sales
charge to qualifying institutional investors.

Sales charge and Fund expenses

Shareholder transaction expenses are incurred directly by an investor on the
purchase or redemption of Fund shares. Fund operating expenses are paid out of
Fund assets for each class of shares and include expenses charged by both the
Fund and the Portfolio. Operating expenses are reflected in the Fund's daily
share price and dividends, and are not charged directly to shareholder accounts.

Shareholder transaction expenses
Class A Class B Class Y
Maximum sales charge on purchases*
(as a percentage of offering price).......5% 0% 0%
Maximum deferred sales charge
imposed on redemptions (as a
percentage of original purchase price)....0% 5% 0%

Annual Fund and allocated Portfolio operating expenses (as a percentage of
average daily net assets):

Class A Class B Class Y
Management fee** 0.56% 0.56% 0.56%
12b-1 fee 0.00% 0.75% 0.00%
Other expenses*** 0.35% 0.36% 0.28%
Total**** 0.91% 1.67% 0.84%

*This charge may be reduced depending on your total investments in IDS funds.
See "Reductions of the sales charge." **The management fee is paid by the Trust
on behalf of the Portfolio. It includes the impact of a performance fee that
increased the management fee by 0.04% in fiscal year 1997.

<PAGE>

***Other expenses include an administrative services fee, a shareholder services
fee, a transfer agency fee and other nonadvisory expenses. Class Y expenses have
been restated to reflect the 0.10% shareholder services fee that commenced on
May 9, 1997.
****The Fund changed to a master/feeder structure on May 13, 1996.
The board considered whether the aggregate expenses of the Fund and the
Portfolio would be more or less than if the Fund invested directly in the type
of securities being held by the Portfolio. AEFC has agreed to pay the small
additional costs required to use a master/feeder structure to manage the
investment portfolio during the first year of its operation and half of such
costs in the second year. These additional costs may be more than offset in
subsequent years if the assets being managed increase.

Example: Suppose for each year for the next 10 years, Fund expenses are as above
and annual return is 5%. If you sold your shares at the end of the following
years, for each $1,000 invested, you would pay total expenses of:

1 year 3 years 5 years 10 years
Class A $59 $78 $ 98 $157
Class B $67 $93 $111 $178**
Class B* $17 $53 $ 91 $178**
Class Y $ 8 $24 $ 42 $ 95

*Assuming Class B shares are not redeemed at the end of the period.
**Based on conversion of Class B shares to Class A shares after
eight years.

This example does not represent actual expenses, past or future. Actual expenses
may be higher or lower than those shown. Because Class B pays annual
distribution (12b-1) fees, long-term shareholders of Class B may indirectly pay
an equivalent of more than a 6.25% sales charge, the maximum permitted by the
National Association of Securities Dealers.

Performance

Financial highlights

Fiscal period ended July 31, Per share income and capital changesa

Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1996b 1995 1994 1993 1992 1991 1990 1989 1988 1987

Net asset value, $18.54 $17.24 $14.06 $14.87 $12.57 $12.01 $9.45 $10.45 $7.94 $9.84 $8.16
beginning of period

Income from investment operations:
Net investment income .15 .17 .16 .09 .06 .06 .15 .24 .16 .14 .16
(loss)
Net gains (losses) 7.80 1.88 3.64 (.18) 3.01 1.13 3.59 (.52) 2.39 (1.12) 3.19
(both realized
and unrealized)

Total from investment 7.95 2.05 3.80 (.09) 3.07 1.19 3.74 (.28) 2.55 (.98) 3.35
operations
<PAGE>
Less distributions:
Dividends from net (.13) (.15) (.12) (.07) (.04) (.14) (.22) (.19) (.04) (.12) (.16)
investment income

Distributions from (.67) (.60) (.50) (.65) (.73) (.49) (.96) (.53) -- (.80) (1.51)
realized gains

Total distributions (.80) (.75) (.62) (.72) (.77) (.63) (1.18) (.72) (.04) (.92) (1.67)

Net asset value, $25.69 $18.54 $17.24 $14.06 $14.87 $12.57 $12.01 $9.45 $10.45 $7.94 $9.84
end of period

Ratios/supplemental data
Class A
1997 1996b 1995 1994 1993 1992 1991 1990 1989 1988 1987

Net assets, end of $8,663 $5,626 $4,575 $4,296 $3,544 $2,253 $1,553 $815 $762 $636 $759
period (in millions)

Ratio of expenses to .91% .94%c .90% .90% .92% .95% .90% .88% .82% .87% .79%
average daily net assetse

Ratio of net income (loss) .73% .78%c 1.07% .75% .51% .57% 1.65% 2.43% 1.70% 1.65% 1.60%
to average daily net assets

Portfolio turnover rate 32% 41% 54% 48% 60% 75% 81% 91% 67% 119% 113%
(excluding short-term
securities) for the
underlying Portfolio

Total returnd 43.8% 12.2% 28.4% (.7%) 25.1% 9.6% 43.3% (2.8%) 32.4% (9.7%) 41.0%

Average brokerage $0.0511 -- -- -- -- -- -- -- -- -- --
commission rate for the
underlying Portfoliof
</TABLE>

aFor a share outstanding throughout the period. Rounded to the nearest cent.
bThe Fund's fiscal year-end was changed from Sept 30 to July 31, effective 1996.
cAdjusted to an annual basis.
dTotal return does not reflect payment of a sales charge.
eEffective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
fEffective fiscal year 1997, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions
are charged. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.

IDS New Dimensions Fund, Inc.
Financial highlights
Fiscal period ended July 31,

Per share income and capital changesa

Class B Class Y
1997 1996b 1995c 1997 1996b 1995c
<S> <C> <C> <C> <C> <C> <C>

Net asset value, $18.38 $17.18 $14.21 $18.56 $17.26 $14.21
beginning of period

Income from investment operations:
Net investment income (0.02) .03 .02 .18 .19 .10
(loss)
Net gains(losses) 7.73 1.88 2.95 7.81 1.88 2.95
(both realized
and unrealized)

Total from investment 7.71 1.91 2.97 7.99 2.07 3.05
operations

<PAGE>
Less distributions:
Dividends from net (.04) (.11) -- (.16) (.17) --
investment income

Distributions from (.67) (.60) -- (.67) (.60) --
realized gains

Total distributions (.71) (.71) -- (.83) (.77) --

Net asset value, $25.38 $18.38 $17.18 $25.72 $18.56 $17.26
end of period

Ratios/supplemental data
Class B Class Y
1997 1996b 1995c 1997 1996b 1995c
Net assets, end of $1,552 $593 $150 $3,745 $2,340 $1,792
period (in millions)

Ratio of expenses to 1.67% 1.71%d 1.72%d .76% .77%d .76%d
average daily net assetsf

Ratio of net income (.02%) .01%d .33%d .88% .95%d 1.26%d
(loss) to average
daily net assets

Portfolio turnover 32% 41% 54% 32% 41% 54%
rate (excluding short-term
securities) for the
underlying Portfolio

Total returne 42.7% 11.5% 20.9% 44.0% 12.3% 21.5%

Average brokerage $0.0511 -- -- $0.0511 -- --
commission rate for the
underlying Portfoliog
</TABLE>

aFor a share outstanding throughout the period. Rounded to the nearest cent.
bThe Fund's fiscal year-end was changed from Sept. 30 to July 31,
effective 1996.
cInception date was March 20, 1995 for Class B and Class Y.
dAdjusted to an annual basis.
eTotal return does not reflect payment of a sales charge.
fEffective fiscal year 1996, expense ratios are based on total expenses of
the Fund before reduction of earnings credits on cash balances.
gEffective fiscal year 1997, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions
are charged. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.

The information in these tables has been audited by KPMG Peat Marwick LLP,
independent auditors. The independent auditors' report and additional
information about the performance of the Fund are contained in the Fund's annual
report which, if not included with this prospectus, may be obtained without
charge.

Total returns

Total return is the sum of all of your returns for a given period, assuming you
reinvest all distributions. It is calculated by taking the total value of shares
you own at the end of the period (including shares acquired by reinvestment),
less the price of shares you purchased at the beginning of the period.
<PAGE>

Average annual total return is the annually compounded rate of return over a
given time period (usually two or more years). It is the total return for the
period converted to an equivalent annual figure.

Average annual total returns as of July 31, 1997

Purchase 1 year Since 5 years 10 years
made ago inception* ago ago
IDS New Dimensions Fund:
Class A +36.62% -- +19.45% +16.15%
Class B +38.72% +30.66% -- --
Class Y +44.02% +33.04% -- --

S&P 500 +52.10% +34.06% +20.61% +14.94%

Lipper Growth
Fund Index +43.76% +29.14% +18.31% +13.28%

*Inception date was March 20, 1995.
**Measurement period started April 1, 1995.

Cumulative total returns as of July 31, 1997

Purchase 1 year Since 5 years 10 years
made ago inception* ago ago
IDS New Dimensions Fund:
Class A +36.62% -- +143.28% +347.57%
Class B +38.72% +88.33% -- --
Class Y +44.02% +96.55% -- --

S&P 500 +52.10% +100.36%** +155.27% +302.43%

Lipper Growth
Fund Index +43.76% +81.62%** +131.82% +248.09%

*Inception date was March 20, 1995.
**Measurement period started April 1, 1995.

These examples show total returns from hypothetical investments in Class A,
Class B and Class Y shares of the Fund. These returns are compared to those of
popular indexes for the same periods. The performance of Class B and Class Y
will vary from the performance of Class A based on differences in sales charges
and fees. March 20, 1995 was the inception date for Class B and Class Y. Past
performance for Class Y for the periods prior to March 20, 1995 may be
calculated based on the performance of Class A, adjusted to reflect differences
in sales charges although not for other differences in expenses.

<PAGE>

For purposes of calculation, information about the Fund assumes:
o a sales charge of 5% for Class A shares
o redemption at the end of the period and deduction of the applicable
contingent deferred sales charge for Class B shares
o no sales charge for Class Y shares
o no adjustments for taxes an investor may have paid on the reinvested
income and capital gains
o a period of widely fluctuating securities prices. Returns shown
should not be considered a representation of the Fund's future
performance.

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
500 companies are generally larger than those in which the Fund invests. The
index reflects reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees.

Lipper Growth Fund Index, an unmanaged index published by Lipper Analytical
Services, Inc., includes 30 funds that are generally similar to the Fund,
although some funds in the index may have somewhat different investment policies
or objectives.

The policies described below apply both to the Fund and the Portfolio. The
Portfolio invests primarily in common stocks of U.S. and foreign corporations
showing potential for significant growth. These companies usually operate in
areas where dynamic economic and technological changes are occurring. They also
may exhibit excellence in technology, marketing or management. Other investments
include debt securities, preferred stocks, derivative instruments and money
market instruments.

Investment policies and risks

The various types of investments the portfolio manager uses to achieve
investment performance are described in more detail in the next section and in
the SAI.

Facts about investments and their risks

Common stocks: Stock prices are subject to market fluctuations. Stocks of
companies experiencing significant growth and operating in areas of financial
and technological change may be subject to more abrupt or erratic price
movements than the stock market as a whole. While established companies in which
the Portfolio invests generally have adequate financial reserves, some of the
Portfolio's investments involve substantial risk and may be considered
speculative.

Preferred stocks: If a company earns a profit, it generally must pay its
preferred stockholders a dividend at a pre-established rate.

<PAGE>

Debt securities: The price of bonds generally falls as interest rates increase,
and rises as interest rates decrease. The price of bonds also fluctuates if the
credit rating is upgraded or downgraded. The price of bonds below investment
grade may react more to the ability of the issuing company to pay interest and
principal when due than to changes in interest rates. These bonds have greater
price fluctuations and are more likely to experience a default. The Portfolio
will not invest more than 5% of its net assets in bonds below investment grade.
Securities that are subsequently downgraded in quality may continue to be held
by the Portfolio and will be sold only when the investment manager believes it
is advantageous to do so.

Foreign investments: Securities of foreign companies and governments may be
traded in the United States, but often they are traded only on foreign markets.
Frequently, there is less information about foreign companies and less
government supervision of foreign markets. Foreign investments are subject to
political and economic risks of the countries in which the investments are made,
including the possibility of seizure or nationalization of companies, imposition
of withholding taxes on income, establishment of exchange controls or adoption
of other restrictions that might affect an investment adversely. If an
investment is made in a foreign market, the local currency may be purchased
using a forward contract in which the price of the foreign currency in U.S.
dollars is established on the date the trade is made, but delivery of the
currency is not made until the securities are received. As long as the Portfolio
holds foreign currencies or securities valued in foreign currencies, the value
of those assets will be affected by changes in the value of the currencies
relative to the U.S. dollar. Because of the limited trading volume in some
foreign markets, efforts to buy or sell a security may change the price of the
security, and it may be difficult to complete the transaction. The Portfolio may
invest up to 30% of its total assets in foreign investments.

Derivative instruments: The portfolio manager may use derivative instruments in
addition to securities to achieve investment performance. Derivative instruments
include futures, options and forward contracts. Such instruments may be used to
maintain cash reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce transaction
costs or to pursue higher investment returns. Derivative instruments are
characterized by requiring little or no initial payment and a daily change in
price based on or derived from a security, a currency, a group of securities or
currencies, or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance characteristics. A
small change in the value of the underlying security, currency or index will
cause a sizable gain or loss in the price of the derivative instrument.
Derivative instruments allow the portfolio manager to change the investment
performance

<PAGE>

characteristics very quickly and at lower costs. Risks include losses of
premiums, rapid changes in prices, defaults by other parties and inability to
close such instruments. The Portfolio will use derivative instruments only to
achieve the same investment performance characteristics it could achieve by
directly holding those securities and currencies permitted under the investment
policies. The Portfolio will designate cash or appropriate liquid assets to
cover its portfolio obligations. No more than 5% of the Portfolio's net assets
can be used at any one time for good faith deposits on futures and premiums for
options on futures that do not offset existing investment positions. This does
not, however, limit the portion of the Portfolio's assets at risk to 5%. The
Portfolio is not limited as to the percentage of its assets that may be invested
in permissible investments, including derivatives, except as otherwise
explicitly provided in this prospectus or the SAI. For descriptions of these and
other types of derivative instruments, see the Appendix to this prospectus and
the SAI.

Securities and other instruments that are illiquid: A security or other
instrument is illiquid if it cannot be sold quickly in the normal course of
business. Some investments cannot be resold to the U.S. public because of their
terms or government regulations. Securities and instruments, however, can be
sold in private sales, and many may be sold to other institutions and qualified
buyers or on foreign markets. The portfolio manager will follow guidelines
established by the board and consider relevant factors such as the nature of the
security and the number of likely buyers when determining whether a security is
illiquid. No more than 10% of the Portfolio's net assets will be held in
securities and other instruments that are illiquid.

Money market instruments: Short-term debt securities rated in the top two grades
or the equivalent are used to meet daily cash needs and at various times to hold
assets until better investment opportunities arise. Generally, less than 25% of
the Portfolio's total assets are in these money market instruments. However, for
temporary defensive purposes these investments could exceed that amount for a
limited period of time.

The investment policies described above may be changed by the boards.

Lending portfolio securities: The Portfolio may lend its securities to earn
income so long as borrowers provide collateral equal to the market value of the
loans. The risks are that borrowers will not provide collateral when required or
return securities when due. Unless a majority of the outstanding voting
securities approve otherwise, loans may not exceed 30% of the Portfolio's net
assets.

<PAGE>
Valuing Fund shares

The public offering price is the net asset value (NAV) adjusted for the sales
charge for Class A. It is the NAV for Class B and Class Y.

The NAV is the value of a single Fund share. The NAV usually changes daily, and
is calculated at the close of business, normally 3 p.m. Central time, each
business day (any day the New York Stock Exchange is open).

To establish the net assets, all securities held by the Portfolio are valued as
of the close of each business day. In valuing assets:

o Securities (except bonds) and assets with available market values are
valued on that basis

o Securities maturing in 60 days or less are valued at amortized cost

o Bonds and assets without readily available market values are valued
according to methods selected in good faith by the board

How to purchase, exchange or redeem shares

Alternative purchase arrangements

The Fund offers three different classes of shares - Class A, Class B and Class
Y. The primary differences among the classes are in the sales charge structures
and in their ongoing expenses. These differences are summarized in the table
below. You may choose the class that best suits your circumstances and
objectives.
<TABLE>
<CAPTION>

Sales charge and
distribution
(12b-1) fee Service fee Other information
<S> <C> <C> <C>

Class A Maximum initial 0.175% of average Initial sales charge
sales charge of daily net assets waived or reduced
5%; no 12b-1 fee for certain purchases

Class B No initial sales 0.175% of average Shares convert to
charge; maximum CDSC daily net assets Class A in the ninth
of 5% declines to 0% year of ownership; CDSC
after six years; 12b-1 waived in certain
fee of 0.75% of average circumstances
daily net assets

Class Y None 0.10% of average Available only to
daily net assets certain qualifying
institutional
investors
</TABLE>

<PAGE>

Conversion of Class B shares to Class A shares - During the ninth calendar year
of owning your Class B shares, Class B shares will convert to Class A shares and
will no longer be subject to a distribution fee. Class B shares that convert to
Class A shares are not subject to a sales charge or distribution fee. Class B
shares purchased through reinvested dividends and distributions also will
convert to Class A shares in the same proportion as the other Class B shares.
This means more of your money will be put to work for you.

Considerations in determining whether to purchase Class A or Class B shares -
You should consider the information below in determining whether to purchase
Class A or Class B shares. The distribution fee (included in "Ongoing expenses")
and sales charges are structured so that you will have approximately the same
total return at the end of eight years regardless of which class you chose.

Sales charges on purchase or redemption

If you purchase Class A If you purchase Class B
shares shares

o You will not have all o All of your money is
of your purchase price invested in shares of
invested. Part of your stock. However, you will
purchase price will go pay a sales charge if you
to pay the sales charge. redeem your shares within
You will not pay a sales six years of purchase.
charge when you redeem
your shares.

o You will be able to o No reductions of the
take advantage of sales charge are
reductions in the sales available for large
charge. purchases.

If your investments in IDS funds that are subject to a sales charge total
$250,000 or more, you are better off paying the reduced sales charge in Class A
than paying the higher fees in Class B. If you qualify for a waiver of the sales
charge, you should purchase Class A shares.

<PAGE>

Ongoing expenses

If you purchase Class A If you purchase Class B
shares shares

o Your shares will have o The distribution and
a lower expense ratio transfer agency fees for
than Class B shares Class B will cause your
because Class A does not shares to have a higher
pay a distribution fee expense ratio and to pay
and the transfer agency lower dividends than
fee for Class A is lower Class A shares. After
than the fee for Class B. eight years, Class B
As a result, Class A shares shares will convert to
will pay higher dividends Class A shares and you
than Class B shares. will no longer be
subject to higher fees.

You should consider how long you plan to hold your shares and whether the
accumulated higher fees and CDSC on Class B shares prior to conversion would be
less than the initial sales charge on Class A shares. Also consider to what
extent the difference would be offset by the lower expenses on Class A shares.
To help you in this analysis, the example in the "Sales charge and Fund
expenses" section of the prospectus illustrates the charges applicable to each
class of shares.

Class Y shares - Class Y shares are offered to certain institutional investors.
Class Y shares are sold without a front-end sales charge or a CDSC and are not
subject to a distribution fee. The following investors are eligible to purchase
Class Y shares:

o Qualified employee benefit plans* if the plan: - uses a daily transfer
recordkeeping service offering participants daily access to IDS funds
and has - at least $10 million in plan assets or - 500 or more
participants; or - does not use daily transfer recordkeeping and has -
at least $3 million invested in funds of the IDS MUTUAL
FUND GROUP or - 500 or more participants.

o Trust companies or similar institutions, and charitable organizations
that meet the definition in Section 501(c)(3) of the Internal Revenue
Code.* These must have at least $10 million invested in funds of the IDS
MUTUAL FUND GROUP.

o Nonqualified deferred compensation plans* whose participants are
included in a qualified employee benefit plan described above.

* Eligibility must be determined in advance by American Express Financial
Advisors. To do so, contact your financial advisor.

<PAGE>
How to purchase shares

If you're investing in this Fund for the first time, you'll need to set up an
account. Your financial advisor will help you fill out and submit an
application. Once your account is set up, you can choose among several
convenient ways to invest.

Important: When opening an account, you must provide your correct
Taxpayer Identification Number (Social Security or Employer
Identification number). See "Distributions and taxes."

When you purchase shares for a new or existing account, the price you pay per
share is determined at the close of business on the day your investment is
received and accepted at the Minneapolis headquarters.

Purchase policies:

o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to be included
in your account that day and to receive that day's share price.
Otherwise, your purchase will be processed the next business day and you
will pay the next day's share price.

o The minimums allowed for investment may change from time to
time.

o Wire orders can be accepted only on days when your bank, AEFC, the Fund
and Norwest Bank Minneapolis are open for business.

o Wire purchases are completed when wired payment is received
and the Fund accepts the purchase.

o AEFC and the Fund are not responsible for any delays that
occur in wiring funds, including delays in processing by the
bank.

o You must pay any fee the bank charges for wiring.

o The Fund reserves the right to reject any application for any
reason.

o If your application does not specify which class of shares you are
purchasing, it will be assumed that you are investing in Class A shares.
<TABLE>
<CAPTION>
Three ways to invest
<S> <C> <C>

1
By regular account Send your check and application Minimum amounts
(or your name and account number Initial investment: $2,000
if you have an established account) Additional
to: investments: $ 100
American Express Financial Advisors Inc. Account balances: $ 300*
P.O. Box 74 Qualified retirement
Minneapolis, MN 55440-0074 accounts: none

Your financial advisor will help Uniform Gifts to Minors Act
you with this process. (UGMA) and Uniform Transfers
to Minors Act (UTMA): $500
<PAGE>

2
By scheduled Contact your financial advisor Minimum amounts
investment plan to set up one of the following Initial investment: $100
scheduled plans: Additional
investments: $100/each payment
o automatic payroll deduction Account balances: none
(on active plans of
o bank authorization monthly payments)

o direct deposit of UGMA and UTMA: $50/each payment
Social Security check If account balance is below
$2,000, ($500 for UGMA and UTMA accounts),
o other plan approved by the Fund frequency of payments must be at least monthly.

3
By wire If you have an established account, If this information is not
you may wire money to: included, the order may be
rejected and all money
Norwest Bank Minneapolis received by the Fund, less
Routing No. 091000019 any costs the Fund or AEFC
Minneapolis, MN incurs, will be returned
Attn: Domestic Wire Dept. promptly.

Give these instructions: Minimum amounts
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your name).
</TABLE>

*If your account balance falls below $300, you will be asked in writing to bring
it up to $300 or establish a scheduled investment plan. If you don't do so
within 30 days, your shares can be redeemed and the proceeds mailed to you.

How to exchange shares

You can exchange your shares of the Fund at no charge for shares of the same
class of any other publicly offered fund in the IDS MUTUAL FUND GROUP available
in your state. Exchanges into IDS Tax-Free Money Fund must be made from Class A
shares. For complete information on any other fund, including fees and expenses,
read that fund's prospectus carefully.

If your exchange request arrives at the Minneapolis headquarters before the
close of business, your shares will be redeemed at the net asset value set for
that day. The proceeds will be used to purchase new fund shares the same day.
Otherwise, your exchange will take place the next business day at that day's net
asset value.

For tax purposes, an exchange represents a redemption and purchase and may
result in a gain or loss. However, you cannot use the sales charge imposed on
the purchase of Class A shares to create or increase a tax loss (or reduce a
taxable gain) by exchanging from the Fund within 91 days of your purchase. For
further explanation, see the SAI.

How to redeem shares

You can redeem your shares at any time. American Express Shareholder Service
will mail payment within seven days after receiving your request.
<PAGE>
When you redeem shares, the amount you receive may be more or less than the
amount you invested. Your shares will be redeemed at net asset value, minus any
applicable sales charge, at the close of business on the day your request is
accepted at the Minneapolis headquarters. If your request arrives after the
close of business, the price per share will be the net asset value, minus any
applicable sales charge, at the close of business on the next business day.

A redemption is a taxable transaction. If your proceeds from your redemption are
more or less than the cost of your shares, you will have a gain or loss, which
can affect your tax liability. Redeeming shares held in an IRA or qualified
retirement account may subject you to certain federal taxes, penalties and
reporting requirements. Consult your tax advisor.
<TABLE>
<CAPTION>
Two ways to request an exchange or redemption of shares
<S> <C>
1
By letter Include in your letter:
o the name of the fund(s)
o the class of shares to be exchanged or redeemed
o your account number(s) (for exchanges, both funds must be registered in the same
ownership)
o your Taxpayer Identification Number (TIN)
o the dollar amount or number of shares you want to exchange or redeem
o signature of all registered account owners
o for redemptions, indicate how you want your money delivered to you
o any paper certificates of shares you hold

Regular mail:
American Express Shareholder Service
Attn: Redemptions
P.O. Box 534
Minneapolis, MN 55440-0534

Express mail:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402

2
By phone
American Express Financial o The Fund and AEFC will honor any telephone exchange or redemption request believed to be
Advisors Telephone authentic and will use reasonable procedures to confirm that they are. This includes
Transaction Service: asking identifying questions and tape recording calls. If reasonable
800-437-3133 or procedures are not followed, the Fund or AEFC will be liable for any loss resulting from
612-671-3800 fraudulent requests.
o Phone exchange and redemption privileges automatically apply to all accounts except
custodial, corporate or qualified retirement accounts unless you request these privileges
NOT apply by writing American Express Shareholder Service. Each registered owner must sign
the request.
o AEFC answers phone requests promptly, but you may experience delays when call volume is
high. If you are unable to get through, use mail procedure as an alternative.
o Acting on your instructions, your financial advisor may conduct telephone transactions
on your behalf.
o Phone privileges may be modified or discontinued at any time.

Minimum amount
Redemption: $100

Maximum amount
Redemption: $50,000
</TABLE>
<PAGE>
Exchange policies:

o You may make up to three exchanges within any 30-day period, with each limited
to $300,000. These limits do not apply to scheduled exchange programs and
certain employee benefit plans or other arrangements through which one
shareholder represents the interests of several. Exceptions may be allowed with
pre-approval of the Fund.

o Exchanges must be made into the same class of shares of the new
fund.

o If your exchange creates a new account, it must satisfy the minimum investment
amount for new purchases.

o Once we receive your exchange request, you cannot cancel it.

o Shares of the new fund may not be used on the same day for
another exchange.

o If your shares are pledged as collateral, the exchange will be delayed until
written approval is obtained from the secured party.

o AEFC and the Fund reserve the right to reject any exchange, limit the amount,
or modify or discontinue the exchange privilege, to prevent abuse or adverse
effects on the Fund and its shareholders. For example, if exchanges are too
numerous or too large, they may disrupt the Fund's investment strategies or
increase its costs.

Redemption policies:

o A "change of mind" option allows you to change your mind after requesting a
redemption and to use all or part of the proceeds to purchase new shares in the
same account from which you redeemed. If you reinvest in Class A, you will
purchase the new shares at net asset value rather than the offering price on the
date of a new purchase. If you reinvest in Class B, any CDSC you paid on the
amount you are reinvesting also will be reinvested. To take advantage of this
option, send a written request within 30 days of the date your redemption
request was received. Include your account number and mention this option. This
privilege may be limited or withdrawn at any time, and it may have tax
consequences.

o A telephone redemption request will not be allowed within 30 days of a
phoned-in address change.

Important: If you request a redemption of shares you recently purchased by a
check or money order that is not guaranteed, the Fund will wait for your check
to clear. It may take up to 10 days from the date of purchase before a check is
mailed to you. (A check may be mailed earlier if your bank provides evidence
satisfactory to the Fund and AEFC that your check has cleared.)

<PAGE>

Three ways to receive payment when you redeem shares
<S> <C>

1
By regular or express mail o Mailed to the address on record
o Payable to names listed on the account

NOTE: You will be charged a fee if you
request express mail delivery.

2
By wire o Minimum wire redemption: $1,000
o Request that money be wired to your bank
o Bank account must be in the same
ownership as the IDS fund account

NOTE: Pre-authorization required. For
instructions, contact your financial
advisor or American Express Shareholder Service.

3
By scheduled payout plan o Minimum payment: $50
o Contact your financial advisor or American Express
Shareholder Service to set up regular
payments to you on a monthly, bimonthly,
quarterly, semiannual or annual basis
o Purchasing new shares while under a payout
plan may be disadvantageous because of
the sales charges
</TABLE>

Reductions and waivers of the sales charge
Class A - initial sales charge alternative

On purchases of Class A shares, you pay a 5% sales charge on the first $50,000
of your total investment and less on investments after the first $50,000:

Total investment Sales charge as a
percent of:*

Public Net
offering amount
price invested

Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

* To calculate the actual sales charge on an investment greater than $50,000 and
less than $1,000,000, amounts for each applicable increment must be totaled. See
the SAI.

<PAGE>

Reductions of the sales charge on Class A shares

Your sales charge may be reduced, depending on the totals of:

o the amount you are investing in this Fund now,

o the amount of your existing investment in this Fund, if any, and

o the amount you and your primary household group are investing or have in other
funds in the IDS MUTUAL FUND GROUP that carry a sales charge. (The primary
household group consists of accounts in any ownership for spouses or domestic
partners and their unmarried children under 21. Domestic partners are
individuals who maintain a shared primary residence and have joint property or
other insurable interests.)

Other policies that affect your sales charge:

o IDS Tax-Free Money Fund and Class A shares of IDS Cash Management Fund do not
carry sales charges. However, you may count investments in these funds if you
acquired shares in them by exchanging shares from IDS funds that carry sales
charges.

o IRA purchases or other employee benefit plan purchases made through a payroll
deduction plan or through a plan sponsored by an employer, association of
employers, employee organization or other similar entity, may be added together
to reduce sales charges for all shares purchased through that plan.

o If you intend to invest $1 million over a period of 13 months, you can reduce
the sales charges in Class A by filing a letter of intent.

For more details, see the SAI.

Waivers of the sales charge for Class A shares

Sales charges do not apply to:

o Current or retired board members, officers or employees of the Fund or AEFC or
its subsidiaries, their spouses and unmarried children under 21.

o Current or retired American Express financial advisors, their spouses and
unmarried children under 21.

o Investors who have a business relationship with a newly associated financial
advisor who joined AEFA from another investment firm provided that (1) the
purchase is made within six months of the advisor's appointment date with AEFA,
(2) the purchase is made with proceeds of a redemption of shares that were
sponsored by the financial advisor's previous broker-dealer, and (3) the
proceeds must be the result of a redemption of an equal or greater value where a
sales load was previously assessed.

<PAGE>

o Qualified employee benefit plans* using a daily transfer recordkeeping system
offering participants daily access to IDS funds.

(Participants in certain qualified plans for which the initial sales charge is
waived may be subject to a deferred sales charge of up to 4% on certain
redemptions. For more information, see the SAI.)

o Shareholders who have at least $1 million invested in funds of the IDS MUTUAL
FUND GROUP. If the investment is redeemed in the first year after purchase, a
CDSC of 1% will be charged on the redemption. The CDSC will be waived only in
the circumstances described for waivers for Class B shares.

o Purchases made within 30 days after a redemption of shares (up to the amount
redeemed):
- of a product distributed by American Express Financial
Advisors in a qualified plan subject to a deferred sales
charge or
- in a qualified plan where American Express Trust Company has a
recordkeeping, trustee, investment management or investment servicing
relationship.

Send the Fund a written request along with your payment, indicating the amount
of the redemption and the date on which it occurred.

o Purchases made with dividend or capital gain distributions from the same class
of another fund in the IDS MUTUAL FUND GROUP that has a sales charge.

o Purchases made through or under a "wrap fee" product sponsored by American
Express Financial Advisors Inc. (total amount of all investments must be
$50,000); the University of Texas System ORP; or a segregated separate account
offered by Nationwide Life Insurance Company or Nationwide Life and Annuity
Insurance Company.

o Purchases made with the proceeds from IDS Life Real Estate Variable Annuity
surrenders through December 31, 1997.

*Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.

Class B - contingent deferred sales charge alternative

Where a CDSC is imposed on a redemption, it is based on the amount of the
redemption and the number of calendar years, including the year of purchase,
between purchase and redemption. The following table shows the declining scale
of percentages that apply to redemptions during each year after a purchase:

If a redemption is The percentage rate
made during the for the CDSC is:

First year 5%
Second year 4%

<PAGE>

Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%

If the amount you are redeeming reduces the current net asset value of your
investment in Class B shares below the total dollar amount of all your purchase
payments during the last six years (including the year in which your redemption
is made), the CDSC is based on the lower of the redeemed purchase payments or
market value.

The following example illustrates how the CDSC is applied. Assume you had
invested $10,000 in Class B shares and that your investment had appreciated in
value to $12,000 after 15 months, including reinvested dividend and capital gain
distributions. You could redeem any amount up to $2,000 without paying a CDSC
($12,000 current value less $10,000 purchase amount). If you redeemed $2,500,
the CDSC would apply only to the $500 that represented part of your original
purchase price. The CDSC rate would be 4% because a redemption after 15 months
would take place during the second year after purchase.

Because the CDSC is imposed only on redemptions that reduce the total of your
purchase payments, you never have to pay a CDSC on any amount you redeem that
represents appreciation in the value of your shares, income earned by your
shares or capital gains. In addition, when determining the rate of any CDSC,
your redemption will be made from the oldest purchase payment you made. Of
course, once a purchase payment is considered to have been redeemed, the next
amount redeemed is the next oldest purchase payment. By redeeming the oldest
purchase payments first, lower CDSCs are imposed than would otherwise be the
case.

Waivers of the contingent deferred sales charge

The CDSC on Class B shares will be waived on redemptions of shares:

o In the event of the shareholder's death,
o Purchased by any board member, officer or employee of a fund or
AEFC or its subsidiaries,
o Held in a trusteed employee benefit plan, o Held in IRAs or certain qualified
plans for which American Express Trust Company acts as custodian, such as Keogh
plans, tax-sheltered custodial accounts or corporate pension plans, provided
that the shareholder is:
- at least 59-1/2 years old, and
- taking a retirement distribution (if the redemption is part
of a transfer to an IRA or qualified plan in a product
distributed by American Express Financial Advisors, or a
custodian-to-custodian transfer to a product not distributed
by American Express Financial Advisors, the CDSC will not be
waived), or
- redeeming under an approved
substantially equal periodic payment arrangement.

<PAGE>

For investors in Class A shares who have over $1 million invested in one year,
the 1% CDSC on redemption of those shares will be waived in the same
circumstances described for Class B.

Special shareholder services

Services

To help you track and evaluate the performance of your investments, AEFC
provides these services:

Quarterly statements listing all of your holdings and transactions during the
previous three months.

Yearly tax statements featuring average-cost-basis reporting of capital gains or
losses if you redeem your shares along with distribution information which
simplifies tax calculations.

A personalized mutual fund progress report detailing returns on your initial
investment and cash-flow activity in your account. It calculates a total return
to reflect your individual history in owning Fund shares. This report is
available from your financial advisor.

Quick telephone reference

American Express Financial Advisors 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

TTY Service
For the hearing impaired
800-846-4852

American Express Financial Advisors Easy Access Line
Automated account information (TouchToneR phones only), including current Fund
prices and performance, account values and recent account transactions
800-862-7919

Distributions and taxes

As a shareholder you are entitled to your share of the Fund's net income and any
net gains realized on its investments. The Fund distributes dividends and
capital gain distributions to qualify as a regulated investment company and to
avoid paying corporate income and excise taxes. Dividend and capital gain
distributions will have tax consequences you should know about.

<PAGE>

Dividend and capital gain distributions

The Portfolio allocates investment income from dividends and interest and net
realized capital gains or losses, if any, to the Fund. The Fund deducts direct
and allocated expenses from the investment income. The Fund's net investment
income is distributed to you by the end of the calendar year as dividends.
Short-term capital gains are included in net investment income. Long-term
capital gains are realized whenever a security held for more than one year is
sold for a higher price than was paid for it.

The Fund will offset any net realized capital gains by any available capital
loss carryovers. Net realized long-term capital gains, if any, are distributed
at the end of the calendar year as capital gain distributions. Before they are
distributed, both net investment income and net long-term capital gains are
included in the value of each share. After they are distributed, the value of
each share drops by the per-share amount of the distribution. (If your
distributions are reinvested, the total value of your holdings will not change.)

Dividends for each class will be calculated at the same time, in the same manner
and will be the same amount prior to deduction of expenses. Expenses
attributable solely to a class of shares will be paid exclusively by that class.

Reinvestments

Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the Fund, unless:

o you request the Fund in writing or by phone to pay
distributions to you in cash, or

o you direct the Fund to invest your distributions in the same class of
another publicly available IDS fund for which you've previously opened
an account.

The reinvestment price is the net asset value at close of business on the day
the distribution is paid. (Your quarterly statement will confirm the amount
invested and the number of shares purchased.)

If you choose cash distributions, you will receive only those declared after
your request has been processed.

If the U.S. Postal Service cannot deliver the checks for the cash distributions,
we will reinvest the checks into your account at the then-current net asset
value and make future distributions in the form of additional shares. Prior to
reinvestment no interest will accrue on amounts represented by uncashed
distribution or redemption checks.

<PAGE>

Taxes

The Fund has received a Private Letter Ruling from the Internal Revenue Service
stating that, for purposes of the Internal Revenue Code, the Fund will be
regarded as directly holding its allocable share of the income and gain realized
by the Portfolio.

Distributions are subject to federal income tax and also may be subject to state
and local taxes. Distributions are taxable in the year the Fund declares them
regardless of whether you take them in cash or reinvest them.

Each January, you will receive a tax statement showing the kinds and total
amount of all distributions you received during the previous year. You must
report distributions on your tax returns, even if they are reinvested in
additional shares.

Buying a dividend creates a tax liability. This means buying shares shortly
before a net investment income or a capital gain distribution. You pay the full
pre-distribution price for the shares, then receive a portion of your investment
back as a distribution, which is taxable.

Redemptions and exchanges subject you to a tax on any capital gain. If you sell
shares for more than their cost, the difference is a capital gain. Your gain may
be either short term (for shares held for one year or less) or long term (for
shares held for more than one year).

Your Taxpayer Identification Number (TIN) is important. As with any financial
account you open, you must list your current and correct Taxpayer Identification
Number (TIN) -- either your Social Security or Employer Identification number.
The TIN must be certified under penalties of perjury on your application when
you open an account.

If you don't provide the TIN, or the TIN you report is incorrect, you could be
subject to backup withholding of 31% of taxable distributions and proceeds from
certain sales and exchanges. You also could be subject to further penalties,
such as:

o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information

You also could be subject to backup withholding because you failed to report
interest or dividends on your tax return as required.

<PAGE>

How to determine the correct TIN
Use the Social Security or
For this type of account: Employer Identification number
of:

Individual or joint account The individual or individuals
listed on the account

Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)

A living trust The grantor-trustee (the person
who puts the money into the
trust)

An irrevocable trust, pension The legal entity (not the
trust or estate personal representative or
trustee, unless no legal entity
is designated in the account
title)

Sole proprietorship The owner

Partnership The partnership

Corporate The corporation

Association, club or The organization
tax-exempt organization

For details on TIN requirements, ask your financial advisor or local American
Express Financial Advisors office for federal Form W-9, "Request for Taxpayer
Identification Number and Certification."

Important: This information is a brief and selective summary of certain federal
tax rules that apply to this Fund. Tax matters are highly individual and
complex, and you should consult a qualified tax advisor about your personal
situation.

How the Fund and Portfolio are organized

The Fund is owned by its shareholders. The Fund issues shares in three classes -
Class A, Class B and Class Y. Each class has different sales arrangements and
bears different expenses. Each class represents interests in the assets of the
Fund. Par value is one cent per share. Both full and fractional shares can be
issued.

The Fund no longer issues stock certificates.

<PAGE>

Voting rights

As a shareholder, you have voting rights over the Fund's management and
fundamental policies. You are entitled to one vote for each share you own.
Shares of the Fund have cumulative voting rights. Each class has exclusive
voting rights with respect to the provisions of the Fund's distribution plan
that pertain to a particular class and other matters for which separate class
voting is appropriate under applicable law.

Shareholder meetings

The Fund does not hold annual shareholder meetings. However, the board members
may call meetings at their discretion, or on demand by holders of 10% or more of
the outstanding shares, to elect or remove board members.

Special considerations regarding master/feeder structure

The Fund pursues its goal by investing its assets in a master fund called the
Portfolio. This means that the Fund does not invest directly in securities;
rather the Portfolio invests in and manages its portfolio of securities. The
Portfolio is a separate investment company, but it has the same goal and
investment policies as the Fund. The goal and investment policies of the
Portfolio are described under the captions "Investment policies and risks" and
"Facts about investments and their risks." Additional information on investment
policies may be found in the SAI.

Board considerations: The board considered the advantages and disadvantages of
investing the Fund's assets in the Portfolio. The board believes that the
master/feeder structure can be in the best interest of the Fund and its
shareholders since it offers the opportunity for economies of scale. The Fund
may redeem all of its assets from the Portfolio at any time. Should the board
determine that it is in the best interest of the Fund and its shareholders to
terminate its investment in the Portfolio, it would consider hiring an
investment advisor to manage the Fund's assets, or other appropriate options.
The Fund would terminate its investments if the Portfolio changed its goal,
investment policies or restrictions without the same change being approved by
the Fund.

Other feeders: The Portfolio sells securities to other affiliated mutual funds
and may sell securities to non-affiliated investment companies and institutional
accounts (known as feeders). These feeders buy the Portfolio's securities on the
same terms and conditions as the Fund and pay their proportionate share of the
Portfolio's expenses. However, their operating costs and sales charges are
different from those of the Fund. Therefore, the investment returns for other
feeders are different from the returns of the Fund. Information about other
feeders may be obtained by calling American Express Financial Advisors at
1-800-AXP-SERV.

<PAGE>

Each feeder that invests in the Portfolio is different and activities of its
investors may adversely affect all other feeders, including the Fund. For
example, if one feeder decides to terminate its investment in the Portfolio, the
Portfolio may elect to redeem in cash or in kind. If cash is used, the Portfolio
will incur brokerage, taxes and other costs in selling securities to raise the
cash. This may result in less investment diversification if entire investment
positions are sold, and it also may result in less liquidity among the remaining
assets. If in-kind distribution is made, a smaller pool of assets remains that
may affect brokerage rates and investment options. In both cases, expenses may
rise since there are fewer assets to cover the costs of managing those assets.

Shareholder meetings: Whenever the Portfolio proposes to change a fundamental
investment policy or to take any other action requiring approval of its security
holders, the Fund will hold a shareholder meeting. The Fund will vote for or
against the Portfolio's proposals in proportion to the vote it receives for or
against the same proposals from its shareholders.

Board members and officers

Shareholders elect a board that oversees the operations of the Fund and chooses
its officers. Its officers are responsible for day-to-day business decisions
based on policies set by the board. The board has named an executive committee
that has authority to act on its behalf between meetings. Board members and
officers serve 47 IDS and IDS Life funds and 15 Master Trust portfolios, except
for William H. Dudley, who does not serve the nine IDS Life funds. The board
members also serve as members of the board of the Trust which manages the
investments of the Fund and other accounts. Should any conflict of interest
arise between the interests of the shareholders of the Fund and those of the
other accounts, the board will follow written procedures to address the
conflict.

Board members and officers of the Fund

President and interested board member

William R. Pearce
Chairman of the board, Board Services Corporation (provides administrative
services to boards including the boards of the IDS and IDS Life funds and Master
Trust portfolios).

Independent board members

H. Brewster Atwater, Jr.
Former chairman and chief executive officer, General Mills, Inc.

Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public
Policy Research.

<PAGE>
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.

Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.

Anne P. Jones
Attorney and telecommunications consultant.

Melvin R. Laird
Senior counsellor for national and international affairs, The Reader's Digest
Association, Inc.

Alan K. Simpson
Former United States senator for Wyoming.

Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.

Wheelock Whitney
Chairman, Whitney Management Company.

C. Angus Wurtele
Chairman of the board, The Valspar Corporation.

Interested board members who are officers and/or employees of AEFC

William H. Dudley
Senior advisor to the chief executive officer, AEFC.

David R. Hubers
President and chief executive officer, AEFC.

John R. Thomas
Senior vice president, AEFC.

Officers who also are officers and/or employees of AEFC

Peter J. Anderson
Senior vice president, AEFC. Vice president - Investments for the Fund.

Melinda S. Urion
Senior vice president and chief financial officer, AEFC. Treasurer for the Fund.

Other officer

Leslie L. Ogg
President, treasurer and corporate secretary of Board Services Corporation. Vice
president, general counsel and secretary for the Fund.

Refer to the SAI for the board members' and officers' biographies.
<PAGE>
Investment manager

The Portfolio pays AEFC for managing its assets. The Fund pays its proportionate
share of the fee. Under the Investment Management Services Agreement, AEFC is
paid a fee for these services based on the average daily net assets of the
Portfolio, as follows:

Assets Annual rate
(billions) at each asset level

First $1.0 0.600%
Next 1.0 0.575
Next 1.0 0.550
Next 3.0 0.525
Over 6.0 0.500

This fee may be increased or decreased by a performance adjustment based on a
comparison of performance of Class A shares of the 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.

For the fiscal year ended July 31, 1997, the Portfolio paid AEFC a total
investment management fee of 0.56% of its average daily net assets. Under the
Agreement, the Portfolio also pays taxes, brokerage commissions and nonadvisory
expenses.

Administrator and transfer agent

The Fund pays AEFC for shareholder accounting and transfer agent services under
two agreements. The first agreement, the Administrative Services Agreement, has
a declining annual rate beginning at 0.05% and decreasing to 0.03% as assets
increase. The second agreement, the Transfer Agency Agreement, has an annual fee
per shareholder account as follows:

o Class A $15
o Class B $16
o Class Y $15

Distributor

The Fund has an exclusive distribution agreement with American Express Financial
Advisors, a wholly-owned subsidiary of AEFC. Financial advisors representing
American Express Financial Advisors provide information to investors about
individual investment programs, the Fund and its operations, new account
applications, and exchange and redemption requests. The cost of these services
is paid partially by the Fund's sales charges.

Persons who buy Class A shares pay a sales charge at the time of purchase.
Persons who buy Class B shares are subject to a contingent deferred sales charge
on a redemption in the first six years and pay an asset-based sales charge (also
known as a 12b-1 fee) of 0.75% of the Fund's average daily net assets. Class Y
shares are sold without a sales charge and without an asset-based sales charge.

<PAGE>

Financial advisors may receive different compensation for selling Class A, Class
B and Class Y shares. Portions of the sales charge also may be paid to
securities dealers who have sold the Fund's shares or to banks and other
financial institutions. The amounts of those payments range from 0.8% to 4% of
the Fund's offering price depending on the monthly sales volume.

Under a Shareholder Service Agreement, the Fund also 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 average daily net assets for Class A
and Class B shares and 0.10% for Class Y shares.

Total expenses paid by the Fund's Class A shares for the fiscal year ended July
31, 1997, were 0.91% of its average daily net assets. Expenses for Class B and
Class Y were 1.67% and .76%, respectively.

About American Express Financial Corporation

General information

The AEFC family of companies offers not only mutual funds but also insurance,
annuities, investment certificates and a broad range of financial management
services.

Besides managing investments for all funds in the IDS MUTUAL FUND GROUP, AEFC
also manages investments for itself and its subsidiaries, IDS Certificate
Company and IDS Life Insurance Company. Total assets under management on July
31, 1997 were more than $170 billion.

American Express Financial Advisors serves individuals and businesses through
its nationwide network of more than 175 offices and more than 8,500 advisors.

Other AEFC subsidiaries provide investment management and related services for
pension, profit sharing, employee savings and endowment funds of businesses and
institutions.

AEFC is located at IDS Tower 10, Minneapolis, MN 55440-0010. It is a
wholly-owned subsidiary of American Express Company (American Express), a
financial services company with headquarters at American Express Tower, World
Financial Center, New York, NY 10285.

The Portfolio may pay brokerage commissions to broker-dealer affiliates of AEFC.

<PAGE>

Appendix

Descriptions of derivative instruments

What follows are brief descriptions of derivative instruments the Portfolio may
use. At various times the Portfolio may use some or all of these instruments and
is not limited to these instruments. It may use other similar types of
instruments if they are consistent with the Portfolio's investment goal and
policies. For more information on these instruments, see the SAI.

Options and futures contracts. An option is an agreement to buy or sell an
instrument at a set price during a certain period of time. A futures contract is
an agreement to buy or sell an instrument for a set price on a future date. The
Portfolio may buy and sell options and futures contracts to manage its exposure
to changing interest rates, security prices and currency exchange rates. Options
and futures may be used to hedge the Portfolio's investments against price
fluctuations or to increase market exposure.

Indexed securities. The value of indexed securities is linked to currencies,
interest rates, commodities, indexes or other financial indicators. Most indexed
securities are short- to intermediate- term fixed income securities whose values
at maturity or interest rates rise or fall according to the change in one or
more specified underlying instruments. Indexed securities may be more volatile
than the underlying instrument itself.

Structured products. Structured products are over-the-counter financial
instruments created specifically to meet the needs of one or a small number of
investors. The instrument may consist of a warrant, an option or a forward
contract embedded in a note or any of a wide variety of debt, equity and/or
currency combinations. Risks of structured products include the inability to
close such instruments, rapid changes in the market and defaults by other
parties.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS NEW DIMENSIONS FUND

Sept. 29, 1997

This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus and the financial statements contained in the
Annual Report which may be obtained from your American Express financial advisor
or by writing to American Express Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534.

This SAI is dated Sept. 29, 1997, and it is to be used with the
prospectus dated Sept. 29, 1997, and the Annual Report for the
fiscal year ended July 31, 1997.

<PAGE>

TABLE OF CONTENTS

Goal and Investment Policies.......................See Prospectus

Additional Investment Policies...............................p. 3

Security Transactions........................................p. 7

Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation.......................p. 9

Performance Information......................................p. 10

Valuing Fund Shares..........................................p. 11

Investing in the Fund........................................p. 13

Redeeming Shares.............................................p. 17

Pay-out Plans................................................p. 18

Taxes........................................................p. 19

Agreements...................................................p. 21

Organizational Information...................................p. 25

Board Members and Officers...................................p. 25

Compensation for Board Members...............................p. 29

Independent Auditors.........................................p. 30

Financial Statements.............................See Annual Report

Prospectus...................................................p. 30

Appendix A: Foreign Currency Transactions...................p. 31

Appendix B: Options and Stock Index Futures Contracts.......p. 36

Appendix C: Mortgage-Backed Securities......................p. 44

Appendix D: Dollar-Cost Averaging...........................p. 45

<PAGE>

ADDITIONAL INVESTMENT POLICIES

The Fund pursues its goal by investing all of its assets in Growth Trends
Portfolio (the "Portfolio") of Growth Trust (the "Trust"), a separate investment
company, rather than by directly investing in and managing its own portfolio of
securities. The Portfolio has the same investment objectives, policies and
restrictions as the Fund.

Fundamental investment policies adopted by the Fund or Portfolio cannot be
changed without the approval of a majority of the outstanding voting securities
of the Fund or Portfolio, respectively, as defined in the Investment Company Act
of 1940 (the 1940 Act). Whenever the Fund is requested to vote on a change in
the investment policies of the corresponding Portfolio, the Fund will hold a
meeting of Fund shareholders and will cast the Fund's vote as instructed by the
shareholders.

Notwithstanding any of the Fund's other investment policies, the Fund may invest
its assets in an open-end management investment company having substantially the
same investment objectives, policies and restrictions as the Fund for the
purpose of having those assets managed as part of a combined pool.

These are investment policies in addition to those presented in the prospectus.
The policies below are fundamental policies that apply to both the Fund and the
Portfolio and may be changed only with shareholder approval. Unless holders of a
majority of the outstanding voting securities agree to make the change, the Fund
and Portfolio will not:

'Act as an underwriter (sell securities for others). However, under the
securities laws, the Portfolio may be deemed to be an underwriter when it
purchases securities directly from the issuer and later resells them.

'Borrow money or property, except as a temporary measure for extraordinary or
emergency purposes, in an amount not exceeding one-third of the market value of
its total assets (including borrowings) less liabilities (other than borrowings)
immediately after the borrowing. The Portfolio has not borrowed in the past and
has no present intention to borrow.

'Make cash loans if the total commitment amount exceeds 5% of the Portfolio's
total assets.

'Concentrate in any one industry. According to the present interpretation by the
Securities and Exchange Commission (SEC), this means no more than 25% of the
Portfolio's total assets, based on current market value at time of purchase, can
be invested in any one industry.

'Purchase more than 10% of the outstanding voting securities of an
issuer.

<PAGE>

'Invest more than 5% of its total assets in securities of any one company,
government or political subdivision thereof, except the limitation will not
apply to investments in securities issued by the U.S. government, its agencies
or instrumentalities, and except that up to 25% of the Portfolio's total assets
may be invested without regard to this 5% limitation.

'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the Portfolio from investing
in securities or other instruments backed by real estate or securities of
companies engaged in the real estate business or real estate investment trusts.
For purposes of this policy, real estate includes real estate limited
partnerships.

'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the Portfolio
from buying or selling financial instruments (such as options and futures
contracts) or from investing in securities or other instruments backed by, or
whose value is derived from, physical commodities.

'Make a loan of any part of its assets to American Express Financial Corporation
(AEFC), to the board members and officers of AEFC or to its own board members
and officers.

'Purchase securities of an issuer if the board members and officers of the Fund,
the Portfolio and AEFC hold more than a certain percentage of the issuer's
outstanding securities. If the holdings of all board members and officers of the
Fund, the Portfolio and of AEFC who own more than 0.5% of an issuer's securities
are added together, and if in total they own more than 5%, the Portfolio will
not purchase securities of that issuer.

'Lend Portfolio securities in excess of 30% of its net assets. The current
policy of the Portfolio's board is to make these loans, either long- or
short-term, to broker-dealers. In making loans, the Portfolio receives the
market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board. If the market price of the loaned securities goes up, the Portfolio will
get additional collateral on a daily basis. The risks are that the borrower may
not provide additional collateral when required or return the securities when
due. During the existence of the loan, the Portfolio receives cash payments
equivalent to all interest or other distributions paid on the loaned securities.
A loan will not be made unless the investment manager believes the opportunity
for additional income outweighs the risks.

Unless changed by the board, the Fund and Portfolio will not:

'Buy on margin or sell short, except the Portfolio may make margin payments in
connection with transactions in stock index futures contracts.

<PAGE>

'Pledge or mortgage its assets beyond 15% of total assets. If the Portfolio were
ever to do so, valuation of the pledged or mortgaged assets would be based on
market values. For purposes of this policy, collateral arrangements for margin
deposits on a futures contract are not deemed to be a pledge of assets.

'Invest more than 5% of its total assets in securities of companies, including
any predecessors, that have a record of less than three years continuous
operations.

'Invest more than 10% of its total assets in securities of
investment companies.

'Invest in a company to control or manage it.

'Invest in exploration or development programs, such as oil, gas or
mineral leases.

'Invest more than 5% of its net assets in warrants.

'Invest more than 10% of its net assets in securities and other instruments that
are illiquid. For purposes of this policy illiquid securities include some
privately placed securities, public securities and Rule 144A securities that for
one reason or another may no longer have a readily available market, repurchase
agreements with maturities greater than seven days, non-negotiable fixed-time
deposits and over-the-counter options.

In determining the liquidity of Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the U.S.
government or its agencies and instrumentalities, the investment manager, under
guidelines established by the board, will consider any relevant factors
including the frequency of trades, the number of dealers willing to purchase or
sell the security and the nature of marketplace trades.

In determining the liquidity of commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933,
the investment manager, under guidelines established by the board, will evaluate
relevant factors such as the issuer and the size and nature of its commercial
paper programs, the willingness and ability of the issuer or dealer to
repurchase the paper, and the nature of the clearance and settlement procedures
for the paper.

The Portfolio may make contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when-issued securities or forward
commitments). Under normal market conditions, the Portfolio does not intend to
commit more than 5% of its total assets to these practices. The Portfolio does
not pay for the securities or receive dividends or interest on them until

<PAGE>

the contractual settlement date. The Portfolio will designate cash or liquid
high-grade debt securities at least equal in value to its commitments to
purchase the securities. When-issued securities or forward commitments are
subject to market fluctuations and they may affect the Portfolio's total assets
the same as owned securities.

The Portfolio may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the Portfolio may use are
short-term U.S. and Canadian government securities and negotiable certificates
of deposit, non-negotiable fixed-time deposits, bankers' acceptances and letters
of credit of banks or savings and loan associations having capital, surplus and
undivided profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent in the
instance of a foreign branch of a U.S. bank) at the date of investment. Any
cash-equivalent investments in foreign securities will be subject to the
limitations on foreign investments described in the prospectus. The Portfolio
also may purchase short-term corporate notes and obligations rated in the top
two classifications by Moody's Investors Service, Inc. (Moody's) or Standard &
Poor's Corporation (S&P) or the equivalent and may use repurchase agreements
with broker-dealers registered under the Securities Exchange Act of 1934 and
with commercial banks. A risk of a repurchase agreement is that if the seller
seeks the protection of the bankruptcy laws, the Portfolio's ability to
liquidate the security involved could be impaired.

The Portfolio may invest in foreign securities that are traded in the form of
American Depositary Receipts (ADRs). ADRs are receipts typically issued by a
U.S. bank or trust company evidencing ownership of the underlying securities of
foreign issuers. European Depositary Receipts (EDRs) and Global Depositary
Receipts (GDRs) are receipts typically issued by foreign banks or trust
companies, evidencing ownership of underlying securities issued by either a
foreign or U.S. issuer. Generally Depositary Receipts in registered form are
designed for use in the U.S. securities market and Depositary Receipts in bearer
form are designed for use in securities markets outside the U.S. Depositary
Receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. Depositary Receipts also
involve the risks of other investments in foreign securities.

For a discussion about foreign currency transactions, see Appendix A. For a
discussion on options and stock index futures contracts, see Appendix B. For a
discussion on mortgage-backed securities, see Appendix C.

<PAGE>

SECURITY TRANSACTIONS

Subject to policies set by the board, AEFC is authorized to determine,
consistent with the Fund's and Portfolio's investment goal and policies, which
securities will be purchased, held or sold. In determining where the buy and
sell orders are to be placed, AEFC has been directed to use its best efforts to
obtain the best available price and the most favorable execution except where
otherwise authorized by the board. In selecting broker-dealers to execute
transactions, AEFC may consider the price of the security, including commission
or mark-up, the size and difficulty of the order, the reliability, integrity,
financial soundness and general operation and execution capabilities of the
broker, the broker's expertise in particular markets, and research services
provided by the broker.

AEFC has a strict Code of Ethics that prohibits its affiliated personnel from
engaging in personal investment activities that compete with or attempt to take
advantage of planned portfolio transactions for any fund or trust for which it
acts as investment manager. AEFC carefully monitors compliance with its Code of
Ethics.

On occasion, it may be desirable to compensate a broker for research services or
for brokerage services by paying a commission that might not otherwise be
charged or a commission in excess of the amount another broker might charge. The
board has adopted a policy authorizing AEFC to do so to the extent authorized by
law, if AEFC determines, in good faith, that such commission is reasonable in
relation to the value of the brokerage or research services provided by a broker
or dealer, viewed either in the light of that transaction or AEFC's overall
responsibilities to the funds in the IDS MUTUAL FUND GROUP and other accounts
for which it acts as investment advisor.

Research provided by brokers supplements AEFC's own research activities. Such
services include economic data on, and analysis of, U.S. and foreign economies;
information on specific industries; information about specific companies,
including earnings estimates; purchase recommendations for stocks and bonds;
portfolio strategy services; political, economic, business and industry trend
assessments; historical statistical information; market data services providing
information on specific issues and prices; and technical analysis of various
aspects of the securities markets, including technical charts. Research services
may take the form of written reports, computer software or personal contact by
telephone or at seminars or other meetings. AEFC has obtained, and in the future
may obtain, computer hardware from brokers, including but not limited to
personal computers that will be used exclusively for investment decision-making
purposes, which include the research, portfolio management and trading functions
and other services to the extent permitted under an interpretation by the SEC.

<PAGE>

When paying a commission that might not otherwise be charged or a commission in
excess of the amount another broker might charge, AEFC must follow procedures
authorized by the board. To date, three procedures have been authorized. One
procedure permits AEFC to direct an order to buy or sell a security traded on a
national securities exchange to a specific broker for research services it has
provided. The second procedure permits AEFC, in order to obtain research, to
direct an order on an agency basis to buy or sell a security traded in the
over-the-counter market to a firm that does not make a market in that security.
The commission paid generally includes compensation for research services. The
third procedure permits AEFC, in order to obtain research and brokerage
services, to cause the Portfolio to pay a commission in excess of the amount
another broker might have charged. AEFC has advised the Portfolio it is
necessary to do business with a number of brokerage firms on a continuing basis
to obtain such services as the handling of large orders, the willingness of a
broker to risk its own money by taking a position in a security, and the
specialized handling of a particular group of securities that only certain
brokers may be able to offer. As a result of this arrangement, some portfolio
transactions may not be effected at the lowest commission, but AEFC believes it
may obtain better overall execution. AEFC has assured the Fund that under all
three procedures the amount of commission paid will be reasonable and
competitive in relation to the value of the brokerage services performed or
research provided.

All other transactions shall be placed on the basis of obtaining the best
available price and the most favorable execution. In so doing, if in the
professional opinion of the person responsible for selecting the broker or
dealer, several firms can execute the transaction on the same basis,
consideration will be given by such person to those firms offering research
services. Such services may be used by AEFC in providing advice to all the funds
in the IDS MUTUAL FUND GROUP even though it is not possible to relate the
benefits to any particular fund or account.

Each investment decision made for the Portfolio is made independently from any
decision made for another portfolio, fund or other account advised by AEFC or
any of its subsidiaries. When the Portfolio buys or sells the same security as
another portfolio, fund or account, AEFC carries out the purchase or sale in a
way the Portfolio agrees in advance is fair. Although sharing in large
transactions may adversely affect the price or volume purchased or sold by the
Portfolio, the Portfolio hopes to gain an overall advantage in execution. AEFC
has assured the Fund it will continue to seek ways to reduce brokerage costs.

On a periodic basis, AEFC makes a comprehensive review of the broker-dealers and
the overall reasonableness of their commissions. The review evaluates execution,
operational efficiency and research services.

<PAGE>

The Portfolio paid total brokerage commissions of $7,124,866 for the fiscal year
ended July 31, 1997, $6,405,032 for the fiscal period ended July 31, 1996, and
$6,993,055 for the fiscal year ended Sept. 30, 1995. Substantially all firms
through whom transactions were executed provide research services.

In fiscal year 1997, transactions amounting to $768,200,000, on which $41,592 in
commissions were imputed or paid, were specifically directed to firms in
exchange for research services.

As of the fiscal year ended July 31, 1997, the Portfolio held securities of its
regular brokers or dealers or of the parent of those brokers or dealers that
derived more than 15% of gross revenue from securities-related activities as
presented below:

Value of Securities
Owned at End of
Name of Issuer Fiscal Year

Bank of America $ 86,960,956
Goldman Sachs 51,879,886
Merrill Lynch 31,910,183
Morgan Stanley 174,412,200
Travelers Group 206,460,625

The portfolio turnover rate was 32% in the fiscal year ended July 31, 1997, and
41% in fiscal period ended July 31, 1996.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AMERICAN
EXPRESS FINANCIAL CORPORATION

Affiliates of American Express Company (American Express) (of which AEFC is a
wholly-owned subsidiary) may engage in brokerage and other securities
transactions on behalf of the Portfolio according to procedures adopted by the
board and to the extent consistent with applicable provisions of the federal
securities laws. AEFC will use an American Express affiliate only if (i) AEFC
determines that the Portfolio will receive prices and executions at least as
favorable as those offered by qualified independent brokers performing similar
brokerage and other services for the Portfolio and (ii) the affiliate charges
the Portfolio commission rates consistent with those the affiliate charges
comparable unaffiliated customers in similar transactions and if such use is
consistent with terms of the Investment Management Services Agreement.

AEFC may direct brokerage to compensate an affiliate. AEFC will receive research
on South Africa from New Africa Advisors, a wholly-owned subsidiary of Sloan
Financial Group. AEFC owns 100% of IDS Capital Holdings Inc. which in turn owns
40% of Sloan Financial Group. New Africa Advisors will send research to AEFC and
in turn AEFC will direct trades to a particular broker. The broker will have an
agreement to pay New Africa Advisors. All transactions will be on a best
execution basis. Compensation received will be reasonable for the services
rendered.

<PAGE>

Information about brokerage commissions paid by the Portfolio for the last three
fiscal years to brokers affiliated with AEFC is contained in the following
table:
<TABLE>
<CAPTION>

For the Fiscal Year Ended July 31, Fiscal Period Fiscal year
ended July 31, ended Sept. 30,
1997 1996 1995
Aggregate Percent of Aggregate Aggregate
Dollar Aggregate Dollar Dollar Dollar
Amount of Percent of Amount of Amount of Amount of
Nature Commissions Aggregate Transactions Commissions Commissions
of Paid to Brokerage Involving Payment Paid to Paid to
Broker Affiliation Broker Commissions of Commissions Broker Broker
<S> <C> <C> <C> <C> <C> <C>

American
Enterprise
Investment
Services Inc. (1) $494,119 6.94% 12.53% $339,272 $617,469
</TABLE>

(1) Wholly-owned subsidiary of AEFC.

PERFORMANCE INFORMATION

The Fund may quote various performance figures to illustrate past performance.
Average annual total return quotations used by the Fund are based on
standardized methods of computing performance as required by the SEC. An
explanation of the methods used by the Fund to compute performance follows
below.

Average annual total return

The Fund may calculate average annual total return for a class for certain
periods by finding the average annual compounded rates of return over the period
that would equate the initial amount invested to the ending redeemable value,
according to the following formula:

P(1+T)n = ERV

where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment, made
at the beginning of a period, at the end of the period (or
fractional portion thereof)

<PAGE>

Aggregate total return

The Fund may calculate aggregate total return for a class for certain periods
representing the cumulative change in the value of an investment in the Fund
over a specified period of time according to the following formula:

ERV - P
P

where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)

In its sales material and other communications, the Fund may quote, compare or
refer to rankings, yields or returns as published by independent statistical
services or publishers and publications such as The Bank Rate Monitor National
Index, Barron's, Business Week, Donoghue's Money Market Fund Report, Financial
Services Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.

VALUING FUND SHARES

The value of an individual share for each class is determined by
using the net asset value before shareholder transactions for the
day. On Aug. 1, 1997, the first business day following the end of
the fiscal year, the computation looked like this:
<TABLE>
<CAPTION>

Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
<S> <C> <C> <C> <C> <C>

Class A $8,609,477,713 divided by 337,229,836 equals $ 25.53
Class B 1,542,491,668 61,161,446 25.22
Class Y 3,721,835,052 145,611,700 25.56
</TABLE>

In determining net assets before shareholder transactions, the Portfolio's
securities are valued as follows as of the close of business of the New York
Stock Exchange (the Exchange):

'Securities, except bonds other than convertibles, traded on a securities
exchange for which a last-quoted sales price is readily available are valued at
the last-quoted sales price on the exchange where such security is primarily
traded.

'Securities traded on a securities exchange for which a last-quoted sales price
is not readily available are valued at the mean of the closing bid and asked
prices, looking first to the bid and asked prices on the exchange where the
security is primarily traded and, if none exist, to the over-the-counter market.

<PAGE>

'Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.

'Securities included in the NASDAQ National Market System for which a
last-quoted sales price is not readily available, and other securities traded
over-the-counter but not included in the NASDAQ National Market System are
valued at the mean of the closing bid and asked prices.

'Futures and options traded on major exchanges are valued at the last-quoted
sales price on their primary exchange.

'Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at the current rate of exchange. Occasionally, events
affecting the value of such securities may occur between such times and the
close of the Exchange that will not be reflected in the computation of the
Portfolio's net asset value. If events materially affecting the value of such
securities occur during such period, these securities will be valued at their
fair value according to procedures decided upon in good faith by the board.

'Short-term securities maturing more than 60 days from the valuation date are
valued at the readily available market price or approximate market value based
on current interest rates. Short- term securities maturing in 60 days or less
that originally had maturities of more than 60 days at acquisition date are
valued at amortized cost using the market value on the 61st day before maturity.
Short-term securities maturing in 60 days or less at acquisition date are valued
at amortized cost. Amortized cost is an approximation of market value determined
by systematically increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium, so that the
carrying value is equal to maturity value on the maturity date.

'Securities without a readily available market price, bonds other than
convertibles and other assets are valued at fair value as determined in good
faith by the board. The board is responsible for selecting methods it believes
provide fair value. When possible, bonds are valued by a pricing service
independent from the Portfolio. If a valuation of a bond is not available from a
pricing service, the bond will be valued by a dealer knowledgeable about the
bond if such a dealer is available.

The Exchange, AEFC and the Fund will be closed on the following
holidays: New Year's Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.

<PAGE>

INVESTING IN THE FUND

Sales Charge

Shares of the Fund are sold at the public offering price determined at the close
of business on the day an application is accepted. The public offering price is
the net asset value of one share plus a sales charge, if applicable. For Class B
and Class Y, there is no initial sales charge so the public offering price is
the same as the net asset value. For Class A, the public offering price for an
investment of less than $50,000, made Aug. 1, 1997, was determined by dividing
the net asset value of one share, $25.53, by 0.95 (1.00-0.05 for a maximum 5%
sales charge) for a public offering price of $26.87. The sales charge is paid to
American Express Financial Advisors by the person buying the shares.

Class A - Calculation of the Sales Charge

Sales charges are determined as follows:

Within each increment,
sales charge as a
percentage of:
Public Net
Amount of Investment Offering Price Amount Invested

First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 400,000 3.8 3.95
Next 500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

Sales charges on an investment greater than $50,000 and less than $1,000,000 are
calculated for each increment separately and then totaled. The resulting total
sales charge, expressed as a percentage of the public offering price and of the
net amount invested, will vary depending on the proportion of the investment at
different sales charge levels.

For example, compare an investment of $60,000 with an investment of $85,000. The
$60,000 investment is composed of $50,000 that incurs a sales charge of $2,500
(5.0% x $50,000) and $10,000 that incurs a sales charge of $450 (4.5% x
$10,000). The total sales charge of $2,950 is 4.92% of the public offering price
and 5.17% of the net amount invested.

In the case of the $85,000 investment, the first $50,000 also incurs a sales
charge of $2,500 (5.0% x $50,000) and $35,000 incurs a sales charge of $1,575
(4.5% x $35,000). The total sales charge of $4,075 is 4.79% of the public
offering price and 5.04% of the net amount invested.

<PAGE>

The following table shows the range of sales charges as a percentage of the
public offering price and of the net amount invested on total investments at
each applicable level.

On total investment, sales
charge as a percentage of
Public Net
Offering Price Amount Invested
Amount of Investment ranges from:

First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 999,999 3.80-2.00 3.95-2.04
$1,000,000 or more 0.00 0.00

The initial sales charge is waived for certain qualified plans that meet the
requirements described in the prospectus. Participants in these qualified plans
may be subject to a deferred sales charge on certain redemptions. The deferred
sales charge on certain redemptions will be waived if the redemption is a result
of a participant's death, disability, retirement, attaining age 59 1/2, loans or
hardship withdrawals. The deferred sales charge varies depending on the number
of participants in the qualified plan and total plan assets as follows:

Deferred Sales Charge

Number of Participants

Total Plan Assets 1-99 100 or more

Less than $1 million 4% 0%

$1 million or more 0% 0%
- ---------------------------------------------------------

Class A - Reducing the Sales Charge

Sales charges are based on the total amount of your investments in the Fund. The
amount of all prior investments plus any new purchase is referred to as your
"total amount invested." For example, suppose you have made an investment of
$20,000 and later decide to invest $40,000 more. Your total amount invested
would be $60,000. As a result, $10,000 of your $40,000 investment qualifies for
the lower 4.5% sales charge that applies to investments of more than $50,000 and
up to $100,000.

<PAGE>

The total amount invested includes any shares held in the Fund in the name of a
member of your primary household group. (The primary household group consists of
accounts in any ownership for spouses or domestic partners and their unmarried
children under 21. Domestic partners are individuals who maintain a shared
primary residence and have joint property or other insurable interests.) For
instance, if your spouse already has invested $20,000 and you want to invest
$40,000, your total amount invested will be $60,000 and therefore you will pay
the lower charge of 4.5% on $10,000 of the $40,000.

Until a spouse remarries, the sales charge is waived for spouses and unmarried
children under 21 of deceased board members, officers or employees of the Fund
or AEFC or its subsidiaries and deceased advisors.

The total amount invested also includes any investment you or your immediate
family already have in the other publicly offered funds in the IDS MUTUAL FUND
GROUP where the investment is subject to a sales charge. For example, suppose
you already have an investment of $30,000 in another IDS fund. If you invest
$40,000 more in this Fund, your total amount invested in the funds will be
$70,000 and therefore $20,000 of your $40,000 investment will incur a 4.5% sales
charge.

Finally, Individual Retirement Account (IRA) purchases, or other employee
benefit plan purchases made through a payroll deduction plan or through a plan
sponsored by an employer, association of employers, employee organization or
other similar entity, may be added together to reduce sales charges for shares
purchased through that plan.

Class A - Letter of Intent (LOI)

If you intend to invest $1 million over a period of 13 months, you can reduce
the sales charges in Class A by filing a LOI. The agreement can start at any
time and will remain in effect for 13 months. Your investment will be charged
normal sales charges until you have invested $1 million. At that time, your
account will be credited with the sales charges previously paid. Class A
investments made prior to signing an LOI may be used to reach the $1 million
total, excluding Cash Management Fund and Tax-Free Money Fund. However, we will
not adjust for sales charges on investments made prior to the signing of the
LOI. If you do not invest $1 million by the end of 13 months, there is no
penalty, you'll just miss out on the sales charge adjustment. A LOI is not an
option (absolute right) to buy shares.

<PAGE>

Here's an example. You file a LOI to invest $1 million and make an investment of
$100,000 at that time. You pay the normal 5% sales charge on the first $50,000
and 4.5% sales charge on the next $50,000 of this investment. Let's say you make
a second investment of $900,000 (bringing the total up to $1 million) one month
before the 13-month period is up. On the date that you bring your total to $1
million, AEFC makes an adjustment to your account. The adjustment is made by
crediting your account with additional shares, in an amount equivalent to the
sales charge previously paid.

Systematic Investment Programs

After you make your initial investment of $2,000 or more, you can arrange to
make additional payments of $100 or more on a regular basis. These minimums do
not apply to all systematic investment programs. For Uniform Gifts to Minors Act
(UGMA) and Uniform Transfers to Minors Act (UTMA), the initial investment is
$500 and the minimum is $50 per month. You decide how often to make payments -
monthly, quarterly, or semiannually. You are not obligated to make any payments.
You can omit payments or discontinue the investment program altogether. The Fund
also can change the program or end it at any time. If there is no obligation,
why do it? Putting money aside is an important part of financial planning. With
a systematic investment program, you have a goal to work for.

How does this work? Your regular investment amount will purchase more shares
when the net asset value per share decreases, and fewer shares when the net
asset value per share increases. Each purchase is a separate transaction. After
each purchase your new shares will be added to your account. Shares bought
through these programs are exactly the same as any other fund shares. They can
be bought and sold at any time. A systematic investment program is not an option
or an absolute right to buy shares. The systematic investment program itself
cannot ensure a profit, nor can it protect against a loss in a declining market.
If you decide to discontinue the program and redeem your shares when their net
asset value is less than what you paid for them, you will incur a loss.

For a discussion on dollar-cost averaging, see Appendix D.

Automatic Directed Dividends

Dividends, including capital gain distributions, paid by another fund in the IDS
MUTUAL FUND GROUP subject to a sales charge, may be used to automatically
purchase shares in the same class of this Fund without paying a sales charge.
Dividends may be directed to existing accounts only. Dividends declared by a
fund are exchanged to this Fund the following day. Dividends can be exchanged
into the same class of another fund in the IDS MUTUAL FUND GROUP but

<PAGE>

cannot be split to make purchases in two or more funds. Automatic directed
dividends are available between accounts of any ownership except:

Between a non-custodial account and an IRA, or 401(k) plan account or other
qualified retirement account of which American Express Trust Company acts as
custodian;

Between two American Express Trust Company custodial accounts with different
owners (for example, you may not exchange dividends from your IRA to the IRA of
your spouse);

Between different kinds of custodial accounts with the same ownership (for
example, you may not exchange dividends from your IRA to your 401(k) plan
account, although you may exchange dividends from one IRA to another IRA).

Dividends may be directed from accounts established under the UGMA or UTMA only
into other UGMA or UTMA accounts with identical ownership.

The Fund's investment goal is described in its prospectus along with other
information, including fees and expense ratios. Before exchanging dividends into
another fund, you should read that fund's prospectus. You will receive a
confirmation that the automatic directed dividend service has been set up for
your account.

REDEEMING SHARES

You have a right to redeem your shares at any time. For an explanation of
redemption procedures, please see the prospectus.

During an emergency, the board can suspend the computation of net asset value,
stop accepting payments for purchase of shares or suspend the duty of the Fund
to redeem shares for more than seven days. Such emergency situations would occur
if:

'The Exchange closes for reasons other than the usual weekend and
holiday closings or trading on the Exchange is restricted, or

'Disposal of the Portfolio's securities is not reasonably
practicable or it is not reasonably practicable for the Portfolio
to determine the fair value of its net assets, or

'The SEC, under the provisions of the 1940 Act, as amended, declares a period of
emergency to exist.

Should the Fund stop selling shares, the board may make a deduction from the
value of the assets held by the Fund to cover the cost of future liquidations of
the assets so as to distribute fairly these costs among all shareholders.

<PAGE>

The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, which
obligates the Fund to redeem shares in cash, with respect to any one shareholder
during any 90-day period, up to the lesser of $250,000 or 1% of the net assets
of the Fund at the beginning of the period. Although redemptions in excess of
this limitation would normally be paid in cash, the Fund reserves the right to
make these payments in whole or in part in securities or other assets in case of
an emergency, or if the payment of a redemption in cash would be detrimental to
the existing shareholders of the Fund as determined by the board. In these
circumstances, the securities distributed would be valued as set forth in the
prospectus. Should the Fund distribute securities, a shareholder may incur
brokerage fees or other transaction costs in converting the securities to cash.

PAY-OUT PLANS

You can use any of several pay-out plans to redeem your investment in regular
installments. If you redeem Class B shares you may be subject to a contingent
deferred sales charge as discussed in the prospectus. While the plans differ on
how the pay-out is figured, they all are based on the redemption of your
investment. Net investment income dividends and any capital gain distributions
will automatically be reinvested, unless you elect to receive them in cash. If
you are redeeming a tax-qualified plan account for which American Express Trust
Company acts as custodian, you can elect to receive your dividends and other
distributions in cash when permitted by law. If you redeem an IRA or a qualified
retirement account, certain restrictions, federal tax penalties and special
federal income tax reporting requirements may apply. You should consult your tax
advisor about this complex area of the tax law.

Applications for a systematic investment in a class of the Fund
subject to a sales charge normally will not be accepted while a
pay-out plan for any of those funds is in effect. Occasional
investments, however, may be accepted.

To start any of these plans, please write American Express Shareholder Service,
P.O. Box 534, Minneapolis, MN 55440-0534, or call American Express Financial
Advisors Telephone Transaction Service at 800-437-3133 (National/Minnesota) or
612-671-3800 (Mpls./St. Paul). Your authorization must be received in the
Minneapolis headquarters at least five days before the date you want your
payments to begin. The initial payment must be at least $50. Payments will be
made on a monthly, bimonthly, quarterly, semiannual or annual basis. Your choice
is effective until you change or cancel it.

<PAGE>

The following pay-out plans are designed to take care of the needs of most
shareholders in a way AEFC can handle efficiently and at a reasonable cost. If
you need a more irregular schedule of payments, it may be necessary for you to
make a series of individual redemptions, in which case you'll have to send in a
separate redemption request for each pay-out. The Fund reserves the right to
change or stop any pay-out plan and to stop making such plans available.

Plan #1: Pay-out for a fixed period of time

If you choose this plan, a varying number of shares will be redeemed at regular
intervals during the time period you choose. This plan is designed to end in
complete redemption of all shares in your account by the end of the fixed
period.

Plan #2: Redemption of a fixed number of shares

If you choose this plan, a fixed number of shares will be redeemed for each
payment and that amount will be sent to you. The length of time these payments
continue is based on the number of shares in your account.

Plan #3: Redemption of a fixed dollar amount

If you decide on a fixed dollar amount, whatever number of shares is necessary
to make the payment will be redeemed in regular installments until the account
is closed.

Plan #4: Redemption of a percentage of net asset value

Payments are made based on a fixed percentage of the net asset value of the
shares in the account computed on the day of each payment. Percentages range
from 0.25% to 0.75%. For example, if you are on this plan and arrange to take
0.5% each month, you will get $50 if the value of your account is $10,000 on the
payment date.

TAXES

If you buy shares in the Fund and then exchange into another fund, it is
considered a redemption and subsequent purchase of shares. Under the tax laws,
if this exchange is done within 91 days, any sales charge waived on Class A
shares on a subsequent purchase of shares applies to the new shares acquired in
the exchange. Therefore, you cannot create a tax loss or reduce a tax gain
attributable to the sales charge when exchanging shares within 91 days.

<PAGE>

Retirement Accounts

If you have a nonqualified investment in the Fund and you wish to move part or
all of those shares to an IRA or qualified retirement account in the Fund, you
can do so without paying a sales charge. However, this type of exchange is
considered a redemption of shares and may result in a gain or loss for tax
purposes. In addition, this type of exchange may result in an excess
contribution under IRA or qualified plan regulations if the amount exchanged
plus the amount of the initial sales charge applied to the amount exchanged
exceeds annual contribution limitations. For example: If you were to exchange
$2,000 in Class A shares from a nonqualified account to an IRA without
considering the 5% ($100) initial sales charge applicable to that $2,000, you
may be deemed to have exceeded current IRA annual contribution limitations. You
should consult your tax advisor for further details about this complex subject.

Net investment income dividends received should be treated as dividend income
for federal income tax purposes. Corporate shareholders are generally entitled
to a deduction equal to 70% of that portion of the Fund's dividend that is
attributable to dividends the Fund received from domestic (U.S.) securities. For
the fiscal year ended July 31, 1997, 100% of the Fund's net investment income
dividends qualified for the corporate deduction.

Capital gain distributions received by individual and corporate shareholders, if
any, should be treated as long-term capital gains regardless of how long they
owned their shares. Short-term capital gains earned by the Fund are paid to
shareholders as part of their ordinary income dividend and are taxable.

Under federal tax law, by the end of a calendar year the Fund must declare and
pay dividends representing 98% of ordinary income for that calendar year and 98%
of net capital gains (both long-term and short-term) for the 12-month period
ending Oct. 31 of that calendar year. The Fund is subject to an excise tax equal
to 4% of the excess, if any, of the amount required to be distributed over the
amount actually distributed. The Fund intends to comply with federal tax law and
avoid any excise tax.

The Fund may be subject to U.S. taxes resulting from holdings in a passive
foreign investment company (PFIC). A foreign corporation is a PFIC when 75% or
more of its gross income for the taxable year is passive income or if 50% or
more of the average value of its assets consists of assets that produce or could
produce passive income.

This is a brief summary that relates to federal income taxation only.
Shareholders should consult their tax advisor as to the application of federal,
state and local income tax laws to Fund distributions.

<PAGE>

AGREEMENTS

Investment Management Services Agreement

The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with AEFC. For its services, AEFC is paid a fee based on the following
schedule. The Fund pays its proportionate share of the fee.

Assets Annual rate at
(billions) each asset level

First $1.0 0.600%
Next 1.0 0.575
Next 1.0 0.550
Next 3.0 0.525
Over 6.0 0.500

On July 31, 1997, the daily rate applied to the Portfolio's net assets was equal
to 0.521% on an annual basis. The fee is calculated for each calendar day on the
basis of net assets as of the close of business two business days prior to the
day for which the calculation is made.

Before the fee based on the asset charge is paid, it is adjusted for investment
performance. The adjustment, determined monthly, will be calculated using the
percentage point difference between the change in the net asset value of one
Class A share of the Fund and the change in the Lipper Growth Fund Index
(Index). The performance of one Class A share of the Fund is measured by
computing the percentage difference between the opening and closing net asset
value of one Class A share of the Fund, as of the last business day of the
period selected for comparison, adjusted for dividend or capital gain
distributions which are treated as reinvested at the end of the month during
which the distribution was made. The performance of the Index for the same
period is established by measuring the percentage difference between the
beginning and ending Index for the comparison period. The performance is
adjusted for dividend or capital gain distributions (on the securities which
comprise the Index), which are treated as reinvested at the end of the month
during which the distribution was made. One percentage point will be subtracted
from the calculation to help assure that incentive adjustments are attributable
to AEFC's management abilities rather than random fluctuations and the result
multiplied by 0.01%. That number will be multiplied times the Fund's average net
assets for the comparison period and then divided by the number of months in the
comparison period to determine the monthly adjustment.

<PAGE>

Where the Fund's Class A share performance exceeds that of the Index, the base
fee will be increased. Where the performance of the Index exceeds the
performance of Class A shares, the base fee will be decreased. The maximum
monthly increase or decrease will be 0.12% of the Fund's average net assets on
an annual basis. The 12 month comparison period rolls over with each succeeding
month, so that it always equals 12 months, ending with the month for which the
performance adjustment is being computed. The adjustment increased the fee by
$3,913,141 for the fiscal year ended July 31, 1997.

The management fee is paid monthly. Under the agreement, the total amount paid
was $61,899,356 for the fiscal year ended July 31, 1997, $37,110,025 for fiscal
period ended July 31, 1996, and $29,578,200 for fiscal year ended Sept. 30,
1995.

Under the agreement, the Portfolio also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees; audit and certain legal
fees; fidelity bond premiums; registration fees for shares; office expenses;
consultants' fees; compensation of board members, Portfolio officers and
employees; corporate filing fees; organizational expenses; expenses incurred in
connection with lending securities of the Portfolio; and expenses properly
payable by the Portfolio, approved by the board. Under the agreement,
nonadvisory expenses paid by the Fund and Portfolio were $2,882,660 for the
fiscal year ended July 31, 1997, $1,977,035 for fiscal period ended July 31,
1996, and $1,647,694 for fiscal year ended Sept. 30, 1995.

In this section, prior to May 13, 1996, the fees and expenses described were
paid directly by the Fund. After that date, the management fees were paid by the
Portfolio.

Administrative Services Agreement

The Fund has an Administrative Services Agreement with AEFC. Under this
agreement, the Fund pays AEFC for providing administration and accounting
services. The fee is calculated as follows:

Assets Annual rate
(billions) each asset level

First $1.0 0.050%
Next 1.0 0.045
Next 1.0 0.040
Next 3.0 0.035
Over 6.0 0.030

On July 31, 1997, the daily rate applied to the Fund's net assets was equal to
0.034% on an annual basis. The fee is calculated for each calendar day on the
basis of net assets as of the close of business two business days prior to the
day for which the calculation is made. Under the agreement, the Fund paid fees
of $4,002,611 for the fiscal year ended July 31, 1997.

<PAGE>

Transfer Agency Agreement

The Fund has a Transfer Agency Agreement with AEFC. This agreement governs
AEFC's responsibility for administering and/or performing transfer agent
functions, for acting as service agent in connection with dividend and
distribution functions and for performing shareholder account administration
agent functions in connection with the issuance, exchange and redemption or
repurchase of the Fund's shares. Under the agreement, AEFC will earn a fee from
the Fund determined by multiplying the number of shareholder accounts at the end
of the day by a rate determined for each class per year and dividing by the
number of days in the year. The rate for Class A and Class Y is $15 per year and
for Class B is $16 per year. The fees paid to AEFC may be changed from time to
time upon agreement of the parties without shareholder approval. Under the
agreement, the Fund paid fees of $ 11,717,286 for the fiscal year ended July 31,
1997.

Distribution Agreement

Under a Distribution Agreement, sales charges deducted for distributing Fund
shares are paid to American Express Financial Advisors daily. These charges
amounted to $26,075,860 for the fiscal year ended July 31, 1997. After paying
commissions to personal financial advisors, and other expenses, the amount
retained was $297,290. The amounts were $19,304,840 and $652,404 for fiscal
period ended July 31, 1996, and $17,037,260 and $12,310,508 for fiscal year
ended Sept. 30, 1995.

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 average
daily net assets for Class A and Class B and 0.10% for Class Y.

Plan and Agreement of Distribution

For Class B shares, to help American Express Financial Advisors defray the cost
of distribution and servicing, not covered by the sales charges received under
the Distribution Agreement, the Fund and American Express Financial Advisors
entered into a Plan and Agreement of Distribution (Plan). These costs cover
almost all aspects of distributing the Fund's shares except compensation to the
sales force. A substantial portion of the costs are not specifically identified
to any one fund in the IDS MUTUAL FUND GROUP. Under the Plan, American Express
Financial Advisors is paid a fee at an annual rate of 0.75% of the Fund's
average daily net assets attributable to Class B shares.

<PAGE>

IDS New Dimensions Fund

The Plan must be approved annually by the board, including a majority of the
disinterested board members, if it is to continue for more than a year. At least
quarterly, the board must review written reports concerning the amounts expended
under the Plan and the purposes for which such expenditures were made. The Plan
and any agreement related to it may be terminated at any time by vote of a
majority of board members who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan, or by vote of a majority of the outstanding
voting securities of the Fund's Class B shares or by American Express Financial
Advisors. The Plan (or any agreement related to it) will terminate in the event
of its assignment, as that term is defined in the 1940 Act, as amended. The Plan
may not be amended to increase the amount to be spent for distribution without
shareholder approval, and all material amendments to the Plan must be approved
by a majority of the board members, including a majority of the board members
who are not interested persons of the Fund and who do not have a financial
interest in the operation of the Plan or any agreement related to it. The
selection and nomination of disinterested board members is the responsibility of
the other disinterested board members. No board member who is not an interested
person, has any direct or indirect financial interest in the operation of the
Plan or any related agreement. For the fiscal year ended July 31, 1997, under
the agreement, the Fund paid fees of $7,711,712.

Custodian Agreement

The Trust's securities and cash are held by American Express Trust Company, 1200
Northstar Center West, 625 Marquette Ave., Minneapolis, MN 55402-2307, through a
custodian agreement. The Fund also retains the custodian pursuant to a custodian
agreement. The custodian is permitted to deposit some or all of its securities
in central depository systems as allowed by federal law. For its services, the
Portfolio pays the custodian a maintenance charge and a charge per transaction
in addition to reimbursing the custodian's out-of-pocket expenses.

The custodian has entered into a sub-custodian arrangement with the Morgan
Stanley Trust Company (Morgan Stanley), One Pierrepont Plaza, Eighth Floor,
Brooklyn, NY 11201-2775. As part of this arrangement, securities purchased
outside the United States are maintained in the custody of various foreign
branches of Morgan Stanley or in such other financial institutions as may be
permitted by law and by the Fund's sub-custodian agreement.

Total fees and expenses

The Fund paid total fees and nonadvisory expenses, net of earnings credits, of
$102,661,551 for the fiscal year ended July 31, 1997.

<PAGE>

ORGANIZATIONAL INFORMATION

The Fund is a diversified, open-end management investment company, as defined in
the Investment Company Act of 1940. Originally incorporated on Feb. 20, 1968 in
Nevada, the Fund changed its state of incorporation on June 13, 1986 by merging
into a Minnesota corporation incorporated April 7, 1986. The Fund headquarters
are at 901 S. Marquette Ave., Suite 2810, Minneapolis, MN 55402-3268.

BOARD MEMBERS AND OFFICERS

The following is a list of the Fund's board members. They serve 15 Master Trust
portfolios and 47 IDS and IDS Life funds (except for William H. Dudley, who does
not serve on the nine IDS Life fund boards.)

All shares have cumulative voting rights with respect to the election of board
members.

H. Brewster Atwater, Jr.
Born in 1931
4900 IDS Tower
Minneapolis, MN

Former chairman and chief executive officer, General Mills, Inc.
Director, Merck & Co., Inc. and Darden Restaurants, Inc.

Lynne V. Cheney'
Born in 1941
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.

Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockheed-Martin, Union Pacific Resources, and FPL Group, Inc.
(holding company for Florida Power and Light).

William H. Dudley**
Born in 1932
2900 IDS Tower
Minneapolis, MN

Senior advisor to the chief executive officer, AEFC.

<PAGE>

Robert F. Froehlke+
Born in 1922
1201 Yale Place
Minneapolis, MN

Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectural
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.

David R. Hubers+**
Born in 1943
2900 IDS Tower
Minneapolis, MN

President and chief executive officer of AEFC since August 1993, and director of
AEFC. Previously, senior vice president, finance and chief financial officer of
AEFC.

Heinz F. Hutter+'
Born in 1929
P.O. Box 2187
Minneapolis, MN

Former president and chief operating officer, Cargill, Incorporated (commodity
merchants and processors).

Anne P. Jones
Born in 1935
5716 Bent Branch Rd.
Bethesda, MD

Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.

Melvin R. Laird
Born in 1922
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.

Senior counsellor for national and international affairs, The Reader's Digest
Association, Inc. Former nine-term U.S. Congressman, U.S. Secretary of Defense
and Presidential Counsellor. Director, Metropolitan Life Insurance Co., The
Reader's Digest Association, Inc., Science Applications International Corp.,
Wallace Reader's Digest Funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).

<PAGE>

William R. Pearce+*
Born in 1927
901 S. Marquette Ave.
Minneapolis, MN

Chairman of the board, Board Services Corporation (provides administrative
services to boards). Director, trustee and officer of registered investment
companies whose boards are served by the company. Former vice chairman of the
board, Cargill, Incorporated (commodity merchants and processors).

Alan K. Simpson'
Born in 1931
1201 Sunshine Ave.
Cody, WY

Former three-term United States Senator for Wyoming. Former
Assistant Republican Leader, U.S. Senate. Director, PacifiCorp
(electric power).

Edson W. Spencer+
Born in 1926
4900 IDS Center
80 S. 8th St.
Minneapolis, MN

President, Spencer Associates Inc. (consulting). Former chairman
of the board and chief executive officer, Honeywell Inc. Director,
Boise Cascade Corporation (forest products). Member of
International Advisory Council of NEC (Japan).

John R. Thomas**
Born in 1937
2900 IDS Tower
Minneapolis, MN

Senior vice president and director of AEFC.

Wheelock Whitney+
Born in 1926
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN

Chairman, Whitney Management Company (manages family assets).

<PAGE>

C. Angus Wurtele'
Born in 1934
Valspar Corporation
Suite 1700
Foshay Tower
Minneapolis, MN

Chairman of the board and retired chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging), Donaldson Company
(air cleaners & mufflers) and
General Mills, Inc. (consumer foods).

+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of the Fund.
**Interested person by reason of being an officer, board member, employee and/or
shareholder of AEFC or American Express.

The board also has appointed officers who are responsible for day-to-day
business decisions based on policies it has established.

In addition to Mr. Pearce, who is president, the Fund's other officers are:

Leslie L. Ogg
Born in 1938
901 S. Marquette Ave.
Minneapolis, MN

President, treasurer and corporate secretary of Board Services Corporation. Vice
president, general counsel and secretary for the Fund.

Officers who also are officers and/or employees of AEFC

Peter J. Anderson
Born in 1942
IDS Tower 10
Minneapolis, MN

Director and senior vice president-investments of AEFC. Vice
president-investments for the Fund.

Melinda S. Urion
Born in 1953
IDS Tower 10
Minneapolis, MN

Director, senior vice president and chief financial officer of AEFC. Director,
executive vice president and controller of IDS Life Insurance Company. Treasurer
for the Fund.

<PAGE>

COMPENSATION FOR FUND BOARD MEMBERS

Members of the board who are not officers of the Fund or AEFC receive an annual
fee of $2,000, and the chair of the Contracts Committee receives an additional
$86. Board members receive a $50 per day attendance fee for board meetings. The
attendance fee for meetings of the Contracts and Investment Review Committees is
$50; for meetings of the Audit Committee and Personnel Committee $25 and for
traveling from out-of-state $20. Expenses for attending meetings are reimbursed.

During the fiscal year ended July 31, 1997, the members of the board, for
attending up to 32 meetings, received the following compensation:
<TABLE>
<CAPTION>

Compensation Table
<S> <C> <C> <C> <C>

Pension or Estimated Total cash compensation
Aggregate Retirement annual from the IDS MUTUAL FUND
compensation benefits accrued benefit upon GROUP and the Preferred
Board member from the Fund as Fund expenses retirement Master Trust Group

H. Brewster Atwater, Jr. $2,170 $0 $0 $ 78,900
(part of year)
Lynne V. Cheney 2,996 0 0 97,400
Robert F. Froehlke 3,074 0 0 104,600
Heinz F. Hutter 3,109 0 0 106,300
Anne P. Jones 3,261 0 0 111,600
Melvin R. Laird 3,012 0 0 98,600
Alan K. Simpson 1,716 0 0 58,200
(part of year)
Edson W. Spencer 3,470 0 0 127,800
Wheelock Whitney 3,159 0 0 109,500
C. Angus Wurtele 3,184 0 0 110,700
</TABLE>

On July 31, 1997, the Fund's board members and officers as a group owned less
than 1% of the outstanding shares of any class.

COMPENSATION FOR PORTFOLIO BOARD MEMBERS

Members of the board who are not officers of the Portfolio or of the Advisor
receive an annual fee of $5,300 for Growth Trends Portfolio. They also receive
attendance and other fees. These fees include for each day in attendance at
meetings of the board, $50; for meetings of the Contracts and Investment Review
Committees, $50; meetings of the Audit and Personnel Committee, $25; for
traveling from out-of-state, $53; and as chair of Contracts Committee, $86.
Expenses for attending meetings are reimbursed.

<PAGE>

During the fiscal year ended July 31, 1997, the members of the board, for
attending up to 32 meetings, received the following compensation:
<TABLE>
<CAPTION>

Compensation Table
for Growth Trends Portfolio
<S> <C> <C> <C> <C>

Pension or Estimated Total cash
Aggregate Retirement annual compensation from
compensation benefits benefit the PREFERRED MASTER
from the accrued as upon TRUST GROUP and IDS
Board member Portfolio Portfolio expenses retirement MUTUAL FUND GROUP

H. Brewster Atwater, Jr. $4,694 $0 $0 $ 78,900
(part of year)
Lynne V. Cheney 5,935 0 0 97,400
Robert F. Froehlke 5,882 0 0 104,600
Heinz F. Hutter 5,917 0 0 106,300
Anne P. Jones 6,265 0 0 111,600
Melvin R. Laird 5,951 0 0 98,600
Alan K. Simpson 3,805 0 0 58,200
(part of year)
Edson W. Spencer 6,278 0 0 127,800
Wheelock Whitney 5,967 0 0 109,500
C. Angus Wurtele 5,992 0 0 110,700
</TABLE>

INDEPENDENT AUDITORS

The Fund's and corresponding Portfolio's financial statements contained in the
Annual Report to shareholders for the fiscal year ended July 31, 1997, were
audited by independent auditors, KPMG Peat Marwick LLP, 4200 Norwest Center, 90
S. Seventh St., Minneapolis, MN 55402-3900. The independent auditors also
provide other accounting and tax-related services as requested by the Fund.

FINANCIAL STATEMENTS

The Independent Auditors' Report and the Financial Statements, including Notes
to the Financial Statements and the Schedule of Investments in Securities,
contained in the Annual Report to shareholders for the fiscal year ended July
31, 1997, pursuant to Section 30(d) of the Investment Company Act of 1940, as
amended, are hereby incorporated in this SAI by reference. No other portion of
the Annual Report, however, is incorporated by reference.

PROSPECTUS

The prospectus for IDS New Dimensions Fund, dated Sept. 29, 1997,
is hereby incorporated in this SAI by reference.

<PAGE>

APPENDIX A

FOREIGN CURRENCY TRANSACTIONS

Since investments in foreign countries usually involve currencies of foreign
countries, and since the Portfolio may hold cash and cash-equivalent investments
in foreign currencies, the value of the Portfolio's assets as measured in U.S.
dollars may be affected favorably or unfavorably by changes in currency exchange
rates and exchange control regulations. Also, the Portfolio may incur costs in
connection with conversions between various currencies.

Spot Rates and Forward Contracts. The Portfolio conducts its foreign currency
exchange transactions either at the spot (cash) rate prevailing in the foreign
currency exchange market or by entering into forward currency exchange contracts
(forward contracts) as a hedge against fluctuations in future foreign exchange
rates. A forward contract involves an obligation to buy or sell a specific
currency at a future date, which may be any fixed number of days from the
contract date, at a price set at the time of the contract. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirements. No commissions are charged at any stage
for trades.

The Portfolio may enter into forward contracts to settle a security transaction
or handle dividend and interest collection. When the Portfolio enters into a
contract for the purchase or sale of a security denominated in a foreign
currency or has been notified of a dividend or interest payment, it may desire
to lock in the price of the security or the amount of the payment in dollars. By
entering into a forward contract, the Portfolio will be able to protect itself
against a possible loss resulting from an adverse change in the relationship
between different currencies from the date the security is purchased or sold to
the date on which payment is made or received or when the dividend or interest
is actually received.

The Portfolio also may enter into forward contracts when management of the
Portfolio believes the currency of a particular foreign country may suffer a
substantial decline against another currency. It may enter into a forward
contract to sell, for a fixed amount of dollars, the amount of foreign currency
approximating the value of some or all of the Portfolio's securities denominated
in such foreign currency. The precise matching of forward contract amounts and
the value of securities involved generally will not be possible since the future
value of such securities in foreign currencies more than likely will change
between the date the forward contract is entered into and the date it matures.
The projection of short-term currency market movements is extremely difficult
and

<PAGE>

successful execution of a short-term hedging strategy is highly uncertain. The
Portfolio will not enter into such forward contracts or maintain a net exposure
to such contracts when consummating the contracts would obligate the Portfolio
to deliver an amount of foreign currency in excess of the value of the
Portfolio's securities or other assets denominated in that currency.

The Portfolio will designate cash or securities in an amount equal to the value
of the Portfolio's total assets committed to consummating forward contracts
entered into under the second circumstance set forth above. If the value of the
securities declines, additional cash or securities will be designated on a daily
basis so that the value of the cash or securities will equal the amount of the
Portfolio's commitments on such contracts.

At maturity of a forward contract, the Portfolio may either sell the security
and make delivery of the foreign currency or retain the security and terminate
its contractual obligation to deliver the foreign currency by purchasing an
offsetting contract with the same currency trader obligating it to buy, on the
same maturity date, the same amount of foreign currency.

If the Portfolio retains the security and engages in an offsetting transaction,
the Portfolio will incur a gain or a loss (as described below) to the extent
there has been movement in forward contract prices. If the Portfolio engages in
an offsetting transaction, it may subsequently enter into a new forward contract
to sell the foreign currency. Should forward prices decline between the date the
Portfolio enters into a forward contract for selling foreign currency and the
date it enters into an offsetting contract for purchasing the foreign currency,
the Portfolio will realize a gain to the extent that the price of the currency
it has agreed to sell exceeds the price of the currency it has agreed to buy.
Should forward prices increase, the Portfolio will suffer a loss to the extent
the price of the currency it has agreed to buy exceeds the price of the currency
it has agreed to sell.

It is impossible to forecast what the market value of securities will be at the
expiration of a contract. Accordingly, it may be necessary for the Portfolio to
buy additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security is less than the amount of foreign
currency the Portfolio is obligated to deliver and a decision is made to sell
the security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received on
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the Portfolio is obligated to deliver.

<PAGE>

The Portfolio's dealing in forward contracts will be limited to the transactions
described above. This method of protecting the value of the Portfolio's
securities against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It simply establishes a
rate of exchange that can be achieved at some point in time. Although such
forward contracts tend to minimize the risk of loss due to a decline in value of
hedged currency, they tend to limit any potential gain that might result should
the value of such currency increase.

Although the Portfolio values its assets each business day in terms of U.S.
dollars, it does not intend to convert its foreign currencies into U.S. dollars
on a daily basis. It will do so from time to time, and shareholders should be
aware of currency conversion costs. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(spread) between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Portfolio
at one rate, while offering a lesser rate of exchange should the Portfolio
desire to resell that currency to the dealer.

Options on Foreign Currencies. The Portfolio may buy put and write covered call
options on foreign currencies for hedging purposes. For example, a decline in
the dollar value of a foreign currency in which securities are denominated will
reduce the dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such diminutions in the
value of securities, the Portfolio may buy put options on the foreign currency.
If the value of the currency does decline, the Portfolio will have the right to
sell such currency for a fixed amount in dollars and will thereby offset, in
whole or in part, the adverse effect on its portfolio which otherwise would have
resulted.

As in the case of other types of options, however, the benefit to the Portfolio
derived from purchases of foreign currency options will be reduced by the amount
of the premium and related transaction costs. In addition, where currency
exchange rates do not move in the direction or to the extent anticipated, the
Portfolio could sustain losses on transactions in foreign currency options which
would require it to forego a portion or all of the benefits of advantageous
changes in such rates.

The Portfolio may write options on foreign currencies for the same types of
hedging purposes. For example, when the Portfolio anticipates a decline in the
dollar value of foreign-denominated securities due to adverse fluctuations in
exchange rates it could, instead of purchasing a put option, write a call option
on the relevant currency. If the expected decline occurs, the option will most
likely not be exercised and the diminution in value of securities will be fully
or partially offset by the amount of the premium received.

<PAGE>

As in the case of other types of options, however, the writing of a foreign
currency option will constitute only a partial hedge up to the amount of the
premium, and only if rates move in the expected direction. If this does not
occur, the option may be exercised and the Portfolio would be required to buy or
sell the underlying currency at a loss which may not be offset by the amount of
the premium. Through the writing of options on foreign currencies, the Portfolio
also may be required to forego all or a portion of the benefits which might
otherwise have been obtained from favorable movements on exchange rates.

All options written on foreign currencies will be covered. An option written on
foreign currencies is covered if the Portfolio holds currency sufficient to
cover the option or has an absolute and immediate right to acquire that currency
without additional cash consideration upon conversion of assets denominated in
that currency or exchange of other currency held in its portfolio. An option
writer could lose amounts substantially in excess of its initial investments,
due to the margin and collateral requirements associated with such positions.

Options on foreign currencies are traded through financial institutions acting
as market-makers, although foreign currency options also are traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation. In an
over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost.

Foreign currency option positions entered into on a national securities exchange
are cleared and guaranteed by the Options Clearing Corporation (OCC), thereby
reducing the risk of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more readily available
than in the over-the-counter market, potentially permitting the Portfolio to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.

The purchase and sale of exchange-traded foreign currency options, however, is
subject to the risks of availability of a liquid secondary market described
above, as well as the risks regarding adverse market movements, margining of
options written, the nature of the foreign currency market, possible
intervention by governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign currencies
involve certain risks not presented by the over-the-

<PAGE>

counter market. For example, exercise and settlement of such options must be
made exclusively through the OCC, which has established banking relationships in
certain foreign countries for the purpose. As a result, the OCC may, if it
determines that foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would result in
undue burdens on OCC or its clearing member, impose special procedures on
exercise and settlement, such as technical changes in the mechanics of delivery
of currency, the fixing of dollar settlement prices or prohibitions on exercise.

Foreign Currency Futures and Related Options. The Portfolio may enter into
currency futures contracts to sell currencies. It also may buy put options and
write covered call options on currency futures. Currency futures contracts are
similar to currency forward contracts, except that they are traded on exchanges
(and have margin requirements) and are standardized as to contract size and
delivery date. Most currency futures call for payment of delivery in U.S.
dollars. The Portfolio may use currency futures for the same purposes as
currency forward contracts, subject to Commodity Futures Trading Commission
(CFTC) limitations. All futures contracts are aggregated for purposes of the
percentage limitations.

Currency futures and options on futures values can be expected to correlate with
exchange rates, but will not reflect other factors that may affect the values of
the Portfolio's investments. A currency hedge, for example, should protect a
Yen-denominated bond against a decline in the Yen, but will not protect the
Portfolio against price decline if the issuer's creditworthiness deteriorates.
Because the value of the Portfolio's investments denominated in foreign currency
will change in response to many factors other than exchange rates, it may not be
possible to match the amount of a forward contract to the value of the
Portfolio's investments denominated in that currency over time.

The Portfolio will hold securities or other options or futures positions whose
values are expected to offset its obligations. The Portfolio will not enter into
an option or futures position that exposes the Portfolio to an obligation to
another party unless it owns either (i) an offsetting position in securities or
(ii) cash, receivables and short-term debt securities with a value sufficient to
cover its potential obligations.

<PAGE>

APPENDIX B

OPTIONS AND STOCK INDEX FUTURES CONTRACTS

The Portfolio may buy or write options traded on any U.S. or foreign exchange or
in the over-the-counter market. The Portfolio may enter into 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 and on stock indexes. Options in the
over-the-counter market will be purchased only when the investment manager
believes a liquid secondary market exists for the options and only from dealers
and institutions the investment manager believes present a minimal credit risk.
Some options are exercisable only on a specific date. In that case, or if a
liquid secondary market does not exist, the Portfolio could be required to buy
or sell securities at disadvantageous prices, thereby incurring losses.

OPTIONS. An option is a contract. A person who buys a call option for a security
has the right to buy the security at a set price for the length of the contract.
A person who sells a call option is called a writer. The writer of a call option
agrees to sell the security at the set price when the buyer wants to exercise
the option, no matter what the market price of the security is at that time. A
person who buys a put option has the right to sell a security at a set price for
the length of the contract. A person who writes a put option agrees to buy the
security at the set price if the purchaser wants to exercise the option, no
matter what the market price of the security is at that time. An option is
covered if the writer owns the security (in the case of a call) or sets aside
the cash or securities of equivalent value (in the case of a put) that would be
required upon exercise.

The price paid by the buyer for an option is called a premium. In addition the
buyer generally pays a broker a commission. The writer receives a premium, less
another commission, at the time the option is written. The cash received is
retained by the writer whether or not the option is exercised. A writer of a
call option may have to sell the security for a below-market price if the market
price rises above the exercise price. A writer of a put option may have to pay
an above-market price for the security if its market price decreases below the
exercise price. The risk of the writer is potentially unlimited, unless the
option is covered.

Options can be used to produce incremental earnings, protect gains and
facilitate buying and selling securities for investment purposes. The use of
options may benefit the Portfolio and its shareholders by improving the
Portfolio's liquidity and by helping to stabilize the value of its net assets.

<PAGE>

Buying options. Put and call options may be used as a trading technique to
facilitate buying and selling securities for investment reasons. Options are
used as a trading technique to take advantage of any disparity between the price
of the underlying security in the securities market and its price on the options
market. It is anticipated the trading technique will be utilized only to effect
a transaction when the price of the security plus the option price will be as
good or better than the price at which the security could be bought or sold
directly. When the option is purchased, the Portfolio pays a premium and a
commission. It then pays a second commission on the purchase or sale of the
underlying security when the option is exercised. For record keeping and tax
purposes, the price obtained on the purchase of the underlying security will be
the combination of the exercise price, the premium and both commissions. When
using options as a trading technique, commissions on the option will be set as
if only the underlying securities were traded.

Put and call options also may be held by the Portfolio for investment purposes.
Options permit the Portfolio to experience the change in the value of a security
with a relatively small initial cash investment.

The risk the Portfolio assumes when it buys an option is the loss of the
premium. To be beneficial to the Portfolio, the price of the underlying security
must change within the time set by the option contract. Furthermore, the change
must be sufficient to cover the premium paid, the commissions paid both in the
acquisition of the option and in a closing transaction or in the exercise of the
option and sale (in the case of a call) or purchase (in the case of a put) of
the underlying security. Even then the price change in the underlying security
does not ensure a profit since prices in the option market may not reflect such
a change.

Writing covered options. The Portfolio will write covered options when it feels
it is appropriate and will follow these guidelines:

'All options written by the Portfolio will be covered. For covered call options
if a decision is made to sell the security, the Portfolio will attempt to
terminate the option contract through a closing purchase transaction.

'The Portfolio will deal only in standard option contracts traded on national
securities exchanges or those that may be quoted on NASDAQ (a system of price
quotations developed by the National Association of Securities Dealers, Inc.)

Net premiums on call options closed or premiums on expired call options are
treated as short-term capital gains. Since the Fund is taxed as a regulated
investment company under the Internal Revenue Code, any gains on options and
other securities held less than three months must be limited to less than 30% of
its annual gross income.

<PAGE>

If a covered call option is exercised, the security is sold by the Portfolio.
The premium received upon writing the option is added to the proceeds received
from the sale of the security. The Portfolio will recognize a capital gain or
loss based upon the difference between the proceeds and the security's basis.
Premiums received from writing outstanding call options are included as a
deferred credit in the Statement of Assets and Liabilities and adjusted daily to
the current market value.

Options are valued at the close of the New York Stock Exchange. An option listed
on a national exchange, CBOE or NASDAQ will be valued at the last-quoted sales
price or, if such a price is not readily available, at the mean of the last bid
and asked prices.

STOCK INDEX FUTURES CONTRACTS. Stock index futures contracts are commodity
contracts listed on commodity exchanges. They currently include contracts on the
Standard & Poor's 500 Stock Index (S&P 500 Index) and other broad stock market
indexes such as the New York Stock Exchange Composite Stock Index and the Value
Line Composite Stock Index, as well as narrower sub-indexes such as the S&P 100
Energy Stock Index and the New York Stock Exchange Utilities Stock Index. A
stock index assigns relative values to common stocks included in the index and
the index fluctuates with the value of the common stocks so included.

A futures contract is a legal agreement between a buyer or seller and the
clearinghouse of a futures exchange in which the parties agree to make a cash
settlement on a specified future date in an amount determined by the stock index
on the last trading day of the contract. The amount is a specified dollar amount
(usually $100 or $500) multiplied by the difference between the index value on
the last trading day and the value on the day the contract was struck.

For example, the S&P 500 Index consists of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. The S&P 500 Index assigns
relative weightings to the common stocks included in the Index, and the Index
fluctuates with changes in the market values of those stocks. In the case of S&P
500 Index futures contracts, the specified multiple is $500. Thus, if the value
of the S&P 500 Index were 150, the value of one contract would be $75,000 (150 x
$500). Unlike other futures contracts, a stock index futures contract specifies
that no delivery of the actual stocks making up the index will take place.
Instead, settlement in cash must occur upon the termination of the contract. For
example, excluding any transaction costs, if the Portfolio enters into one
futures contract to buy the S&P 500 Index at a specified future date at a
contract value of 150 and the S&P 500 Index is at 154 on that future date, the
Portfolio will gain $500 x (154-150) or $2,000. If the Portfolio enters into one
futures contract to sell the S&P 500 Index at a specified future date at a
contract value of 150 and the S&P 500 Index is at 152 on that future date, the
Portfolio will lose $500 x (152-150) or $1,000.

<PAGE>

Unlike the purchase or sale of an equity security, no price would be paid or
received by the Portfolio upon entering into futures contracts. However, the
Portfolio would be required to deposit with its custodian, in a segregated
account in the name of the futures broker, an amount of cash or U.S. Treasury
bills equal to approximately 5% of the contract value. This amount is known as
initial margin. The nature of initial margin in futures transactions is
different from that of margin in security transactions in that futures contract
margin does not involve borrowing funds by the Portfolio to finance the
transactions. Rather, the initial margin is in the nature of a performance bond
or good-faith deposit on the contract that is returned to the Portfolio upon
termination of the contract, assuming all contractual obligations have been
satisfied.

Subsequent payments, called variation margin, to and from the broker would be
made on a daily basis as the price of the underlying stock index fluctuates,
making the long and short positions in the contract more or less valuable, a
process known as marking to market. For example, when the Portfolio enters into
a contract in which it benefits from a rise in the value of an index and the
price of the underlying stock index has risen, the Portfolio will receive from
the broker a variation margin payment equal to that increase in value.
Conversely, if the price of the underlying stock index declines, the Portfolio
would be required to make a variation margin payment to the broker equal to the
decline in value.

How the Portfolio Would Use Stock Index Futures Contracts. The Portfolio intends
to use stock index futures contracts and related options for hedging and not for
speculation. Hedging permits the Portfolio to gain rapid exposure to or protect
itself from changes in the market. For example, the Portfolio may find itself
with a high cash position at the beginning of a market rally. Conventional
procedures of purchasing a number of individual issues entail the lapse of time
and the possibility of missing a significant market movement. By using futures
contracts, the Portfolio can obtain immediate exposure to the market and benefit
from the beginning stages of a rally. The buying program can then proceed and
once it is completed (or as it proceeds), the contracts can be closed.
Conversely, in the early stages of a market decline, market exposure can be
promptly offset by entering into stock index futures contracts to sell units of
an index and individual stocks can be sold over a longer period under cover of
the resulting short contract position.

The Portfolio may enter into contracts with respect to any stock index or
sub-index. To hedge the Portfolio successfully, however, the Portfolio must
enter into contracts with respect to indexes or sub-indexes whose movements will
have a significant correlation with movements in the prices of the Portfolio's
securities.

<PAGE>

Special Risks of Transactions in Stock Index Futures Contracts

1. Liquidity. The Portfolio may elect to close some or all of its contracts
prior to expiration. The purpose of making such a move would be to reduce or
eliminate the hedge position held by the Portfolio. The Portfolio may close its
positions by taking opposite positions. Final determinations of variation margin
are then made, additional cash as required is paid by or to the Portfolio, and
the Portfolio realizes a gain or a loss. Positions in stock index futures
contracts may be closed only on an exchange or board of trade providing a
secondary market for such futures contracts. For example, futures contracts
transactions can currently be entered into with respect to the S&P 500 Stock
Index on the Chicago Mercantile Exchange, the New York Stock Exchange Composite
Stock Index on the New York Futures Exchange and the Value Line Composite Stock
Index on the Kansas City Board of Trade. Although the Portfolio intends to enter
into futures contracts only on exchanges or boards of trade where there appears
to be an active secondary market, there is no assurance that a liquid secondary
market will exist for any particular contract at any particular time. In such
event, it may not be possible to close a futures contract position, and in the
event of adverse price movements, the Portfolio would have to make daily cash
payments of variation margin. Such price movements, however, will be offset all
or in part by the price movements of the securities subject to the hedge. Of
course, there is no guarantee the price of the securities will correlate with
the price movements in the futures contract and thus provide an offset to losses
on a futures contract.

2. Hedging Risks. There are several risks in using stock index futures contracts
as a hedging device. One risk arises because the prices of futures contracts may
not correlate perfectly with movements in the underlying stock index due to
certain market distortions. First, all participants in the futures market are
subject to initial margin and variation margin requirements. Rather than making
additional variation margin payments, investors may close the contracts through
offsetting transactions which could distort the normal relationship between the
index and futures markets. Second, the margin requirements in the futures market
are lower than margin requirements in the securities market, and as a result the
futures market may attract more speculators than does the securities market.
Increased participation by speculators in the futures market also may cause
temporary price distortions. Because of price distortion in the futures market
and because of imperfect correlation between movements in stock indexes and
movements in prices of futures contracts, even a correct forecast of general
market trends may not result in a successful hedging transaction over a short
period.

<PAGE>

Another risk arises because of imperfect correlation between movements in the
value of the futures contracts and movements in the value of securities subject
to the hedge. If this occurred, the Portfolio could lose money on the contracts
and also experience a decline in the value of its portfolio securities. While
this could occur, the investment manager believes that over time the value of
the Portfolio will tend to move in the same direction as the market indexes and
will attempt to reduce this risk, to the extent possible, by entering into
futures contracts on indexes whose movements it believes will have a significant
correlation with movements in the value of the Portfolio's securities sought to
be hedged. It also is possible that if the Portfolio has hedged against a
decline in the value of the stocks held in its portfolio and stock prices
increase instead, the Portfolio will lose part or all of the benefit of the
increased value of its stock which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the
Portfolio has insufficient cash, it may have to sell securities to meet daily
variation margin requirements. Such sales of securities may be, but will not
necessarily be, at increased prices which reflect the rising market. The
Portfolio may have to sell securities at a time when it may be disadvantageous
to do so.

OPTIONS ON STOCK INDEX FUTURES CONTRACTS. Options on stock index futures
contracts are similar to options on stock except that options on futures
contracts give the purchaser the right, in return for the premium paid, to
assume a position in a stock index futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the period of the option. If the option is
closed instead of exercised, the holder of the option receives an amount that
represents the amount by which the market price of the contract exceeds (in the
case of a call) or is less than (in the case of a put) the exercise price of the
option on the futures contract. If the option does not appreciate in value prior
to the exercise date, the Portfolio will suffer a loss of the premium paid.

OPTIONS ON STOCK INDEXES. Options on stock indexes are securities traded on
national securities exchanges. An option on a stock index is similar to an
option on a futures contract except all settlements are in cash. A portfolio
exercising a put, for example, would receive the difference between the exercise
price and the current index level. Such options would be used in the same manner
as options on futures contracts.

<PAGE>

SPECIAL RISKS OF TRANSACTIONS IN OPTIONS ON STOCK INDEX FUTURES CONTRACTS AND
OPTIONS ON STOCK INDEXES. As with options on stocks, the holder of an option on
a futures contract or on a stock index may terminate a position by selling an
option covering the same contract or index and having the same exercise price
and expiration date. The ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid secondary
market. The Portfolio will not purchase options unless the market for such
options has developed sufficiently, so that the risks in connection with options
are not greater than the risks in connection with stock index futures contracts
transactions themselves. Compared to using futures contracts, purchasing options
involves less risk to the Portfolio because the maximum amount at risk is the
premium paid for the options (plus transaction costs). There may be
circumstances, however, when using an option would result in a greater loss to
the Portfolio than using a futures contract, such as when there is no movement
in the level of the stock index.

TAX TREATMENT. As permitted under federal income tax laws, the Portfolio intends
to identify futures contracts as mixed straddles and not mark them to market,
that is, not treat them as having been sold at the end of the year at market
value. Such an election may result in the Portfolio being required to defer
recognizing losses incurred by entering into futures contracts and losses on
underlying securities identified as being hedged against.

Federal income tax treatment of gains or losses from transactions in options on
futures contracts and indexes will depend on whether such option is a section
1256 contract. If the option is a non-equity option, the Portfolio will either
make a 1256(d) election and treat the option as a mixed straddle or mark to
market the option at fiscal year end and treat the gain/loss as 40% short-term
and 60% long-term. Certain provisions of the Internal Revenue Code may also
limit the Portfolio's ability to engage in futures contracts and related options
transactions. For example, at the close of each quarter of the Fund's taxable
year, at least 50% of the value of its assets must consist of cash, government
securities and other securities, subject to certain diversification
requirements. Less than 30% of its gross income must be derived from sales of
securities held less than three months.

The IRS has ruled publicly that an exchange-traded call option is a security for
purposes of the 50%-of-assets test and that its issuer is the issuer of the
underlying security, not the writer of the option, for purposes of the
diversification requirements. In order to avoid realizing a gain within the
three-month period, the Portfolio may be required to defer closing out a
contract beyond the time when it might otherwise be advantageous to do so. The
Portfolio also may be restricted in purchasing put options for the purpose of
hedging underlying securities because of applying the short sale holding period
rules with respect to such underlying securities.

<PAGE>

Accounting for futures contracts will be according to generally accepted
accounting principles. Initial margin deposits will be recognized as assets due
from a broker (the Portfolio's agent in acquiring the futures position). During
the period the futures contract is open, changes in value of the contract will
be recognized as unrealized gains or losses by marking to market on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Variation margin payments will be made or received depending upon
whether gains or losses are incurred. All contracts and options will be valued
at the last-quoted sales price on their primary exchange.

<PAGE>

APPENDIX C

MORTGAGE-BACKED SECURITIES

A mortgage pass-through certificate is one that represents an interest in a
pool, or group, of mortgage loans assembled by the Government National Mortgage
Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal
National Mortgage Association (FNMA) or non-governmental entities. In
pass-through certificates, both principal and interest payments, including
prepayments, are passed through to the holder of the certificate. Prepayments on
underlying mortgages result in a loss of anticipated interest, and the actual
yield (or total return) to the Portfolio, which is influenced by both stated
interest rates and market conditions, may be different than the quoted yield on
certificates. Some U.S. government securities may be purchased on a when-issued
basis, which means that it may take as long as 45 days after the purchase before
the securities are delivered to the Portfolio.

Stripped Mortgage-Backed Securities. The Portfolio may invest in stripped
mortgage-backed securities. Generally, there are two classes of stripped
mortgage-backed securities: Interest Only (IO) and Principal Only (PO). IOs
entitle the holder to receive distributions consisting of all or a portion of
the interest on the underlying pool of mortgage loans or mortgage-backed
securities. POs entitle the holder to receive distributions consisting of all or
a portion of the principal of the underlying pool of mortgage loans or
mortgage-backed securities. The cash flows and yields on IOs and POs are
extremely sensitive to the rate of principal payments (including prepayments) on
the underlying mortgage loans or mortgage-backed securities. A rapid rate of
principal payments may adversely affect the yield to maturity of IOs. A slow
rate of principal payments may adversely affect the yield to maturity of POs. On
an IO, if prepayments of principal are greater than anticipated, an investor may
incur substantial losses. If prepayments of principal are slower than
anticipated, the yield on a PO will be affected more severely than would be the
case with a traditional mortgage-backed security.

Mortgage-Backed Security Spread Options. The Portfolio may purchase
mortgage-backed security (MBS) put spread options and write covered MBS call
spread options. MBS spread options are based upon the changes in the price
spread between a specified mortgage-backed security and a like-duration Treasury
security. MBS spread options are traded in the OTC market and are of short
duration, typically one to two months. The Portfolio would buy or sell covered
MBS call spread options in situations where mortgage-backed securities are
expected to underperform like-duration Treasury securities.

<PAGE>

APPENDIX D

DOLLAR-COST AVERAGING

A technique that works well for many investors is one that eliminates random buy
and sell decisions. One such system is dollar-cost averaging. Dollar-cost
averaging involves building a portfolio through the investment of fixed amounts
of money on a regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility of the
financial markets. By using this strategy, more shares will be purchased when
the price is low and less when the price is high. As the accompanying chart
illustrates, dollar-cost averaging tends to keep the average price paid for the
shares lower than the average market price of shares purchased, although there
is no guarantee.

While this technique does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many shareholders who
can continue investing on a regular basis through changing market conditions,
including times when the price of their shares falls or the market declines, to
accumulate shares in a fund to meet long-term goals.

Dollar-cost averaging

- -------------------------------------------------------------------
Regular Market Price Shares
Investment of a Share Acquired
$100 $6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
$500 $25.00 103.4

Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).

<PAGE>

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, 1997, and the related
statement of operations for the year then ended and the statements of
changes in net assets for the year ended July 31, 1997 and the ten-month
period ended July 31, 1996, and the financial highlights for the year
ended July 31, 1997, the ten months ended July 31, 1996 and each of the
years in the nine 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, 1997, 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 5, 1997

Financial statements

Statement of assets and liabilities
IDS New Dimensions Fund, Inc.
July 31, 1997

Assets

<S> <C>
Investment in Growth Trends Portfolio (Note 1) $13,961,446,515
---------------
Total assets 13,961,446,515
--------------

Liabilities

Accrued distribution fee 31,523
Accrued service fee 58,550
Accrued transfer agency fee 35,717
Accrued administrative services fee 12,999
Other accrued expenses 1,131,165
---------
Total liabilities 1,269,954
---------
Net assets applicable to outstanding capital stock $13,960,176,561
===============

Represented by

Capital stock-- authorized 10,000,000,000 shares of $.01 par value $ 5,440,030
Additional paid-in capital 7,811,782,433
Undistributed (excess of distribution over)net investment income 51,125,860
Accumulated net realized gain (loss) (Note 1) 494,262,891
Unrealized appreciation (depreciation) on investments 5,597,565,347
-------------
Total-- representing net assets applicable to outstanding capital stock $13,960,176,561
===============
Net assets applicable to outstanding shares: Class A $ 8,662,982,437
Class B $ 1,552,114,079
Class Y $ 3,745,080,045
Net asset value per share of outstanding capital stock: Class A shares 337,229,836 $ 25.69
Class B shares 61,161,446 $ 25.38
Class Y shares 145,611,700 $ 25.72

See accompanying notes to financial statements.

</TABLE>

Statement of operations
IDS New Dimensions Fund, Inc.
Year ended July 31, 1997

Investment income

Income:
<S> <C>
Dividends $ 114,202,729
Interest 66,349,219
Less: Foreign taxes withheld (645,211)
--------
Total income 179,906,737
-----------
Expenses (Note 2):
Expenses, including investment management services fee
allocated from Growth Trends Portfolio 62,355,668
Distribution fee -- Class B 7,711,712
Transfer agency fee 11,597,904
Incremental transfer agency fee-- Class B 119,382
Service fee
Class A 12,014,410
Class B 1,791,453
Class Y 786,956
Administrative services fees and expenses 4,002,611
Compensation of board members 34,184
Compensation of officers 34,434
Postage 812,397
Registration fees 1,433,182
Reports to shareholders 373,743
Audit fees 10,250
Other 20,206
------
Total expenses 103,098,492
Earnings credits on cash balances (Note 2) (436,941)
--------
Total net expenses 102,661,551
-----------
Investment income (loss) -- net 77,245,186
----------

Realized and unrealized gain (loss) -- net

Net realized gain (loss) on security transactions 558,596,748
Net change in unrealized appreciation (depreciation) on investments 3,419,852,495
-------------
Net gain (loss) on investments 3,978,449,243
-------------
Net increase (decrease) in net assets resulting from operations $4,055,694,429
==============

See accompanying notes to financial statements.

</TABLE>

Financial statements

Statements of changes in net assets
IDS New Dimensions Fund, Inc.

Operations and distributions July 31, 1997 July 31, 1996

Year ended Ten-months
ended
<S> <C> <C>
Investment income (loss)-- net $ 77,245,186 $ 51,583,889
Net realized gain (loss) on investments 558,596,748 325,967,822
Net change in unrealized appreciation (depreciation) on investments 3,419,852,495 463,113,975
------------- -----------
Net increase (decrease) in net assets resulting from operations 4,055,694,429 840,665,686
------------- -----------
Distributions to shareholders from:
Net investment income
Class A (39,669,181) (39,448,269)
Class B (1,734,180) (1,492,148)
Class Y (20,903,051) (19,131,175)
Net realized gain
Class A (211,691,845) (162,150,758)
Class B (30,220,222) (8,111,389)
Class Y (89,184,320) (68,560,165)
----------- -----------
Total distributions (393,402,799) (298,893,904)
------------ ------------

Capital share transactions (Note 3)

Proceeds from sales
Class A shares (Note 2) 1,503,550,276 1,078,880,570
Class B shares 685,227,207 442,410,073
Class Y shares 1,132,923,031 862,302,096
Reinvestment of distributions at net asset value
Class A shares 245,314,571 198,597,094
Class B shares 31,850,456 9,572,264
Class Y shares 110,087,371 87,691,340
Payments for redemptions
Class A shares (1,035,073,877) (593,204,599)
Class B shares (Note 2) (105,961,908) (24,532,266)
Class Y shares (829,208,400) (560,414,845)
------------ ------------
Increase in net assets from capital share transactions 1,738,708,727 1,501,301,727
------------- -------------
Total increase in net assets 5,401,000,357 2,043,073,509
Net assets at beginning of period 8,559,176,204 6,516,102,695
------------- -------------
Net assets at end of period $13,960,176,561 $8,559,176,204
=============== ==============
Undistributed (excess of distributions over)
net investment income $ 51,125,860 $ 36,187,086
--------------- --------------

See accompanying notes to financial statements.

</TABLE>
<PAGE>

Notes to financial statements

IDS New Dimensions Fund, Inc.

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 during the ninth calendar year of ownership. 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 (the 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 ownership interest in the net assets of the
Portfolio. The percentage of the Portfolio owned by the Fund at July 31,
1997 was 99.85%. 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.

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.

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 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 0.03% annually. Additional
administrative service expenses paid by the Fund are office expenses,
consultant's fees and compensation of officers and employees. Under this
agreement, the Fund also pays taxes, audit and certain legal fees,
registration fees for shares, compensation of board members, corporate
filing fees, organizational expenses, and any other expenses properly
payable by the Fund and 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:

oClass A $15
oClass B $16
oClass Y $15

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 and commencing on May 9,
1997, 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 American Express Financial Advisors Inc. for
distributing Fund shares were $25,309,066 for Class A and $766,794 for
Class B for the year ended July 31, 1997.

During the year ended July 31, 1997, the Fund's transfer agency fees were
reduced by $436,941 as a result of earnings credits from overnight cash
balances.

Capital share
transactions

Transactions in shares of capital stock for the periods indicated are as
follows:

Year ended July 31, 1997
Class A Class B Class Y

Sold 69,802,144 32,213,213 52,586,867

Issued for reinvested
distributions 11,712,924 1,532,597 5,254,015

Redeemed (47,748,549) (4,867,366) (38,295,346)

Net increase (decrease) 33,766,519 28,878,444 19,545,536

Fiscal period ended July 31, 1996
Class A Class B Class Y

Sold 59,377,568 24,364,763 47,643,756

Issued for reinvested
distributions 11,500,909 556,495 5,077,375

Redeemed (32,745,436) (1,354,343) (30,480,217)

Net increase (decrease) 38,133,041 23,566,915 22,240,914

Financial
Highlights

"Financial highlights" showing per share data and selected information is
presented on pages 8 and 9 of the prospectus.

<PAGE>

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, 1997, and the related
statement of operations for the year then ended and the statements of
changes in net assets for the year ended July 31, 1997 and for the period
from May 13, 1996 (commencement of operations) to July 31, 1996. 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 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 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 at July 31, 1997, and the results of its operations and the
changes in its net assets for the periods stated in the first paragraph
above, in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 5, 1997

(This annual report is not part of the prospectus.)

Financial statements

Statement of assets and liabilities
Growth Trends Portfolio
July 31, 1997

Assets

Investments in securities, at value (Note 1)
<S> <C>
(identified cost $8,372,207,444) $13,978,299,604
Cash in bank on demand deposit 2,840,701
Dividends and accrued interest receivable 11,815,908
Receivable for investment securities sold 99,709,242
U.S. government securities held as collateral (Note 4) 104,156,922
-----------
Total assets 14,196,822,377
--------------

Liabilities

Payable for investment securities purchased 62,091,859
Payable upon return of securities loaned (Note 4) 152,302,522
-----------
Accrued investment management services fee 197,825
Other accrued expenses 100,818
-------
Total liabilities 214,693,024
-----------
Net assets $13,982,129,353
===============

See accompanying notes to financial statements.

</TABLE>

Statement of operations
Growth Trends Portfolio
Year ended July 31, 1997

Investment income

Income:
<S> <C>
Dividend (including $1,712,000 from affiliates) $ 114,463,383
Interest 66,416,365
Less: Foreign taxes withheld (646,420)
--------
Total income 180,233,328
-----------
Expenses (Note 2):
Investment management services fee 61,899,356
Compensation of board members 54,226
Custodian fees 412,768
Audit fees 30,750
Other 120,194
-------
Total expenses 62,517,294
Earnings credits on cash balances (Note 2) (16,733)
- -------
Total net expenses 62,500,561
----------
Investment income (loss)-- net 117,732,767
-----------

Realized and unrealized gain (loss) -- net

Net realized gain (loss) on security transactions (including gain of $27,777,394 on
sale of affiliated issuers) (Note 3) 559,194,834
Net change in unrealized appreciation (depreciation) on investments 3,427,643,228
-------------
Net gain (loss) on investments 3,986,838,062
-------------
Net increase (decrease) in net assets resulting from operations $4,104,570,829
==============

See accompanying notes to financial statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Financial statements
Statements of changes in net assets
Growth Trends Portfolio

Operations

Year ended For the period from
July 31, 1997 May 13, 1996* to
July 31, 1996
<S> <C> <C>
Investment income (loss)-- net $ 117,732,767 $ 20,723,600
Net realized gain (loss) on investments 559,194,834 44,047,563
Net change in unrealized appreciation (depreciation) on investments 3,427,643,228 (147,155,473)
------------- ------------
Net increase (decrease) in net assets resulting from operations 4,104,570,829 (82,384,310)
Net contributions 1,292,719,326 8,667,173,508
------------- -------------
Total increase (decrease) in net assets 5,397,290,155 8,584,789,198
Net assets at beginning of period (Note 1) 8,584,839,198 50,000
------------- ------
Net assets at end of period $13,982,129,353 $8,584,839,198
=============== ==============

*Commencement of operations.

See accompanying notes to financial statements.

</TABLE>

<PAGE>

Notes to financial statements

Growth Trends Portfolio

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 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. On April
15, 1996, American Express Financial Corporation (AEFC) contributed
$50,000 to the Portfolio. Operations did not formally commence until May
13, 1996, at which time an existing fund transferred its assets to the
Portfolio in return for an ownership percentage of the Portfolio.

Significant accounting policies followed by the Portfolio are summarized
below:

Use of 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 and 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 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 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 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 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.

Fees and expenses

The Trust, on behalf of the Portfolio, has entered into an Investment
Management Services Agreement with 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 $3,913,141 for the year ended July 31, 1997.

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, 1997, the Portfolio's custodian fees were
reduced by $16,733 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.

Securities
transactions

Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $4,130,798,686 and $3,133,785,763,
respectively, for the year ended July 31, 1997. For the same year, the
portfolio turnover rate was 32%. Realized gains and losses are determined
on an identified cost basis.

Brokerage commissions paid to brokers affiliated with AEFC were $494,119
for this period.

Lending of
portfolio securities

At July 31, 1997, securities valued at $151,536,023 were on loan to
brokers. For collateral, the Portfolio received $48,145,600 in cash and
U.S. government securities valued at $104,156,922. Income from securities
lending amounted to $1,653,692 for the year ended July 31, 1997. 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>

Investments in securities

Growth Trends Portfolio (Percentages represent value of
July 31, 1997 investments compared to net assets)

Common stocks (90.0%)

Issuer Shares Value(a)

Aerospace & defense (3.6%)
Boeing 4,800,000 $ 282,300,000
Rockwell Intl 900,000 59,062,500
United Technologies 2,000,000 169,125,000
Total 510,487,500

Airlines (1.5%)
AMR 1,950,000(b) 209,746,875

Automotive & related (0.4%)
Chrysler 1,400,000 51,975,000

Banks and savings & loans (7.7%)
BankAmerica 1,000,000 75,500,000
Barnett Banks 1,400,000(e) 79,712,500
Citicorp 3,000,000 407,250,000
Norwest 5,000,000 315,312,500
State Street 3,660,000 205,188,750
Total 1,082,963,750

Beverages & tobacco (1.6%)
Coca-Cola 3,200,000 221,600,000

Building materials & construction (1.2%)
Tyco Intl 2,100,000 170,100,000

Chemicals (3.2%)
Monsanto 6,000,000 298,875,000
Praxair 1,300,000 71,662,500
USA Waste Service 2,000,000(b) 80,625,000
Total 451,162,500

Communications equipment & services (1.8%)
ADC Telecommunications 2,200,000(b) 88,825,000
Motorola 500,000 40,156,250
Tellabs 2,000,000(b) 119,750,000
Total 248,731,250

Computers & office equipment (12.1%)
Cisco Systems 3,800,000(b) 302,337,500
Compaq Computer 5,500,000(b) 314,187,500
Computer Associates Intl 1,350,000 91,884,375
Computer Sciences 1,000,000(b) 81,437,500
First Data 1,700,000 74,162,500
Hewlett-Packard 3,400,000 238,212,500
Microsoft 2,200,000(b) 311,300,000
Oracle 3,000,000(b) 163,312,500
Parametric Technology 1,600,000(b) 78,400,000
Western Digital 1,000,000(b) 38,500,000
Total 1,693,734,375

Electronics (3.5%)
AMP 140,000 7,315,000
Intel 4,800,000 440,700,000
Texas Instruments 400,000 46,000,000
Total 494,015,000

Energy (2.3%)
Exxon 2,000,000 128,500,000
Mobil 2,000,000 153,000,000
Unocal 1,148,600 45,944,000
Total 327,444,000

Energy equipment & services (0.8%)
Schlumberger 1,400,000 106,925,000

Financial services (4.4%)
Associates First Capital Cl A 600,000 39,562,500
Household Intl 400,000 51,800,000
MBNA 3,600,000 162,000,000
Morgan Stanley, Dean 2,900,000 151,706,250
Witter, Discover & Co
Travelers Group 2,870,000 206,460,625
Total 611,529,375

Food (2.4%)
ConAgra 4,200,000 295,312,500
Pioneer Hi-Bred Intl 500,000 37,000,000
Total 332,312,500

Health care (8.9%)
Amgen 2,000,000(b) 117,625,000
Boston Scientific 1,150,000(b) 82,512,500
Johnson & Johnson 3,800,000 236,787,500
Lilly (Eli) 620,000 70,060,000
Medtronic 1,750,000 152,687,500
Merck & Co 2,000,000 207,875,000
Pfizer 6,300,000 375,637,500
Total 1,243,185,000

Health care services (2.6%)
Cardinal Health 1,700,000 105,825,000
HBO & Co 1,200,000 92,850,000
HEALTHSOUTH 2,200,000(b) 58,300,000
Service Corp Intl 1,000,000 34,000,000
United Healthcare 1,400,000 79,800,000
Total 370,775,000

Household products (3.1%)
Gillette 2,300,000 227,700,000
Procter & Gamble 1,400,000 212,975,000
Total 440,675,000

Industrial equipment & services (2.7%)
Deere & Co 5,200,000 295,750,000
Illinois Tool Works 1,500,000 77,812,500
Total 373,562,500

Insurance (1.9%)
American Intl Group 1,500,000 159,750,000
SunAmerica 817,050 49,431,525
UNUM 1,200,000 53,400,000
Total 262,581,525

Leisure time & entertainment (1.7%)
Marriot Intl 2,600,000 178,750,000
Mirage Resorts 2,000,000(b) 53,500,000
Total 232,250,000

Media (0.4%)
Belo (AH) Cl A 390,000 17,355,000
Gannett 350,000 34,759,375
Total 52,114,375

Metals (1.3%)
Aluminum Co of America 2,000,000 177,000,000

Multi-industry conglomerates (6.7%)
AccuStaff 157,400(b) 4,289,150
Emerson Electric 3,800,000 224,200,000
General Electric 7,600,000 533,425,000
Minnesota Mining & Mfg 1,400,000 132,650,000
Westinghouse Electric 1,600,000 38,500,000
Total 933,064,150

Restaurants & lodging (0.8%)
HFS 1,000,000(b) 58,250,000
Promus Hotel 1,300,000(b) 51,106,250
Total 109,356,250

Retail (2.2%)
CUC Intl 1,400,000(b) 34,475,000
CVS 950,000 54,031,250
Kroger 1,200,000(b) 35,475,000
Safeway 3,400,000(b) 182,325,000
Total 306,306,250

Utilities -- electric (0.7%)
CMS Energy 2,800,000 103,600,000

Utilities -- gas (0.4%)
El Paso Natural Gas 960,000 55,500,000

Utilities -- telephone (2.1%)
AirTouch Communications 1,000,000(b) 32,937,500
BellSouth 3,900,000 184,762,500
WorldCom 2,200,000(b) 76,862,500
Total 294,562,500

Foreign (8.0%)(c)
ACE 2,000,000 164,000,000
British Telecommunications
ADR 900,000(e) 63,731,250
Elan ADR 800,000(b,e)38,000,000
Ericsson (LM) ADR 4,300,000 194,575,000
Northern
Telecommunications 2,000,000 209,125,000
Royal Dutch Petroleum 4,000,000 223,750,000
SmithKline Beecham ADR 2,250,000 218,812,500
Total 1,111,993,750

Total common stocks
(Cost: $6,972,852,850) $12,579,253,425

Short-term securities (10.0%)

Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase

U.S. government agency (0.1%)
Federal Natl Mtge Assn Disc Nt
08-04-97 5.37% $10,000,000 $ 9,995,542

Certificate of deposit (0.1%)
Harris Trust
08-04-97 5.55 15,400,000 15,400,000

Commercial paper (9.7%)
ABB Treasury Center USA
09-04-97 5.62 8,500,000(d) 8,451,772
ABN Amro North American Finance
11-10-97 5.62 10,000,000 9,839,350
A. I. Credit
08-05-97 5.69 15,000,000 14,990,257
10-21-97 5.55 12,000,000 11,845,020
AIG Funding
08-20-97 5.75 15,000,000 14,953,962
American General
08-05-97 5.58 7,000,000(d) 6,995,683
09-03-97 5.54 8,400,000(d) 8,357,650
Ameritech Capital Funding
08-18-97 5.57 18,000,000(d) 17,950,742
10-20-97 5.65 15,000,000 14,808,637
Associates Corp North America
08-04-97 5.57 10,200,000 10,195,291
08-04-97 5.63 11,300,000 11,293,965
09-18-97 5.62 10,000,000 9,923,633
10-02-97 5.55 13,500,000 13,366,046
Avco Financial Services
08-05-97 5.69 9,500,000 9,493,168
08-06-97 5.72 16,900,000 16,884,942
08-29-97 5.66 8,700,000 8,658,666
09-04-97 5.65 10,000,000 9,943,261
09-08-97 5.56 1,900,000 1,888,480
09-11-97 5.64 11,300,000 11,226,028
09-29-97 5.64 10,300,000 10,203,207
BBV Finance (Delaware)
08-04-97 5.52 12,000,000 11,993,707
BellSouth Capital Funding
08-01-97 5.57 5,900,000 5,900,000
Beneficial
08-14-97 5.63 20,000,000 19,956,914
08-19-97 5.58 10,200,000 10,171,746
09-25-97 5.55 6,900,000 6,839,944
BHP Finance
09-17-97 5.56 26,600,000 26,400,870
BOC Group
08-11-97 5.60 3,000,000 2,995,375
09-08-97 5.55 10,000,000 9,941,839
CAFCO
09-15-97 5.54 8,500,000(d) 8,441,456
09-16-97 5.52 10,100,000(d) 10,029,277
Cargill
08-15-97 5.52 4,000,000 3,991,444
09-12-97 5.61 7,600,000 7,548,199
10-14-97 5.66 10,000,000 9,881,875
Cargill Global Funding
09-09-97 5.54 22,100,000(d) 21,968,321
11-18-97 5.49 13,200,000(d) 12,971,310
11-24-97 5.66 10,000,000(d) 9,817,300
Ciesco LP
08-13-97 5.63 12,800,000 12,773,619
08-25-97 5.59 11,400,000(d) 11,353,782
10-10-97 5.55 8,000,000(d) 7,910,540
Coca-Cola
09-03-97 5.58 9,300,000(d) 9,249,594
Colgate-Palmolive
09-05-97 5.53 8,000,000(d) 7,957,222
Commercial Credit
09-12-97 5.52 15,000,000 14,904,100
Commerzbank U.S. Finance
08-26-97 5.51 9,000,000 8,965,687
CPC Intl
08-07-97 5.72 10,000,000(d) 9,989,996
08-19-97 5.70 20,000,000(d) 19,940,566
10-20-97 5.56 12,300,000(d) 12,143,083
10-27-97 5.55 4,500,000(d) 4,437,630
Fleet Funding
08-08-97 5.59 6,000,000(d) 5,993,513
09-11-97 5.53 7,900,000(d) 7,850,515
Ford Motor Credit
08-01-97 5.57 12,000,000 12,000,000
08-27-97 5.52 46,500,000 46,315,291
Gannett
08-21-97 5.51 8,500,000(d) 8,474,075
General Electric Capital
09-19-97 5.64 15,000,000 14,881,142
Goldman Sachs Group
08-13-97 5.60 5,400,000 5,389,974
08-21-97 5.60 23,000,000 22,929,083
09-03-97 5.64 10,000,000 9,945,627
09-08-97 5.64 13,700,000 13,615,202
Household Finance
08-29-97 5.53 7,800,000 7,766,633
Kredietbank North America Finance
08-07-97 5.62 10,000,000 9,989,787
08-27-97 5.50 10,000,000 9,960,422
09-02-97 5.61 14,900,000 14,821,283
Lincoln Natl
09-05-97 5.63 7,000,000(d) 6,958,346
09-12-97 5.55 5,500,000(d) 5,461,791
09-25-97 5.53 8,100,000(d) 8,032,061
10-01-97 5.54 7,300,000(d) 7,228,715
May Department Stores
08-11-97 5.60 13,210,000 13,185,081
MCI Communications
09-12-97 5.62 9,000,000(d) 8,937,476
09-18-97 5.62 10,000,000(d) 9,923,633
09-22-97 5.73 8,300,000(d) 8,231,133
09-23-97 5.63 10,000,000(d) 9,915,882
10-14-97 5.58 6,000,000(d) 5,929,125
10-31-97 5.56 3,200,000(d) 3,153,632
11-05-97 5.77 15,000,000(d) 14,770,838
11-17-97 5.64 7,900,000(d) 7,764,377
11-20-97 5.70 17,800,000(d) 17,486,008
Merrill Lynch
08-12-97 5.71 25,000,000 24,947,954
09-05-97 5.60 7,000,000 6,962,229
Metlife Funding
08-08-97 5.60 12,000,000 11,984,644
09-10-97 5.54 18,500,000 18,386,944
Mobil Australia Finance (Delaware)
08-11-97 5.69 8,200,000(d) 8,185,197
08-22-97 5.41 15,000,000(d) 14,945,487
08-22-97 5.49 10,000,000(d) 9,963,658
10-17-97 5.92 15,346,000(d) 15,157,474
Morgan Stanley Group
08-28-97 5.53 22,800,000 22,705,950
Natl Australia Funding (Delaware)
08-08-97 5.52 8,500,000 8,490,910
09-15-97 5.61 12,600,000 12,508,373
09-22-97 5.52 9,600,000 9,524,149
New Center Asset Trust
09-04-97 5.50 20,000,000 19,896,678
Northern States Power
09-22-97 5.63 12,000,000 11,900,434
Paccar Financial
08-04-97 5.57 3,100,000 3,098,566
08-08-97 5.69 9,000,000 8,988,234
Pfizer
08-01-97 5.53 8,000,000(d) 8,000,000
09-08-97 5.51 12,000,000(d) 11,930,587
Pitney Bowes Credit
10-16-97 5.65 10,000,000 9,878,725
10-20-97 5.75 10,000,000 9,872,425
Reed Elsevier
08-25-97 5.52 9,300,000(d) 9,265,900
08-28-97 5.49 7,100,000(d) 7,070,872
09-24-97 5.52 15,000,000(d) 14,871,671
10-07-97 5.57 13,100,000(d) 12,959,699
SAFECO Credit
08-05-97 5.70 6,000,000 5,995,401
08-11-97 5.69 3,400,000 3,393,862
St. Paul Companies
08-26-97 5.52 11,500,000(d) 11,456,156
09-11-97 5.50 7,100,000(d) 7,055,850
SBC Communications Capital
08-08-97 5.52 6,500,000(d) 6,493,049
09-04-97 5.57 3,300,000(d) 3,281,844
10-09-97 5.57 20,000,000(d) 19,779,500
12-10-97 5.59 12,000,000(d) 11,750,520
Societe Generale North America
09-05-97 5.57 10,000,000 9,946,333
09-08-97 5.65 15,000,000 14,907,155
Southern California Gas
08-20-97 5.66 6,786,000(d) 6,763,566
Toyota Motor Credit
08-01-97 5.60 15,400,000 15,400,000
UBS Finance (Delaware)
08-08-97 5.52 8,900,000 8,890,482
United Parcel Services
08-29-97 5.49 18,000,000 17,923,420
USAA Capital
08-04-97 5.71 10,000,000 9,994,109
08-07-97 5.71 12,000,000 11,986,340
08-15-97 5.59 25,100,000 25,035,807
08-26-97 5.39 7,900,000 7,866,632
08-26-97 5.59 8,900,000 8,862,502
11-17-97 5.60 10,000,000 9,828,325
Wachovia Bank
08-18-97 5.59 10,000,000 10,000,000
Total 1,354,763,414

Letters of credit (0.1%)
Bank of America -
Formosa Plastics
08-21-97 5.70% 10,000,000 9,965,760
Bank of America -
AES Barbers Point
08-22-97 5.52 1,500,000 1,495,196
Bank of New York -
River Fuel Trust
10-03-97 5.58 7,500,000(d) 7,426,267
Total 18,887,223

Total short-term securities
(Cost: $1,399,354,594) $ 1,399,046,179

Total investment in securities
(Cost: $8,372,207,444)(g) $13,978,299,604

See accompanying notes to investments in securities.

<PAGE>

Investments in securities
Growth Trends Portfolio

Notes to investments in securities

(a) Securities are valued by procedures described in Note 1 to the financial
statements.

(b) Non-income producing.

(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) Security is partially or fully on loan. See Note 4 to the financial
statements.

(f) Transactions with companies that were affiliates during the year ended July
31, 1997 are as follows:

Beginning Purchase Sales Ending Dividend
Issuer cost cost cost cost income

Reynolds &
Reynolds Cl A $72,334,648 $10,169,540 $82,504,188 -- $1,712,000

(g) At July 31, 1997, the cost of securities for federal income tax purposes was
$8,373,026,872 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:

Unrealized appreciation...................................... $5,614,342,905
Unrealized depreciation...........................................(9,070,173)
Net unrealized appreciation.................................. $5,605,272,732

<PAGE>
PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) FINANCIAL STATEMENTS:

List of financial statements filed as part of this Post-Effective Amendment to
the Registration Statement:

For IDS New Dimensions Fund:

o Independent Auditors' Report dated September 5, 1997
o Statement of assets and liabilities, July 31, 1997
o Statement of operations, year ended July 31, 1997
o Statement of changes in net assets, for the ten-months
ended July 31, 1996 and the year ended July 31, 1997
o Notes to Financial Statements
o Investments in Securities, July 31, 1997
o Notes to Investments in Securities

For Growth Trends Portfolio:

o Independent Auditors' Report dated September 5, 1997
o Statement of assets and liabilities, July 31, 1997
o Statement of operations, year ended July 31, 1997
o Statement of changes in net assets, period from May 13, 1996 to
July 31, 1996 and the year ended July 31, 1997
o Notes to Financial Statements
o Investments in Securities, July 31, 1997
o Notes to Investments in Securities

(b) EXHIBITS:

1. Copy of Amended and Restated Articles of Incorporation
dated Nov. 10, 1988, filed electronically as Exhibit No.
1 to Post-Effective Amendment No. 42 to Registration
Statement No. 2-28529, is incorporated herein by
reference.

2. By-Laws, as amended January 10, 1996, filed
electronically as Exhibit 2 to Post-Effective Amendment
No. 56 to Registration Statement No. 2-28529, is
incorporated herein by reference.

3. Not Applicable.

4. Form of Stock certificate, filed as Exhibit 3 to
Registrant's Amendment Number One to Registration
Statement No. 2-28529 dated July 8, 1968, is incorporated
herein by reference.

5. Copy of Investment Management Services Agreement between
Registrant and American Express Financial Corporation,
dated March 20, 1995, filed electronically as Exhibit 5
to Registrant's Post-Effective Amendment No. 53 to Registration
Statement No. 2-28529 is incorporated herein by reference.
The agreement was assumed by the Portfolio when the Fund
adopted the master/feeder structure.

6. Copy of Distribution Agreement between Registrant and
American Express Financial Advisors Inc. is filed
electronically herewith.
<PAGE>
7. All employees are eligible to participate in a profit sharing
plan. Entry into the plan is Jan. 1 or July 1. The Registrant
contributes each year an amount up to 15 percent of their annual
salaries, the maximum deductible amount permitted under Section
404(a) of the Internal Revenue Code.

8(a). Copy of Custodian Agreement between Registrant and
American Express Trust Company is filed electronically
herewith.

8(b). Copy of Addendum to the Custodian Agreement between IDS New
Dimensions Fund, Inc., American Express Trust Company and
American Express Financial Corporation dated May 13, 1996, is
filed electronically herewith.

8(c). Copy of Custody Agreement between Morgan Stanley Trust
Company and IDS Bank and Trust dated May, 1993 is filed
electronically herewith.

9(a). Copy of Plan and Agreement of Merger dated April 10,
1986, filed electronically as Exhibit No. 9 to Post-
Effective Amendment No. 38 to Registration Statement No.
2-28529, is herein incorporated by reference.

9(b). Copy of Transfer Agency Agreement between Registrant and
American Express Financial Corporation is filed
electronically herewith.

9(c). Copy of License Agreement between Registrant and IDS
Financial Corporation dated January 28, 1988, filed
electronically as Exhibit 9(c) to Post-Effective
Amendment No. 44 to Registration Statement No. 2-28529 is
herein incorporated by reference.

9(d). Copy of Shareholder Service Agreement between Registrant
and American Express Financial Advisors Inc. is filed
electronically herewith.

9(e). Copy of Administrative Services Agreement between
Registrant and American Express Financial Corporation is
filed electronically herewith.

9(f). Copy of Agreement and Declaration of Unitholders between
IDS New Dimensions Fund, Inc. and Strategist Growth Fund,
Inc. dated May 13, 1996, is filed electronically
herewith.

9(g). Copy of the Class Y Shareholder Service Agreement between
IDS New Dimensions Fund, Inc. and American Express
Financial Advisors Inc., dated May 9, 1997, is filed
electronically herewith.

<PAGE>

10. Opinion and consent of counsel as to the legality of the
securities being registered is filed with Registrant's
most recent 24f-2 Notice.

11. Independent Auditor's Consent, filed electronically
herewith.

12. None.

13. Not Applicable.

14. Forms of Keogh, IRA and other retirement plans, filed as
Exhibits 14(a) through 14(n) to IDS Growth Fund, Inc.,
Post-Effective Amendment No. 34 to Registration Statement
No. 2-38355 on Sept. 8, 1986 are incorporated herein by
reference.

15. Copy of Plan and Agreement of Distribution between
Registrant and American Express Financial Advisors Inc.
is filed electronically herewith.

16. Copy of schedule for computation of each performance
quotation provided in the Registration Statement in
response to Item 22(b), filed as Exhibit No. 16 to Post-
Effective Amendment No. 47 to Registration Statement No.
2-28529 is hereby incorporated by reference.

17. Financial Data Schedules, filed electronically herewith.

18. Copy of Plan pursuant to Rule 18f-3 under the 1940 Act
filed electronically as Exhibit 18 to Registrant's Post-
Effective Amendment No. 54 to Registration Statement No.
2-28529, is herein incorporated by reference.

19(a). Directors' Power of Attorney, dated January 8, 1997 is
filed electronically herewith.

19(b). Officers' Power of Attorney, dated Nov. 1, 1995, filed
electronically as Exhibit 19(b) to Registrant's Post-
Effective Amendment No. 55, is incorporated herein by
reference.

19(c). Trustees Power of Attorney dated January 8, 1997, is
filed electronically herewith.

19(d). Officers' Power of Attorney dated April 11, 1996, filed
electronically as Exhibit 19(d) to Registrant's Post-
Effective Amendment No. 56, is incorporated herein by
reference.

Item 25. Persons Controlled by or Under Common Control with
Registrant:

None.

<PAGE>

Item 26. Number of Holders of Securities

(1) (2)
Number of Record
Holders as of
Title of Class Sept. 11, 1997
Class A 487,513
Class B 160,623
Class Y 226,205

Item 27. Indemnification

The Articles of Incorporation of the registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that she or he is or was a director, officer, employee or
agent of the Fund, or is or was serving at the request of the Fund as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may purchase
liability insurance and advance legal expenses, all to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended. The By-laws of the registrant provide that present or former directors
or officers of the Fund made or threatened to be made a party to or involved
(including as a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by the Minnesota
Business Corporation Act, all as more fully set forth in the By-laws filed as an
exhibit to this registration statement.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.

<PAGE>

<PAGE>
PAGE 1
<PAGE>
Item 29(c). Not applicable.

Item 30. Location of Accounts and Records

American Express Financial Corporation
IDS Tower 10
Minneapolis, MN 55440

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, IDS New Dimensions Fund, Inc. certifies
that it meets the requirements for the effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1993,
and has duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis and the State of Minnesota on the 26th day of September, 1997.

IDS NEW DIMENSIONS FUND, INC.

By /s/ William R. Pearce**
William R. Pearce, President

By /s/ Melinda S. Urion**
Melinda S. Urion, Treasurer

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
its Registration Statement has been signed below by the following persons in the
capacities and on the 26th day of September, 1997.

Signature Capacity

/s/ William R. Pearce** President and Principal
William R. Pearce Executive Officer and
Director

/s/ H. Brewster Atwater, Jr.* Director
H. Brewster Atwater, Jr.

/s/ Leslie L. Ogg** Vice President, General
Leslie L. Ogg Counsel and Secretary

/s/ Lynne V. Cheney* Director
Lynne V. Cheney

/s/ William H. Dudley* Director
William H. Dudley

/s/ Robert F. Froehlke* Director
Robert F. Froehlke

/s/ David R. Hubers* Director
David R. Hubers

/s/ Heinz F. Hutter* Director
Heinz F. Hutter

/s/ Anne P. Jones* Director
Anne P. Jones

<PAGE>

Signature Capacity

/s/ Melvin R. Laird* Director
Melvin R. Laird

/s/ Alan K. Simpson* Director
Alan K. Simpson

/s/ Edson W. Spencer* Director
Edson W. Spencer

/s/ John R. Thomas* Director
John R. Thomas

/s/ Wheelock Whitney* Director
Wheelock Whitney

/s/ C. Angus Wurtele* Director
C. Angus Wurtele

* Signed pursuant to Directors' Power of Attorney dated January 8, 1997 is filed
electronically herewith.

- ------------------------------
William R. Pearce

** Signed pursuant to Officers' Power of Attorney dated Nov. 1,
1995, filed electronically as Exhibit 19(b) to Registrant's Post-
Effective Amendment No. 55 to Registration Statement No. 2-28529,
by:

- ------------------------------
William R. Pearce

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, GROWTH TRUST consents to the filing of this Amendment to
the Registration Statement signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Minneapolis and State of Minnesota, on the 26th
day of September, 1997.

GROWTH TRUST

By /s/ William R. Pearce**
William R. Pearce, President

By /s/ Melinda S. Urion**
Melinda S. Urion, Treasurer

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated on the 26th day of September, 1997.

Signatures Capacity

/s/ William R. Pearce** Trustee
William R. Pearce

/s/ H. Brewster Atwater, Jr.* Trustee
H. Brewster Atwater, Jr.

/s/ Lynne V. Cheney* Trustee
Lynne V. Cheney

/s/ William H. Dudley* Trustee
William H. Dudley

/s/ Robert F. Froehlke* Trustee
Robert F. Froehlke

/s/ David R. Hubers* Trustee
David R. Hubers

/s/ Heinz F. Hutter* Trustee
Heinz F. Hutter

/s/ Anne P. Jones* Trustee
Anne P. Jones

/s/ Melvin R. Laird* Trustee
Melvin R. Laird

<PAGE>

Signatures Capacity

/s/ Alan K. Simpson* Trustee
Alan K. Simpson

/s/ Edson W. Spencer* Trustee
Edson W. Spencer

/s/ John R. Thomas* Trustee
John R. Thomas

/s/ Wheelock Whitney* Trustee
Wheelock Whitney

/s/ C. Angus Wurtele* Trustee
C. Angus Wurtele

* Signed pursuant to Trustees Power of Attorney dated April 11, 1996, filed
electronically herewith as Exhibit 19(c), by:

__________________
William R. Pearce

** Signed pursuant to Officers' Power of Attorney dated April 11,
1996, filed electronically as Exhibit 19(d)to Registrant's Post-
Effective Amendment No. 56 to Registration Statement No. 2-28529,
by:

___________________
William R. Pearce

<PAGE>

CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 57
TO REGISTRATION STATEMENT NO. 2-28529

This post-effective amendment comprises the following papers and documents:

The facing sheet.

Cross reference sheet.

Part A.

The prospectus.

Part B.

Statement of Additional Information.

Financial Statements.

Part C.

Other information.

Exhibits.

The signatures.

PAGE 1
IDS New Dimensions Fund, Inc.
File No. 2-28529/811-1629

EXHIBIT INDEX

Exhibit 6: Copy of Distribution Agreement, dated March 20,
1995.

Exhibit 8(a): Copy of Custodian Agreement, dated March 20, 1995.

Exhibit 8(b): Copy of Addendum to the Custodian Agreement, dated
May 13, 1996.

Exhibit 8(c): Copy of Custody Agreement, dated May, 1993.

Exhibit 9(b): Copy of Transfer Agency Agreement, dated March 20,
1995.

Exhibit 9(d): Copy of Shareholder Service Agreement, dated March
20, 1995.

Exhibit 9(e): Copy of Administrative Services Agreement, dated
March 20, 1995.

Exhibit 9(f): Copy of Agreement and Declaration of Unitholders,
dated May 13, 1996.

Exhibit 9(g): Copy of Class Y Shareholder Service Agreement, dated
May 9, 1997.

Exhibit 11: Independent Auditors' Consent

Exhibit 15: Copy of Plan and Agreement of Distribution, dated
March 20, 1995.

Exhibit 17: Financial Data Schedules.

Exhibit 19(a): Directors' Power of Attorney, dated January 8, 1997.

Exhibit 19(c): Trustees Power of Attorney, dated January 8, 1997.

DISTRIBUTION AGREEMENT

Agreement made as of the 20th day of March, 1995, by and between IDS New
Dimensions Fund, Inc. (the "Fund"), a Minnesota corporation, for and on behalf
of each class of the Fund and American Express Financial Advisors Inc., a
Delaware corporation.

Part One: DISTRIBUTION OF SECURITIES

(1) The Fund covenants and agrees that, during the term of this agreement and
any renewal or extension, American Express Financial Advisors shall have the
exclusive right to act as principal underwriter for the Fund and to offer for
sale and to distribute either directly or through any affiliate any and all
shares of each class of capital stock issued or to be issued by the Fund.

(2) American Express Financial Advisors hereby covenants and agrees to act as
the principal underwriter of each class of capital shares issued and to be
issued by the Fund during the period of this agreement and agrees during such
period to offer for sale such shares as long as such shares remain available for
sale, unless American Express Financial Advisors is unable or unwilling to make
such offer for sale or sales or solicitations therefor legally because of any
federal, state, provincial or governmental law, rule or agency or for any
financial reason.

(3) With respect to the offering for sale and sale of shares of each class to be
issued by the Fund, it is mutually understood and agreed that such shares are to
be sold on the following terms:

(a) All sales shall be made by means of an application, and every
application shall be subject to acceptance or rejection by the Fund at its
principal place of business. Shares are to be sold for cash, payable at the time
the application and payment for such shares are received at the principal place
of business of the Fund.

(b) No shares shall be sold at less than the asset value (computed in
the manner provided by the currently effective prospectus or Statement of
Additional Information and the Investment Company Act of 1940, and rules
thereunder). The number of shares or fractional shares to be acquired by each
applicant shall be determined by dividing the amount of each accepted
application by the public offering price of one share of the capital stock of
the appropriate class as of the close of business on the day when the
application, together with payment, is received by the Fund at its principal
place of business. The computation as to the number of shares and fractional
shares shall be carried to three decimal points of one share with the
computation being carried to the nearest 1/lOOOth of a share. If the day of
receipt of the application and payment is not a full business day, then the
asset value of the share for use in such computation shall be determined as of
the close of business on the next succeeding full business day. In the event of
a period of emergency, the computation of the asset value for the purpose of
determining the number of shares or fractional shares to be acquired by the
applicant may be deferred until the close of business on the first full business
day following the termination of the period of

<PAGE>

emergency. A period of emergency shall have the definition given thereto in the
Investment Company Act of 1940, and rules thereunder.

(4) The Fund agrees to make prompt and reasonable effort to do any and all
things necessary, in the opinion of American Express Financial Advisors, to have
and to keep the Fund and the shares properly registered or qualified in all
appropriate jurisdictions and, as to shares, in such amounts as American Express
Financial Advisors may from time to time designate in order that the Fund's
shares may be offered or sold in such jurisdictions.

(5) The Fund agrees that it will furnish American Express Financial Advisors
with information with respect to the affairs and accounts of the Fund, and in
such form, as American Express Financial Advisors may from time to time
reasonably require and further agrees that American Express Financial Advisors,
at all reasonable times, shall be permitted to inspect the books and records of
the Fund.

(6) American Express Financial Advisors or its agents may prepare or cause to be
prepared from time to time circulars, sales literature, broadcast material,
publicity data and other advertising material to be used in the sales of shares
issued by the Fund, including material which may be deemed to be a prospectus
under rules promulgated by the Securities and Exchange Commission (each separate
promotional piece is referred to as an "Item of Soliciting Material"). At its
option, American Express Financial Advisors may submit any Item of Soliciting
Material to the Fund for its prior approval. Unless a particular Item of
Soliciting Material is approved in writing by the Fund prior to its use,
American Express Financial Advisors agrees to indemnify the Fund and its
directors and officers against any and all claims, demands, liabilities and
expenses which the Fund or such persons may incur arising out of or based upon
the use of any Item of Soliciting Material. The term "expenses" includes amounts
paid in satisfaction of judgments or in settlements. The foregoing right of
indemnification shall be in addition to any other rights to which the Fund or
any director or officer may be entitled as a matter of law. Notwithstanding the
foregoing, such indemnification shall not be deemed to abrogate or diminish in
any way any right or claim American Express Financial Advisors may have against
the Fund or its officers or directors in connection with the Fund's registration
statement, prospectus, Statement of Additional Information or other information
furnished by or caused to be furnished by the Fund.

(7) American Express Financial Advisors agrees to submit to the Fund each
application for shares immediately after the receipt of such application and
payment therefor by American Express Financial Advisors at its principal place
or business.

(8) American Express Financial Advisors agrees to cause to be delivered to each
person submitting an application a prospectus or circular to be furnished by the
Fund in the form required by the applicable federal laws or by the acts or
statutes of any applicable state, province or country.

<PAGE>

(9) The Fund shall have the right to extend to shareholders of each class the
right to use the proceeds of any cash dividend paid by the Fund to that
shareholder to purchase shares of the same class at the net asset value at the
close of business upon the day of purchase, to the extent set forth in the
currently effective prospectus or Statement of Additional Information.

(10) Shares of each class issued by the Fund may be offered and sold at their
asset value to the shareholders of the same class of other funds in the IDS
MUTUAL FUND GROUP who wish to exchange their investments in shares of the other
funds in the IDS MUTUAL FUND GROUP to investments in shares of the Fund, to the
extent set forth in the currently effective prospectus or Statement of
Additional Information, such asset value to be computed as of the close of
business on the day of sale of such shares of the Fund.

(11) American Express Financial Advisors and the Fund agree to use their best
efforts to conform with all applicable state and federal laws and regulations
relating to any rights or obligations under the term of this agreement.

Part Two: ALLOCATION OF EXPENSES

Except as provided by any other agreements between the parties, American Express
Financial Advisors covenants and agrees that during the period of this agreement
it will pay or cause or be paid all expenses incurred by American Express
Financial Advisors, or any of its affiliates, in the offering for sale or sale
of each class of the Fund's shares.

Part Three: COMPENSATION

(1) It is covenanted and agreed that American Express Financial
Advisors shall be paid:

(i) for a class of shares imposing a front-end sales charge, by the
purchasers of Fund shares in an amount equal to the difference between the total
amount received upon each sale of shares issued by the Fund and the asset value
of such shares at the time of such sale; and

(ii) for a class of shares imposing a deferred sales charge, by owners
of Fund shares at the time the sales charge is imposed in an amount equal to any
deferred sales charge, as described in the Fund's prospectus.

Such sums as are received by the Fund shall be received as Agent for American
Express Financial Advisors and shall be remitted to American Express Financial
Advisors daily as soon as practicable after receipt.

(2) The asset value of any share of each class of the Fund shall be determined
in the manner provided by the classes currently effective prospectus and
Statement of Additional Information and the Investment Company Act of 1940, and
rules thereunder.

<PAGE>

Part Four: MISCELLANEOUS

(1) American Express Financial Advisors shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this agreement,
shall have no authority to act for or represent the Fund.

(2) American Express Financial Advisors shall be free to render to others
services similar to those rendered under this agreement.

(3) Neither this agreement nor any transaction had pursuant hereto shall be
invalidated or in any way affected by the fact that directors, officers, agents
and/or shareholders of the Fund are or may be interested in American Express
Financial Advisors as directors, officers, shareholders or otherwise; that
directors, officers, shareholders or agents of American Express Financial
Advisors are or may be interested in the Fund as directors, officers,
shareholders or otherwise; or that American Express Financial Advisors is or may
be interested in the Fund as shareholder or otherwise, provided, however, that
neither American Express Financial Advisors nor any officer or director of
American Express Financial Advisors or any officers or directors of the Fund
shall sell to or buy from the Fund any property or security other than a
security issued by the Fund, except in accordance with a rule, regulation or
order of the federal Securities and Exchange Commission.

(4) For the purposes of this agreement, a "business day" shall have the same
meaning as is given to the term in the By-laws of the Fund.

(5) Any notice under this agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the parties to this agreement at each
company's principal place of business in Minneapolis, Minnesota, or to such
other address as either party may designate in writing mailed to the other.

(6) American Express Financial Advisors agrees that no officer, director or
employee of American Express Financial Advisors will deal for or on behalf of
the Fund with himself as principal or agent, or with any corporation or
partnership in which he may have a financial interest, except that this shall
not prohibit:

(a) Officers, directors and employees of American Express Financial
Advisors from having a financial interest in the Fund or in American Express
Financial Advisors.

(b) The purchase of securities for the Fund, or the sale of securities
owned by the Fund, through a security broker or dealer, one or more of whose
partners, officers, directors or employees is an officer, director or employee
of American Express Financial Advisors, provided such transactions are handled
in the capacity of broker only and provided commissions charged do not exceed
customary brokerage charges for such services.

<PAGE>

(c) Transactions with the Fund by a broker-dealer affiliate of American
Express Financial Advisors if allowed by rule or order of the Securities and
Exchange Commission and if made pursuant to procedures adopted by the Fund's
Board of Directors.

(7) American Express Financial Advisors agrees that, except as otherwise
provided in this agreement, or as may be permitted consistent with the use of a
broker-dealer affiliate of American Express Financial Advisors under applicable
provisions of the federal securities laws, neither it nor any of its officers,
directors or employees shall at any time during the period of this agreement
make, accept or receive, directly or indirectly, any fees, profits or emoluments
of any character in connection with the purchase or sale of securities (except
securities issued by the Fund) or other assets by or for the Fund.

Part Five: TERMINATION

(1) This agreement shall continue from year to year unless and until terminated
by American Express Financial Advisors or the Fund, except that such continuance
shall be specifically approved at least annually by a vote of a majority of the
Board of Directors who are not parties to this agreement or interested persons
of any such party, cast in person at a meeting called for the purpose of voting
on such approval, and by a majority of the Board of Directors or by vote of a
majority of the outstanding voting securities of the Fund. As used in this
paragraph, the term "interested person" shall have the meaning as set forth in
the Investment Company Act of 1940, as amended.

(2) This agreement may be terminated by American Express Financial Advisors or
the Fund at any time by giving the other party sixty (60) days written notice of
such intention to terminate.

(3) This agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning as set forth in the
Investment Company Act of 1940, as amended.

IN WITNESS WHEREOF, The parties hereto have executed the foregoing agreement on
the date and year first above written.

IDS NEW DIMENSIONS FUND, INC.

By /s/ Leslie L. Ogg
Leslie L. Ogg
Vice President

AMERICAN EXPRESS FINANCIAL ADVISORS INC.

By /s/ Janis E. Miller
Vice President

CUSTODIAN AGREEMENT

THIS CUSTODIAN AGREEMENT dated March 20, 1995, between IDS New Dimensions Fund,
Inc., a Minnesota Corporation (the "Corporation") and American Express Trust
Company, a corporation organized under the laws of the State of Minnesota with
its principal place of business at Minneapolis, Minnesota (the "Custodian").

WHEREAS, the Corporation desires that its securities and cash be hereafter held
and administered by Custodian pursuant to the terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Corporation and the Custodian agree as follows:

Section 1. Definitions

The word "securities" as used herein shall be construed to include, without
being limited to, shares, stocks, treasury stocks, including any stocks of this
Corporation, notes, bonds, debentures, evidences of indebtedness, options to buy
or sell stocks or stock indexes, certificates of interest or participation in
any profit-sharing agreements, collateral trust certificates, preorganization
certificates or subscriptions, transferable shares, investment contracts, voting
trust certificates, certificates of deposit for a security, fractional or
undivided interests in oil, gas or other mineral rights, or any certificates of
interest or participation in, temporary or interim certificates for, receipts
for, guarantees of, or warrants or rights to subscribe to or purchase any of the
foregoing, acceptances and other obligations and any evidence of any right or
interest in or to any cash, property or assets and any interest or instrument
commonly known as a security. In addition, for the purpose of this Custodian
Agreement, the word "securities" also shall include other instruments in which
the Corporation may invest including currency forward contracts and commodities
such as interest rate or index futures contracts, margin deposits on such
contracts or options on such contracts.

The words "custodian order" shall mean a request or direction, including a
computer printout, directed to the Custodian and signed in the name of the
Corporation by any two individuals designated in the current certified list
referred to in Section 2.

The word "facsimile" shall mean an exact copy or likeness which is
electronically transmitted for instant reproduction.

Section 2. Names, Titles and Signatures of Authorized Persons

The Corporation will certify to the Custodian the names and
signatures of its present officers and other designated persons
authorized on behalf of the Corporation to direct the Custodian by
custodian order as herein before defined. The Corporation agrees

<PAGE>

that whenever any change occurs in this list it will file with the Custodian a
copy of a resolution certified by the Secretary or an Assistant Secretary of the
Corporation as having been duly adopted by the Board of Directors or the
Executive Committee of the Board of Directors of the Corporation designating
those persons currently authorized on behalf of the Corporation to direct the
Custodian by custodian order, as herein before defined, and upon such filing (to
be accompanied by the filing of specimen signatures of the designated persons)
the persons so designated in said resolution shall constitute the current
certified list. The Custodian is authorized to rely and act upon the names and
signatures of the individuals as they appear in the most recent certified list
from the Corporation which has been delivered to the Custodian as herein above
provided.

Section 3. Use of Subcustodians

The Custodian may make arrangements, where appropriate, with other banks having
not less than two million dollars aggregate capital, surplus and undivided
profits for the custody of securities. Any such bank selected by the Custodian
to act as subcustodian shall be deemed to be the agent of the Custodian.

The Custodian also may enter into arrangements for the custody of securities
entrusted to its care through foreign branches of United States banks; through
foreign banks, banking institutions or trust companies; through foreign
subsidiaries of United States banks or bank holding companies, or through
foreign securities depositories or clearing agencies (hereinafter also called,
collectively, the "Foreign Subcustodian" or indirectly through an agent,
established under the first paragraph of this section, if and to the extent
permitted by Section 17(f) of the Investment Company Act of 1940 and the rules
promulgated by the Securities and Exchange Commission thereunder, any order
issued by the Securities and Exchange Commission, or any "no-action" letter
received from the staff of the Securities and Exchange Commission. To the extent
the existing provisions of the Custodian Agreement are consistent with the
requirements of such Section, rules, order or no-action letter, they shall apply
to all such foreign custodianships. To the extent such provisions are
inconsistent with or additional requirements are established by such Section,
rules, order or no-action letter, the requirements of such Section, rules, order
or no-action letter will prevail and the parties will adhere to such
requirements; provided, however, in the absence of notification from the
Corporation of any changes or additions to such requirements, the Custodian
shall have no duty or responsibility to inquire as to any such changes or
additions.

Section 4. Receipt and Disbursement of Money

(1) The Custodian shall open and maintain a separate account or accounts in the
name of the Corporation or cause its agent to open and maintain such account or
accounts subject only to checks, drafts or directives by the Custodian pursuant
to the terms of this Agreement. The Custodian or its agent shall hold in such
account or accounts, subject to the provisions hereof, all cash received by

<PAGE>

it from or for the account of the Corporation. The Custodian or its agent shall
make payments of cash to or for the account of the Corporation from such cash
only:

(a) for the purchase of securities for the portfolio of the
Corporation upon the receipt of such securities by the
Custodian or its agent unless otherwise instructed on
behalf of the Corporation;

(b) for the purchase or redemption of shares of capital
stock of the Corporation;

(c) for the payment of interest, dividends, taxes, management
fees, or operating expenses (including, without limitation
thereto, fees for legal, accounting and auditing services);

(d) for payment of distribution fees, commissions, or
redemption fees, if any;

(e) for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed
to by the Corporation held by or to be delivered to the
Custodian;

(f) for payments in connection with the return of securities
loaned by the Corporation upon receipt of such securities or
the reduction of collateral upon receipt of proper notice;

(g) for payments for other proper corporate purposes;

(h) or upon the termination of this Agreement.

Before making any such payment for the purposes permitted under the terms of
items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1) of this section, the
Custodian shall receive and may rely upon a custodian order directing such
payment and stating that the payment is for such a purpose permitted under these
items (a), (b), (c), (d), (e), (f) or (g) and that in respect to item (g), a
copy of a resolution of the Board of Directors or of the Executive Committee of
the Board of Directors of the Corporation signed by an officer of the
Corporation and certified by its Secretary or an Assistant Secretary, specifying
the amount of such payment, setting forth the purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is made.
Notwithstanding the above, for the purposes permitted under items (a) or (f) of
paragraph (1) of this section, the Custodian may rely upon a facsimile order.

(2) The Custodian is hereby appointed the attorney-in-fact of the Corporation to
endorse and collect all checks, drafts or other orders for the payment of money
received by the Custodian for the account of the Corporation and drawn on or to
the order of the Corporation and to deposit same to the account of the
Corporation pursuant to this Agreement.

<PAGE>

Section 5. Receipt of Securities

Except as permitted by the second paragraph of this section, the Custodian or
its agent shall hold in a separate account or accounts, and physically
segregated at all times from those of any other persons, firms or corporations,
pursuant to the provisions hereof, all securities received by it for the account
of the Corporation. The Custodian shall record and maintain a record of all
certificate numbers. Securities so received shall be held in the name of the
Corporation, in the name of an exclusive nominee duly appointed by the Custodian
or in bearer form, as appropriate.

Subject to such rules, regulations or guidelines as the Securities and Exchange
Commission may adopt, the Custodian may deposit all or any part of the
securities owned by the Corporation in a securities depository which includes
any system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, or
such other person as may be permitted by the Commission, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities.

All securities are to be held or disposed of by the Custodian for, and subject
at all times to the instructions of, the Corporation pursuant to the terms of
this Agreement. The Custodian shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such securities, except pursuant
to the directive of the Corporation and only for the account of the Corporation
as set forth in Section 6 of this Agreement.

Section 6. Transfer Exchange, Delivery, etc. of Securities

The Custodian shall have sole power to release or deliver any securities of the
Corporation held by it pursuant to this Agreement. The Custodian agrees to
transfer, exchange or deliver securities held by it or its agent hereunder only:

(a) for sales of such securities for the account of the
Corporation, upon receipt of payment therefor;

(b) when such securities are called, redeemed, retired or
otherwise become payable;

(c) for examination upon the sale of any such securities in accordance with
"street delivery" custom which would include delivery against interim
receipts or other proper delivery receipts;

(d) in exchange for or upon conversion into other securities
alone or other securities and cash whether pursuant to any
plan of

(e) merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;

<PAGE>

(f) for the purpose of exchanging interim receipts or temporary
certificates for permanent certificates;

(g) upon conversion of such securities pursuant to their terms
into other securities;

(h) upon exercise of subscription, purchase or other similar rights
represented by such securities; for loans of such securities by the
Corporation upon receipt of collateral; or

(i) for other proper corporate purposes.

As to any deliveries made by the Custodian pursuant to items (a), (b), (c), (d),
(e), (f), (g) and (h), securities or cash received in exchange therefore shall
be delivered to the Custodian, its agent, or to a securities depository. Before
making any such transfer, exchange or delivery, the Custodian shall receive a
custodian order or a facsimile from the Corporation requesting such transfer,
exchange or delivery and stating that it is for a purpose permitted under
Section 6 (whenever a facsimile is utilized, the Corporation will also deliver
an original signed custodian order) and, in respect to item (i), a copy of a
resolution of the Board of Directors or of the Executive Committee of the Board
of Directors of the Corporation signed by an officer of the Corporation and
certified by its Secretary or an Assistant Secretary, specifying the securities,
setting forth the purpose for which such payment, transfer, exchange or delivery
is to be made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom such transfer, exchange or delivery of such
securities shall be made.

Section 7. Custodian's Acts Without Instructions

Unless and until the Custodian receives a contrary custodian order from the
Corporation, the Custodian shall or shall cause its agent to:

(a) present for payment all coupons and other income items held by the
Custodian or its agent for the account of the Corporation which call
for payment upon presentation and hold all cash received by it upon
such payment for the account of the Corporation;

(b) present for payment all securities held by it or its agent
which mature or when called, redeemed, retired or otherwise
become payable;

(c) ascertain all stock dividends, rights and similar securities to be
issued with respect to any securities held by the Custodian or its
agent hereunder, and to collect and hold for the account of the
Corporation all such securities; and

(d) ascertain all interest and cash dividends to be paid to security
holders with respect to any securities held by the Custodian or its
agent, and to collect and hold such interest and cash dividends for the
account of the Corporation.

<PAGE>

Section 8. Voting and Other Action

Neither the Custodian nor any nominee of the Custodian shall vote any of the
securities held hereunder by or for the account of the Corporation. The
Custodian shall promptly deliver to the Corporation all notices, proxies and
proxy soliciting materials with relation to such securities, such proxies to be
executed by the registered holder of such securities (if registered otherwise
than in the name of the Corporation), but without indicating the manner in which
such proxies are to be voted.

Custodian shall transmit promptly to the Corporation all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Custodian
from issuers of the securities being held for the Corporation. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Corporation all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer.

Section 9. Transfer Taxes

The Corporation shall pay or reimburse the Custodian for any transfer taxes
payable upon transfers of securities made hereunder, including transfers
resulting from the termination of this Agreement. The Custodian shall execute
such certificates in connection with securities delivered to it under this
Agreement as may be required, under any applicable law or regulation, to exempt
from taxation any transfers and/or deliveries of any such securities which may
be entitled to such exemption.

Section 10. Custodian's Reports

The Custodian shall furnish the Corporation as of the close of business each day
a statement showing all transactions and entries for the account of the
Corporation. The books and records of the Custodian pertaining to its actions as
Custodian under this Agreement and securities held hereunder by the Custodian
shall be open to inspection and audit by officers of the Corporation, internal
auditors employed by the Corporation's investment adviser, and independent
auditors employed by the Corporation. The Custodian shall furnish the
Corporation in such form as may reasonably be requested by the Corporation a
report, including a list of the securities held by it in custody for the account
of the Corporation, identification of any subcustodian, and identification of
such securities held by such subcustodian, as of the close of business of the
last business day of each month, which shall be certified by a duly authorized
officer of the Custodian. It is further understood that additional reports may
from time to time be requested by the Corporation. Should any report ever be
filed with any governmental authority pertaining to lost or stolen securities,
the Custodian will concurrently provide the Corporation with a copy of that
report.

<PAGE>

The Custodian also shall furnish such reports on its systems of internal
accounting control as the Corporation may reasonably request from time to time.

Section 11. Concerning Custodian

For its services hereunder the Custodian shall be paid such compensation at such
times as may from time to time be agreed on in writing by the parties hereto in
a Custodian Fee Agreement. The Custodian shall not be liable for any action
taken in good faith upon any custodian order or facsimile herein described or
certified copy of any resolution of the Board of Directors or of the Executive
Committee of the Board of Directors of the Corporation, and may rely on the
genuineness of any such document which it may in good faith believe to have been
validly executed.

The Corporation agrees to indemnify and hold harmless Custodian and its nominee
from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or its nominee in
connection with the performance of this Agreement, except such as may arise from
the Custodian's or its nominee's own negligent action, negligent failure to act
or willful misconduct. Custodian is authorized to charge any account of the
Corporation for such items. In the event of any advance of cash for any purpose
made by Custodian resulting from orders or instructions of the Corporation, or
in the event that Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Corporation shall be
security therefor.

The Custodian shall maintain a standard of care equivalent to that which would
be required of a bailee for hire and shall not be liable for any loss or damage
to the Corporation resulting from participation in a securities depository
unless such loss or damage arises by reason of any negligence, misfeasance, or
willful misconduct of officers or employees of the Custodian, or from its
failure to enforce effectively such rights as it may have against any securities
depository or from use of an agent, unless such loss or damage arises by reason
of any negligence, misfeasance, or willful misconduct of officers or employees
of the Custodian, or from its failure to enforce effectively such rights as it
may have against any agent.

Section 12. Termination and Amendment of Agreement

The Corporation and the Custodian mutually may agree from time to time in
writing to amend, to add to, or to delete from any provision of this Agreement.

The Custodian may terminate this Agreement by giving the Corporation ninety
days' written notice of such termination by registered mail addressed to the
Corporation at its principal place of business.

<PAGE>

The Corporation may terminate this Agreement at any time by written notice
thereof delivered, together with a copy of the resolution of the Board of
Directors authorizing such termination and certified by the Secretary of the
Corporation, by registered mail to the Custodian.

Upon such termination of this Agreement, assets of the Corporation held by the
Custodian shall be delivered by the Custodian to a successor custodian, if one
has been appointed by the Corporation, upon receipt by the Custodian of a copy
of the resolution of the Board of Directors of the Corporation certified by the
Secretary, showing appointment of the successor custodian, and provided that
such successor custodian is a bank or trust company, organized under the laws of
the United States or of any State of the United States, having not less than two
million dollars aggregate capital, surplus and undivided profits. Upon the
termination of this Agreement as a part of the transfer of assets, either to a
successor custodian or otherwise, the Custodian will deliver securities held by
it hereunder, when so authorized and directed by resolution of the Board of
Directors of the Corporation, to a duly appointed agent of the successor
custodian or to the appropriate transfer agents for transfer of registration and
delivery as directed. Delivery of assets on termination of this Agreement shall
be effected in a reasonable, expeditious and orderly manner; and in order to
accomplish an orderly transition from the Custodian to the successor custodian,
the Custodian shall continue to act as such under this Agreement as to assets in
its possession or control. Termination as to each security shall become
effective upon delivery to the successor custodian, its agent, or to a transfer
agent for a specific security for the account of the successor custodian, and
such delivery shall constitute effective delivery by the Custodian to the
successor under this Agreement.

In addition to the means of termination herein before authorized, this Agreement
may be terminated at any time by the vote of a majority of the outstanding
shares of the Corporation and after written notice of such action to the
Custodian.

Section 13. General

Nothing expressed or mentioned in or to be implied from any provision of this
Agreement is intended to, or shall be construed to give any person or
corporation other than the parties hereto, any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any covenant, condition or
provision herein contained, this Agreement and all of the covenants, conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns.

<PAGE>

This Agreement shall be governed by the laws of the State of Minnesota.

This Agreement supersedes all prior agreements between the parties.

IDS NEW DIMENSIONS FUND, INC.

By: /s/ Leslie L. Ogg
Leslie L. Ogg
Vice President

AMERICAN EXPRESS TRUST COMPANY

By: /s/ Chandrakant A. Patel
Vice President

ADDENDUM TO THE CUSTODIAN AGREEMENT

THIS ADDENDUM TO THE CUSTODIAN AGREEMENT dated March 20, 1995 between IDS New
Dimensions Fund, Inc. (the Corporation) and American Express Trust Company (the
Custodian) is made pursuant to Section 12 of the Agreement to reflect the
Corporation's arrangement of investing all of its assets in a master trust.

American Express Financial Corporation (AEFC) serves as administrator for the
Corporation and for the master trust in which the Corporation invests.

The Corporation, the Custodian and AEFC agree as follows:

The parties to this Agreement acknowledge that, so long as the Corporation
invests all of its assets in a master trust, the only assets held by the
Corporation will be units of the master trust. The parties agree that the
Custodian is entitled to rely upon AEFC for an accounting of the number of units
held, purchased or redeemed by the Corporation and to delegate to AEFC
responsibility for all reporting to the Corporation. AEFC agrees to indemnify
and hold harmless the Custodian from all claims and liabilities incurred or
assessed against the Custodian in connection with the accounting for and
reporting to the Corporation by AEFC.

IN WITNESS WHEREOF, the Corporation, the Custodian and AEFC have caused this
addendum to the Custodian Agreement to be executed on May 13, 1996 which shall
remain in effect until terminated by one of the parties on written notice to the
other parties to this Addendum.

IDS NEW DIMENSIONS FUND, INC.

By /s/ Leslie L. Ogg
Leslie L. Ogg
Vice President

AMERICAN EXPRESS TRUST COMPANY

By /s/ Chandrakant A. Patel
Chandrakant A. Patel
Vice President

AMERICAN EXPRESS FINANCIAL CORPORATION

By /s/ Richard W. Kling
Richard W. Kling
Senior Vice President

CUSTODY AGREEMENT

This Custody Agreement is dated May, 1993 between MORGAN STANLEY TRUST COMPANY,
a New York State chartered trust company (the "Custodian"), and IDS Bank & Trust
(the "Customer").

1. The Customer hereby appoints the Custodian as a custodian of securities and
other property owned or under the control of the Customer which are delivered to
the Custodian, or any Subcustodian as appointed below, from time to time to be
held in custody for the benefit of the Customer. The Customer instructs the
Custodian to establish on the books and records of the Custodian an account (the
"Account") in the name of the Customer. The Custodian shall record in the
Account and shall have general responsibility for the safekeeping of all
securities ("Securities"), cash and other property (all such Securities, cash
and other Property being collectively the "Property") of the Customer so
delivered for custody. It is understood that the specific procedures the
Custodian will use in carrying out its responsibilities under this Agreement are
set forth in the procedures manual (the "Procedures Manual") prepared by the
Custodian and delivered to the Customer, as such Procedures Manual may be
amended from time to time by the Custodian by 90 days prior written notice to
the Customer (unless the Customer agrees to a shorter period). The Customer
acknowledges that the Procedures Manual constitutes an integral part of this
Agreement.

2. The Property may be held in custody and deposit accounts that have been
established by the Custodian with one or more domestic or foreign banks, or
through the facilities of one or more clearing agencies or central securities
depositories, as listed on Exhibit A hereto (the "Subcustodians"), as such
Exhibit may be amended from time to time by the Custodian by written notice to
the Customer. The Custodian shall deliver to the Customer such information as is
necessary or appropriate for the Customer to determine that the Customer is in
compliance with Rule 17f-5 promulgated under the Investment Company Act of 1940,
as amended. The Custodian may hold Property for all of its customers with a
Subcustodian in a single account that is identified-as belonging to the
Custodian for the benefit of its customers. Any Subcustodian may hold Property
in a securities depository and may utilize a clearing agency. The Customer
agrees that the Property may be physically held outside the United States. The
Custodian shall not be liable for any loss resulting directly from the physical
presence of any Property in a foreign country (and not by virtue of the actions
of the Custodian or any Subcustodian) including, but not limited to, losses
resulting from nationalization, expropriation, exchange controls or acts of war
or terrorism. Except as provided in the previous sentence, the liability of the
Custodian for losses incurred by the Customer in respect of Securities shall not
be affected by the Custodian's use of Subcustodians.

<PAGE>

3. With respect to Property held by a Subcustodian pursuant to
Section 2:

(a) The Custodian will identify on its books as belonging to
the Customer any Property held by a Subcustodian for the
Custodian's account;

(b) The Custodian will hold Property through a Subcustodian only if (i)
such Subcustodian and any securities depository or clearing agency in
which such Subcustodian holds Property, or any of their creditors, may
not assert any right, charge security interest, lien, encumbrance or
other claim of any kind to such Property except a claim of payment for
its safe custody or administration and (ii) beneficial ownership of
such Property may be freely transferred without the payment of money or
value other than for safe custody or administration;

(c) The Custodian shall require that Property held by the Subcustodian
for the Custodian's account be identified on the Subcustodian's books
as separate from any property held by the Subcustodian other than
property of the Custodian's customers and as held solely for the
benefit of customers of the Custodian; and

(d) In the event that the Subcustodian holds Property in a securities
depository or clearing agency, such Subcustodian will be required by
its agreement with the Custodian to identify on its books such Property
as being held for the account of the Custodian as a custodian for its
customers.

4. The Custodian shall allow the Customer's accountants reasonable access to the
Custodian's records relating to the Property held by the Custodian as such
accountants may reasonably require in connection with their examination of the
Customer's affairs. The Custodian shall also obtain from any Subcustodian (and
will require each Subcustodian to use reasonable efforts to obtain from any
securities depository or clearing agency in which it deposits Property) an
undertaking, to the extent consistent with local practice and the laws of the
jurisdiction or jurisdictions to which such Subcustodian, securities depository
or clearing agency is subject, to permit independent public accountants such
reasonable access to the records of such Subcustodian, securities depository or
clearing agency as may be reasonably required in connection with the examination
of the Customer's affairs or to take such other action as the Custodian in its
judgment may deem sufficient to ensure such reasonable access.

5. The Custodian shall provide such reports and other information to the
Customer and to such persons as the Customer directs as the Custodian and the
Customer may agree from time to time, including such reports which are described
in the Procedures Manual.

<PAGE>

6. The Custodian shall make or cause any Subcustodian to make payments from
monies being held in the Account only:

(a) upon the purchase of Securities and then, to the extent consistent
with practice in the jurisdiction in which settlement occurs, upon the
delivery of such Securities;

(b) for payments to be made in connection with the
conversion, exchange or surrender of Securities;

(d) upon a request of the Customer that monies be exchanged for or used
to purchase monies denominated in a different currency and then only
upon receipt of such exchanged or purchased monies;

(e) as provided in Section 8 and 12 hereof;

(f) upon termination of this Custody Agreement as hereinafter
set forth; and

(g) for any other purpose upon receipt of explicit instructions of the
Customer accompanied by evidence reasonably acceptable to the Custodian
as to the authorization of such payment.

Except as provided in the last two sentences of this Section 6 and as provided
in Section 8, all payments pursuant to this Section 6 will be made only upon
receipt by the Custodian of Authorized Instructions (as hereinafter defined)
from the Customer which shall specify the purpose for which the payment is to be
made. In the event that it is not possible to make a payment in accordance with
Authorized Instructions of the Customer, the Custodian shall proceed in
accordance with the procedures set forth in the Procedures Manual. Any payment
pursuant to subsection (f) of this Section 6 will be made in accordance with
Section 16.

7. The Custodian shall make or cause any Subcustodian to make
transfers, exchanges or deliveries of Securities only:

(a) upon sale of such Securities and then, to the extent consistent
with practice in the jurisdiction in which settlement occurs, upon
receipt of payment therefor;

(b) upon exercise of conversion, subscription, purchase, exchange or
other similar rights pertaining to such Securities and, if applicable
to such exercise and if consistent with practice in the applicable
jurisdiction, only on receipt of substitute or additional securities to
be received upon such exercise;

(d) upon the termination of this Custody Agreement as
hereinafter set forth; and

<PAGE>

(e) for any other purpose upon receipt of explicit instructions of the
Customer accompanied by evidence reasonably acceptable to the Custodian
as to the authorization of such transfer, exchange or delivery.

Except as provided in the last two sentences of this Section 7 and as provided
in Section 8, all transfers, exchanges or deliveries of Securities pursuant to
this Section 7 will be made only upon receipt by the Custodian of Authorized
Instructions of the Customer which shall specify the purpose for which the
transfer, exchange or delivery is to be made. In the event that it is not
possible to transfer Securities in accordance with Authorized Instructions of
the Customer, the Custodian shall proceed in accordance with the procedures set
forth in the Procedures Manual. Any transfer or delivery pursuant to subsection
(d) of this Section 7 will be made in accordance with Section 16.

8. In the absence of Authorized Instructions from the Customer to
the contrary, the Custodian may, and may authorize any Subcustodian
to:

(a) make payments to itself or others for expenses of handling Property
or other similar items relating to its duties under this Agreement,
provided that all such payments shall be accounted for to the Customer;

(b) receive and collect all income and principal with respect
to Securities and to credit cash receipts to the Account;

(c) exchange Securities when the exchange is purely ministerial
(including, without limitation, the exchange of interim receipts or
temporary securities for securities in definitive form and the exchange
of warrants, or other documents of entitlement to securities, for the
securities themselves);

(d) surrender Securities at maturity or when called for
redemption upon receiving payment therefor;

(e) execute in the Customer's name such ownership and other
certificates as may be required to obtain the payment of income from
Securities:

(f) pay or cause to be paid, from the Account, any and all taxes and
levies in the nature of taxes imposed on Property by any governmental
authority in connection with custody of and transactions in such
Property;

(g) endorse for collection, in the name of the Customer,
checks, drafts and other negotiable instruments; and

(h) in general, attend to all nondiscretionary details in connection
with the custody, sale, purchase, transfer and other dealings with the
Property.

<PAGE>

9. "Authorized Instructions" of the Customer shall mean instructions received by
telecopy, tested telex, electronic link or other electronic means or by such
other means as may be agreed in writing in advance between the Customer and the
Custodian. The Custodian shall be entitled to act, and shall have no liability
for acting, in accordance with the terms of this Agreement or upon any
instructions, notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by one or more
persons which the Customer has previously identified to the Custodian as
authorized to act on the Customer's behalf.

10. Securities which must be held in registered form may be registered in the
name of the Custodian's nominee or, in the case of Securities in the custody of
an entity other than the Custodian, in the name of such entity's nominee. The
Customer agrees to hold the Custodian and Subcustodians and any such nominee
harmless from any liability arising out of any such person acting as a holder of
record of such Securities. The Custodian may without notice to the Customer
cause any Securities to cease to be registered in the name of any such nominee
and to be registered in the name of the Customer.

11. All cash received by the Custodian for the Account shall be held by the
Custodian as a short-term credit balance in favor of the Customer and, if the
Custodian and the Customer have agreed in writing in advance that such credit
balances shall bear interest, the Customer shall earn interest at the rates and
times as agreed between the Custodian and the Customer. The Customer understands
that any such credit balances will not be accompanied by the benefit of any
governmental insurance.

12. From time to time, the Custodian may arrange or extend short-term credit for
the Customer which is (i) necessary in connection with payment and clearance of
securities and foreign exchange transactions or (ii) pursuant to an agreed
schedule, as and if set forth in the Procedures Manual, of credits for dividends
and interest payments on Securities. All such extensions of credit shall be
repayable by the Customer on demand. The Custodian shall be entitled to charge
the Customer interest for any such credit extension at rates to be agreed upon
from time to time. In addition to any other remedies available, the Custodian
shall be entitled to a right of set-off against the Property to satisfy the
repayment of such credit extensions and the payment of accrued interest thereon.
The Custodian may act as the Customer's agent or act as a principal in foreign
exchange transactions at such rates as are agreed from time to time between the
Customer and the Custodian.

13. The Customer represents that (i) the execution, delivery and performance of
this Agreement (including, without limitation, the ability to obtain the
short-term extensions of credit in accordance with Section 12) are within the
Customer's power and authority and have been duly authorized by all requisite
action (corporate or otherwise) and (ii) this Agreement and each extension of
short-term credit extended or arranged for the benefit of the Customer in
accordance with Section 12 will at all times constitute a legal, valid and
binding obligation of the Customer and be enforceable

<PAGE>

against the Customer in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

The Custodian represents that the execution, delivery and performance of this
Agreement is within the Custodian's power and authority and has been duly
authorized by all requisite action of the Custodian. This Agreement constitutes
the legal, valid and binding obligation of the Custodian enforceable against the
Custodian in accordance with its terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
in general and subject to the effect of general principles of equity (regardless
of whether considered in a proceeding in equity or at law).

14. The Custodian shall be responsible for the performance of only such duties
as are set forth in this Agreement or the Procedures Manual or contained in
Authorized Instructions given to the Custodian which are not contrary to the
provisions of any relevant law or regulation. The Custodian shall not be liable
to the Customer or to any other person for any action taken or omitted to be
taken by it in connection with this Agreement in the absence of negligence or
willful misconduct on the part of the Custodian. Upon Custodian, the Customer
agrees to deliver to the Custodian a duly executed power of attorney, in form
and substance satisfactory to the Custodian, authorizing the Custodian to take
any action or execute any instrument on behalf of the Customer as necessary or
advisable to accomplish the purposes of this Agreement.

15. The Customer agrees to pay to the Custodian from time to time such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon from time to time and the Custodian's out-of-pocket or incidental
expenses. The Customer hereby agrees to hold the Custodian harmless from any
liability or loss resulting from any taxes or other governmental charges, and
any expenses related thereto, which may be imposed or assessed with respect to
the Account or any Property held therein. The Custodian is and any Subcustodians
are authorized to charge the Account for such items and the Custodian shall have
a lien, charge and security interest on any and all Property for any amount
owing to the Custodian from time to time under this Agreement. Except as set
forth in the previous sentence, or otherwise permitted pursuant to the terms of
this agreement, the Custodian shall not pledge, assign, hypothecate or otherwise
encumber Property without Authorized Instructions; it being understood that a
Subcustodian will generally retain a lien against securities which the
Subcustodian has purchased for the Account but for which the Customer has not
yet paid. If the Customer is a U.S. person as defined in Rule 902 promulgated by
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended (the "Act"), the Customer recognizes that, in connection with the
Customer's election from time to time to participate in distributions of
securities (whether pursuant to rights offerings, warrant subscriptions,
mergers, reorganizations or otherwise) which have not been registered pursuant
to the Act, the Custodian may inform the issuer and its agents that the acquire

<PAGE>

of the securities is a U.S. person. The Custodian shall not be responsible to
the Customer for the consequences of any issuer's or agent's refusal to permit
the Customer to acquire such securities, and the Customer shall hold the
Custodian harmless from liability to the issuer and its agents in connection
with any such election by the Customer.

16. This Agreement may be terminated by the Customer or the Custodian by 90 days
written notice to the other, sent by registered mail. If notice of termination
is given, the Customer shall, within 60 days following the giving of such
notice, deliver to the Custodian a statement in writing specifying the successor
custodian or other person to whom the Custodian shall transfer the Property. In
either event the Custodian, subject to the satisfaction of any lien it may have,
will transfer the Property to the person so specified. If the Custodian does not
receive such statement the Custodian, at its election, may transfer the Property
to a bank or trust company established under the laws of the United States or
any state thereof to be held and disposed of pursuant to the provisions of this
Agreement or may continue to hold the Property until such a statement is
delivered to the Custodian. In such event the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian remains
in possession of any Property and the provisions of this Agreement relating to
the duties and obligations of the Custodian shall remain in full force and
effect; provided, however, that the Custodian shall no longer settle any
transactions in securities for the Account.

17. The Custodian, its agents and employees will maintain the confidentiality of
information concerning the Property held in the Account, including in dealings
with affiliates of the Custodian. In the event the Custodian or any Subcustodian
is requested or required to disclose any confidential information concerning the
Property, the Custodian shall to the extent practicable and legally permissible,
promptly notify the Customer of such request or requirement so that the Customer
may seek a protective order or waive the Custodian's or such Subcustodian's
compliance with this Section 17. In the absence of such a waiver, if the
Custodian or such Subcustodian is compelled, in the opinion of its counsel, to
disclose any confidential information, the Custodian or such Subcustodian may
disclose such information to such persons as, in the opinion of counsel, is so
required.

18. Any notice or other communication from the Customer to the Custodian, unless
otherwise provided by this Agreement, shall be sent by certified or registered
mail to Morgan Stanley Trust Company, One Pierrepont Plaza, Brooklyn, New York,
11201, Attention: President, and any notice from the Custodian to the Customer
is to be mailed postage prepaid, addressed to the Customer at the address
appearing below, or as it may hereafter be changed on the Custodian's records in
accordance with notice from the Customer.

<PAGE>

19. The Custodian may assign all of its rights and obligations hereunder to any
other entity which is qualified to act as custodian under the terms of this
Agreement and majority-owned, directly or indirectly, by Morgan Stanley Group
Inc., and upon the assumption of the rights and obligations hereunder by such
entity, such entity shall succeed to all of the rights and obligations of, and
be substituted for, the Custodian hereunder as if such entity had been
originally named as custodian herein. The Custodian shall give prompt written
notice to the Customer upon the effectiveness of any such assignment.

This Agreement shall bind the successors and assigns of the Customer and the
Custodian and shall be governed by the laws of the State of New York applicable
to contracts executed in and to be performed in that state.

------------------------

By /s/ Mark Ellis
Name: Mark Ellis
Title: Vice President

Address for record: IDS Trust
1200 Northstar West
P.O. Box 534
Minneapolis, MN 55440-0534
------------------------

Accepted:

MORGAN STANLEY TRUST COMPANY

By /s/ David P. Roccato
Authorized Signature
Roccato

TRANSFER AGENCY AGREEMENT

AGREEMENT dated as of March 20, 1995, between IDS New Dimensions Fund, Inc. (the
"Fund"), a Minnesota corporation, and American Express Financial Corporation
(the "Transfer Agent"), a Delaware corporation.

In consideration of the mutual promises set forth below, the Fund and the
Transfer Agent agree as follows:

1. Appointment of the Transfer Agent. The Fund hereby appoints the Transfer
Agent, as transfer agent for its shares and as shareholder servicing agent for
the Fund, and the Transfer Agent accepts such appointment and agrees to perform
the duties set forth below.

2. Compensation. The Fund will compensate the Transfer Agent for
the performance of its obligations as set forth in Schedule A.
Schedule A does not include out-of-pocket disbursements of the
Transfer Agent for which the Transfer Agent shall be entitled to
bill the Fund separately.

The Transfer Agent will bill the Fund monthly. The fee provided for hereunder
shall be paid in cash by the Fund to American Express Financial Corporation
within five (5) business days after the last day of each month.

Out-of-pocket disbursements shall include, but shall not be limited to, the
items specified in Schedule B. Reimbursement by the Fund for expenses incurred
by the Transfer Agent in any month shall be made as soon as practicable after
the receipt of an itemized bill from the Transfer Agent.

Any compensation jointly agreed to hereunder may be adjusted from time to time
by attaching to this Agreement a revised Schedule A, dated and signed by an
officer of each party.

3. Documents. The Fund will furnish from time to time such
certificates, documents or opinions as the Transfer Agent deems to
be appropriate or necessary for the proper performance of its
duties.

4. Representations of the Fund and the Transfer Agent.

(a) The Fund represents to the Transfer Agent that all outstanding shares are
validly issued, fully paid and non-assessable by the Fund. When shares are
hereafter issued in accordance with the terms of the Fund's Articles of
Incorporation and its prospectus, such shares shall be validly issued, fully
paid and non-assessable by the Fund.

(b) The Transfer Agent represents that it is registered under Section 17A(c) of
the Securities Exchange Act of 1934. The Transfer Agent agrees to maintain the
necessary facilities, equipment and personnel to perform its duties and
obligations under this agreement and to comply with all applicable laws.

<PAGE>

5. Duties of the Transfer Agent. The Transfer Agent shall be
responsible, separately and through its subsidiaries or affiliates,
for the following functions:

(a) Sale of Fund Shares.

(1) On receipt of an application and payment, wired instructions and payment, or
payment identified as being for the account of a shareholder, the Transfer Agent
will deposit the payment, prepare and present the necessary report to the
Custodian and record the purchase of shares in a timely fashion in accordance
with the terms of the prospectus. All shares shall be held in book entry form
and no certificate shall be issued unless the Fund is permitted to do so by the
prospectus and the purchaser so requests.

(2) On receipt of notice that payment was dishonored, the Transfer Agent shall
stop redemptions of all shares owned by the purchaser related to that payment,
place a stop payment on any checks that have been issued to redeem shares of the
purchaser and take such other action as it deems appropriate.

(b) Redemption of Fund Shares. On receipt of instructions to redeem shares in
accordance with the terms of the Fund's prospectus, the Transfer Agent will
record the redemption of shares of the Fund, prepare and present the necessary
report to the Custodian and pay the proceeds of the redemption to the
shareholder, an authorized agent or legal representative upon the receipt of the
monies from the Custodian.

(c) Transfer or Other Change Pertaining to Fund Shares. On receipt of
instructions or forms acceptable to the Transfer Agent to transfer the shares to
the name of a new owner, change the name or address of the present owner or take
other legal action, the Transfer Agent will take such action as is requested.

(d) Exchange of Fund Shares. On receipt of instructions to exchange the shares
of the Fund for the shares of another fund in the IDS MUTUAL FUND GROUP or other
American Express Financial Corporation product in accordance with the terms of
the prospectus, the Transfer Agent will process the exchange in the same manner
as a redemption and sale of shares.

(e) Right to Seek Assurance. The Transfer Agent may refuse to transfer, exchange
or redeem shares of the Fund or take any action requested by a shareholder until
it is satisfied that the requested transaction or action is legally authorized
or until it is satisfied there is no basis for any claims adverse to the
transaction or action. It may rely on the provisions of the Uniform Act for the
Simplification of Fiduciary Security Transfers or the Uniform Commercial Code.
The Fund shall indemnify the Transfer Agent for any act done or omitted to be
done in reliance on such laws or for refusing to transfer, exchange or redeem
shares or taking any requested action if it acts on a good faith belief that the
transaction or action is illegal or unauthorized.

(f) Shareholder Records, Reports and Services.

<PAGE>

(1) The Transfer Agent shall maintain all shareholder accounts, which shall
contain all required tax, legally imposed and regulatory information; shall
provide shareholders, and file with federal and state agencies, all required tax
and other reports pertaining to shareholder accounts; shall prepare shareholder
mailing lists; shall cause to be printed and mailed all required prospectuses,
annual reports, semiannual reports, statements of additional information (upon
request), proxies and other mailings to shareholders; and shall cause proxies to
be tabulated.

(2) The Transfer Agent shall respond to all valid inquiries related to its
duties under this Agreement.

(3) The Transfer Agent shall create and maintain all records in accordance with
all applicable laws, rules and regulations, including, but not limited to, the
records required by Section 31(a) of the Investment Company Act of 1940.

(g) Dividends and Distributions. The Transfer Agent shall prepare and present
the necessary report to the Custodian and shall cause to be prepared and
transmitted the payment of income dividends and capital gains distributions or
cause to be recorded the investment of such dividends and distributions in
additional shares of the Fund or as directed by instructions or forms acceptable
to the Transfer Agent.

(h) Confirmations and Statements. The Transfer Agent shall confirm each
transaction either at the time of the transaction or through periodic reports as
may be legally permitted.

(i) Lost or Stolen Checks. The Transfer Agent will replace lost or stolen checks
issued to shareholders upon receipt of proper notification and will maintain any
stop payment orders against the lost or stolen checks as it is economically
desirable to do.

(j) Reports to Fund. The Transfer Agent will provide reports pertaining to the
services provided under this Agreement as the Fund may request to ascertain the
quality and level of services being provided or as required by law.

(k) Other Duties. The Transfer Agent may perform other duties for
additional compensation if agreed to in writing by the parties to
this Agreement.

6. Ownership and Confidentiality of Records. The Transfer Agent agrees that all
records prepared or maintained by it relating to the services to be performed by
it under the terms of this Agreement are the property of the Fund and may be
inspected by the Fund or any person retained by the Fund at reasonable times.
The Fund and Transfer Agent agree to protect the confidentiality of those
records.

7. Action by Board and Opinion of Fund's Counsel. The Transfer
Agent may rely on resolutions of the Board of Directors or the
Executive Committee of the Board of Directors and on opinion of
counsel for the Fund.

<PAGE>

8. Duty of Care. It is understood and agreed that, in furnishing the Fund with
the services as herein provided, neither the Transfer Agent, nor any officer,
director or agent thereof shall be held liable for any loss arising out of or in
connection with their actions under this Agreement so long as they act in good
faith and with due diligence, and are not negligent or guilty of any willful
misconduct. It is further understood and agreed that the Transfer Agent may rely
upon information furnished to it reasonably believed to be accurate and
reliable. In the event the Transfer Agent is unable to perform its obligations
under the terms of this Agreement because of an act of God, strike or equipment
or transmission failure reasonably beyond its control, the Transfer Agent shall
not be liable for any damages resulting from such failure.

9. Term and Termination. This Agreement shall become effective on the date first
set forth above (the "Effective Date") and shall continue in effect from year to
year thereafter as the parties may mutually agree; provided that either party
may terminate this Agreement by giving the other party notice in writing
specifying the date of such termination, which shall be not less than 60 days
after the date of receipt of such notice. In the event such notice is given by
the Fund, it shall be accompanied by a vote of the Board of Directors, certified
by the Secretary, electing to terminate this Agreement and designating a
successor transfer agent or transfer agents. Upon such termination and at the
expense of the Fund, the Transfer Agent will deliver to such successor a
certified list of shareholders of the Fund (with name, address and taxpayer
identification or Social Security number), a historical record of the account of
each shareholder and the status thereof, and all other relevant books, records,
correspondence, and other data established or maintained by the Transfer Agent
under this Agreement in the form reasonably acceptable to the Fund, and will
cooperate in the transfer of such duties and responsibilities, including
provisions for assistance from the Transfer Agent's personnel in the
establishment of books, records and other data by such successor or successors.

10. Amendment. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties.

11. Subcontracting. The Fund agrees that the Transfer Agent may subcontract for
certain of the services described under this Agreement with the understanding
that there shall be no diminution in the quality or level of the services and
that the Transfer Agent remains fully responsible for the services. Except for
out-of-pocket expenses identified in Schedule B, the Transfer Agent shall bear
the cost of subcontracting such services, unless otherwise agreed by the
parties.

12. Miscellaneous.

(a) This Agreement shall extend to and shall be binding upon the parties hereto,
and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable without the written consent of the other
party.

<PAGE>

(b) This Agreement shall be governed by the laws of the State of
Minnesota.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers as of the day and year written above.

IDS NEW DIMENSIONS FUND, INC.

By: /s/ Leslie L. Ogg
Leslie L. Ogg
Vice President

AMERICAN EXPRESS FINANCIAL CORPORATION

By: /s/ Janis E. Miller
Vice President

<PAGE>

Schedule A

IDS NEW DIMENSIONS FUND, INC.

TRANSFER AGENT FEE

Effective the 20th day of March, 1995, the Annual Per Account Fee
accrued daily and payable monthly is revised as follows:

CLASS FEE

A $ 15

B 16

Y 15

<PAGE>

Schedule B
OUT-OF-POCKET EXPENSES

The Fund shall reimburse the Transfer Agent monthly for the following
out-of-pocket expenses:

o typesetting, printing, paper, envelopes, postage and return
postage for proxy soliciting material, and proxy tabulation costs

o printing, paper, envelopes and postage for dividend notices, dividend checks,
records of account, purchase confirmations, exchange confirmations and exchange
prospectuses, redemption confirmations, redemption checks, confirmations on
changes of address and any other communication required to be sent to
shareholders

o typesetting, printing, paper, envelopes and postage for prospectuses, annual
and semiannual reports, statements of additional information, supplements for
prospectuses and statements of additional information and other required
mailings to shareholders

o stop orders

o outgoing wire charges

o other expenses incurred at the request or with the consent of the
Fund

Shareholder Service Agreement

This agreement is between IDS New Dimensions Fund, Inc. (the "Fund") and
American Express Financial Advisors Inc., the principal underwriter of the Fund,
for services to be provided to shareholders by personal financial advisors and
other servicing agents. It is effective on the first day the Fund offers
multiple classes of shares.

American Express Financial Advisors represents that shareholders consider their
financial advisor or servicing agent a significant factor in their satisfaction
with their investment and, to help retain financial advisors or servicing
agents, it is necessary for the Fund to pay annual servicing fees to financial
advisors and other servicing agents.

American Express Financial Advisors represents that fees paid to financial
advisors will be used by financial advisors to help shareholders thoughtfully
consider their investment goals and objectively monitor how well the goals are
being achieved. As principal underwriter, American Express Financial Advisors
will use its best efforts to assure that other distributors provide comparable
services to shareholders for the servicing fees received.

American Express Financial Advisors agrees to monitor the services provided by
financial advisors and servicing agents, to measure the level and quality of
services provided, to provide training and support to financial advisors and
servicing agents and to devise methods for rewarding financial advisors and
servicing agents who achieve an exemplary level and quality of services.

The Fund agrees to pay American Express financial advisors and other servicing
agents 0.15 percent of the net asset value for each shareholder account assigned
to a financial advisor or servicing agent that holds either Class A or Class B
shares. In addition, the Fund agrees to pay American Express Financial Advisors'
costs to monitor, measure, train and support services provided by financial
advisors or servicing agents up to 0.025 percent of the net asset value for each
shareholder account assigned to a financial advisor or servicing agent that
holds either Class A or Class B shares. The Fund agrees to pay American Express
Financial Advisors in cash within five (5) business days after the last day of
each month.

American Express Financial Advisors agrees to provide the Fund, prior to the
beginning of the calendar year, a budget covering its expected costs to monitor,
measure, train and support services and a quarterly report of its actual
expenditures. American Express Financial Advisors agrees to meet with
representatives of the Fund at their request to provide information as may be
reasonably necessary to evaluate its performance under the terms of this
agreement.

American Express Financial Advisors agrees that if, at the end of any month, the
expenses of the Fund, including fees under this agreement and any other
agreement between the Fund and American

<PAGE>

Express Financial Advisors or American Express Financial Corporation, but
excluding taxes, brokerage commissions and charges in connection with the
purchase and sale of assets exceed the most restrictive applicable state expense
limitation for the Fund's current fiscal year, the Fund shall not pay fees and
expenses under this agreement to the extent necessary to keep the Fund's
expenses from exceeding the limitation, it being understood that American
Express Financial Advisors will assume all unpaid expenses and bill the Fund for
them in subsequent months but in no event can the accumulation of unpaid
expenses or billing be carried past the end of the Fund's fiscal year.

This agreement shall continue in effect for a period of more than one year so
long as it is reapproved at least annually at a meeting called for the purpose
of voting on the agreement by a vote, in person, of the members of the Board who
are not interested persons of the Fund and have no financial interest in the
operation of the agreement, and of all the members of the Board.

This agreement may be terminated at any time without payment of any penalty by a
vote of a majority of the members of the Board who are not interested persons of
the Fund and have no financial interest in the operation of the agreement or by
American Express Financial Advisors. The agreement will terminate automatically
in the event of its assignment as that term is defined in the Investment Company
Act of 1940. This agreement may be amended at any time provided the amendment is
approved in the same manner the agreement was initially approved and the
amendment is agreed to by American Express Financial Advisors.

Approved this 20th day of March, 1995.

IDS NEW DIMENSIONS FUND, INC.

/s/ Leslie L. Ogg
Leslie L. Ogg
Vice President

AMERICAN EXPRESS FINANCIAL ADVISORS INC.

/s/ Janis E. Miller
Vice President

ADMINISTRATIVE SERVICES AGREEMENT

AGREEMENT made the 20th day of March, 1995, by and between IDS New Dimensions
Fund, Inc. (the "Fund"), a Minnesota corporation, and American Express Financial
Corporation, a Delaware corporation.

Part One: SERVICES

(1) The Fund hereby retains American Express Financial Corporation, and American
Express Financial Corporation hereby agrees, for the period of this Agreement
and under the terms and conditions hereinafter set forth, to furnish the Fund
continuously with all administrative, accounting, clerical, statistical,
correspondence, corporate and all other services of whatever nature required in
connection with the administration of the Fund as provided under this Agreement;
and to pay such expenses as may be provided for in Part Three hereof; subject
always to the direction and control of the Board of Directors, the Executive
Committee and the authorized officers of the Fund. American Express Financial
Corporation agrees to maintain an adequate organization of competent persons to
provide the services and to perform the functions herein mentioned. American
Express Financial Corporation agrees to meet with any persons at such times as
the Board of Directors deems appropriate for the purpose of reviewing American
Express Financial Corporation's performance under this Agreement.

(2) The Fund agrees that it will furnish to American Express Financial
Corporation any information that the latter may reasonably request with respect
to the services performed or to be performed by American Express Financial
Corporation under this Agreement.

(3) It is understood and agreed that in furnishing the Fund with the services as
herein provided, neither American Express Financial Corporation, nor any
officer, director or agent thereof shall be held liable to the Fund or its
creditors or shareholders for errors of judgment or for anything except willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the terms of this
Agreement. It is further understood and agreed that American Express Financial
Corporation may rely upon information furnished to it reasonably believed to be
accurate and reliable.

Part Two: COMPENSATION FOR SERVICES

(1) The Fund agrees to pay to American Express Financial Corporation, and
American Express Financial Corporation covenants and agrees to accept from the
Fund in full payment for the services furnished, based on the net assets of the
Fund as set forth in the following table:

<PAGE>

Assets Annual Rate At
(Billions) Each Asset Level

First $1 0.050%
Next 1 0.045
Next 1 0.040
Next 3 0.035
Over 6 0.030

The administrative fee for each calendar day of each year shall be equal to
1/365th (1/366th in each leap year) of the total amount computed. The
computation shall be made for each such day on the basis of net assets as of the
close of business of the full business day two (2) business days prior to the
day for which the computation is being made. In the case of the suspension of
the computation of net asset value, the administrative fee for each day during
such suspension shall be computed as of the close of business on the last full
business day on which the net assets were computed. As used herein, "net assets"
as of the close of a full business day shall include all transactions in shares
of the Fund recorded on the books of the Fund for that day.

(2) The administrative fee shall be paid on a monthly basis and, in the event of
the termination of this Agreement, the administrative fee accrued shall be
prorated on the basis of the number of days that this Agreement is in effect
during the month with respect to which such payment is made.

(3) The administrative fee provided for hereunder shall be paid in cash by the
Fund to American Express Financial Corporation within five (5) business days
after the last day of each month.

Part Three: ALLOCATION OF EXPENSES

(1) The Fund agrees to pay:

(a) Administrative fees payable to American Express Financial Corporation for
its services under the terms of this Agreement.

(b) Taxes.

(d) Fees and expenses of attorneys (i) it employs in matters not involving the
assertion of a claim by a third party against the Fund, its directors and
officers, (ii) it employs in conjunction with a claim asserted by the Board of
Directors against American Express Financial Corporation, except that American
Express Financial Corporation shall reimburse the Fund for such fees and
expenses if it is ultimately determined by a court of competent jurisdiction, or
American Express Financial Corporation agrees, that it is liable in whole or in
part to the Fund, and (iii) it employs to assert a claim against a third party.

<PAGE>

(e) Fees paid for the qualification and registration for public sale of the
securities of the Fund under the laws of the United States and of the several
states in which such securities shall be offered for sale.

(f) Office expenses which shall include a charge for occupancy, insurance on the
premises, furniture and equipment, telephone, telegraph, electronic information
services, books, periodicals, published services, and office supplies used by
the Fund, equal to the cost of such incurred by American Express Financial
Corporation.

(g) Fees of consultants employed by the Fund.

(h) Directors, officers and employees expenses which shall include fees,
salaries, memberships, dues, travel, seminars, pension, profit sharing, and all
other benefits paid to or provided for directors, officers and employees,
directors and officers liability insurance, errors and omissions liability
insurance, worker's compensation insurance and other expenses applicable to the
directors, officers and employees, except the Fund will not pay any fees or
expenses of any person who is an officer or employee of American Express
Financial Corporation or its affiliates.

(i) Filing fees and charges incurred by the Fund in connection with filing any
amendment to its articles of incorporation, or incurred in filing any other
document with the State of Minnesota or its political subdivisions.

(j) Organizational expenses of the Fund.

(k) One-half of the Investment Company Institute membership dues charged jointly
to the IDS MUTUAL FUND GROUP and American Express Financial Corporation.

(l) Expenses properly payable by the Fund, approved by the Board of
Directors.

(2) American Express Financial Corporation agrees to pay all expenses associated
with the services it provides under the terms of this Agreement. Further,
American Express Financial Corporation agrees that if, at the end of any month,
the expenses of the Fund under this Agreement and any other agreement between
the Fund and American Express Financial Corporation, but excluding those
expenses set forth in (1)(b) of this Part Three, exceed the most restrictive
applicable state expenses limitation, the Fund shall not pay those expenses set
forth in (1)(a) and (c) through (m) of this Part Three to the extent necessary
to keep the Fund's expenses from exceeding the limitation, it being understood
that American Express Financial Corporation will assume all unpaid expenses and
bill the Fund for them in subsequent months but in no event can the accumulation
of unpaid expenses or billing be carried past the end of the Fund's fiscal year.

<PAGE>

Part Four: MISCELLANEOUS

(1) American Express Financial Corporation shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this Agreement,
shall have no authority to act for or represent the Fund.

(2) A "full business day" shall be as defined in the By-laws.

(3) The Fund recognizes that American Express Financial Corporation now renders
and may continue to render investment advice and other services to other
investment companies and persons which may or may not have investment policies
and investments similar to those of the Fund and that American Express Financial
Corporation manages its own investments and/or those of its subsidiaries.
American Express Financial Corporation shall be free to render such investment
advice and other services and the Fund hereby consents thereto.

(4) Neither this Agreement nor any transaction had pursuant hereto shall be
invalidated or in anyway affected by the fact that directors, officers, agents
and/or shareholders of the Fund are or may be interested in American Express
Financial Corporation or any successor or assignee thereof, as directors,
officers, stockholders or otherwise; that directors, officers, stockholders or
agents of American Express Financial Corporation are or may be interested in the
Fund as directors, officers, shareholders, or otherwise; or that American
Express Financial Corporation or any successor or assignee, is or may be
interested in the Fund as shareholder or otherwise, provided, however, that
neither American Express Financial Corporation, nor any officer, director or
employee thereof or of the Fund, shall sell to or buy from the Fund any property
or security other than shares issued by the Fund, except in accordance with
applicable regulations or orders of the United States Securities and Exchange
Commission.

(5) Any notice under this Agreement shall be given in writing, addressed, and
delivered, or mailed postpaid, to the party to this Agreement entitled to
receive such, at such party's principal place of business in Minneapolis,
Minnesota, or to such other address as either party may designate in writing
mailed to the other.

(6) American Express Financial Corporation agrees that no officer, director or
employee of American Express Financial Corporation will deal for or on behalf of
the Fund with himself as principal or agent, or with any corporation or
partnership in which he may have a financial interest, except that this shall
not prohibit officers, directors or employees of American Express Financial
Corporation from having a financial interest in the Fund or in American Express
Financial Corporation.

(7) The Fund agrees that American Express Financial Corporation may subcontract
for certain of the services described under this Agreement with the
understanding that there shall be no diminution in the quality or level of the
services and that American Express Financial Corporation remains fully
responsible for the services.

<PAGE>

(8) This Agreement shall extend to and shall be binding upon the parties hereto,
and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable without the written consent of the other
party. This Agreement shall be governed by the laws of the State of Minnesota.

Part Five: RENEWAL AND TERMINATION

(1) This Agreement shall become effective on the date first set forth above (the
"Effective Date") and shall continue in effect from year to year thereafter as
the parties may mutually agree; provided that either party may terminate this
Agreement by giving the other party notice in writing specifying the date of
such termination, which shall be not less than 60 days after the date of receipt
of such notice.

(2) This Agreement may not be amended or modified in any manner except by a
written agreement executed by both parties.

IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as
of the day and year first above written.

IDS NEW DIMENSIONS FUND, INC.

By: /s/ Leslie L. Ogg
Leslie L. Ogg
Vice President

AMERICAN EXPRESS FINANCIAL CORPORATION

By: /s/ Janis E. Miller
Vice President

GROWTH TRENDS PORTFOLIO

AGREEMENT AND DECLARATION OF UNITHOLDERS

This AGREEMENT AND DECLARATION OF UNITHOLDERS is made at Minneapolis, Minnesota,
as of this 13th day of May, 1996 by the holders of beneficial interest of Growth
Trends Portfolio, a separate series of Growth Trust.

WITNESS that

WHEREAS, the Declaration of Trust for Growth Trust provides for no
restrictions on the transfer of units therein; and

WHEREAS, the holders of units in Growth Trends Portfolio desire to restrict the
transfer of their units in Growth Trends Portfolio;

NOW, THEREFORE, the undersigned hereby declare that they will not transfer any
units in Growth Trends Portfolio held by them without the prior written consent
of the other unitholders holding at least two thirds of the Growth Trends
Portfolio's units outstanding (excluding the units of the holder seeking to
effect the transfer) and that any attempted transfer in violation of this
agreement shall be null and void. This agreement shall not affect the rights of
any unitholder to redeem units in Growth Trends Portfolio as provided for in the
Declaration of Trust. The undersigned also acknowledge that the remedy of
damages for the violation of this agreement would be inadequate and therefore
further agree that this agreement shall be enforceable solely by the remedy of
specific performance.

IDS NEW DIMENSIONS FUND, INC.

/s/ Leslie L. Ogg
Leslie L. Ogg
Vice President and General Counsel

STRATEGIST GROWTH FUND, INC.
Strategist Growth Trends Fund

/s/ James A. Mitchell
James A. Mitchell
President

Class Y Shareholder Service Agreement

This agreement is between IDS New Dimensions Fund, Inc. (the Fund)
and American Express Financial Advisors Inc. (AEFA), the principal
underwriter of the Fund, for services to be provided to
shareholders of Class Y of the Fund by AEFA and other servicing
agents.

AEFA represents that shareholders consider personal service a significant factor
in their satisfaction with their investment. AEFA represents that fees paid by
the Fund will be used to help shareholders thoughtfully consider their
investment goals and objectively monitor how well the goals are being achieved.

The Fund agrees to pay AEFA 0.10 percent of the net asset value of Class Y. The
Fund agrees to pay AEFA in cash within five (5) business days after the last day
of each month.

AEFA agrees to provided the Fund annually a budget covering its expected costs
and a quarterly report of its actual expenditures. AEFA agrees to meet with
representatives of the Fund at their request to provide information as may be
reasonably necessary to evaluate its performance under the terms of this
agreement.

This agreement may be terminated at any time without payment of any penalty by a
vote of a majority of the members of the Board who are not interested persons of
the Fund and have no financial interest in the operation of the agreement or by
AEFA. The agreement will terminate automatically in the event of its assignment
as that term is defined in the Investment Company Act of 1940. This agreement
may be amended at any time provided the amendment is approved in the same manner
the agreement was initially approved and the amendment is agreed to by AEFA.

Approved as of this 9th day of May, 1997.

IDS NEW DIMENSIONS FUND, INC. AMERICAN EXPRESS
FINANCIAL ADVISORS INC.

/s/ Leslie L. Ogg /s/ Ward D. Armstrong
Leslie L. Ogg Ward D. Armstrong
Vice President Vice President

<PAGE>

Independent auditors' consent
- ------------------------------------------------------------------------------

The board and shareholders
IDS New Dimensions Fund, Inc.:

The board of trustees and unitholders Growth Trust:
Growth Trends Portfolio

We consent to the use of our reports incorporated herein by reference and to the
references to our Firm under the headings "Financial highlights" in Part A and
"INDEPENDENT AUDITORS" in Part B of the Registration Statement.

KPMG Peat Marwick LLP

Minneapolis, Minnesota
September , 1997

Plan and Agreement of Distribution

This plan and agreement is between IDS New Dimensions Fund, Inc. (the "Fund")
and American Express Financial Advisors Inc., the principal underwriter of the
Fund, for distribution services to the Fund. It is effective on the first day
the Fund offers multiple classes of shares.

The plan and agreement has been approved by members of the Board of Directors
(the "Board") of the Fund who are not interested persons of the Fund and have no
direct or indirect financial interest in the operation of the plan or any
related agreement, and all of the members of the Board, in person, at a meeting
called for the purpose of voting on the plan and agreement.

The plan and agreement provides that:

1. The Fund will reimburse American Express Financial Advisors for all sales and
promotional expenses attributable to the sale of Class B shares, including sales
commissions, business and employee expenses charged to distribution of Class B
shares, and corporate overhead appropriately allocated to the sale of Class B
shares.

2. The amount of the reimbursement shall be equal on an annual basis to 0.75% of
the average daily net assets of the Fund attributable to Class B shares. The
amount so determined shall be paid to American Express Financial Advisors in
cash within five (5) business days after the last day of each month. American
Express Financial Advisors agrees that if, at the end of any month, the expenses
of the Fund, including fees under this agreement and any other agreement between
the Fund and American Express Financial Advisors or American Express Financial
Corporation, but excluding taxes, brokerage commissions and charges in
connection with the purchase and sale of assets exceed the most restrictive
applicable state expense limitation for the Fund's current fiscal year, the Fund
shall not pay fees and expenses under this agreement to the extent necessary to
keep the Fund's expenses from exceeding the limitation, it being understood that
American Express Financial Advisors will assume all unpaid expenses and bill the
Fund for them in subsequent months, but in no event can the accumulation of
unpaid expenses or billing be carried past the end of the Fund's fiscal year.

3. For each purchase of Class B shares, after eight years the Class B shares
will be converted to Class A shares and those assets will no longer be included
in determining the reimbursement amount.

4. The Fund understands that if a shareholder redeems Class B shares before they
are converted to Class A shares, American Express Financial Advisors will impose
a sales charge directly on the redemption proceeds to cover those expenses it
has previously incurred on the sale of those shares.

5. American Express Financial Advisors agrees to provide at least quarterly an
analysis of distribution expenses and to meet with representatives of the Fund
as reasonably requested to provide additional information.

<PAGE>

6. The plan and agreement shall continue in effect for a period of more than one
year provided it is reapproved at least annually in the same manner in which it
was initially approved.

7. The plan and agreement may not be amended to increase materially the amount
that may be paid by the Fund without the approval of a least a majority of the
outstanding shares of Class B. Any other amendment must be approved in the
manner in which the plan and agreement was initially approved.

8. This agreement may be terminated at any time without payment of any penalty
by a vote of a majority of the members of the Board who are not interested
persons of the Fund and have no financial interest in the operation of the plan
and agreement, or by vote of a majority of the outstanding Class B shares, or by
American Express Financial Advisors. The plan and agreement will terminate
automatically in the event of its assignment as that term is defined in the
Investment Company Act of 1940.

Approved this 20th day of March, 1995.

IDS NEW DIMENSIONS FUND, INC.

/s/ Leslie L. Ogg
Leslie L. Ogg
Vice President

AMERICAN EXPRESS FINANCIAL ADVISORS INC.

/s/ Janis E. Miller
Vice President

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> IDS NEW DIMENSIONS FUND CLASS A

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 13961446515
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13961446515
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1269954
<TOTAL-LIABILITIES> 1269954
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7817222463
<SHARES-COMMON-STOCK> 337229836
<SHARES-COMMON-PRIOR> 303463317
<ACCUMULATED-NII-CURRENT> 51125860
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 494262891
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5597565347
<NET-ASSETS> 8662982437
<DIVIDEND-INCOME> 113557518
<INTEREST-INCOME> 66349219
<OTHER-INCOME> 0
<EXPENSES-NET> 102661551
<NET-INVESTMENT-INCOME> 77245186
<REALIZED-GAINS-CURRENT> 558596748
<APPREC-INCREASE-CURRENT> 3419852495
<NET-CHANGE-FROM-OPS> 4055694429
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 39669181
<DISTRIBUTIONS-OF-GAINS> 211691845
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 69802144
<NUMBER-OF-SHARES-REDEEMED> 47748549
<SHARES-REINVESTED> 11712924
<NET-CHANGE-IN-ASSETS> 5401000357
<ACCUMULATED-NII-PRIOR> 36187086
<ACCUMULATED-GAINS-PRIOR> 266762530
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 62355668
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 103098492
<AVERAGE-NET-ASSETS> 6979753579
<PER-SHARE-NAV-BEGIN> 18.54
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> 7.80
<PER-SHARE-DIVIDEND> .13
<PER-SHARE-DISTRIBUTIONS> .67
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.69
<EXPENSE-RATIO> .91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> IDS NEW DIMENSIONS FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 13961446515
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13961446515
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1269954
<TOTAL-LIABILITIES> 1269954
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7817222463
<SHARES-COMMON-STOCK> 61161446
<SHARES-COMMON-PRIOR> 32283002
<ACCUMULATED-NII-CURRENT> 51125860
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 494262891
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5597565347
<NET-ASSETS> 1552114079
<DIVIDEND-INCOME> 113557518
<INTEREST-INCOME> 66349219
<OTHER-INCOME> 0
<EXPENSES-NET> 102661551
<NET-INVESTMENT-INCOME> 77245186
<REALIZED-GAINS-CURRENT> 558596748
<APPREC-INCREASE-CURRENT> 3419852495
<NET-CHANGE-FROM-OPS> 4055694429
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1734180
<DISTRIBUTIONS-OF-GAINS> 30220222
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 32213213
<NUMBER-OF-SHARES-REDEEMED> 4867366
<SHARES-REINVESTED> 1532597
<NET-CHANGE-IN-ASSETS> 5401000357
<ACCUMULATED-NII-PRIOR> 36187086
<ACCUMULATED-GAINS-PRIOR> 266762530
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 62355668
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 103098492
<AVERAGE-NET-ASSETS> 1029147369
<PER-SHARE-NAV-BEGIN> 18.38
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 7.73
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .67
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.38
<EXPENSE-RATIO> 1.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> IDS NEW DIMENSIONS FUND CLASS Y

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 13961446515
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13961446515
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1269954
<TOTAL-LIABILITIES> 1269954
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7817222463
<SHARES-COMMON-STOCK> 145611700
<SHARES-COMMON-PRIOR> 126066164
<ACCUMULATED-NII-CURRENT> 51125860
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 494262891
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5597565347
<NET-ASSETS> 3745080045
<DIVIDEND-INCOME> 113557518
<INTEREST-INCOME> 66349219
<OTHER-INCOME> 0
<EXPENSES-NET> 102661551
<NET-INVESTMENT-INCOME> 77245186
<REALIZED-GAINS-CURRENT> 558596748
<APPREC-INCREASE-CURRENT> 3419852495
<NET-CHANGE-FROM-OPS> 4055694429
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 20903051
<DISTRIBUTIONS-OF-GAINS> 89184320
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 52586867
<NUMBER-OF-SHARES-REDEEMED> 38295346
<SHARES-REINVESTED> 5254015
<NET-CHANGE-IN-ASSETS> 5401000357
<ACCUMULATED-NII-PRIOR> 36187086
<ACCUMULATED-GAINS-PRIOR> 266762530
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 62355668
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 103098492
<AVERAGE-NET-ASSETS> 2973020993
<PER-SHARE-NAV-BEGIN> 18.56
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> 7.81
<PER-SHARE-DIVIDEND> .16
<PER-SHARE-DISTRIBUTIONS> .67
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.72
<EXPENSE-RATIO> .76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> GROWTH TRENDS PORTFOLIO

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 8372207444
<INVESTMENTS-AT-VALUE> 13978299604
<RECEIVABLES> 111525150
<ASSETS-OTHER> 106997623
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14196822377
<PAYABLE-FOR-SECURITIES> 62091859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 152601165
<TOTAL-LIABILITIES> 214693024
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 13982129353
<DIVIDEND-INCOME> 113816963
<INTEREST-INCOME> 66416365
<OTHER-INCOME> 0
<EXPENSES-NET> 62500561
<NET-INVESTMENT-INCOME> 117732767
<REALIZED-GAINS-CURRENT> 559194834
<APPREC-INCREASE-CURRENT> 3427643228
<NET-CHANGE-FROM-OPS> 4104570829
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5397290155
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 61899356
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 62517294
<AVERAGE-NET-ASSETS> 11009302842
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

DIRECTORS/TRUSTEES POWER OF ATTORNEY

City of Minneapolis

State of Minnesota

Each of the undersigned, as directors and trustees of the below listed
open-end, diversified investment companies that previously have filed
registration statements and amendments thereto pursuant to the requirements of
the Securities Act of 1933 and the Investment Company Act of 1940 with the
Securities and Exchange Commission:

1933 Act 1940 Act
Reg. Number Reg. Number

IDS Bond Fund, Inc. 2-51586 811-2503
IDS California Tax-Exempt Trust 33-5103 811-4646
IDS Discovery Fund, Inc. 2-72174 811-3178
IDS Equity Select Fund, Inc. 2-13188 811-772
IDS Extra Income Fund, Inc. 2-86637 811-3848
IDS Federal Income Fund, Inc. 2-96512 811-4260
IDS Global Series, Inc. 33-25824 811-5696
IDS Growth Fund, Inc. 2-38355 811-2111
IDS High Yield Tax-Exempt Fund, Inc. 2-63552 811-2901
IDS International Fund, Inc. 2-92309 811-4075
IDS Investment Series, Inc. 2-11328 811-54
IDS Managed Retirement Fund, Inc. 2-93801 811-4133
IDS Market Advantage Series, Inc. 33-30770 811-5897
IDS Money Market Series, Inc. 2-54516 811-2591
IDS New Dimensions Fund, Inc. 2-28529 811-1629
IDS Precious Metals Fund, Inc. 2-93745 811-4132
IDS Progressive Fund, Inc. 2-30059 811-1714
IDS Selective Fund, Inc. 2-10700 811-499
IDS Special Tax-Exempt Series Trust 33-5102 811-4647
IDS Stock Fund, Inc. 2-11358 811-498
IDS Strategy Fund, Inc. 2-89288 811-3956
IDS Tax-Exempt Bond Fund, Inc. 2-57328 811-2686
IDS Tax-Free Money Fund, Inc. 2-66868 811-3003
IDS Utilities Income Fund, Inc. 33-20872 811-5522

hereby constitutes and appoints William R. Pearce and Leslie L. Ogg or either
one of them, as her or his attorney-in-fact and agent, to sign for her or him in
her or his name, place and stead any and all further amendments to said
registration statements filed pursuant to said Acts and any rules and
regulations thereunder, and to file such amendments with all exhibits thereto
and other documents in connection therewith with the Securities and Exchange
Commission, granting to either of them the full power and authority to do and
perform each and every act required and necessary to be done in connection
therewith.

<PAGE>

Dated the 8th day of January, 1997.

/s/ H. Brewster Atwater, Jr. /s/ Melvin R. Laird
H. Brewster Atwater, Jr. Melvin R. Laird

/s/ Lynne V. Cheney /s/ William R. Pearce
Lynne V. Cheney William R. Pearce

/s/ William H. Dudley /s/ Alan K. Simpson
William H. Dudley Alan K. Simpson

/s/ Robert F. Froehlke /s/ Edson W. Spencer
Robert F. Froehlke Edson W. Spencer

/s/ David R. Hubers /s/ John R. Thomas
David R. Hubers John R. Thomas

/s/ Heinz F. Hutter /s/ Wheelock Whitney
Heinz F. Hutter Wheelock Whitney

/s/ Anne P. Jones /s/ C. Angus Wurtele
Anne P. Jones C. Angus Wurtele

TRUSTEES POWER OF ATTORNEY

City of Minneapolis

State of Minnesota

Each of the undersigned, as trustees of the below listed open-end,
diversified investment companies that previously have filed registration
statements and amendments thereto pursuant to the requirements of the Investment
Company Act of 1940 with the Securities and Exchange Commission:

1940 Act
Reg. Number

Growth Trust 811-07395
Growth and Income Trust 811-07393
Income Trust 811-07307
Tax-Free Income Trust 811-07397
World Trust 811-07399

hereby constitutes and appoints William R. Pearce and Leslie L. Ogg or either
one of them, as her or his attorney-in-fact and agent, to sign for her or him in
her or his name, place and stead any and all further amendments to said
registration statements filed pursuant to said Act and any rules and regulations
thereunder, and to file such amendments with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
granting to either of them the full power and authority to do and perform each
and every act required and necessary to be done in connection therewith.

Dated the 8th day of January, 1997.

/s/ H. Brewster Atwater, Jr. /s/ Melvin R. Laird
H. Brewster Atwater, Jr. Melvin R. Laird

/s/ Lynne V. Cheney /s/ William R. Pearce
Lynne V. Cheney William R. Pearce

/s/ William H. Dudley /s/ Alan K. Simpson
William H. Dudley Alan K. Simpson

/s/ Robert F. Froehlke /s/ Edson W. Spencer
Robert F. Froehlke Edson W. Spencer

/s/ David R. Hubers /s/ John R. Thomas
David R. Hubers John R. Thomas

/s/ Heinz F. Hutter /s/ Wheelock Whitney
Heinz F. Hutter Wheelock Whitney

/s/ Anne P. Jones /s/ C. Angus Wurtele
Anne P. Jones C. Angus Wurtele