-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RSLbWm+kczyef4NQ96wXERbLGmoC+mmnW+1PuWyVH9VEfGGFJlEYbg4aWA8LHPCk Hx33vqMM6x1ika+WvLcIVg== 0000820027-96-000525.txt : 19960930 0000820027-96-000525.hdr.sgml : 19960930 ACCESSION NUMBER: 0000820027-96-000525 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19960927 EFFECTIVENESS DATE: 19960927 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS NEW DIMENSIONS FUND INC CENTRAL INDEX KEY: 0000049717 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 410940846 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-28529 FILM NUMBER: 96635745 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-01629 FILM NUMBER: 96635746 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 485BPOS 1 IDS NEW DIMENSIONS FUND, INC. PAGE 1 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. 56 (File No. 2-28529) X and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 31 (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. 26, 1996 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 period ended July 31, 1996 will be filed on or about September 24, 1996. 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 2 Cross reference sheet showing the location in its 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 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 is organized 14(a) Board members and officers of the Fund;** (b) Investment policies and risks Board members and officers (c) Investment policies and risks (b) Board members and Officers (c) Board members and Officers 5(a) Board members and officers; Board members and officers of the Fund (listing) 15(a) NA (b)(i) Investment manager; About American Express (b) NA Financial Corporation -- General (c) Board members and Officers Information (b)(ii) Investment manager 16(a)(i) How the Fund is organized; About American (b)(iii) Investment manager Express Financial Corporation** (c) Portfolio manager (a)(ii) Agreements: Investment Management Services (d) Administrator and transfer agent Agreement, Plan and Supplemental (e) Administrator and transfer agent Agreement of Distribution (f) Distributor (a)(iii) Agreements: Investment Management Services Agreement (g) Investment manager; About American Express (b) Agreements: Investment Management Services Agreement Financial Corporation -- General (c) NA Information (d) Agreements: Administrative Services Agreement, Shareholder Service Agreement 5A(a) * (e) NA (b) * (f) Agreements: Distribution Agreement (g) NA 6(a) Shares; Voting rights (h) Custodian; Independent Auditors (b) NA (i) Agreements: Transfer Agency Agreement; Custodian (c) NA (d) Voting rights 17(a) Security Transactions (e) Cover page; Special shareholder services (b) Brokerage Commissions Paid to Brokers Affiliated (f) Dividends and capital gains distributions; with American Express Financial Corporation Reinvestments (c) Security Transactions (g) Taxes (d) Security Transactions (h) Alternative sales 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) NA (e) NA (f) Distributor 20 Taxes 8(a) How to redeem shares 21(a) Agreements: Distribution Agreement (b) NA (b) Agreements: Distribution Agreement (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 3 IDS New Dimensions Fund Prospectus Sept. 27, 1996 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 a separate investment company managed by American Express Financial Corporation that 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, dated Sept. 27, 1996, is incorporated here by reference. For a free copy, contact American Express Shareholder Service. 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. SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. INVESTMENTS IN THE FUND INVOLVE INVESTMENT RISK INCLUDING POSSIBLE LOSS OF PRINCIPAL. American Express Shareholder Service P.O. Box 534 Minneapolis, MN 55440-0534 612-671-3733 TTY: 800-846-4852 PAGE 4 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 is 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 5 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 the Growth Trends Portfolio (the Portfolio) of Growth Trust (the Trust). 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. Goals 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 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 investments may be considered speculative and involve additional investment risks. Structure of the Fund This Fund uses what is commonly known as a master/feeder structure. This means that it is a feeder fund that invests all of its assets in the Portfolio which is its master fund. The Portfolio actually 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 6 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 $51 billion in assets. 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 is 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 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+ (% of average daily net assets): Class A Class B Class Y Management fee** 0.57% 0.57% 0.57% 12b-1 fee 0.00% 0.75% 0.00% Other expenses*** 0.37% 0.39% 0.20% Total**** 0.94% 1.71% 0.77% *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 PAGE 7 increased the management fee by 0.03% in fiscal 1996. ***Other expenses include an administrative services fee, a shareholder services fee for Class A and Class B, a transfer agency fee and other non-advisory expenses. Expense ratios are based on total expenses of the Fund before applying earnings credit on cash balances. ****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. American Express Financial Corporation 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. + Expenses are based on actual annualized expenses for the period from Oct. 1, 1995 to July 31, 1996. 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 $ 99 $160 Class B $67 $94 $113 $177** Class B* $17 $54 $ 93 $177** Class Y $ 8 $25 $ 43 $ 96 *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. PAGE 8 Performance Financial highlights
Financial highlights IDS New Dimensions Fund, Inc. Performance Financial highlights Fiscal period ended July 31, Per share income and capital changes* Class A 1996** 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 Net asset value, $17.24 $14.06 $14.87 $12.57 $12.01 $9.45 $10.45 $7.94 $9.84 $8.16 $8.08 beginning of period Income from investment operations: Net investment income 0.17 0.16 0.09 0.06 0.06 0.15 0.24 0.16 0.14 0.16 0.17 Net gains (losses) 1.88 3.64 (0.18) 3.01 1.13 3.59 (0.52) 2.39 (1.12) 3.19 2.27 (both realized and unrealized) Total from investment 2.05 3.8 (0.09) 3.07 1.19 3.74 (0.28) 2.55 (0.98) 3.35 2.44 operations Less distributions: Dividends from net (0.15) (0.12) (0.07) (0.04) (0.14) (0.22) (0.19) (0.04) (0.12) (0.16)(0.18) investment income Distributions from (0.6) (0.5) (0.65) (0.73) (0.49) (0.96) (0.53) - - (0.8) (1.51)(2.18) realized gains Total distributions (0.75) (0.62) (0.72) (0.77) (0.63) (1.18) (0.72) (0.04) (0.92) (1.67)(2.36) 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 end of period Ratios/supplemental data Class A 1996** 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 Net assets, end of $5,626 $4,575 $4,296 $3,544 $2,253 $1,553 $815 $762 $636 $759 $510 period (in millions) Ratio of expenses to .94%+ .90% .90% .92% .95% .90% .88% .82% .87% .79% .63% average daily net assets # Ratio of net income .78%+ 1.07% 0.75% 0.51% 0.57% 1.65% 2.43% 1.70% 1.65% 1.60% 1.68% to average daily net assets Total return ++ 12.2% 28.4% (.7%) 25.1% 9.6% 43.3% (2.8%) 32.4% (9.7%) 41.0% 30.2% Portfolio turnover rate 41% 54% 48% 60% 75% 81% 91% 67% 119% 113% 128% (excluding short-term securities) for the underlying Portfolio *For a share outstanding throughout the period. Rounded to the nearest cent. **The Fund's fiscal year-end was changed from Sept 30 to July 31, effective 1996. +Adjusted to an annual basis. ++Total return does not reflect payment of a sales charge. #Effective fiscal year 1996, expense ratio is based on total expenses of the Fund before reduction of earnings credit on cash balances. PAGE 9 IDS New Dimensions Fund, Inc. Performance Financial highlights Fiscal period ended July 31, Per share income and capital changes* Class B Class Y 1996** 1995*** 1996** 1995*** Net asset value, $17.18 $14.21 $17.26 $14.21 beginning of period Income from investment operations: Net investment income (loss) 0.03 0.02 0.19 0.1 Net gains(losses) 1.88 2.95 1.88 2.95 (both realized and unrealized) Total from investment 1.91 2.97 2.07 3.05 operations Less distributions: Dividends from net (0.11) -- (0.17) -- investment income Distributions from (0.6) -- (0.6) -- realized gains Total distributions (0.71) -- (0.77) -- Net asset value, $18.38 $17.18 $18.56 $17.26 end of period Ratios/supplemental data Class B Class Y 1996** 1995*** 1996** 1995*** Net assets, end of $593 $150 $2,340 $1,792 period (in millions) Ratio of expenses to 1.71%+ 1.72%+ .77%+ .76%+ average daily net assets # Ratio of net income .01%+ .33%+ .95%+ 1.26%+ to average daily net assets Total return++ 11.5% 20.9% 12.3% 21.5% Portfolio turnover rate 41% 54% 41% 54% (excluding short-term securities) for the underlying Portfolio *For a share outstanding throughout the period. Rounded to the nearest cent. **The Fund's fiscal year-end was changed from Sept. 30 to July 31, effective 1996. ***Inception date was March 20, 1995 for Class B and Class Y. +Adjusted to an annual basis. ++Total return does not reflect payment of a sales charge. #Effective fiscal year 1996, expense ratios are based on total expenses of the Fund before reduction of earnings credit on cash balances. 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.
PAGE 10 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. 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, 1996 Purchase 1 year Since 5 years 10 years made ago inception* ago ago IDS New Dimensions Fund: Class A +10.67% -- +14.02% +15.07% Class B +10.65% +21.70% -- -- Class Y +16.68% +25.54% -- -- S&P 500 +16.39% +22.88% +13.61% +13.94% Lipper Growth Fund Index + 8.89% +16.01% +12.30% +12.21% *Inception date was March 20, 1995. Cumulative total returns as of July 31, 1996 Purchase 1 year Since 5 years 10 years made ago inception* ago ago IDS New Dimensions Fund: Class A +10.67% -- +92.89% +307.67% Class B +10.65% +30.76% -- -- Class Y +16.68% +36.47% -- -- S&P 500 +16.39% +31.72% +89.30% +268.84% Lipper Growth Fund Index + 8.89% +22.83% +78.63% +216.45% *Inception date was March 20, 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. 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 11 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. Investment policies and risks The Fund and the Portfolio have the same investment policies. 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. 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 most of the Portfolio's investments are in established companies having adequate financial reserves, some 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. 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 PAGE 12 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. 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 Portfolio's 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 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 PAGE 13 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 Fund'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. All securities and other 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 net assets. 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). PAGE 14 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.
Sales charge and distribution (12b-1) fee Service fee Other information 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 after eight of 5% declines to 0% years; CDSC waived in after six years; 12b-1 certain circumstances fee of 0.75% of average daily net assets Class Y None None Available only to certain qualifying institutional investors
Conversion of Class B shares to Class A shares - Eight calendar years after Class B shares were originally purchased, Class B shares will convert to Class A shares and will no longer be subject to a distribution fee. The conversion will be on the basis of relative net asset values of the two classes, without the imposition of any sales charge. Class B shares purchased through reinvested dividends and distributions will convert to Class A shares in a pro rata portion as the Class B shares purchased other than through reinvestment. PAGE 15 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. 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 PAGE 16 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 either a service fee or 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. 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 AEFC with 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. PAGE 17 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. Three ways to invest
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 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/mo. o automatic payroll deduction Account balances: none (on active plans of o bank authorization monthly payments) o direct deposit of UGMA and UTMA: $50/mo. Social Security check o other plan approved by the Fund 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). *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. /TABLE PAGE 18 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, including fees and expenses, read the prospectus carefully before exchanging into a new fund. 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 create 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. 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. Two ways to request an exchange or redemption of shares
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 PAGE 19 Express mail: American Express Shareholder Service Attn: Redemptions 733 Marquette Ave. Minneapolis, MN 55402 2 By phone American Express Telephone o The Fund and AEFC will honor any telephone exchange or redemption request believed to be Transaction Service: authentic and will use reasonable procedures to confirm that they are. This includes 800-437-3133 or asking identifying questions and tape recording calls. If reasonable 612-671-3800 procedures are not followed, the Fund or AEFC will be liable for any loss resulting from 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
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. PAGE 20 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.) Three ways to receive payment when you redeem shares
1 By regular or express mail o Mailed to the address on record. o Payable to names listed on the account. NOTE: The express mail delivery charges you pay will vary depending on the courier you select. 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.
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: PAGE 21 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. 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. PAGE 22 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 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. 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 another fund in the IDS MUTUAL FUND GROUP that has a sales charge. o Purchases made through American Express Strategic Portfolio Service (total amount of all investments made in the Strategic Portfolio Service must be at least $50,000). o Purchases made under the University of Texas System ORP. *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: PAGE 23 If a redemption is The percentage rate made during the for the CDSC is: First year 5% Second year 4% 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 PAGE 24 by American Express Financial Advisors, the CDSC will not be waived), or - redeeming under an approved substantially equal periodic payment arrangement. 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 Telephone Transaction Service Redemptions and exchanges, dividend payments or reinvestments and automatic payment arrangements National/Minnesota: 800-437-3133 Mpls./St. Paul area: 671-3800 American Express Shareholder Service Fund performance, objectives and account inquiries 612-671-3733 TTY Service For the hearing impaired 800-846-4852 American Express Infoline Automated account information (TouchToneR phones only), including current Fund prices and performance, account values and recent account transactions National/Minnesota: 800-272-4445 Mpls./St. Paul area: 671-1630 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 PAGE 25 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. Dividend and capital gain distributions Investment income is allocated to the Fund by the Portfolio, less direct and allocated expenses. The Fund's net realized capital gains or losses, if any, consist of the net realized capital gains or losses allocated to the Fund from the Portfolio. The Fund's net investment income from dividends and interest is distributed to you by the end of the calendar year as dividends. Short-term capital gains are distributed at the end of the calendar year and 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. Net realized long-term capital gains, if any, are distributed at the end of the calendar year as capital gain distributions. Before they're distributed, both net investment income and net long-term capital gains are included in the value of each share. After they're 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. Class B shareholders will receive lower per share dividends than Class A and Class Y shareholders because expenses for Class B are higher than for Class A or Class Y. Class A shareholders will receive lower per share dividends than Class Y shareholders because expenses for Class A are higher than for Class Y. 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 any publicly available IDS fund for which you've previously opened an account. You pay no sales charge on shares purchased through reinvestment from this Fund into any IDS fund. 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. PAGE 26 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. 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 at AEFC. 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 27 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 is organized 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. Shares 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. PAGE 28 The Fund no longer issues stock certificates. 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 goals 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 goals and investment policies as the Fund. The goals 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 investment if the Portfolio changes its goals, 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 29 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 must 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. The board members serve on the boards of all 41 of the funds in the IDS MUTUAL FUND GROUP, except for Mr. Dudley, who is a board member of all 32 publicly offered funds. The members of the Board 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 President of all funds in the IDS MUTUAL FUND GROUP. Independent board members Lynne V. Cheney Distinguished fellow, American Enterprise Institute for Public Policy Research. 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. PAGE 30 Anne P. Jones Attorney and telecommunications consultant. Melvin R. Laird Senior counsellor for national and international affairs, The Reader's Digest Association, Inc. 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 Executive vice president, 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 Vice president of all funds in the IDS MUTUAL FUND GROUP. Melinda S. Urion Treasurer of all funds in the IDS MUTUAL FUND GROUP. Other officer Leslie L. Ogg Vice president, general counsel and secretary of all funds in the IDS MUTUAL FUND GROUP. Refer to the SAI for the board members' and officers' biographies. 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 that became effective March 20, 1995, and was assumed by the Portfolio on May 13, 1996, AEFC is paid a fee for these services based on the average daily net assets of the Portfolio, as follows: PAGE 31 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 period ended July 31, 1996, the Portfolio paid AEFC a total investment management fee of 0.57% 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, the Administrative Services Agreement, has a declining annual rate beginning at 0.05% and decreasing to 0.03% as assets increase. The second, 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 plan) 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. 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. PAGE 32 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 the Fund's average daily net assets attributable to Class A and Class B shares. Total expenses paid by the Fund's Class A shares for the fiscal period ended July 31, 1996, were 0.94% of its average daily net assets. Expenses for Class B and Class Y were 1.71% and 0.77%, respectively. Total fees and expenses (excluding taxes and brokerage commissions) cannot exceed the most restrictive applicable state expense limitation. 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 publicly offered 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, 1996 were more than $136 billion. American Express Financial Advisors serves individuals and businesses through its nationwide network of more than 175 offices and more than 7,900 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 33 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 34 STATEMENT OF ADDITIONAL INFORMATION FOR IDS NEW DIMENSIONS FUND Sept. 27, 1996 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. 27, 1996, and it is to be used with the prospectus dated Sept. 27, 1996, and the Annual Report for the fiscal period ended July 31, 1996. PAGE 35 TABLE OF CONTENTS Goal and Investment Policies.........................See Prospectus Additional Investment Policies................................p. 3 Security Transactions.........................................p. 6 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. 12 Redeeming Shares..............................................p. 16 Pay-out Plans.................................................p. 17 Taxes.........................................................p. 18 Agreements....................................................p. 20 Board Members and Officers....................................p. 23 Custodian.....................................................p. 27 Independent Auditors..........................................p. 28 Financial Statements..............................See Annual Report Prospectus....................................................p. 28 Appendix A: Foreign Currency Transactions....................p. 29 Appendix B: Options and Stock Index Futures Contracts........p. 34 Appendix C: Mortgage-Backed Securities.......................p. 41 Appendix D: Dollar-Cost Averaging............................p. 42 PAGE 36 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 restrictions 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, 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 restrictions 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. These are investment policies in addition to those presented in the prospectus. The policies below are fundamental policies of 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 37 '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 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 American Express Financial Corporation (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 board is to make these loans, either long- or short-term, to broker-dealers. In making loans, the Portfolio gets 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, but it may make margin payments in connection with transactions in stock index futures contracts. PAGE 38 '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 the purpose of this restriction, collateral arrangements for margin deposits on futures contracts 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 assets in securities of investment companies. Under one state's law, the Portfolio is limited to investment in the open market where no commission or profit to a sponsor or dealer results from the purchase other than the customary broker's commission, or when the purchase is part of a plan or merger, consolidation, reorganization or acquisition. '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. Under one state's law no more than 2% of the Portfolio's net assets may be invested in warrants not listed on the New York or American Stock Exchange. 'Invest more than 10% of its net assets in securities and derivative 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. PAGE 39 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 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. 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. 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. SECURITY TRANSACTIONS Subject to policies set by the board, AEFC is authorized to determine, consistent with the 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 PAGE 40 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 funds 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. 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 PAGE 41 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 Portfolio 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 Portfolio 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. The Portfolio paid total brokerage commissions of $6,405,032 for the fiscal period ended July 31, 1996, $6,993,055 for fiscal year 1995, and $4,629,595 for fiscal year 1994. Substantially all firms through whom transactions were executed provide research services. In fiscal period ended July 31, 1996, transactions amounting to $43,304,000, on which $37,896 in commissions were imputed or paid, were specifically directed to firms in exchange for research services. As of the fiscal period ended July 31, 1996, 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: PAGE 42 Value of Securities Owned at End of Name of Issuer Fiscal Period Dean Witter $44,496,830 Goldman Sachs 21,494,070 Merrill Lynch 3,686,576 Morgan Stanley Group 64,243,321 Nations Bank 22,999,104 The portfolio turnover rate was 41% in the fiscal period ended July 31, 1996, and 54% in fiscal year 1995. 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. 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: PAGE 43
For the Fiscal Period Ended July 31, 1996 1995 1994 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 Lehman (1) None None None None $199,920 Brothers, Inc. American Enterprise Investment (2) $339,272 5.30% 8.95% $617,469 $888,862 The Robinson Humphrey Company, Inc. (3) None None None None 21,853 Shearson Lehman Brothers, Inc. (4) None None None None 82,231
(1) Under common control with AEFC as a subsidiary of American Express until May 31, 1994. (2) 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) 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 PAGE 44 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, 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, 1996, the first business day following the end of the fiscal period, the computation looked like this:
Net assets before Shares outstanding Net asset value shareholder transactions at end of previous day of one share Class A $5,717,248,873 divided by 303,463,317 equals $ 18.84 Class B 603,046,477 32,283,002 18.68 Class Y 2,377,607,853 126,066,164 18.86
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. '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. PAGE 45 '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 Fund'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, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. 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 adjusted for 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, 1996, was determined by dividing the net asset value of one share, PAGE 46 $18.84, by 0.95 (1.00-0.05 for a maximum 5% sales charge) for a public offering price of $19.83. 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. 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
PAGE 47 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. 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. PAGE 48 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. 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 PAGE 49 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 one fund but 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 its 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. PAGE 50 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. 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 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. PAGE 51 To start any of these plans, please write or call American Express Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534, 612-671-3733. 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. 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 sale 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 52 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 sale 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 period ended July 31, 1996, 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 53 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: 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, 1996, the daily rate applied to the Portfolio's net assets was equal to 0.535% 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. 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. PAGE 54 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 $2,298,845 for the fiscal period ended July 31, 1996. The management fee is paid monthly. The total amount paid was $37,110,025 for the fiscal period ended July 31, 1996, $29,578,200 for fiscal year 1995, and $24,534,014 for fiscal year 1994. 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, 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, the Fund paid nonadvisory expenses of $1,977,035 for the fiscal period ended July 31, 1996, $1,647,694 for fiscal year 1995, and $2,296,838 for fiscal year 1994. 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, 1996, the daily rate applied to the Fund's net assets was equal to 0.037% 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 $2,438,358 for the fiscal period ended July 31, 1996. 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 PAGE 55 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 $7,855,155 for the fiscal period ended July 31, 1996. 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 $19,304,840 for the fiscal period ended July 31, 1996. After paying commissions to personal financial advisors, and other expenses, the amount retained was $652,404. The amounts were $17,037,260 and $12,310,508 for fiscal year 1995, and $18,384,527 and $6,366,755 for fiscal year 1994. Additional information about commissions and compensation for the fiscal period ended July 31, 1996, is contained in the following table:
(1) (2) (3) (4) (5) Net Compensation Name of Underwriting on Redemption Principal Discounts and and Brokerage Other Underwriter Commissions Repurchases Commissions Compensation AEFC None None $339,272* $2,186,389** American Express Financial Advisors $19,304,840 None None None
*For further information see "Brokerage Commissions Paid to Brokers Affiliated with AEFC." **Distribution fees paid pursuant to the Plan and Agreement of Distribution. 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. 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 PAGE 56 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. 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 period ended July 31, 1996, the Fund paid fees of $2,186,389. Total fees and expenses Total combined fees and nonadvisory expenses of both the Fund and the Portfolio cannot exceed the most restrictive applicable state limitation. Currently, the most restrictive applicable state expense limitation, subject to exclusion of certain expenses, is 2.5% of the first $30 million of the Fund's average daily net assets, 2% of the next $70 million and 1.5% of average daily net assets over $100 million, on an annual basis. At the end of each month, if the fees and expenses of the Fund exceed this limitation for the Fund's fiscal year in progress, AEFC will assume all expenses in excess of the limitation. AEFC then may bill the Fund for such expenses in subsequent months up to the end of that fiscal year, but not after that date. No interest charges are assessed by AEFC for expenses it assumes. The Fund paid total fees and nonadvisory expenses of $59,783,156 for the fiscal period ended July 31, 1996. BOARD MEMBERS AND OFFICERS The following is a list of the Fund's board members who, except for Mr. Dudley, are also board members and officers of all other funds in the IDS MUTUAL FUND GROUP. Mr. Dudley is a board member of the PAGE 57 34 publicly offered funds. The board members and officers also are board members and officers of all five trusts in the Preferred Master Trust Group. All shares have cumulative voting rights with respect to the election of board members. 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, the Interpublic Group of Companies, Inc. (advertising), and FPL Group, Inc. (holding company for Florida Power and Light). William H. Dudley** Born in 1932 2900 IDS Tower Minneapolis, MN Executive vice president and director of AEFC. 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, chief executive officer 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). PAGE 58 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 congressman, secretary of defense and presidential counsellor. Director, Martin Marietta Corp., 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). William R. Pearce+* Born in 1927 901 S. Marquette Ave. Minneapolis, MN President of all funds in the IDS MUTUAL FUND GROUP since June 1993. Former vice chairman of the board, Cargill, Incorporated (commodity merchants and processors). 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. PAGE 59 Wheelock Whitney+ Born in 1926 1900 Foshay Tower 821 Marquette Ave. Minneapolis, MN Chairman, Whitney Management Company (manages family assets). 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 Vice president, general counsel and secretary of all funds in the IDS MUTUAL FUND GROUP. Officers who also are officers and/or employees of AEFC Peter J. Anderson Born in 1942 IDS Tower 10 Minneapolis, MN Vice president-investments of all funds in the IDS MUTUAL FUND GROUP. Director and senior vice president-investments of AEFC. PAGE 60 Melinda S. Urion Born in 1953 IDS Tower 10 Minneapolis, MN Treasurer of all funds in the IDS MUTUAL FUND GROUP. Director, senior vice president and chief financial officer of AEFC. Director and executive vice president and controller of IDS Life Insurance Company. Members of the board who are not officers of the Fund or of AEFC receive an annual fee of $6,750. They also receive attendance and other fees, the cost of which the Fund shares with the other funds in the IDS MUTUAL FUND GROUP. These fees include attendance of meetings of the Board, $1,000; meetings of the Contracts Committee, $750; meetings of the Audit, Executive or Investment Review Committees, $500; meetings of the Personnel Committee, $300; out- of-state, $500; and Chair of the Contracts Committee, $5,000. Expenses for attending those meetings are also reimbursed. During the fiscal period ended July 31, 1996, the members of the board, for attending up to 22 meetings, received the following compensation:
Compensation Table Pension or Estimated Aggregate Retirement annual Total cash compensation benefits benefit compensation from the accrued as upon from the IDS Board member Fund Fund expenses* retirement MUTUAL FUND GROUP Lynne V. Cheney $4,921 $20,998 $3,375 $69,300 Robert F. Froehlke 4,916 4,743 3,375 69,600 Heinz F. Hutter 4,918 1,533 1,631 69,300 Anne P. Jones 4,961 1,020 3,375 70,800 Donald M. Kendall 3,720 12,717 3,375 51,000 (Part of Year) Melvin R. Laird 5,012 4,494 3,375 72,900 Lewis W. Lehr 3,772 10,249 3,291 53,500 (Part of Year) Edson W. Spencer 5,057 2,184 1,800 75,100 Wheelock Whitney 4,932 2,135 3,375 70,300 C. Angus Wurtele 4,849 1,615 3,347 66,800
On July 31, 1996, the Fund's board members and officers as a group owned less than 1% of the outstanding shares. During the fiscal period ended July 31, 1996, no board member or officer earned more than $60,000 from this Fund. All board members and officers as a group earned $161,750, including $61,688 of retirement plan benefits, from this Fund. *The Fund had a retirement plan for its independent board members. The plan was terminated April 30, 1996. CUSTODIAN 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. PAGE 61 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. INDEPENDENT AUDITORS The financial statements contained in the Annual Report to shareholders for the fiscal period ended July 31, 1996, 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 1996 Annual Report to shareholders, 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. 27, 1996, is hereby incorporated in this SAI by reference. PAGE 62 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 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 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 PAGE 63 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. The Portfolio's dealing in forward contracts will be limited to the transactions described above. This method of protecting the value of the 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. PAGE 64 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. 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. PAGE 65 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- 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. PAGE 66 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 Fund 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 67 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. 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 PAGE 68 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.) 'The Portfolio will write options only as permitted under federal or state laws or regulations, such as those that limit the amount of total assets subject to the options. While no limit has been set by the Portfolio, it will conform to the requirements of those states. For example, California limits the writing of options to 50% of the assets of a fund. Net premiums on call options closed or premiums on expired call options are treated as short-term capital gains. Since the Portfolio 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 69 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 70 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 71 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. 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 PAGE 72 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 Fund 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 fund 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. 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 PAGE 73 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. 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 74 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 75 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 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 through changing market conditions 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 76 Independent auditors' report The board and shareholders IDS New Dimensions Fund, Inc.: We have audited the accompanying statement of assets and liabilities of IDS New Dimensions Fund, Inc. as of July 31, 1996, and the related statement of operations for the ten-month period then ended and the statements of changes in net assets for the ten- month period ended July 31, 1996 and the year ended September 30, 1995, and the financial highlights for the ten-month period ended July 31, 1996 and for each of the years in the ten-year period ended September 30, 1995. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IDS New Dimensions Fund, Inc. at July 31, 1996, and the results of its operations, changes in its net assets and the financial highlights for the periods stated in the first paragraph above, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Minneapolis, Minnesota September 6, 1996 PAGE 77
Statement of assets and liabilities IDS New Dimensions Fund, Inc. July 31, 1996 Assets Investment in Growth Trends Portfolio (Note 1) $8,560,236,452 Total assets 8,560,236,452 Liabilities Disbursements in excess of cash on demand deposit 4,432 Accrued distribution fee 11,906 Accrued service fee 29,193 Accrued transfer agency fee 28,509 Accrued administrative services fee 8,539 Other accrued expenses 977,669 Total liabilities 1,060,248 Net assets applicable to outstanding capital stock $8,559,176,204 Represented by Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 4,618,125 Additional paid-in-capital 6,073,895,611 Undistributed net investment income 36,187,086 Accumulated net realized gain (Note 1) 266,762,530 Unrealized appreciation of investments 2,177,712,852 Total - representing net assets applicable to outstanding capital stock 8,559,176,204 Net assets applicable to outstanding shares: Class A $5,625,868,997 Class B $ 593,497,390 Class Y $2,339,809,817 Net asset value per share of outstanding capital stock:Class A shares 303,463,317 $ 18.54 Class B shares 32,283,002 $ 18.38 Class Y shares 126,066,164 $ 18.56 See accompanying notes to financial statements.
PAGE 78
Statement of operations IDS New Dimensions Fund, Inc. Ten months ended July 31, 1996 Oct. 1, 1995 to May 13, 1996 to May 12, 1996 July 31, 1996 Total (Notes 1 and 5) Investment income Income: Interest $ 30,498,568 $ 12,065,824 $ 42,564,392 Dividends 48,412,633 20,390,020 68,802,653 * Total income 78,911,201 32,455,844 111,367,045 Expenses (Note 2): Investment management services fee 25,565,271 -- 25,565,271 Distribution fee -- Class B 1,287,734 898,655 2,186,389 Transfer agency fee 5,546,585 2,262,070 7,808,655 Incremental transfer agency fee -- Class B 29,093 17,407 46,500 Service fee Class A 5,253,546 2,206,914 7,460,460 Class B 299,676 209,485 509,161 Administrative services fee 1,721,130 717,228 2,438,358 Compensation of board members 84,873 25,346 110,219 Compensation of officers 48,007 3,524 51,531 Custodian fees 263,008 -- 263,008 Postage 217,165 72,389 289,554 Registration fees 695,687 171,917 867,604 Reports to shareholders 232,470 64,955 297,425 Audit fees 28,798 1,528 30,326 Administrative 26,962 8,988 35,950 Other 41,431 6,162 47,593 Total expenses 41,341,436 6,666,568 48,008,004 Earnings credits on cash balances (Note 5) (16,175) -- (16,175) 41,325,261 6,666,568 47,991,829 Expenses, including investment management services fee allocated from Growth Trends Portfolio -- 11,791,327 11,791,327 Total net expenses 41,325,261 18,457,895 59,783,156 Investment income -- net 37,585,940 13,997,949 51,583,889 Realized and unrealized gain (loss) -- net Net realized gain on security transactions 280,525,097 45,442,725 325,967,822 Net change in unrealized appreciation or depreciation 611,005,528 (147,891,553) 463,113,975 Net gain (loss) on investments 891,530,625 (102,448,828) 789,081,797 Net increase (decrease) in net assets resulting from operations $929,116,565 $ (88,450,879) $840,665,686 *Net of foreign taxes withheld of $476,797. See accompanying notes to financial statements.
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Statement of changes in net assets IDS New Dimensions Fund, Inc. Operations and distributions July 31, 1996 Sept. 30, 1995 Ten-month Year ended period ended Investment income - net $ 51,583,889 $ 56,020,175 Net realized gain on investments 325,967,822 188,034,728 Net change in unrealized appreciation or depreciation 463,113,975 1,122,806,020 Net increase in net assets resulting from operations 840,665,686 1,366,860,923 Distributions to shareholders from: Net investment income Class A (39,448,269) (37,824,704) Class B (1,492,148) -- Class Y (19,131,175) -- Net realized gain Class A (162,150,758) (161,781,539) Class B (8,111,389) -- Class Y (68,560,165) -- Excess distributions of realized gain Class A -- (10,005) Total distributions (298,893,904) (199,616,248) Capital share transactions (Note 3) Proceeds from sales Class A shares (Note 2) 1,078,880,570 1,277,766,445 Class B shares 442,410,073 139,503,525 Class Y shares 862,302,096 1,678,216,434 Reinvestment of distributions at net asset value Class A shares 198,597,094 197,521,609 Class B shares 9,572,264 -- Class Y shares 87,691,340 -- Payments for redemptions Class A shares (593,204,599) (2,058,310,273) Class B shares (Note 2) 1,049,209,558 1,071,628,871 Class Y shares (560,414,845) 893,569,214 Increase in net assets from capital share transactions 1,501,301,727 1,052,412,177 Total increase in net assets 2,043,073,509 2,219,656,852 Net assets at beginning of period 6,516,102,695 4,296,445,843 Net assets at end of period (including undistributed net investment income of $36,187,086 and $44,674,789) $8,559,176,204 $6,516,102,695 See accompanying notes to financial statements.
PAGE 80 Notes to financial statements IDS New Dimensions Fund, Inc. ___________________________________________________________________ 1. Summary of significant accounting policies The Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The Fund offers Class A, Class B and Class Y shares. Class A shares are sold with a front-end sales charge. Class B shares may be subject to a contingent deferred sales charge and such shares automatically convert to Class A after eight years. Class Y shares have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend, liquidation and other rights, and the same terms and conditions, except that the level of distribution fee, transfer agency fee and service fee (class specific expenses) differs among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. Investment in Growth Trends Portfolio Effective May 13, 1996, the Fund began investing all of its assets in the Growth Trends Portfolio (Portfolio), a series of Growth Trust, an open-end investment company that has the same objectives as the Fund. This was accomplished by transferring the Fund's assets to the Portfolio in return for a proportionate ownership interest in the Portfolio. Growth Trends Portfolio invests primarily in common stocks of companies showing potential for significant growth and operating in areas where economic or technological changes are occuring. The Fund records daily its share of the Portfolio's income, expenses and realized and unrealized gains and losses. The financial statements of the Portfolio are included elsewhere in this report and should be read in conjunction with the Fund's financial statements. The Fund records its investment in the Portfolio at value which is equal to the Fund's proportionate owership interest in the net assets of the Portfolio. The percentage of the Portfolio owned by the Fund at July 31, 1996 was 99.71%. Valuation of securities held by the Portfolio is discussed in Note 1 of the Portfolio's Notes to Financial Statements, which are included elsewhere in this report. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates. PAGE 81 Federal taxes Since the Fund's policy is to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to the shareholders, no provision for income or excise taxes is required. Net investment income (loss) and net realized gains (losses) allocated from the Portfolio may differ for financial statement and tax purposes primarily because of the deferral of losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. Dividends to shareholders An annual dividend declared and paid at the end of the calendar year from net investment income is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. ___________________________________________________________________ 2. Expenses and sales charges In addition to the expenses allocated from the Portfolio, the Fund accrues its own expenses as follows: Effective March 20, 1995, the Fund entered into agreements with American Express Financial Corporation (AEFC) for providing administrative services and serving as transfer agent. Under its Administrative Services Agreement, the Fund pays AEFC for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.05% to 0.03% annually. Under this agreement, the Fund also pays taxes; audit and certain legal fees; registration fees for shares; office expenses; consultant's fees; compensation of board members, officers and employees; corporate filing fees; organizational expenses; and any other expenses properly payable by the Fund approved by the board. Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts and records. The Fund pays AEFC an annual fee per shareholder account for this service as follows: o Class A $15 o Class B $16 o Class Y $15 PAGE 82 Also effective March 20, 1995, the Fund entered into agreements with American Express Financial Advisors Inc. for distribution and shareholder servicing-related services. Under a Plan and Agreement of Distribution, the Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B shares for distribution-related services. Under a Shareholder Service Agreement, the Fund pays a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.175% of the Fund's average daily net assets attributable to Class A and Class B shares. AEFC will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. Sales charges received by American Express Financial Advisors for distributing Fund shares were $19,094,029 for Class A and $210,811 for Class B for the period ended July 31, 1996. Prior to April 30, 1996, the Fund had a retirement plan for its independent board members. The plan was terminated April 30, 1996. The retirement plan expense amounted to $61,688 for the period. The total liability for the plan is $179,512 which will be paid out at some future date. ___________________________________________________________________ 3. Capital share transactions Transactions in shares of capital stock for the periods indicated are as follows:
Period ended July 31, 1996 Class A Class B Class Y _______________________________________________________________________ Sold 59,377,568 24,364,763 47,643,756 Issued for reinvested 11,500,909 556,495 5,077,375 distributions Redeemed (32,745,436) (1,354,343) (30,480,217) _______________________________________________________________________ Net increase 38,133,041 23,566,915 22,240,914 _______________________________________________________________________ Year ended Sept. 30, 1995 Class A Class B* Class Y* _______________________________________________________________________ Sold 87,791,383 8,845,958 115,253,413 Issued for reinvested 14,863,540 ___ ___ distributions Redeemed (142,988,018) (129,871) (11,428,163) _______________________________________________________________________ Net increase (decrease) (40,333,095) 8,716,087 103,825,250 _______________________________________________________________________ *Inception date was March 20, 1995.
___________________________________________________________________ 4. Change of Fund's fiscal year The By-Laws of the Fund were amended on Jan. 11, 1996, changing it's fiscal year end from Sept. 30 to July 31, effective 1996. PAGE 83 ___________________________________________________________________ 5. Pre-conversion to Master Prior to transferring its securities to Growth Trends Portfolio on May 13, 1996, various transactions took place as stated below. Expenses and sales charges Prior to the conversion on May 13, 1996, the Fund paid an investment management fee to AEFC. Subsequent to the conversion, the investment management fee is assessed at the Portfolio level. (See the footnotes to the Portfolio financial statements for the terms of the investment management agreement which remain unchanged.) Prior to conversion, the investment management fee was adjusted by a performance incentive adjustment based on the Funds's average daily net assets over a rolling 12-month period as measured against the change in the Lipper Growth Fund Index. The adjustment increased the fee by $1,168,789 for the period from Oct. 1, 1995 to May 12, 1996. During the period from Oct. 1, 1995 to May 12, 1996, the Fund's custodian fees were reduced by $16,175 as a result of earnings credits from overnight cash balances. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $2,918,666,737 and $2,267,032,914, respectively, for the period from Oct. 1, 1995 to May 12, 1996. Brokerage commissions paid to brokers affiliated with AEFC were $272,605 during this period. Lending of portfolio securities Income from securities lending amounted to $38,750 for the period from Oct. 1, 1995 to May 12, 1996. ___________________________________________________________________ 6. Financial highlights "Financial highlights" showing per share data and selected information is presented on pages 8 and 9 of the prospectus. PAGE 84 The board of trustees and unitholders Growth Trust: We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of Growth Trends Portfolio (a series of Growth Trust) as of July 31, 1996, and the related statements of operations and changes in net assets for the period from May 13, 1996 (commencement of operations) to July 31, 1996. These financial statements are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Investment securities held in custody are confirmed to us by the custodian. As to securities purchased and sold but not received or delivered, and securities on loan, we request confirmations from brokers, and where replies are not received, we carry out other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Growth Trends Portfolio at July 31, 1996, and the results of its operations and the changes in its net assets for the period from May 13, 1996 (commencement of operations) to July 31, 1996, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Minneapolis, Minnesota September 6, 1996 PAGE 85
Statement of assets and liabilities Growth Trends Portfolio July 31, 1996 Assets Investments in securities, at value (Note 1) Investments in securities of unaffiliated issuers (identified cost $6,336,887,547) $8,454,639,876 Investments in securities of affiliated issuers (identified cost $72,334,647) 133,031,250 Cash in bank on demand deposit 3,393,915 Dividends and accrued interest receivable 7,099,993 Receivable for investment securities sold 37,289,090 U.S. government securities held as collateral (Note 4) 640,540 Total assets 8,636,094,664 Liabilities Payable for investment securities purchased 45,520,458 Payable upon return of securities loaned (Note 4) 5,018,140 Accrued investment management services fee 561,398 Other accrued expenses 155,470 Total liabilities 51,255,466 Net assets $8,584,839,198 See accompany notes to financial statements. PAGE 86 Statement of Operations Growth Trends Portfolio For the period from May 13, 1996 (commencement of operations) to July 31, 1996 Investment income Income: Interest $ 12,099,456 Dividends (net of foreign taxes withheld of $73,091) 20,448,561 Total income 32,548,017 Expenses (Note 2): Investment management services fee 11,544,754 Compensation of board members 10,250 Custodian fees 256,677 Audit fees 4,582 Administrative 2,892 Other 11,403 Total expenses 11,830,558 Earnings credits on cash balances (Note 2) (6,141) Total net expenses 11,824,417 Investment income -- net 20,723,600 Realized and unrealized gain (loss) -- net Net realized gain on security transactions (Note 3) 44,047,563 Net change in unrealized appreciation or depreciation (147,155,473) Net loss on investments (103,107,910) Net decrease in net assets resulting from operations $ (82,384,310) See accompanying notes to financial statements. PAGE 87 Statement of changes in net assets Growth Trends Portfolio For the period from May 13, 1996 (commencement of operations) to July 31, 1996 Operations and distributions Investment income -- net $ 20,723,600 Net realized gain on investments 44,047,563 Net change in unrealized appreciation or depreciation (147,155,473) Net decrease in net assets resulting from operations (103,107,910) Net contributions 8,667,223,508 Total increase in net assets 8,584,839,198 Net assets at beginning of period (Note 1) -- Net assets at end of period $8,584,839,198 See accompanying notes to financial statements.
PAGE 88 Notes to financial statements Growth Trends Portfolio ___________________________________________________________________ 1. Summary of significant accounting policies The Growth Trends Portfolio (Portfolio) is a series of Growth Trust (Trust) and is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. Growth Trends Portfolio invests primarily in common stocks of companies showing potential for significant growth and operating in areas where economic or technological changes are occurring. The Declaration of Trust permits the Trustees to issue non-transferable interests in the Portfolio. The Portfolio commenced operations on May 13, 1996. At this time, an existing fund transferred its assets to the Portfolio in return for an ownership percentage of the Portfolio. Significant accounting polices followed by the Portfolio are summarized below: Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates. Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price; securities for which market quotations are not readily available are valued at fair value according to methods selected in good faith by the board. Determination of fair value involves, among other things, reference to market indexes, matrixes and data from independent brokers. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions In order to produce incremental earnings, protect gains and facilitate buying and selling of securities for investment purposes, the Portfolio may buy or write options traded on any U.S. or foreign exchange or in the over-the-counter market where the completion of the obligation is dependent upon the credit standing of the other party. The Portfolio also may buy and sell put and call options and write covered call options on portfolio securities and may write cash-secured put options. The risk in writing a call option is that the Portfolio gives up the opportunity of profit if the market price of the security increases. The risk in writing a put option is that the Portfolio may incur a loss if the market PAGE 89 price of the security decreases and the option is exercised. The risk in buying an option is that the Portfolio pays a premium whether or not the option is exercised. The Portfolio also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Portfolio will realize a gain or loss upon expiration or closing of the option transaction. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. Futures transactions In order to gain exposure to or protect itself from changes in the market, the Portfolio may buy and sell stock index futures contracts traded on any U.S. or foreign exchange. The Portfolio also may buy or write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the Portfolio is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Portfolio each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Portfolio recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars at the closing rate of exchange. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement dates on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Portfolio may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Portfolio and the resulting unrealized appreciation or depreciation PAGE 90 are determined using foreign currency exchange rates from an independent pricing service. The Portfolio is subject to the credit risk that the other party will not complete the obligations of the contract. Federal taxes For federal income tax purposes the Portfolio qualifies as a partnership and each investor in the Portfolio is treated as the owner of its proportionate share of the net assets, income, expenses and realized and unrealized gains and losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio does not pay any income dividends or capital gain distributions. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including level-yield amortization of premium and discount, is accrued daily. ___________________________________________________________________ 2. Fees and expenses The Trust, on behalf of the Portfolio, has entered into an Investment Management Services Agreement with American Express Financial Corporation (AEFC) for managing its portfolio. Under this agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Portfolio's average daily net assets in reducing percentages from 0.6% to 0.5% annually. The fees may be increased or decreased by a performance adjustment based on a comparison of the performance of Class A shares of IDS New Dimensions Fund to the Lipper Growth Fund Index. The maximum adjustment is 0.12% of the Portfolio's average daily net assets on an annual basis. The adjustment increased the fee by $1,130,056 for the period from May 13, 1996 to July 31, 1996. Under the agreement, the Trust also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees to be paid to an affiliate of AEFC; audit and certain legal fees; fidelity bond premiums; registration fees for units; Portfolio office expenses; consultants' fees; compensation of trustees; corporate filing fees; expenses incurred in connection with lending securities of the Portfolio; and any other expenses properly payable by the Trust or Portfolio, approved by the board. For the period from May 13, 1996 to July 31, 1996, the Portfolio's custodian fees were reduced by $6,141 as a result of earnings credits from overnight cash balances. Pursuant to a Placement Agency Agreement, American Express Financial Advisors Inc. acts as placement agent of the units of the Trust. PAGE 91 ___________________________________________________________________ 3. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $883,856,643 and $586,814,919, respectively, for the period from May 13, 1996 to July 31, 1996. For the same period, the portfolio turnover rate was 7%. Realized gains and losses are determined on an identified cost basis. Brokerage commissions paid to brokers affiliated with AEFC were $66,667 for this period. ___________________________________________________________________ 4. Lending of portfolio securities At July 31, 1996, securities valued at $4,997,200 were on loan to brokers. For collateral, the Portfolio received $4,377,600 in cash and U.S. government securities valued at $640,540. Income from securities lending amounted to $86,952 for the period ended July 31, 1996. The risks to the Portfolio of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. PAGE 92
Investments in securities Growth Trends Portfolio (Percentages represent value of July 31, 1996 investments compared to net assets) Investments in securities of unaffiliated issuers Common stocks (86.7%) Issuer Shares Value (a) Aerospace & defense (5.3%) Boeing 2,100,000 $ 185,850,000 Lockheed Martin 1,100,000 91,162,500 Raytheon 1,700,000 82,450,000 United Technologies 860,000 96,857,500 Total 456,320,000 Airlines (0.9%) AMR 1,000,000 (b) 78,875,000 Automotive & related (1.3%) Chrylser 4,000,000 113,500,000 Banks and savings & loans (5.4%) Citicorp 3,200,000 262,000,000 MBNA 1,700,000 47,387,500 Norwest 3,700,000 131,350,000 State Street Boston 500,000 25,125,000 Total 465,862,500 Beverages & tobacco (3.9%) Anheuser-Busch 1,150,000 85,962,500 Coca-Cola 3,200,000 150,000,000 PepsiCo 3,000,000 94,875,000 Total 330,837,500 Building materials & construction (0.6%) Tyco Intl 1,300,000 53,300,000 Chemicals (3.3%) IMC Global 1,100,000 43,450,000 Monsanto 7,000,000 218,750,000 Praxair 620,000 23,792,500 Total 285,992,500 Communications equipment & services (1.7%) ADC Telecommunications 1,100,000 (b) 46,475,000 Andrew 1,000,000 (b) 40,875,000 Tellabs 1,000,000 (b) 59,750,000 Total 147,100,000 PAGE 93 Computers & office equipment (16.2%) Ceridian 2,100,000 (b) 91,350,000 Cisco Systems 6,000,000 (b) 310,500,000 Computer Associates Intl 2,100,000 106,837,500 Computer Sciences 1,260,000 (b) 85,680,000 First Data 2,300,000 178,537,500 Hewlett-Packard 3,330,000 146,520,000 Microsoft 1,200,000 (b) 141,450,000 Oracle 4,000,000 (b) 156,500,000 Parametric Technology 2,500,000 (b) 104,062,500 3Com 1,850,000 (b) 72,843,750 Total 1,394,281,250 Electronics (2.6%) Intel 3,000,000 225,375,000 Energy (2.5%) Amoco 300,000 20,062,500 Exxon 1,000,000 82,250,000 Mobil 1,000,000 110,375,000 Total 212,687,500 Energy equipment & services (1.6%) Fluor 1,600,000 96,400,000 Sonat Offshore Drilling 800,000 39,200,000 Total 135,600,000 Financial services (1.6%) Dean Witter 800,000 40,700,000 Household Intl 600,000 44,700,000 Morgan Stanley 1,050,000 51,187,500 Total 136,587,500 Food (2.2%) ConAgra 4,000,000 170,000,000 Pioneer Hi-Bred Intl 400,000 21,500,000 Total 191,500,000 Health care (9.5%) Amgen 2,400,000 (b) 131,100,000 Boston Scientific 1,000,000 (b) 47,750,000 Guidant 800,000 40,600,000 Johnson & Johnson 3,600,000 171,900,000 Medtronic 1,700,000 80,537,500 Merck 1,600,000 102,800,000 Pfizer 3,400,000 237,575,000 Total 812,262,500 Health care services (1.3%) Cardinal Health 472,400 32,831,800 HBO & Co 1,200,000 73,500,000 Total 106,331,800 Household products (3.0%) Gillette 2,100,000 133,612,500 Procter & Gamble 1,400,000 125,125,000 Total 258,737,500 Industrial equipment & services (1.7%) Case 600,000 26,550,000 Deere 2,500,000 89,375,000 Illinois Tool Works 400,000 25,750,000 Total 141,675,000 Insurance (2.2%) ACE Limited 1,000,000 44,000,000 American Intl Group 1,000,000 94,125,000 UNUM 840,000 51,240,000 Total 189,365,000 PAGE 94 Leisure time & entertainment (1.8%) Marriott Intl 1,800,000 92,475,000 Mattel 800,000 19,800,000 Mirage Resorts 2,000,000 (b) 45,000,000 Total 157,275,000 Media (1.0%) A.H. Belo Series A 650,000 26,162,500 Infinity Broadcasting Cl A 900,000 (b) 24,750,000 Time Warner 1,000,000 34,875,000 Total 85,787,500 Metals (1.0%) Aluminum Co of America 1,400,000 81,200,000 Multi-industry conglomerates (5.4%) Alco Standard 1,650,000 72,187,500 Emerson Electric 1,477,200 124,638,750 General Electric 3,200,000 263,600,000 Total 460,426,250 Restaurants & lodging (2.6%) Hospitality Franchise System 1,700,000 (b) 102,000,000 McDonald's 2,000,000 92,750,000 Promus Hotel 1,000,000 (b) 27,250,000 Total 222,000,000 Retail (2.9%) Albertson's 1,300,000 53,300,000 Circuit City 700,000 22,050,000 Federated Department Stores 1,400,000 (b) 42,350,000 Home Depot 1,000,000 50,500,000 Kroger 500,000 (b) 18,875,000 Safeway 1,700,000 (b) 61,200,000 Total 248,275,000 Textiles & apparel (0.6%) NIKE Cl B 500,000 51,437,500 Utilities -- telephone (1.7%) AirTouch Communications 2,000,000 (b) 55,000,000 GTE 1,700,000 70,125,000 MFS Communications 700,000 (b) 22,050,000 Total 147,175,000 Foreign (2.9%) (c) British Airways ADR 400,000 (d) 32,600,000 Reuters Holdings ADR 700,000 43,837,500 Royal Dutch Petroleum 300,000 (d) 45,262,500 Schlumberger 700,000 56,000,000 SmithKline Beecham ADR 1,350,000 72,562,500 Total 250,262,500 Total common stocks (Cost: $5,322,021,805) $7,440,029,300
PAGE 95
Short-term securities (11.8%) Issuer Annualized Amount Value (a) yield on payable at date of maturity purchase U.S. government agencies (0.1%) Federal Home Loan Bank Disc Nt 08-05-96 5.32 600,000 $ 599,647 Federal Home Loan Mtge Corp Disc Nt 08-16-96 5.25 7,900,000 7,882,784 Total 8,482,431 Commercial paper (11.5%) ABN Amro 08-27-96 5.06 15,000,000 14,937,992 10-11-96 5.52 9,000,000 8,900,100 A.I. Credit 08-20-96 5.41 10,000,000 9,970,327 09-18-96 5.37 10,235,000 10,162,263 Alabama Power 08-23-96 5.31 6,700,000 6,678,340 American General Finance 08-01-96 5.38 1,500,000 1,500,000 08-01-96 5.35 10,100,000 10,100,000 Ameritech Capital Funding 08-13-96 5.40 13,600,000 13,572,004 08-27-96 5.41 10,400,000 (f) 10,355,472 08-29-96 5.42 1,200,000 (f) 1,194,564 Associates North America 09-25-96 5.42 10,000,000 9,913,640 AVCO Financial Services 08-01-96 5.40 3,500,000 3,500,000 08-19-96 5.34 9,000,000 8,974,609 08-29-96 5.34 8,300,000 8,263,616 10-22-96 5.49 8,700,000 8,588,676 10-30-96 5.49 5,400,000 5,321,952 10-31-96 5.50 18,000,000 17,741,480 BBV Finance (Delaware) 08-01-96 5.32 9,000,000 9,000,000 08-07-96 5.33 4,400,000 4,395,729 08-07-96 5.29 10,000,000 9,990,292 Becton Dickinson 08-28-96 5.44 7,000,000 6,971,650 BellSouth 08-28-96 5.42 6,958,000 6,928,555 09-17-96 5.38 9,800,000 9,731,678 Beneficial 09-12-96 5.39 10,000,000 9,937,583 CAFCO 09-11-96 5.44 15,000,000 14,901,870 Cargill 08-14-96 5.37 7,100,000 7,086,283 10-08-96 5.53 8,000,000 7,914,900 10-23-96 5.50 17,000,000 (f) 16,779,850 Chevron 08-21-96 5.43 13,000,000 12,966,995 Ciesco LP 08-21-96 5.40 6,100,000 (f) 6,079,364 08-23-96 5.34 7,000,000 6,974,122 09-13-96 5.45 10,000,000 9,928,793 10-01-96 5.43 10,000,000 9,904,417 CIT Group 08-16-96 5.41 15,000,000 14,966,375 Commercial Credit 08-08-96 5.39 5,400,000 5,394,361 Commerzbank U.S. Finance 08-13-96 5.35 8,000,000 7,982,181 08-14-96 5.39 16,700,000 16,661,560 PAGE 96 CPC Intl 09-04-96 5.44 8,300,000 (f) 8,254,972 09-16-96 5.47 11,000,000 (f) 10,919,977 09-24-96 5.37 12,000,000 (f) 11,899,533 09-26-96 5.45 20,000,000 (f) 19,824,338 10-22-96 5.49 10,300,000 (f) 10,168,203 Dean Witter 08-05-96 5.37 3,800,000 3,796,830 Ford Motor Credit 09-05-96 5.39 15,000,000 14,921,979 Gannett 10-11-96 5.54 12,400,000 (f) 12,262,360 10-15-96 5.52 5,400,000 (f) 5,376,337 10-16-96 5.54 10,700,000 (f) 10,572,982 General Electric Capital 08-14-96 5.37 12,000,000 11,971,840 08-22-96 5.43 15,000,000 14,946,404 08-28-96 5.44 10,000,000 9,954,418 08-29-96 5.32 6,500,000 6,473,206 Goldman Sachs 08-05-96 5.36 6,000,000 5,995,299 08-23-96 5.39 5,000,000 4,981,030 09-09-96 5.50 1,400,000 1,390,947 09-10-96 5.47 7,000,000 6,954,606 10-21-96 5.53 2,200,000 2,172,188 Harris Trust 08-09-96 5.37 10,400,000 10,399,592 Hewlett-Packard 08-29-96 5.42 4,500,000 4,479,153 09-17-96 5.42 2,430,000 2,411,536 Household Finance 08-26-96 5.42 10,000,000 9,958,074 09-19-96 5.44 20,000,000 19,841,873 Kredietbank North America Finance 09-03-96 5.16 10,000,000 9,945,270 Lilly (Eli) & Co. 08-09-96 5.40 11,200,000 11,186,610 Merrill Lynch 08-23-96 5.43 3,700,000 3,686,576 Metlife Funding 09-09-96 5.39 9,700,000 9,643,675 Mobil Australia Finance (Delaware) 08-15-96 5.40 8,000,000 (f) 7,980,371 08-30-96 5.41 10,000,000 (f) 9,951,305 09-18-96 5.48 8,000,000 (f) 7,937,946 09-18-96 5.45 9,908,000 (f) 9,831,146 10-02-96 5.49 7,000,000 (f) 6,932,012 Morgan Stanley Group 08-08-96 5.40 6,000,000 5,993,735 09-06-96 5.37 7,100,000 7,062,086 Motorola 08-28-96 5.35 13,523,000 13,469,043 Natl Australia Funding (Delaware) 08-13-96 5.39 6,700,000 6,686,316 NationsBank 08-06-96 5.37 15,000,000 14,999,931 09-04-96 5.40 8,000,000 7,999,173 Norfolk Southern 08-29-96 5.37 5,000,000 (f) 4,977,144 PACCAR 08-26-96 5.34 9,000,000 8,962,856 Penney (JC) Funding 09-17-96 5.43 9,000,000 8,932,984 Pfizer 08-02-96 5.40 20,000,000 (f) 19,997,017 Pitney Bowes Credit 08-29-96 5.42 9,000,000 8,958,859 10-09-96 5.49 3,500,000 3,452,048 10-16-96 5.51 8,800,000 8,695,537 Reed Elsevier 09-20-96 5.47 20,000,000 (f) 19,839,148 SAFECO Credit 08-05-96 5.35 8,100,000 8,093,845 08-23-96 5.41 7,500,000 7,475,387 09-23-96 5.40 1,000,000 991,768 PAGE 97 Sandoz 08-01-96 5.38 12,000,000 (f) 12,000,000 08-06-96 5.40 8,800,000 8,793,449 08-20-96 5.35 8,000,000 7,973,647 09-10-96 5.47 7,900,000 (f) 7,847,816 Siemens 08-20-96 5.41 9,100,000 9,070,024 09-18-96 5.44 1,300,000 1,289,701 SmithKline Beecham 08-13-96 5.40 15,600,000 15,572,024 Societe Generale North America 08-12-96 5.39 21,700,000 21,664,526 Southern California Gas 09-03-96 5.03 10,269,000 (f) 10,212,059 10-29-96 5.53 5,623,000 (f) 5,546,246 Southwestern Bell Telephone 09-10-96 5.37 8,500,000 8,449,567 Transamerica Financial 08-19-96 5.37 6,000,000 5,981,152 09-23-96 5.40 3,000,000 2,975,303 USAA Capital 08-07-96 5.40 9,100,000 9,091,856 08-12-96 5.37 14,000,000 13,972,579 08-19-96 5.34 10,000,000 9,968,587 08-23-96 5.41 6,700,000 6,678,013 09-06-96 5.33 5,100,000 5,072,970 U S WEST Communications 09-17-96 5.44 9,600,000 9,525,755 09-24-96 5.40 8,600,000 8,530,856 10-24-96 5.49 10,000,000 9,868,958 Total 987,866,146 Letters of credit (0.2%) First Chicago - Commed Fuel 08-15-96 5.42 9,134,000 9,112,039 09-09-96 5.35 9,203,000 9,149,960 Total 18,261,999 Total short-term securities (Cost: $1,014,865,742) $1,014,610,576 Total investments in securities of unaffiliated issuers (Cost: $6,336,887,547) $8,454,639,876 Investments in securities of affiliated issuer (e) Common Stock (1.5%) Issuer Shares Value (a) Reynolds & Reynolds Cl A 2,750,000 $ 133,031,250 Total investments in securities of affiliated issuer (Cost: $72,334,647) 133,031,250 Total investments in securities (Cost: $6,409,222,194) (g) $8,587,671,126 PAGE 98 Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Presently non-income producing. (c) Foreign security values are stated in U.S. dollars. (d) Security is partially or fully on loan. See Note 4 to the financial statements. (e) Investments representing 5% or more of the outstanding voting securities of the issuer. (f) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. (g) At July 31, 1996, the cost of securities for federal income tax purposes was $6,409,235,783 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation 2,247,642,210 Unrealized depreciation (69,206,867) Net unrealized appreciation 2,178,435,343
PAGE 99 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 6, 1996 o Statement of Assets and Liabilities, July 31, 1996 o Statement of Operations, ten months ended July 31, 1996 o Statement of Changes in Net Assets, for the two-year period ended Sept. 30, 1995 and July 31, 1996 o Notes to Financial Statements o Investments in Securities, July 31, 1996 o Notes to Investments in Securities For Growth Trends Portfolio: o Independent Auditors' Report dated September 6, 1996 o Statement of Assets and Liabilities, July 31, 1996 o Statement of Operations, period from May 13, 1996 to July 31, 1996 o Statement of Changes in Net Assets, period from May 13, 1996 to July 31, 1996 o Notes to Financial Statements o Investments in Securities, July 31, 1996 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, is filed electronically herewith. 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. Form 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. PAGE 100 6. Form of Distribution Agreement between Registrant and American Express Financial Advisors Inc., dated March 20, 1995, filed electronically as Exhibit 6 to Registrant's Post-Effective Amendment No. 53 to Registration Statement No. 2-28529 is incorporated herein by reference. 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). Form of Custodian Agreement between Registrant and American Express Trust Company, dated March 20, 1995, filed electronically as Exhibit 8(a) to Registrant's Post-Effective Amendment No. 53 to Registration Statement No. 2-28529 is incorporated herein by reference. 8(b). Form 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). Form of Custody Agreement between Morgan Stanley Trust Company and IDS Bank and Trust dated May, 1993 was filed electronically as Exhibit 8(b) to Registrant's Post-Effective Amendment No. 54 to Registration Statement No. 2-28529, is herein incorporated by reference. 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). Form of Transfer Agency Agreement between Registrant and American Express Financial Corporation, dated March 20, 1995, filed electronically as Exhibit 9(b) to Registrant's Post-Effective Amendment No. 53 to Registration Statement No. 2-28529 is incorporated herein by reference. 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). Form of Shareholder Service Agreement between Registrant and American Express Financial Advisors Inc., dated March 20, 1995, filed electronically as Exhibit 9(d) to Registrant's Post-Effective Amendment No. 53 to Registration Statement No. 2-28529 is incorporated herein by reference. 9(e). Form of Administrative Services Agreement between Registrant and American Express Financial Corporation, dated March 20, 1995, filed electronically as Exhibit 9(e) to Registrant's Post-Effective Amendment No. 53 to Registration Statement No. 2-28529 is incorporated herein by reference. PAGE 101 9(f). Form 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. 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. Form of Plan and Agreement of Distribution between Registrant and American Express Financial Advisors Inc., dated March 20, 1995, filed electronically as Exhibit 15 to Registrant's Post-Effective Amendment No. 53 to Registration Statement No. 2-28529 is incorporated herein by reference. 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 Schedule, 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 November 10, 1994, filed electronically as Exhibit 18(a) to Registrant's Post-Effective Amendment No. 52, is incorporated herein by reference. 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 April 11, 1996, is filed electronically herewith. 19(d). Officers' Power of Attorney dated April 11, 1996, is filed electronically herewith. Item 25. Persons Controlled by or Under Common Control with Registrant: None. PAGE 102 Item 26. Number of Holders of Securities (1) (2) Number of Record Holders as of Title of Class Sept. 10, 1996 Common Stock 500,179 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 103 PAGE 1
Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation) Directors and officers of American Express Financial Corporation who are directors and/or officers of one or more other companies: Ronald G. Abrahamson, Vice President--Service Quality and Reengineering American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Service Quality and Reengineering Douglas A. Alger, Vice President--Total Compensation American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Total Compensation Peter J. Anderson, Director and Senior Vice President--Investments American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Investments IDS Advisory Group Inc. Director and Chairman of the Board IDS Capital Holdings Inc. Director and President IDS International, Inc. Director, Chairman of the Board and Executive Vice President IDS Securities Corporation Executive Vice President- Investments NCM Capital Management Group, Inc. 2 Mutual Plaza Director 501 Willard Street Durham, NC 27701 Ward D. Armstrong, Vice President-Sales and Marketing, American Express Institutional Services American Express Financial Advisors IDS Tower 10 Vice President-Sales and Minneapolis, MN 55440 Marketing, American Express Institutional Services Joseph M. Barsky III, Vice President--Senior Portfolio Manager American Express Financial Advisors IDS Tower 10 Vice President-Senior Minneapolis, MN 55440 Portfolio Manager IDS Advisory Group Inc. Vice President Robert C. Basten, Vice President--Tax and Business Services American Express Financial Advisors IDS Tower 10 Vice President-Tax Minneapolis, MN 55440 and Business Services American Express Tax & Business Director, President and Services Inc. Chief Executive Officer PAGE 2 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) Timothy V. Bechtold, Vice President--Risk Management Products American Express Financial Advisors IDS Tower 10 Vice President-Risk Minneapolis, MN 55440 Management Products IDS Life Insurance Company Vice President-Risk Management Products Carl E. Beihl, Vice President--Strategic Technology Planning American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Strategic Technology Planning Alan F. Bignall, Vice President--Technology and Development American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Technology and Development John C. Boeder, Vice President--Mature Market Group American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Mature Market Group IDS Life Insurance Company of New York Box 5144 Director Albany, NY 12205 Karl J. Breyer, Director, Senior Vice President--Corporate Affairs and General Counsel American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Corporate Affairs and Special Counsel American Express Minnesota Foundation Director IDS Aircraft Services Corporation Director and President Daniel J. Candura, Vice President--Marketing Support American Express Financial Advisors IDS Tower 10 Vice President-Marketing Minneapolis, MN 55440 Support Cynthia M. Carlson, Vice President--American Express Securities Services American Enterprise Investment IDS Tower 10 Director, President and Services Inc. Minneapolis, MN 55440 Chief Executive Officer American Express Financial Advisors Vice President-American Express Securities Services Orison Y. Chaffee III, Vice President--Field Real Estate American Express Financial Advisors IDS Tower 10 Vice President-Field Minneapolis, MN 55440 Real Estate PAGE 3 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) James E. Choat, Director and Senior Vice President--Field Management American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Field Management American Express Insurance Agency of Nevada Inc. Vice President--North Central Region American Express Minnesota Foundation Director IDS Insurance Agency of Alabama Inc. Vice President--North Central Region IDS Insurance Agency of Arkansas Inc. Vice President--North Central Region IDS Insurance Agency of Massachusetts Inc. Vice President--North Central Region IDS Insurance Agency of New Mexico Inc. Vice President--North Central Region IDS Insurance Agency of North Carolina Inc. Vice President--North Central Region IDS Insurance Agency of Ohio Inc. Vice President--North Central Region IDS Insurance Agency of Wyoming Inc. Vice President-- North Central Region Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty AMEX Assurance Co. Director and President American Express Financial Advisors IDS Tower 10 Vice President and General Minneapolis, MN 55440 Manager-IDS Property Casualty IDS Property Casualty Insurance Co. I WEG Blvd. Director and President DePere, Wisconsin 54115 Colleen Curran, Vice President and Assistant General Counsel American Express Financial Advisors IDS Tower 10 Vice President and Minneapolis, MN 55440 Assistant General Counsel American Express Service Corporation Vice President and Chief Legal Counsel Alan R. Dakay, Vice President--Institutional Products Group American Centurion Life Assurance Co. IDS Tower 10 Director and Vice Chairman Minneapolis, MN 55440 and President, Financial Institutions Division American Enterprise Life Insurance Co. Director and President IDS Life Insurance Company Vice President - Institutional Insurance Marketing American Express Financial Advisors Vice President - Institutional Products Group Regenia David, Vice President--Systems Services American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Systems Services PAGE 4 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) William H. Dudley, Director and Executive Vice President--Investment Operations American Express Financial Advisors IDS Tower 10 Director and Executive Minneapolis, MN 55440 Vice President- Investment Operations IDS Advisory Group Inc. Director IDS Capital Holdings Inc. Director IDS Futures Corporation Director IDS Futures III Corporation Director IDS International, Inc. Director IDS Securities Corporation Director, Chairman of the Board, President and Chief Executive Officer Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel American Express Financial Advisors IDS Tower 10 Senior Vice President and Minneapolis, MN 55440 General Counsel American Express Insurance Agency of Nevada Inc. Director and Vice President IDS Insurance Agency of Alabama Inc. Director and Vice President IDS Insurance Agency of Arkansas Inc. Director and Vice President IDS Insurance Agency of Massachusetts Inc. Director and Vice President IDS Insurance Agency of New Mexico Inc. Director and Vice President IDS Insurance Agency of North Carolina Inc. Director and Vice President IDS Insurance Agency of Ohio Inc. Director and Vice President IDS Insurance Agency of Wyoming Inc. Director and Vice President IDS Real Estate Services, Inc. Vice President Investors Syndicate Development Corp. Director Robert M. Elconin, Vice President--Government Relations American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Government Relations IDS Life Insurance Company Vice President Mark A. Ernst, Vice President--Retail Services American Enterprise Investment IDS Tower 10 Director Services Inc. Minneapolis, MN 55440 American Express Financial Advisors Vice President- Retail Services American Express Tax & Business Director and Chairman of Services Inc. the Board Gordon M. Fines, Vice President--Mutual Fund Equity Investments American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Mutual Fund Equity Investments IDS Advisory Group Inc. Executive Vice President Robert G. Gilbert, Vice President--Real Estate American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Real Estate PAGE 5 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) John J. Golden, Vice President--Field Compensation Development American Express Financial Advisors IDS Tower 10 Vice President-Field Minneapolis, MN 55440 Compensation Development Harvey Golub, Director American Express Company American Express Tower Chairman and Chief World Financial Center Executive Officer New York, New York 10285 American Express Travel Chairman and Chief Related Services Company, Inc. Executive Officer Morris Goodwin Jr., Vice President and Corporate Treasurer American Centurion Life Assurance Co. Vice President and Treasurer American Enterprise Investment IDS Tower 10 Vice President and Services Inc. Minneapolis, MN 55440 Treasurer American Enterprise Life Insurance Vice President and Company Treasurer American Express Financial Advisors Vice President and Corporate Treasurer American Express Insurance Agency of Nevada Inc. Vice President and Treasurer American Express Minnesota Foundation Vice President and Treasurer American Express Tax & Business Vice President and Services Inc. Treasurer American Partners Life Insurance Co. Vice President and Treasurer AMEX Assurance Co. Vice President and Treasurer IDS Advisory Group Inc. Vice President and Treasurer IDS Aircraft Services Corporation Vice President and Treasurer IDS Cable Corporation Director, Vice President and Treasurer IDS Cable II Corporation Director, Vice President and Treasurer IDS Capital Holdings Inc. Vice President and Treasurer IDS Certificate Company Vice President and Treasurer IDS Deposit Corp. Director, President and Treasurer IDS Futures Corp. Director IDS Futures III Corp. Director IDS Insurance Agency of Alabama Inc. Vice President and Treasurer IDS Insurance Agency of Arkansas Inc. Vice President and Treasurer IDS Insurance Agency of Massachusetts Inc. Vice President and Treasurer PAGE 6 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) IDS Insurance Agency of New Mexico Inc. Vice President and Treasurer IDS Insurance Agency of North Carolina Inc. Vice President and Treasurer IDS Insurance Agency of Ohio Inc. Vice President and Treasurer IDS Insurance Agency of Wyoming Inc. Vice President and Treasurer IDS International, Inc. Vice President and Treasurer IDS Life Insurance Company Vice President and Treasurer IDS Life Series Fund, Inc. Vice President and Treasurer IDS Life Variable Annuity Funds A&B Vice President and Treasurer IDS Management Corporation Director, Vice President and Treasurer IDS Partnership Services Corporation Director, Vice President and Treasurer IDS Plan Services of California, Inc. Vice President and Treasurer IDS Property Casualty Insurance Co. Vice President and Treasurer IDS Real Estate Services, Inc Vice President and Treasurer IDS Realty Corporation Director, Vice President and Treasurer IDS Sales Support Inc. Director, Vice President and Treasurer IDS Securities Corporation Vice President and Treasurer Investors Syndicate Development Corp. Vice President and Treasurer National Computer Systems, Inc. 11000 Prairie Lakes Drive Director Minneapolis, MN 55440 NCM Capital Management Group, Inc. 2 Mutual Plaza Director 501 Willard Street Durham, NC 27701 Sloan Financial Group, Inc. Director Suzanne Graf, Vice President--Systems Services American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Systems Services David A. Hammer, Vice President and Marketing Controller American Express Financial Advisors IDS Tower 10 Vice President and Minneapolis, MN 55440 Marketing Controller IDS Plan Services of California, Inc. Director and Vice President PAGE 7 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) Lorraine R. Hart, Vice President--Insurance Investments American Enterprise Life IDS Tower 10 Vice President-Investments Insurance Company Minneapolis, MN 55440 American Express Financial Advisors Vice President-Insurance Investments American Partners Life Insurance Co. Director and Vice President-Investments AMEX Assurance Co. Vice President-Investments IDS Certificate Company Vice President-Investments IDS Life Insurance Company Vice President-Investments IDS Life Series Fund, Inc. Vice President-Investments IDS Life Variable Annuity Funds A and B Vice President-Investments IDS Property Casualty Insurance Company Vice President-Investment Officer Investors Syndicate Development Corp. Director and Vice President-Investments Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management American Express Financial Advisors IDS Tower 10 Vice President-Assured Minneapolis, MN 55440 Assets Product Development & Management James G. Hirsh, Vice President and Assistant General Counsel American Express Financial Advisors IDS Tower 10 Vice President and Minneapolis, MN 55440 Assistant General Counsel IDS Securities Corporation Director, Vice President and General Counsel Darryl G. Horsman, Vice President--Product Development and Technology, American Express Institutional Retirement Services American Express Trust Company IDS Tower 10 Director and President Minneapolis, MN 55440 Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer American Enterprise Investment IDS Tower 10 Vice President and Chief Services Inc. Minneapolis, MN 55440 Compliance Officer American Express Financial Advisors Vice President- Government and Customer Relations American Express Service Corporation Vice President and Chief Compliance Officer IDS Securities Corporation Vice President and Chief Compliance Officer David R. Hubers, Director, President and Chief Executive Officer American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive Minneapolis, MN 55440 Officer and President American Express Service Corporation Director and Executive Vice President PAGE 8 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) AMEX Assurance Co. Director IDS Aircraft Services Corporation Director IDS Certificate Company Director IDS Life Insurance Company Director IDS Plan Services of California, Inc. Director and President IDS Property Casualty Insurance Co. Director Marietta L. Johns, Director and Senior Vice President--Field Management American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Field Management James E. Kaare, Vice President--Marketing Promotions American Express Financial Advisors IDS Tower 10 Vice President-Marketing Minneapolis, MN 55440 Promotions Linda B. Keene, Vice President--Market Development American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Market Development G. Michael Kennedy, Vice President--Investment Services and Investment Research American Express Financial Advisors IDS Tower 10 Vice President-Investment Minneapolis, MN 55440 Services and Investment Research Susan D. Kinder, Director and Senior Vice President--Human Resources American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Human Resources American Express Minnesota Foundation Director Richard W. Kling, Director and Senior Vice President--Risk Management Products American Centurion Life Assurance Co. Director American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of Minneapolis, MN 55440 the Board American Express Financial Advisors Senior Vice President- Risk Management Products American Express Insurance Agency of Nevada Inc. Director and President American Express Service Corporation Vice President American Partners Life Insurance Co. Director and Chairman of the Board AMEX Assurance Co. Director and Chairman of the Board IDS Certificate Company Director and Chairman of the Board IDS Insurance Agency of Alabama Inc. Director and President IDS Insurance Agency of Arkansas Inc. Director and President IDS Insurance Agency of Massachusetts Inc. Director and President IDS Insurance Agency of New Mexico Inc. Director and President IDS Insurance Agency of North Carolina Inc. Director and President IDS Insurance Agency of Ohio Inc. Director and President PAGE 9 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) IDS Insurance Agency of Wyoming Inc. Director and President IDS Life Insurance Company Director and President IDS Life Series Fund, Inc. Director and President IDS Life Variable Annuity Funds A and B Director and Chairman of the Board and President IDS Property Casualty Insurance Co. Director and Chairman of the Board IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the of New York Albany, NY 12205 Board and President Paul F. Kolkman, Vice President--Actuarial Finance American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Actuarial Finance IDS Life Insurance Company Director and Executive Vice President IDS Life Series Fund, Inc. Vice President and Chief Actuary IDS Property Casualty Insurance Company Director Claire Kolmodin, Vice President--Service Quality American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Service Quality Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems American Express Financial Advisors IDS Tower 10 Director and Senior Vice Minneapolis, MN 55440 President-Field Management and Business Systems Edward Labenski, Jr., Vice President--Senior Portfolio Manager American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Senior Portfolio Manager IDS Advisory Group Inc. Senior Vice President Kurt A. Larson, Vice President--Senior Portfolio Manager American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Senior Portfolio Manager Lori J. Larson, Vice President--Variable Assets Product Development American Express Financial Advisors IDS Tower 10 Vice President-Variable Minneapolis, MN 55440 Assets Product Development IDS Cable Corporation Director and Vice President IDS Cable II Corporation Director and Vice President IDS Futures Brokerage Group Assistant Vice President- General Manager/Director IDS Futures Corporation Director and Vice President IDS Futures III Corporation Director and Vice President IDS Management Corporation Director and Vice President PAGE 10 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) IDS Partnership Services Corporation Director and Vice President IDS Realty Corporation Director and Vice President Ryan R. Larson, Vice President--IPG Product Development American Centurion Life Assurance Co. Director and Vice President-Product Development American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 IPG Product Development IDS Life Insurance Company Vice President- Annuity Product Development Daniel E. Laufenberg, Vice President and Chief U.S. Economist American Express Financial Advisors IDS Tower 10 Vice President and Minneapolis, MN 55440 Chief U.S. Economist Richard J. Lazarchic, Vice President--Senior Portfolio Manager American Express Financial Advisors IDS Tower 10 Vice President-Senior Minneapolis, MN 55440 Portfolio Manager Peter A. Lefferts, Director and Senior Vice President--Corporate Strategy and Development American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Corporate Strategy and Development American Express Trust Company Director IDS Plan Services of California, Inc. Director Investors Syndicate Development Corp. Director Douglas A. Lennick, Director and Executive Vice President--Private Client Group American Express Financial Advisors IDS Tower 10 Director and Executive Minneapolis, MN 55440 Vice President-Private Client Group Jonathan S. Linen, Director Mary J. Malevich, Vice President--Senior Portfolio Manager American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Senior Portfolio Manager Fred A. Mandell, Vice President--Field Marketing Readiness American Express Financial Advisors IDS Tower 10 Vice President-Field Minneapolis, MN 55440 Marketing Readiness PAGE 11 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) William J. McKinney, Vice President--Field Management Support American Express Financial Advisors IDS Tower 10 Vice President-Field Minneapolis, MN 55440 Management Support Thomas W. Medcalf, Vice President--Senior Portfolio Manager American Express Financial Advisors IDS Tower 10 Vice President-Senior Minneapolis, MN 55440 Portfolio Manager William C. Melton, Vice President-International Research and Chief International Economist American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 International Research and Chief International Economist Janis E. Miller, Vice President--Variable Assets American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Variable Assets IDS Cable Corporation Director and President IDS Cable II Corporation Director and President IDS Futures Corporation Director and President IDS Futures III Corporation Director and President IDS Life Insurance Company Director and Executive Vice President-Variable Assets IDS Life Series Fund, Inc. Director IDS Life Variable Annuity Funds A&B Director IDS Management Corporation Director and President IDS Partnership Services Corporation Director and President IDS Realty Corporation Director and President IDS Life Insurance Company of New York Box 5144 Executive Vice President Albany, NY 12205 James A. Mitchell, Director and Executive Vice President--Marketing and Products American Enterprise Investment IDS Tower 10 Director Services Inc. Minneapolis, MN 55440 American Express Financial Advisors Executive Vice President- Marketing and Products American Express Service Corporation Senior Vice President American Express Tax and Business Director Services Inc. AMEX Assurance Co. Director IDS Certificate Company Director IDS Life Insurance Company Director, Chairman of the Board and Chief Executive Officer IDS Plan Services of California, Inc. Director IDS Property Casualty Insurance Co. Director PAGE 12 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) Pamela J. Moret, Vice President--Services American Express Financial Advisors IDS Tower 10 Vice President-Services Minneapolis, MN 55440 American Express Minnesota Foundation Director and President Barry J. Murphy, Director and Senior Vice President--Client Service American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Client Service IDS Life Insurance Company Director and Executive Vice President-Client Service Mary Owens Neal, Vice President--Mature Market Segment American Express Financial Advisors Inc. IDS Tower 10 Vice President- Minneapolis, MN 55440 Mature Market Segment Robert J. Neis, Vice President--Technology Services American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Technology Services James R. Palmer, Vice President--Taxes American Express Financial Advisors IDS Tower 10 Vice President-Taxes Minneapolis, MN 55440 IDS Aircraft Services Corp. Vice President IDS Life Insurance Company Vice President-Taxes Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business American Express Financial Advisors IDS Tower 10 Vice President-Specialty Minneapolis, MN 55440 Service Teams and Emerging Business Susan B. Plimpton, Vice President--Segmentation Development and Support American Express Financial Advisors IDS Tower 10 Vice President-- Minneapolis, MN 55440 Segmentation Development and Support Ronald W. Powell, Vice President and Assistant General Counsel American Express Financial Advisors IDS Tower 10 Vice President and Minneapolis, MN 55440 Assistant General Counsel IDS Cable Corporation Vice President and Assistant Secretary IDS Cable II Corporation Vice President and Assistant Secretary IDS Management Corporation Vice President and Assistant Secretary IDS Partnership Services Corporation Vice President and Assistant Secretary PAGE 13 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) IDS Plan Services of California, Inc. Vice President and Assistant Secretary IDS Realty Corporation Vice President and Assistant Secretary James M. Punch, Vice President--Geographic Service Teams American Express Financial Advisors IDS Tower 10 Vice President-Geographic Minneapolis, MN 55440 Services Teams Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments American Express Financial Advisors IDS Tower 10 Vice President-- Minneapolis, MN 55440 Taxable Mutual Fund Investments IDS Advisory Group Inc. Vice President ReBecca K. Roloff, Vice President--Private Client Group American Express Financial Advisors IDS Tower 10 Vice President-Private Minneapolis, MN 55440 Client Group Stephen W. Roszell, Vice President--Advisory Institutional Marketing American Express Financial Advisors IDS Tower 10 Vice President-Advisory Minneapolis, MN 55440 Institutional Marketing IDS Advisory Group Inc. President and Chief Executive Officer IDS International, Inc. Director IDS Fund Management Limited Director Robert A. Rudell, Vice President--American Express Institutional Retirement Services American Express Financial Advisors IDS Tower 10 Vice President-American Minneapolis, MN 55440 Express Institutional Services American Express Trust Company Director and Chairman of the Board IDS Sales Support Inc. Director and President John P. Ryan, Vice President and General Auditor American Express Financial Advisors IDS Tower 10 Vice President and General Minneapolis, MN 55440 Auditor Erven A. Samsel, Director and Senior Vice President--Field Management American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Field Management American Express Insurance Agency of Nevada Inc. Vice President- New England Region IDS Insurance Agency of Alabama Inc. Vice President- New England Region IDS Insurance Agency of Arkansas Inc. Vice President- New England Region PAGE 14 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) IDS Insurance Agency of Massachusetts Inc. Vice President- New England Region IDS Insurance Agency of New Mexico Inc. Vice President- New England Region IDS Insurance Agency of North Carolina Inc. Vice President- New England Region IDS Insurance Agency of Ohio Inc. Vice President- New England Region IDS Insurance Agency of Wyoming Inc. Vice President- New England Region Stuart A. Sedlacek, Vice President--Assured Assets American Centurion Life Assurance Co. Director and Chairman and President American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive Minneapolis, MN 55440 Vice President, Assured Assets American Express Financial Advisors Vice President- Assured Assets American Partners Life Insurance Co. Director and President IDS Certificate Company Director and President IDS Life Insurance Company Director and Executive Vice President, Assured Assets Investors Syndicate Development Corp. Director and Chairman of the Board and President Donald K. Shanks, Vice President--Property Casualty American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Property Casualty IDS Property Casualty Insurance Co. Senior Vice President F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real Minneapolis, MN 55440 Estate Loan Management American Express Financial Advisors Vice President-Senior Portfolio Manager, Insurance Investments American Partners Life Insurance Co. Vice President-Real Estate Loan Management AMEX Assurance Co. Vice President IDS Certificate Company Vice President-Real Estate Loan Management IDS Life Insurance Company Vice President-Real Estate Loan Management IDS Partnership Services Corporation Vice President IDS Real Estate Services Inc. Director and Vice President IDS Realty Corporation Vice President IDS Life Insurance Company of New York Box 5144 Vice President and Albany, NY 12205 Assistant Treasurer PAGE 15 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) Judy P. Skoglund, Vice President--Human Resources and Organization Development American Express Financial Advisors IDS Tower 10 Vice President-Human Minneapolis, MN 55440 Resources and Organization Development Ben C. Smith, Vice President--Workplace Marketing American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Workplace Marketing William A. Smith, Vice President and Controller--Private Client Group American Express Financial Advisors IDS Tower 10 Vice President and Minneapolis, MN 55440 Controller-Private Client Group Bridget Sperl, Vice President--Human Resources Management Services American Express Financial Advisors IDS Tower 10 Vice President-Human Minneapolis, MN 55440 Resources Management Services William A. Stoltzmann, Vice President and Assistant General Counsel American Express Financial Advisors IDS Tower 10 Vice President and Minneapolis, MN 55440 Assistant General Counsel American Partners Life Insurance Co. Director, Vice President, General Counsel and Secretary IDS Life Insurance Company Vice President, General Counsel and Secretary American Enterprise Life Insurance P.O. Box 534 Director, Vice President, Company Minneapolis, MN 55440 General Counsel and Secretary James J. Strauss, Vice President--Corporate Planning and Analysis American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Corporate Planning and Analysis Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD American Express Financial Advisors IDS Tower 10 Vice President-Information Minneapolis, MN 55440 Resource Management/ISD John R. Thomas, Director and Senior Vice President--Information and Technology American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Information and Technology PAGE 16 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) Melinda S. Urion, Director, Senior Vice President and Chief Financial Officer American Enterprise Life IDS Tower 10 Vice President and Insurance Company Minneapolis, MN 55440 Controller American Express Financial Advisors Senior Vice President and Chief Financial Officer American Express Trust Company Director American Partners Life Insurance Co. Director and Vice President IDS Life Insurance Company Director, Executive Vice President and Controller IDS Life Series Fund, Inc. Vice President and Controller Wesley W. Wadman, Vice President--Senior Portfolio Manager American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Senior Portfolio Manager IDS Advisory Group Inc. Executive Vice President IDS Fund Management Limited Director and Vice Chairman IDS International, Inc. Senior Vice President Norman Weaver Jr., Director and Senior Vice President--Field Management American Express Financial Advisors IDS Tower 10 Senior Vice President-- Minneapolis, MN 55440 Field Management American Express Insurance Agency of Nevada Inc. Vice President-Southeast Region IDS Insurance Agency of Alabama Inc. Vice President-Pacific Region IDS Insurance Agency of Arkansas Inc. Vice President-Pacific Region IDS Insurance Agency of Massachusetts Inc. Vice President-Pacific Region IDS Insurance Agency of New Mexico Inc. Vice President-Pacific Region IDS Insurance Agency of North Carolina Inc. Vice President-Pacific Region IDS Insurance Agency of Ohio Inc. Vice President-Pacific Region IDS Insurance Agency of Wyoming Inc. Vice President-Pacific Region Michael L. Weiner, Vice President--Tax Research and Audit American Express Financial Advisors IDS Tower 10 Vice President-Tax Research Minneapolis, MN 55440 and Audit American Express Service Corporation Assistant Treasurer IDS Capital Holdings Inc. Vice President IDS Futures Brokerage Group Vice President IDS Futures Corporation Vice President, Treasurer and Secretary IDS Futures III Corporation Vice President, Treasurer and Secretary PAGE 17 Item 28. Business and Other Connections of Investment Adviser (American Express Financial Corporation)(cont'd) Lawrence J. Welte, Vice President--Investment Administration American Express Financial Advisors IDS Tower 10 Vice President- Minneapolis, MN 55440 Investment Administration IDS Securities Corporation Director, Executive Vice President and Chief Operating Officer Jeffry F. Welter, Vice President--Equity and Fixed Income Trading American Express Financial Advisors IDS Tower 10 Vice President-Equity Minneapolis, MN 55440 and Fixed Income Trading William N. Westhoff, Director, Senior Vice President and Global Chief Investment Officer American Enterprise Life Insurance IDS Tower 10 Director Company Minneapolis, MN 55440 American Express Financial Advisors Senior Vice President and Global Chief Investment Officer IDS Fund Management Limited Director IDS International, Inc. Director IDS Partnership Services Corporation Director and Vice President IDS Real Estate Services Inc. Director, Chairman of the Board and President IDS Realty Corporation Director and Vice President Investors Syndicate Development Corp. Director Edwin M. Wistrand, Vice President and Assistant General Counsel American Express Financial Advisors IDS Tower 10 Vice President and Minneapolis, MN 55440 Assistant General Counsel Michael R. Woodward, Director and Senior Vice President--Field Management American Express Financial Advisors IDS Tower 10 Senior Vice President- Minneapolis, MN 55440 Field Management American Express Insurance Agency of Nevada Inc. Vice President- North Region IDS Insurance Agency of Alabama Inc. Vice President- North Region IDS Insurance Agency of Arkansas Inc. Vice President- North Region IDS Insurance Agency of Massachusetts Inc. Vice President- North Region IDS Insurance Agency of New Mexico Inc. Vice President- North Region IDS Insurance Agency of North Carolina Inc. Vice President- North Region IDS Insurance Agency of Ohio Inc. Vice President- North Region IDS Insurance Agency of Wyoming Inc. Vice President- North Region IDS Life Insurance Company Box 5144 Director of New York Albany, NY 12205 /TABLE PAGE 18 Item 29. Principal Underwriters. (a) American Express Financial Advisors acts as principal underwriter for the following investment companies: IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS Discovery Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax- Exempt Fund, Inc.; IDS International Fund, Inc.; IDS Investment Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy Fund, Inc.; IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money Fund, Inc.; IDS Utilities Income Fund, Inc. and IDS Certificate Company. (b) As to each director, officer or partner of the principal underwriter: Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Ronald G. Abrahamson Vice President- None IDS Tower 10 Service Quality and Minneapolis, MN 55440 Reengineering Douglas A. Alger Vice President-Total None IDS Tower 10 Compensation Minneapolis, MN 55440 Peter J. Anderson Senior Vice President- Vice IDS Tower 10 Investments President-- Minneapolis, MN 55440 Investments Ward D. Armstrong Vice President- None IDS Tower 10 Sales and Marketing, Minneapolis, MN 55440 IDS Institutional Retirement Services Joseph M. Barsky III Vice President-Senior None IDS Tower 10 Portfolio Manager Minneapolis, MN 55440 Robert C. Basten Vice President-Tax None IDS Tower 10 and Business Services Minneapolis, MN 55440 Timothy V. Bechtold Vice President-Risk None IDS Tower 10 Management Products Minneapolis, MN 55440 John D. Begley Group Vice President- None Suite 100 Ohio/Indiana 7760 Olentangy River Rd. Columbus, OH 43235 PAGE 19 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Carl E. Beihl Vice President- None IDS Tower 10 Strategic Technology Minneapolis, MN 55440 Planning Jack A. Benjamin Group Vice President- None Suite 200 Greater Pennsylvania 3500 Market Street Camp Hill, PA 17011 Alan F. Bignall Vice President- None IDS Tower 10 Technology and Minneapolis, MN 55440 Development Brent L. Bisson Group Vice President- None Ste 900 E. Westside Twr Los Angeles Metro 11835 West Olympic Blvd. Los Angeles, CA 90064 John C. Boeder Vice President- None IDS Tower 10 Mature Market Group Minneapolis, MN 55440 Walter K. Booker Group Vice President- None Suite 200 New Jersey 3500 Market Street Camp Hill, NJ 17011 Bruce J. Bordelon Group Vice President- None Galleria One Suite 1900 Gulf States Galleria Blvd. Metairie, LA 70001 Charles R. Branch Group Vice President- None Suite 200 Northwest West 111 North River Dr Spokane, WA 99201 Karl J. Breyer Senior Vice President- None IDS Tower 10 Corporate Affairs and Minneapolis, MN 55440 Special Counsel Daniel J. Candura Vice President- None IDS Tower 10 Marketing Support Minneapolis, MN 55440 Cynthia M. Carlson Vice President- None IDS Tower 10 American Express Minneapolis, MN 55440 Securities Services PAGE 20 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Orison Y. Chaffee III Vice President-Field None IDS Tower 10 Real Estate Minneapolis, MN 55440 James E. Choat Senior Vice President- None IDS Tower 10 Field Management Minneapolis, MN 55440 Kenneth J. Ciak Vice President and None IDS Property Casualty General Manager- 1400 Lombardi Avenue IDS Property Casualty Green Bay, WI 54304 Roger C. Corea Group Vice President- None 290 Woodcliff Drive Upstate New York Fairport, NY 14450 Henry J. Cormier Group Vice President- None Commerce Center One Connecticut 333 East River Drive East Hartford, CT 06108 John M. Crawford Group Vice President- None Suite 200 Arkansas/Springfield/Memphis 10800 Financial Ctr Pkwy Little Rock, AR 72211 Kevin F. Crowe Group Vice President- None Suite 312 Carolinas/Eastern Georgia 7300 Carmel Executive Pk Charlotte, NC 28226 Colleen Curran Vice President and None IDS Tower 10 Assistant General Counsel Minneapolis, MN 55440 Alan R. Dakay Vice President- None IDS Tower 10 Institutional Products Minneapolis, MN 55440 Group Regenia David Vice President- None IDS Tower 10 Systems Services Minneapolis, MN 55440 Scott M. DiGiammarino Group Vice President- None Suite 500 Washington/Baltimore 8045 Leesburg Pike Vienna, VA 22182 PAGE 21 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Bradford L. Drew Group Vice President- None Two Datran Center Eastern Florida Penthouse One B 9130 S. Dadeland Blvd. Miami, FL 33156 William H. Dudley Director and Executive Board member IDS Tower 10 Vice President- Minneapolis MN 55440 Investment Operations Gordon L. Eid Senior Vice President None IDS Tower 10 and General Counsel Minneapolis, MN 55440 Robert M. Elconin Vice President- None IDS Tower 10 Government Relations Minneapolis, MN 55440 Mark A. Ernst Vice President- None IDS Tower 10 Retail Services Minneapolis, MN 55440 Joseph Evanovich Jr. Group Vice President- None One Old Mill Nebraska/Iowa/Dakotas 101 South 108th Avenue Omaha, NE 68154 Louise P. Evenson Group Vice President- None Suite 200 San Francisco Bay Area 1333 N. California Blvd. Walnut Creek, CA 94596 Gordon M. Fines Vice President- None IDS Tower 10 Mutual Fund Equity Minneapolis MN 55440 Investments Douglas L. Forsberg Group Vice President- None Suite 100 Portland/Eugene 7931 N. E. Halsey Portland, OR 97213 William P. Fritz Group Vice President- None Suite 160 Northern Missouri 12855 Flushing Meadows Dr St. Louis, MO 63131 Carl W. Gans Group Vice President- None 8500 Tower Suite 1770 Twin City Metro 8500 Normandale Lake Blvd. Bloomington, MN 55437 PAGE 22 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Robert G. Gilbert Vice President- None IDS Tower 10 Real Estate Minneapolis, MN 55440 John J. Golden Vice President- None IDS Tower 10 Field Compensation Minneapolis, MN 55440 Development Morris Goodwin Jr. Vice President and None IDS Tower 10 Corporate Treasurer Minneapolis, MN 55440 Suzanne Graf Vice President- None IDS Tower 10 Systems Services Minneapolis, MN 55440 Bruce M. Guarino Group Vice President- None Suite 1736 Hawaii 1585 Kapiolani Blvd. Honolulu, HI 96814 David A. Hammer Vice President None IDS Tower 10 and Marketing Minneapolis, MN 55440 Controller Teresa A. Hanratty Group Vice President- None Suites 6&7 Northern New England 169 South River Road Bedford, NH 03110 John R. Hantz Group Vice President- None Suite 107 Detroit Metro 17177 N. Laurel Park Livonia, MI 48154 Robert L. Harden Group Vice President- None Two Constitution Plaza Boston Metro Boston, MA 02129 Lorraine R. Hart Vice President- None IDS Tower 10 Insurance Investments Minneapolis, MN 55440 Scott A. Hawkinson Vice President-Assured None IDS Tower 10 Assets Product Development Minneapolis, MN 55440 and Management Brian M. Heath Group Vice President- None Suite 150 North Texas 801 E. Campbell Road Richardson, TX 75081 PAGE 23 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant James G. Hirsh Vice President and None IDS Tower 10 Assistant General Minneapolis, MN 55440 Counsel David J. Hockenberry Group Vice President- None 30 Burton Hills Blvd. Eastern Tennessee Suite 175 Nashville, TN 37215 Kevin P. Howe Vice President- None IDS Tower 10 Government and Minneapolis, MN 55440 Customer Relations and Chief Compliance Officer David R. Hubers Chairman, Chief Board member IDS Tower 10 Executive Officer and Minneapolis, MN 55440 President Marietta L. Johns Senior Vice President- None IDS Tower 10 Field Management Minneapolis, MN 55440 James E. Kaarre Vice President- None IDS Tower 10 Marketing Promotions Minneapolis, MN 55440 Linda B. Keene Vice President- None IDS Tower 10 Market Development Minneapolis, MN 55440 G. Michael Kennedy Vice President-Investment None IDS Tower 10 Services and Investment Minneapolis, MN 55440 Research Susan D. Kinder Senior Vice President- None IDS Tower 10 Human Resources Minneapolis, MN 55440 Richard W. Kling Senior Vice President- None IDS Tower 10 Risk Management Products Minneapolis, MN 55440 Paul F. Kolkman Vice President- None IDS Tower 10 Actuarial Finance Minneapolis, MN 55440 Claire Kolmodin Vice President- None IDS Tower 10 Service Quality Minneapolis, MN 55440 PAGE 24 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant David S. Kreager Group Vice President- None Ste 108 Trestle Bridge V Greater Michigan 5136 Lovers Lane Kalamazoo, MI 49002 Steven C. Kumagai Director and Senior None IDS Tower 10 Vice President-Field Minneapolis, MN 55440 Management and Business Systems Mitre Kutanovski Group Vice President- None Suite 680 Chicago Metro 8585 Broadway Merrillville, IN 48410 Edward Labenski Jr. Vice President- None IDS Tower 10 Senior Portfolio Minneapolis, MN 55440 Manager Kurt A. Larson Vice President- None IDS Tower 10 Senior Portfolio Minneapolis, MN 55440 Manager Lori J. Larson Vice President- None IDS Tower 10 Variable Assets Product Minneapolis, MN 55440 Development Ryan R. Larson Vice President- None IDS Tower 10 IPG Product Development Minneapolis, MN 55440 Daniel E. Laufenberg Vice President and None IDS Tower 10 Chief U.S. Economist Minneapolis, MN 55440 Richard J. Lazarchic Vice President- None IDS Tower 10 Senior Portfolio Minneapolis, MN 55440 Manager Peter A. Lefferts Senior Vice President- None IDS Tower 10 Corporate Strategy and Minneapolis, MN 55440 Development Douglas A. Lennick Director and Executive None IDS Tower 10 Vice President-Private Minneapolis, MN 55440 Client Group Mary J. Malevich Vice President- None IDS Tower 10 Senior Portfolio Minneapolis, MN 55440 Manager PAGE 25 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Fred A. Mandell Vice President- None IDS Tower 10 Field Marketing Readiness Minneapolis, MN 55440 Daniel E. Martin Group Vice President- None Suite 650 Pittsburgh Metro 5700 Corporate Drive Pittsburgh, PA 15237 William J. McKinney Vice President- None IDS Tower 10 Field Management Minneapolis, MN 55440 Support Thomas W. Medcalf Vice President- None IDS Tower 10 Senior Portfolio Manager Minneapolis, MN 55440 William C. Melton Vice President- None IDS Tower 10 International Research Minneapolis, MN 55440 and Chief International Economist Janis E. Miller Vice President- None IDS Tower 10 Variable Assets Minneapolis, MN 55440 James A. Mitchell Executive Vice President- None IDS Tower 10 Marketing and Products Minneapolis, MN 55440 John P. Moraites Group Vice President- None Union Plaza Suite 900 Kansas/Oklahoma 3030 Northwest Expressway Oklahoma City, OK 73112 Pamela J. Moret Vice President-Services None IDS Tower 10 Minneapolis, MN 55440 Alan D. Morgenstern Group Vice President- None Suite 200 Central California/ 3500 Market Street Western Nevada Camp Hill, NJ 17011 Barry J. Murphy Senior Vice President- None IDS Tower 10 Client Service Minneapolis, MN 55440 Mary Owens Neal Vice President- None IDS Tower 10 Mature Market Segment Minneapolis, MN 55440 PAGE 26 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Robert J. Neis Vice President- None IDS Tower 10 Technology Services Minneapolis, MN 55440 Operations Ronald E. Newton Group Vice President- None 319 Southbridge St. Rhode Island/Central Auburn, MA 01501 Massachusetts Thomas V. Nicolosi Group Vice President- None Suite 220 New York Metro Area 500 Mamaroneck Avenue Harrison, NY 10528 James R. Palmer Vice President- None IDS Tower 10 Taxes Minneapolis, MN 55440 Carla P. Pavone Vice President- None IDS Tower 10 Specialty Service Teams Minneapolis, MN 55440 and Emerging Business Susan B. Plimpton Vice President- None IDS Tower 10 Segmentation Development Minneapolis, MN 55440 and Support Larry M. Post Group Vice President- None One Tower Bridge Philadelphia Metro 100 Front Street 8th Fl West Conshohocken, PA 19428 Ronald W. Powell Vice President and None IDS Tower 10 Assistant General Minneapolis, MN 55440 Counsel James M. Punch Vice President- None IDS Tower 10 Geographical Service Minneapolis, MN 55440 Teams Frederick C. Quirsfeld Vice President-Taxable None IDS Tower 10 Mutual Fund Investments Minneapolis, MN 55440 R. Daniel Richardson Group Vice President- None Suite 800 Southern Texas Arboretum Plaza One 9442 Capital of Texas Hwy N. Austin, TX 78759 PAGE 27 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Roger B. Rogos Group Vice President- None One Sarasota Tower Western Florida Suite 700 Two N. Tamiami Trail Sarasota, FL 34236 ReBecca K. Roloff Vice President-Private None IDS Tower 10 Client Group Minneapolis, MN 55440 Stephen W. Roszell Vice President- None IDS Tower 10 Advisory Institutional Minneapolis, MN 55440 Marketing Max G. Roth Group Vice President- None Suite 201 S IDS Ctr Wisconsin/Upper Michigan 1400 Lombardi Avenue Green Bay, WI 54304 Robert A. Rudell Vice President- None IDS Tower 10 American Express Minneapolis, MN 55440 Institutional Retirement Services John P. Ryan Vice President and None IDS Tower 10 General Auditor Minneapolis, MN 55440 Erven Samsel Senior Vice President- None 45 Braintree Hill Park Field Management Suite 402 Braintree, MA 02184 Russell L. Scalfano Group Vice President- None Suite 201 Illinois/Indiana/Kentucky 101 Plaza East Blvd. Evansville, IN 47715 William G. Scholz Group Vice President- None Suite 205 Arizona/Las Vegas 7333 E Doubletree Ranch Rd Scottsdale, AZ 85258 Stuart A. Sedlacek Vice President- None IDS Tower 10 Assured Assets Minneapolis, MN 55440 Donald K. Shanks Vice President- None IDS Tower 10 Property Casualty Minneapolis, MN 55440 PAGE 28 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant F. Dale Simmons Vice President-Senior None IDS Tower 10 Portfolio Manager, Minneapolis, MN 55440 Insurance Investments Judy P. Skoglund Vice President- None IDS Tower 10 Human Resources and Minneapolis, MN 55440 Organization Development Julian W. Sloter Group Vice President- None Ste 1700 Orlando FinCtr Orlando/Jacksonville 800 North Magnolia Ave. Orlando, FL 32803 Ben C. Smith Vice President- None IDS Tower 10 Workplace Marketing Minneapolis, MN 55440 William A. Smith Vice President and None IDS Tower 10 Controller-Private Minneapolis, MN 55440 Client Group James B. Solberg Group Vice President- None 466 Westdale Mall Eastern Iowa Area Cedar Rapids, IA 52404 Bridget Sperl Vice President- None IDS Tower 10 Human Resources Minneapolis, MN 55440 Management Services Paul J. Stanislaw Group Vice President- None Suite 1100 Southern California Two Park Plaza Irvine, CA 92714 Lois A. Stilwell Group Vice President- None Suite 433 Outstate Minnesota Area/ 9900 East Bren Road North Dakota/Western Wisconsin Minnetonka, MN 55343 William A. Stoltzmann Vice President and None IDS Tower 10 Assistant General Minneapolis, MN 55440 Counsel James J. Strauss Vice President- None IDS Tower 10 Corporate Planning Minneapolis, MN 55440 and Analysis Jeffrey J. Stremcha Vice President-Information None IDS Tower 10 Resource Management/ISD Minneapolis, MN 55440 PAGE 29 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Neil G. Taylor Group Vice President- None Suite 425 Seattle/Tacoma 101 Elliott Avenue West Seattle, WA 98119 John R. Thomas Senior Vice President- Board member IDS Tower 10 Information and Minneapolis, MN 55440 Technology Melinda S. Urion Senior Vice President Treasurer IDS Tower 10 and Chief Financial Minneapolis, MN 55440 Officer Peter S. Velardi Group Vice President- None Suite 180 Atlanta/Birmingham 1200 Ashwood Parkway Atlanta, GA 30338 Charles F. Wachendorfer Group Vice President- None Suite 100 Denver/Salt Lake City/ Stanford Plaza II Albuquerque 7979 East Tufts Ave Pkwy Denver, CO 80237 Wesley W. Wadman Vice President- None IDS Tower 10 Senior Portfolio Minneapolis, MN 55440 Manager Norman Weaver Jr. Senior Vice President- None 1010 Main St Suite 2B Field Management Huntington Beach, CA 92648 Michael L. Weiner Vice President- None IDS Tower 10 Tax Research and Audit Minneapolis, MN 55440 Lawrence J. Welte Vice President- None IDS Tower 10 Investment Administration Minneapolis, MN 55440 Jeffry M. Welter Vice President- None IDS Tower 10 Equity and Fixed Income Minneapolis, MN 55440 Trading William N. Westhoff Senior Vice President and None IDS Tower 10 Global Chief Investment Minneapolis, MN 55440 Officer PAGE 30 Item 29(b). As to each director, officer or partner of the principal underwriter (American Express Financial Advisors): (cont'd) Positions and Name and Principal Position and Offices Offices with Business Address with Underwriter Registrant Thomas L. White Group Vice President- None Suite 200 Cleveland Metro 28601 Chagrin Blvd. Woodmere, OH 44122 Eric S. Williams Group Vice President- None Suite 250 Virginia 3951 Westerre Parkway Richmond, VA 23233 Edwin M. Wistrand Vice President and None IDS Tower 10 Assistant General Minneapolis, MN 55440 Counsel Michael R. Woodward Senior Vice President- None 32 Ellicott St Ste 100 Field Management Batavia, NY 14020 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 104 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, 1996. IDS NEW DIMENSIONS FUND, INC. By /s/ Melinda S. Urion Melinda S. Urion, Treasurer By /s/ William R. Pearce** William R. Pearce, President 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, 1996. Signature Capacity /s/ William R. Pearce** President and Principal William R. Pearce Executive Officer and Director /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 105 Signature Capacity /s/ Melvin R. Laird* Director Melvin R. Laird /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 November 10, 1994, filed electronically as Exhibit 18(a) to Registrant's Post-Effective Amendment No. 52, by: ______________________________ Leslie L. Ogg ** 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, by: ______________________________ Leslie L. Ogg PAGE 106 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, 1996. GROWTH TRUST By /s/ Melinda S. Urion Melinda S. Urion, Treasurer By /s/ William R. Pearce** William R. Pearce, President 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, 1996. Signatures Capacity /s/ William R. Pearce** Trustee William R. Pearce /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 107 Signatures Capacity Trustee Edson W. Spencer /s/ John R. Thomas* Trustee John R. Thomas 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: Leslie L. Ogg ** Signed pursuant to Officers' Power of Attorney dated April 11, 1996, filed electronically herewith as Exhibit 19(d), by: Leslie L. Ogg PAGE 108 CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 56 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. EX-99 2 EXHIBIT INDEX PAGE 1 IDS New Dimensions Fund, Inc. File No. 2-28529/811-1629 EXHIBIT INDEX Exhibit 2: By-laws, as amended January 10, 1996. Exhibit 8(b): Form 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. Exhibit 9(f): Form of Agreement and Declaration of Unitholders between IDS New Dimensions Fund, Inc. and Strategist Income Fund, Inc. dated May 13, 1996. Exhibit 11: Independent Auditors' Consent. Exhibit 17: Financial Data Schedule. Exhibit 19(c): Trustees Power of Attorney dated April 11, 1996. Exhibit 19(d): Officers' Power of Attorney dated April 11, 1996. EX-99.2-BY-LAWS 3 2 BY-LAWS PAGE 1 Effective: June 13, 1986 Amended: 5/14/87, 1/12/89, 1/10/96 BY-LAWS OF IDS NEW DIMENSIONS FUND, INC. ARTICLE I Corporate Seal The corporate seal shall bear the inscription "IDS New Dimensions Fund, Inc., Minnesota, Incorporated 1986". ARTICLE II Meeting of Shareholders Section 1. No regular meeting of shareholders need be held, however, a majority of directors present at a duly held meeting may call a regular meeting of shareholders by fixing the date, time and place for a meeting. A regular meeting of the shareholders shall include an election of directors. No meeting shall be considered a regular meeting unless specifically designated as such in the notice of meeting. Regular meetings may be held no more frequently than once per year. If a regular meeting of shareholders has not been held during the immediately preceding 15 months, a shareholder or shareholders holding three percent or more of the voting power of all shares entitled to vote may demand a regular meeting of shareholders by written notice of demand given to the chief executive officer or chief financial officer of the Fund. Within 30 days after receipt of the demand by one of those officers, the Board of Directors shall cause a regular meeting of shareholders to be called and held on notice no later than 90 days after receipt of the demand, all at the expense of the Fund. If the Board fails to cause a regular meeting to be called, the shareholder or shareholders making the demand may call the regular meeting by giving notice as required by the laws of Minnesota at the expense of the Fund. Section 2. The holders of at least ten percent (10%) of the shares outstanding and entitled to vote, present in person or by proxy, shall constitute a quorum, but the holders of a smaller amount may adjourn from time to time without further notice, other than by notice at the time, until a quorum is secured at any such adjourned meeting. In case a quorum is not present, the meeting may be adjourned from time to time without notice other than by notice at the meeting. At any adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. Section 3. At each meeting of the shareholders, the polls may be opened and closed, the proxies and ballots may be received and taken in charge, and all questions touching the qualification of voters, the validity of proxies, and acceptances or rejections of PAGE 2 votes may be decided by two (2) inspectors of election. Inspectors may be appointed by the Board of Directors before or at the meeting. If no such appointment shall have been made or if any inspector be absent or fails to act, the presiding officer at the meeting shall appoint a person or persons to fill such vacancy. Inspectors shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law. Section 4. Special meetings of the shareholders may be called at any time as provided for by the laws of the State of Minnesota. Section 5. Shareholders shall take action by the affirmative vote of the holders of a majority of the voting power of the shares present and entitled to vote except where a larger portion is otherwise required. ARTICLE III Directors Section 1. An organizational meeting of the Board of Directors shall be held as soon as convenient to a majority of the directors, after the final adjournment of each regular meeting of the shareholders, and no notice shall be required. Other meetings of the Board of Directors may be previously scheduled or called by the President or any two directors. Notice of specially called meetings shall be sufficient if given to each director at least five days prior thereto by mail or one day prior thereto by telephone, telegraph or in person, unless such notice period is waived by each director. Section 2. The Board of Directors shall fix and change, as it may from time to time determine, by majority vote, the compensation to be paid the directors, officers and all employees appointed by the Board of Directors. Section 3. A director may give advance written consent or opposition to a proposal to be acted on at a Board meeting. If the director is not present at the meeting, consent or opposition to a proposal does not constitute presence for purposes of determining the existence of a quorum, but consent or opposition shall be counted as a vote in favor of or against the proposal and shall be entered in the minutes of the meeting, if the proposal acted on at the meeting is substantially the same or has substantially the same effect as the proposal to which the director has consented or objected. Section 4. A majority of the directors shall constitute a quorum, but a smaller number may adjourn from time to time without notice, other than by announcement at the meeting, until a quorum is secured; and, likewise, in case a quorum is present, the meeting may be adjourned from time to time without notice other than by announcement at the meeting. At any adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. PAGE 3 Section 5. The Board of Directors may, by resolution passed by a majority of the whole Board, designate an Executive Committee of two or more directors, which may meet at stated times or on notice to all by any of their number during intervals between meetings of the Board. The Executive Committee shall advise with and aid the officers of the Fund in all matters concerning its interests and the management of its business, and generally perform such duties and exercise such powers as may be delegated to it from time to time by the Board of Directors. Vacancies in the membership of such Executive Committee shall be filled by the Board of Directors. Section 6. From time to time the Board of Directors may, by resolution passed by a majority of the whole Board, appoint any other committee or committees for any purpose or purposes, which committee or committees shall have such powers as shall be specified in the resolution of appointment. Section 7. The quorum for such committee established by the Board of Directors is two members regardless of the number of members serving on the committee. Section 8. Any action required or permitted to be taken at any meeting of the Board of Directors or of a duly appointed committee of the Board of Directors may be taken in any manner permitted by law. ARTICLE IV Officers Section 1. The Fund shall have a President who shall serve as the chief executive officer, a Treasurer who shall serve as the chief financial officer, and may have such other officers as the Board of Directors may choose from time to time. Section 2. The Treasurer shall be the chief financial officer of the Fund, shall keep or cause to be kept full and accurate accounts of receipts and disbursements in books belonging to the Fund, and shall perform such other duties as the Board of Directors may from time to time prescribe or require. Section 3. Any person designated by the Board of Directors as a Vice President shall be vested with all the powers and required to perform all the duties of the President in the President's absence or disability, shall at all times be vested with the same power as the President to sign and deliver in the name of the Fund any deeds, mortgages, bonds, contracts or other instruments pertaining to the business of the Fund, and shall perform such other duties as may be prescribed by the Board of Directors. Section 4. Any person designed by the Board of Directors as Secretary shall attend all meetings of the shareholders of the Fund, the Board of Directors, and such other meetings as may be designated by the Board of Directors. The Secretary shall record all of the proceedings of such meetings in a book or books to be kept for that purpose; shall have custody of the seal, stock PAGE 4 certificate books and minute books of the Fund; may affix the seal of the Fund to any instrument and perform such additional duties as shall be assigned by the Board of Directors. Section 5. The officers of the Fund shall hold office until their successors are chosen and qualify in their stead. Any officer chosen and appointed by the Board of Directors may be removed either with or without cause at any time by the Board of Directors. ARTICLE V Capital Stock Shares of capital stock shall be uncertificated. 1/12/89 ARTICLE VI Transfers 1/12/89 Section 1. Shares of stock of the Fund shall be transferred on the books of the Fund at the request of the holder thereof in person or of her or his duly authorized attorney upon surrender of the certificate or certificates therefor, if any, or in their absence by a request for transfer in a form acceptable to the Fund that may include the request be in writing, and be signed by the registered holder or by his duly authorized attorney in the manner specified by the Fund. No transfer or assignment of shares shall affect the right of the Fund to pay any dividend due upon the shares, or to treat the holder of record as the holder in fact, until such transfer or assignment is registered on the books of the Fund and the Fund shall be entitled to treat the holder of record of any of its shares as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to, or interest in, such shares on the part of any person whether or not it shall have express or other notice thereof, save as may be expressly provided by law. Section 2. The Board of Directors shall have power and authority from time to time to appoint one or more transfer agents and/or clerks and registrars for the securities issued by the Fund and to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of such securities. Section 3. If any security issued by the Fund be lost, stolen, mutilated or destroyed, the security may be transferred upon giving of a satisfactory bond of indemnity in an amount which, in the judgment of the Board of Directors, is sufficient to indemnify the Fund against any claim that may result therefrom. PAGE 5 ARTICLE VII Definitions For all purposes of the Articles of Incorporation and these By-Laws, the term "business day" shall be defined as a day with respect to which the New York Stock Exchange is open for business. ARTICLE VIII Custodian or Trustee Agreements The Fund shall enter into a custodian or trustee agreement with a bank or trust company having aggregate capital, surplus and undivided profits of not less than $2,000,000 for the custody of the Fund's securities and other assets. All securities and cash assets owned or acquired by the Fund shall be held by such custodian or trustee pursuant to the terms of such agreement and the Fund shall deposit or cause to be deposited with such custodian or trustee all such securities and cash assets. The agreement between the Fund and the custodian or trustee may be terminated at any time by a vote of a majority of the outstanding shares of the Fund. ARTICLE IX Miscellaneous 1/10/96 Section 1. The fiscal year of the Fund shall begin on the first day of August in each year and end on the thirty-first day of July following. Section 2. If the sale of shares issued by the Fund shall at any time be discontinued, the Board of Directors may in its discretion, pursuant to resolution, deduct from the value of the assets an amount equal to the brokerage commissions, transfer taxes, and charges, if any, which would be payable on the sale of such securities if they were then being sold. ARTICLE X Indemnification 5/14/87 Section 1. Each person made or threatened to be made a party to or is involved (including, without limitation, as a witness) in any actual or threatened action, suit or proceeding whether civil, criminal, administrative, arbitration, or investigative, including a proceeding by or in the right of the Fund by reason of the former or present capacity as a director or officer of the Fund or who, while a director or officer of the Fund, is or was serving at the request of the Fund or whose duties as a director or officer involve or involved service as a director, officer, partner, trustee or agent of another organization or employee benefit plan, PAGE 6 whether the basis of any proceeding is alleged action in an official capacity or in any capacity while serving as a director, officer, partner, trustee or agent, shall be indemnified and held harmless by the Fund to the full extent authorized by the Minnesota Business Corporation Act, as the same or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Fund to provide broader indemnification rights than the law permitted the Fund to provide prior to such amendment, or by any other applicable law as then in effect, against judgments, penalties, fines including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements and reasonable expenses, including attorneys' fees and disbursements, incurred in connection therewith) and such indemnification shall continue as to any person who has ceased to be a director or officer and shall inure to the benefit of the person's heirs, executors and administrators provided, however, in an action brought against the Fund to enforce rights to indemnification, the director or officer shall be indemnified only if the action was authorized by the Board of Directors of the Fund. The right to indemnification conferred by this Section shall be a contract right and shall include the right to be paid by the Fund in advance of the final disposition of a proceeding for expenses incurred in connection therewith provided, however, such payment of expenses shall be made only upon receipt of a written undertaking by the director or officer to repay all amounts so paid if it is ultimately determined that the director or officer is not entitled to indemnification. Section 2. Each person who upon written request to the Fund has not received payment within thirty days may at any time thereafter bring suit against the Fund to recover any unpaid amount and, to the extent successful, in whole or in part, shall be entitled to be paid the expenses of prosecuting such suit. Each person shall be presumed to be entitled to indemnification upon filing a written request for payment and the Fund shall have the burden of proof to overcome the presumption that the director or officer is not so entitled. Neither the determination by the Fund, whether by the Board of Directors, special legal counsel or by shareholder, nor the failure of the Fund to have made any determination shall be a defense or create the presumption that the director or officer is not entitled to indemnification. Section 3. The right to indemnification and to the payment of expenses prior to any final determination shall not be exclusive of any other right which any person may have or hereinafter acquire under any statute, provision of the Articles of Incorporation, by- law, agreement, vote of shareholders or otherwise and notwithstanding any provisions in this Article X, the Fund is not obligated to make any payment with respect to any claim for which payment is required to be made to or on behalf of the director or officer under any insurance policy, except with respect to any excess beyond the amount of required payment under such insurance and no indemnification will be made in violation of the provisions of the Investment Company Act of 1940. EX-99.8B-ADDEN 4 8(B) ADDENDUM TO THE CUSTODIAN AGREEMENT PAGE 1 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 ____________________________ Leslie L. Ogg Vice President AMERICAN EXPRESS TRUST COMPANY By ____________________________ Chandrakant A. Patel Vice President AMERICAN EXPRESS FINANCIAL CORPORATION By ____________________________ Richard W. Kling Senior Vice President EX-99.9F-AGMT-DEC 5 9(F) AGREEMENT AND DECLARATION OF UNITHOLDERS PAGE 1 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. ______________________________ Leslie L. Ogg Vice President and General Counsel STRATEGIST GROWTH FUND, INC. Strategist Growth Trends Fund ______________________________ James A. Mitchell President EX-99.11-CONSENT 6 11 INDEPENDENT AUDITORS' CONSENT PAGE 1 INDEPENDENT AUDITORS' CONSENT ___________________________________________________________________ The Board and shareholders IDS New Dimensions Fund, Inc.: The audits referred to in our report dated Sept. 6, 1996 included the related supplementary financial statement data in Schedule III on pages 2-3 of Exhibit 11 to Part C of this Registration Statement. The supplementary financial statement data is the responsibility of Fund Management. Our responsibility is to express an opinion on this supplementary financial statement data based on our audit. In our opinion, such supplementary financial statement data, when considered with the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We consent to the use of our report 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 27, 1996 PAGE 2
SCHEDULE III IDS NEW DIMENSIONS FUND, INC. INVESTMENTS IN AFFILIATES (AS DEFINED IN SECTION 2 (a) OF THE INVESTMENT COMPANY ACT OF 1940) YEAR ENDED JULY 31, 1996 COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E ________________________________________________________________________________________________________________ Amount of equity in Name of issuer and Number of shares held net profit and loss Amount of Value at title of issuer at close of year for the year dividend income May 31, 1996 ________________________________________________________________________________________________________________ Common stocks: Reynolds & Reynolds 2,750,000 NA 858,000 $ 133,031,250.00 PAGE 3 SCHEDULE III (CONT'D) IDS NEW DIMENSIONS FUND, INC. CHANGES IN INVESTMENTS IN AFFILIATES FOR THE FISCAL YEAR ENDED JULY 31, 1996 Gross Gross Shares held purchases sales Shares held Market value Amount of Name of issuer at beginning and and at close at dividend and title of issuer of year additions reductions of year May 31, 1996 income __________________________________________________________________________________________________________________________ Common stock: Reynolds & Reynolds 2,020,000 730,000 -- 2,750,000 $133,031,250.00 858,000
EX-27 7 17 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
6 1 IDS NEW DIMENSIONS FUND CLASS A 12-MOS JUL-31-1996 JUL-31-1996 6409222194 8560236452 0 0 0 8560236452 0 0 1060248 1060248 0 6078513736 303463317 265330276 36187086 0 266762530 0 2177712852 5625868997 68802653 42564392 0 (59783156) 51583889 325967822 463113975 840665686 0 (39448269) (162150758) 0 1078880570 (593204599) 198597094 2043073509 56020175 188034728 0 0 25565271 0 51583889 5180677115 17.24 .17 1.88 0 (.75) 0 18.54 .94 0 0
6 [NUMBER] 2 IDS NEW DIMENSIONS FUND CLASS B 12-MOS JUL-31-1996 JUL-31-1996 [INVESTMENTS-AT-COST] 6409222194 [INVESTMENTS-AT-VALUE] 8560236452 [RECEIVABLES] 0 [ASSETS-OTHER] 0 [OTHER-ITEMS-ASSETS] 0 [TOTAL-ASSETS] 8560236452 [PAYABLE-FOR-SECURITIES] 0 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 1060248 [TOTAL-LIABILITIES] 1060248 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 6078513736 [SHARES-COMMON-STOCK] 32283002 [SHARES-COMMON-PRIOR] 8716087 [ACCUMULATED-NII-CURRENT] 36187086 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 266762530 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 2177712852 [NET-ASSETS] 593497390 [DIVIDEND-INCOME] 68802653 [INTEREST-INCOME] 42564392 [OTHER-INCOME] 0 [EXPENSES-NET] (59783156) [NET-INVESTMENT-INCOME] 51583889 [REALIZED-GAINS-CURRENT] 325967822 [APPREC-INCREASE-CURRENT] 463113975 [NET-CHANGE-FROM-OPS] 840665686 [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] (1492148) [DISTRIBUTIONS-OF-GAINS] (8111389) [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 442410073 [NUMBER-OF-SHARES-REDEEMED] (24532266) [SHARES-REINVESTED] 9572264 [NET-CHANGE-IN-ASSETS] 2043073509 [ACCUMULATED-NII-PRIOR] 56020175 [ACCUMULATED-GAINS-PRIOR] 188034728 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 25565271 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 51583889 [AVERAGE-NET-ASSETS] 348561467 [PER-SHARE-NAV-BEGIN] 17.18 [PER-SHARE-NII] .03 [PER-SHARE-GAIN-APPREC] 1.88 [PER-SHARE-DIVIDEND] 0 [PER-SHARE-DISTRIBUTIONS] (.71) [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 18.38 [EXPENSE-RATIO] 1.71 [AVG-DEBT-OUTSTANDING] 0 [AVG-DEBT-PER-SHARE] 0
6 [NUMBER] 3 IDS NEW DIMENSIONS FUND CLASS Y 12-MOS JUL-31-1996 JUL-31-1996 [INVESTMENTS-AT-COST] 6409222194 [INVESTMENTS-AT-VALUE] 8560236452 [RECEIVABLES] 0 [ASSETS-OTHER] 0 [OTHER-ITEMS-ASSETS] 0 [TOTAL-ASSETS] 8560236452 [PAYABLE-FOR-SECURITIES] 0 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 1060248 [TOTAL-LIABILITIES] 1060248 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 6078513736 [SHARES-COMMON-STOCK] 126066164 [SHARES-COMMON-PRIOR] 103825250 [ACCUMULATED-NII-CURRENT] 36187086 [OVERDISTRIBUTION-NII] 0 [ACCUMULATED-NET-GAINS] 266762530 [OVERDISTRIBUTION-GAINS] 0 [ACCUM-APPREC-OR-DEPREC] 2177712852 [NET-ASSETS] 2339809817 [DIVIDEND-INCOME] 68802653 [INTEREST-INCOME] 42564392 [OTHER-INCOME] 0 [EXPENSES-NET] (59783156) [NET-INVESTMENT-INCOME] 51583889 [REALIZED-GAINS-CURRENT] 325967822 [APPREC-INCREASE-CURRENT] 463113975 [NET-CHANGE-FROM-OPS] 840665686 [EQUALIZATION] 0 [DISTRIBUTIONS-OF-INCOME] (19131175) [DISTRIBUTIONS-OF-GAINS] (68560165) [DISTRIBUTIONS-OTHER] 0 [NUMBER-OF-SHARES-SOLD] 862302096 [NUMBER-OF-SHARES-REDEEMED] (560414845) [SHARES-REINVESTED] 87691340 [NET-CHANGE-IN-ASSETS] 2043073509 [ACCUMULATED-NII-PRIOR] 56020175 [ACCUMULATED-GAINS-PRIOR] 188034728 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 25565271 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 51583889 [AVERAGE-NET-ASSETS] 2194611265 [PER-SHARE-NAV-BEGIN] 17.26 [PER-SHARE-NII] .19 [PER-SHARE-GAIN-APPREC] 1.88 [PER-SHARE-DIVIDEND] 0 [PER-SHARE-DISTRIBUTIONS] (.77) [RETURNS-OF-CAPITAL] 0 [PER-SHARE-NAV-END] 18.56 [EXPENSE-RATIO] .77 [AVG-DEBT-OUTSTANDING] 0 [AVG-DEBT-PER-SHARE] 0
6 [NUMBER] 2 GROWTH TRENDS PORTFOLIO 12-MOS JUL-31-1996 JUL-31-1996 [INVESTMENTS-AT-COST] 6409222194 [INVESTMENTS-AT-VALUE] 8587671126 [RECEIVABLES] 44389083 [ASSETS-OTHER] 640540 [OTHER-ITEMS-ASSETS] 0 [TOTAL-ASSETS] 8636094664 [PAYABLE-FOR-SECURITIES] 45520458 [SENIOR-LONG-TERM-DEBT] 0 [OTHER-ITEMS-LIABILITIES] 5735008 [TOTAL-LIABILITIES] 51255466 [SENIOR-EQUITY] 0 [PAID-IN-CAPITAL-COMMON] 0 [SHARES-COMMON-STOCK] 463138567 [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] 8636094664 [DIVIDEND-INCOME] 20448561 [INTEREST-INCOME] 12099456 [OTHER-INCOME] 0 [EXPENSES-NET] (11824417) [NET-INVESTMENT-INCOME] 20723600 [REALIZED-GAINS-CURRENT] 44047563 [APPREC-INCREASE-CURRENT] 147155473 [NET-CHANGE-FROM-OPS] (82384310) [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] 8584839198 [ACCUMULATED-NII-PRIOR] 0 [ACCUMULATED-GAINS-PRIOR] 0 [OVERDISTRIB-NII-PRIOR] 0 [OVERDIST-NET-GAINS-PRIOR] 0 [GROSS-ADVISORY-FEES] 11544754 [INTEREST-EXPENSE] 0 [GROSS-EXPENSE] 11824417 [AVERAGE-NET-ASSETS] 7491510633 [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
EX-99.19C-TRUST-POA 8 19(C) TRUSTEES POWER OF ATTORNEY PAGE 1 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: Growth Trust Growth and Income Trust Income Trust Tax-Free Income Trust World Trust 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 11th day of April, 1996. /s/ Lynne V. Cheney /s/ Melvin R. Laird Lynne V. Cheney Melvin R. Laird /s/ William H. Dudley /s/ William R. Pearce William H. Dudley William R. Pearce /s/ Robert F. Froehlke Robert F. Froehlke Edson W. Spencer /s/ David R. Hubers /s/ John R. Thomas David R. Hubers John R. Thomas /s/ Heinz F. Hutter Heinz F. Hutter Wheelock Whitney /s/ Anne P. Jones /s/ C. Angus Wurtele Anne P. Jones C. Angus Wurtele EX-99.19D-OFF-POA 9 19(D) OFFICERS' POWER OF ATTORNEY PAGE 1 OFFICERS' POWER OF ATTORNEY City of Minneapolis State of Minnesota Each of the undersigned, as officers 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: Growth Trust Growth and Income Trust Income Trust Tax-Free Income Trust World Trust 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, as an officer, 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 11th day of April, 1996. /s/ William R. Pearce William R. Pearce /s/ Melinda S. Urion Melinda S. Urion -----END PRIVACY-ENHANCED MESSAGE-----