<PAGE>
PAGE 1
IDS Selective Fund
1995 annual report
(prospectus enclosed)
(icon of) city skyline
The goals of IDS Selective Fund, Inc. are current income and the
preservation of capital by investing in investment-grade bonds.
(This annual report includes a prospectus that describes in detail
the Fund's objective, investment policies, risks, sales charges,
fees and other matters of interest. Please read the prospectus
carefully before you invest or send money.)
Distributed by American Express Financial Advisors Inc.<PAGE>
PAGE 2
(icon of) city skyline
A quest for quality
Not all bonds are created equal. A bond's quality depends on the
ability of its issuer to make the interest and principal payments
owed to the bondholders. The quality is determined by independent
rating agencies, which assign a credit rating (in the form of a
letter grade) to each bond.
Since its establishment in 1945, Selective Fund has concentrated
its investments in the four highest investment grades. Along the
way, investors have enjoyed a steady stream of interest income with
minimal risk to their principal.<PAGE>
PAGE 3
Contents
(Icon of) One open book inside of another.
The purpose of this annual report is to tell investors how the Fund
performed.
The prospectus, which is bound into the middle of this annual
report, describes the Fund in detail.
1995 annual report
From the president 4
From the portfolio manager 4
Ten largest holdings 6
Making the most of your Fund 7
Long-term performance 8
Independent auditors' report 9
Financial statements 10
Notes to financial statements 13
Investments in securities 22
IDS mutual funds 30
Federal income tax information 33
1995 prospectus
The Fund in brief 3p
Goals 3p
Types of Fund investments and their risks 3p
Proposed conversion to master/feeder structure 3p
Manager and distributor 3p
Portfolio manager 4p
Alternative purchase arrangements 4p
Sales charge and Fund expenses 5p
Performance 7p
Financial highlights 7p
Total returns 9p
Yield 11p
Investment policies and risks 12p
Facts about investments and their risks 12p
Valuing Fund shares 16p
How to purchase, exchange or redeem shares 17p
Alternative purchase arrangements 17p
How to purchase shares 19p
How to exchange shares 22p
How to redeem shares 22p
Reductions and waivers of the sales charge 27p
Special shareholder services 31p
Services 31p
Quick telephone reference 31p
<PAGE>
PAGE 4
Distributions and taxes 32p
Dividend and capital gain distributions 32p
Reinvestments 33p
Taxes 33p
How to determine the correct TIN 35p
How the Fund is organized 36p
Shares 36p
Voting rights 36p
Shareholder meetings 36p
Special considerations regarding
master/feeder structure 37p
Board members and officers 39p
Investment manager and transfer agent 41p
Distributor 42p
About American Express Financial Corporation 44p
General information 44p
Appendices 45p
Description of investment-grade corporate
bond ratings 45p
Descriptions of derivative instruments 46p
<PAGE>
PAGE 5
To our shareholders
(photo of) William R. Pearce
President of the Fund
(photo of) Ray Goodner
Portfolio manager
From the president
If you're an experienced investor, you know that 1995 was an
unusually strong year for the U.S. financial markets. Perhaps just
as important, you also know that history shows that bull markets
don't last forever. Though they're often unpredictable, declines -
- - whether they're brief or long-lasting, moderate or substantial --
are always a possibility.
That fact reinforces the need for investors to review periodically
their long-term goals and assess whether their investment program
remains on track to achieving them. Your quarterly investment
statements are one part of that monitoring process. The other is a
meeting with your American Express financial advisor. That becomes
even important if there's a major change in your financial
situation or in the financial markets.
William R. Pearce
From the portfolio manager
Patience clearly paid off for bond investors during the past 12
months. After suffering through one of the bond market's worst
years in 1994, investors who stayed the course were rewarded by a
powerful market comeback that more than made up for the previous
year's decline. More important, IDS Selective fund was well-
positioned to capitalize on the positive environment, providing
investors in Class A shares with just over a 20% return (including
net asset value change, interest income and capital gains) for the
December 1994 through 1995 fiscal year.
The surge in the bond market corresponded almost exactly with the
beginning of the Fund's reporting period, as a decline in long-term
interest rates began in mid-November 1994. Because falling rates
boost bond values, the market immediately started moving higher and
maintained a steady advance into the summer. (This marked a sharp
reversal from the rising-rate trend that dominated nearly all of
1994 and drove down bond prices so dramatically.) Following a
relatively brief downturn last July, the market's positive trend
reasserted itself, and bonds finished the fiscal year with a
healthy rally last fall.
Inflation fears put aside in '95
What had disturbed bonds through 1994 -- a fear that an expanding
economy would soon lead to a rise in the inflation rate and,
consequently, higher interest rates -- was largely forgotten during
the past 12 months as the economy slowed down and inflation reports
remained unthreatening. In that light, the interest income <PAGE>
PAGE 6
provided by longer-term bonds looked increasingly attractive to
investors. As they rushed back into the market, long-term interest
rates continued to decline, pushing bond values increasingly
higher.
Our key strategy during the year centered on extending the average
maturity of the bonds in the portfolio to increase the Fund's
ability to benefit from the interest-rate drop. (The longer the
maturity, the greater a bond's price-sensitivity to a change in
rates.) In addition, we reduced cash reserves, whose returns were
meager compared with what we were able to realize from bonds.
As for our portfolio mix, we kept about a third of assets invested
in U.S. government bonds and roughly another third in bonds issued
by American corporations. The remainder was divided mainly among
mortgage-backed bonds and U.S. dollar-denominated foreign
government bonds. Consistent with our charter, all investments
were of investment-grade quality.
Market still on solid ground
As we begin a new fiscal year, the long-term environment still
appears to be positive for bonds. Inflation, always the primary
influence on the direction of interest rates, has yet to become a
problem. More recently, the increasing likelihood that the federal
budget will eventually be balanced, or, at least, the deficit will
be curbed, has lent further support to the favorable inflation
outlook. In addition to those factors, the speculative investment
psychology that pervaded the bond market and helped fuel 1994's
downturn is no longer present. Therefore, unless there's a marked
change in the environment, we plan to stay with the basic,
relatively aggressive strategy that proved successful for us during
the past year.
Ray Goodner
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
__________________________
Nov. 30, 1995 $ 9.53
__________________________
Nov. 30, 1994 $ 8.57
__________________________
Increase $ 0.96
__________________________
Distributions
Dec. 1, 1994-Nov. 30, 1995
__________________________
From income $ 0.58
__________________________
From capital gains $ 0.13
__________________________
Total distributions $ 0.71
__________________________
Total return** +20.3%***
__________________________<PAGE>
PAGE 7
Class B
March 20, 1995-Nov. 30, 1995
__________________________
(All figures per share)
Net asset value (NAV)
__________________________
Nov. 30, 1995 $ 9.53
__________________________
March 20, 1995* $ 8.78
__________________________
Increase $ 0.75
__________________________
Distributions
March 20, 1995*-Nov. 30, 1995
__________________________
From income $ 0.40
__________________________
From capital gains $ --
__________________________
Total distributions $ 0.40
__________________________
Total return** +13.1%***
__________________________
Class Y
March 20, 1995-Nov 30, 1995
__________________________
(All figures per share)
Net asset value (NAV)
__________________________
Nov. 30, 1995 $ 9.53
__________________________
March 20, 1995* $ 8.78
__________________________
Increase $ 0.75
__________________________
Distributions
March 20, 1995*-Nov. 30, 1995
__________________________
From income $ 0.46
__________________________
From capital gains $ --
__________________________
Total distributions $ 0.46
__________________________
Total return** +13.8%***
__________________________
*Inception date.
**The prospectus discusses the
effect of the sales charges,
if any, on the various classes.
***The total return is a hypothetical
investment in the fund with all
distributions reinvested.
<PAGE>
PAGE 8
<TABLE>
<CAPTION>
IDS Selective Fund, Inc.
Your Fund's ten largest holdings
(Pie chart)
The ten holdings listed here make up 10.89% of the Fund's net assets
Percent Value
(of Fund's net assets) (as of Nov. 30, 1995)
<S> <C> <C>
Japan Finance 1.66% $28,232,043
9.25% 1998
Republic of Italy 1.30 22,082,456
6.875% 2023
Southern California Edison 1.28 21,856,170
8.875% 1st Mortgage 2023
Tokyo Electric Power Euro 1.25 21,297,685
6.125% 2003
Pacific Bell .95 16,230,600
8.50% 2031
PDV America .92 15,693,810
7.875% 2003
General Electric Capital .89 15,173,100
8.65% Reset Note 2018
Texas Utilities Electric .89 15,136,290
9.75% 1st Mortgage 2021
Bundes .88 15,022,200
7.50% 2004
General Motors Acceptance .87 14,810,224
7.00% 2000
Excludes U.S. Treasury and government agencies holdings that total 43% of the
Fund's net assets.
</TABLE>
<PAGE>
PAGE 9
Making the most of your Fund
Average annual total return
(as of Nov. 30, 1995)
Class A
1 year 5 years 10 years
+14.24% +9.73% +9.69%
Total returns for Class A, Class B and Class Y for the period from
March 20, 1995 to Nov. 30, 1995 were +7.95%, +8.09% and +13.76%,
respectively. March 20, 1995 was the inception date for Class B
and Class Y. Total return for Class A is shown for comparative
purposes. The performance of Class B and Class Y will vary from
the performance of Class A based on differences in sales charges
and fees.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
Figures for Class A and Class B reflect the effect of the maximum
5% sales charge. This was a period of widely fluctuating security
prices. Past performance is no guarantee of future results.
Build your assets systematically
One of the best ways to invest in the Fund is by dollar-cost
averaging -- a time-tested strategy that can make market
fluctuations work for you. To dollar-cost average, simply invest a
fixed amount of money regularly. You'll automatically buy more
shares when the Fund's share price is low, fewer shares when it is
high.
This does not ensure a profit or avoid a loss if the market
declines. But, if you can continue to invest regularly through
changing market conditions, it can be an effective way to
accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Month Amount Per-share Number of shares purchased
invested market price
Jan $100 $20 5.00 XXXXX
Feb 100 18 5.56 XXXXXx
Mar 100 17 5.88 XXXXXx
Apr 100 15 6.67 XXXXXXx
May 100 16 6.25 XXXXXXx
June 100 18 5.56 XXXXXx
July 100 17 5.88 XXXXXx
Aug 100 19 5.26 XXXXXx
Sept 100 21 4.76 XXXXx
Oct 100 20 5.00 XXXXX
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more
shares when the per share market price is low...
<PAGE>
PAGE 10
(arrow in table pointing to August) and fewer shares when the per
share market price is high.
You have paid an average price of only $17.91 per share over the 10
months, while the average market price actually was $18.10.
Your Fund's long-term performance
Three ways to benefit from a mutual Fund:
o your shares increase in value when the Fund's investments do
well
o you receive capital gains when the gains on investments sold
by the Fund exceed losses
o you receive income when the Fund's stock dividends, interest
and short-term gains exceed its expenses.
All three make up your total return. And you potentially can
increase your investment if, like most investors, you reinvest your
dividends and capital gain distributions to buy additional shares
of the Fund or another Fund.
Class A*
How your $10,000 has grown in IDS Selective Fund
Average annual total return
(as of Nov. 30, 1995)
1 year 5 years 10 years x
+14.24% +9.73% +9.69% $25,222
Selective Fund
$20,000
x Lehman Aggregate Bond Index
x
$9,500 (line graph showing the return of Selective
Fund tracking slightly below the Lehman
Aggregate Bond Index)
'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95
* The graph above is for Class A only. Class B and Class Y are
not shown. Total returns for Class A, Class B and Class Y for
the period from March 20, 1995 to Nov. 30, 1995 were +7.95%,
+8.09% and +13.76%, respectively. March 20, 1995 was the
inception date for Class B and Class Y. Total return for Class
A is shown for comparative purposes. The performance of Class B
and Class Y will vary from the performance of Class A based on
differences in sales charges and fees.
(the following two paragraphs appear in the margin to the left of
the graph above:)
Assumes: -Holding period from 11/30/85 to 11/30/95. -Returns do
not reflect taxes payable on distributions. -Reinvestment of all
income and capital gain distributions for the Fund, with a value of
$14,235. Also see "Performance" in the Fund's current prospectus.<PAGE>
PAGE 11
The Lehman Aggregate bond Index is made up of a representative list
of government and corporate bonds as well as asset-backed
securities and mortgage-backed securities. The index is frequently
used as a general measure of bond market performance. However, the
securities used to create the index may not be representative of
the bonds held in Selective Fund.
On the graph above you can see how the Fund's total return compared
to a widely cited performance measure, the Lehman Aggregate Bond
Index. In comparing Selective Fund to this index, you should take
into account the fact that the Fund's performance reflects the
maximum sales charge of 5%, while such charges are not reflected in
the performance of the index. If you were actually to buy either
individual bonds or bond mutual funds, any sales charges that you
pay would reduce your total return as well.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
This was a period of widely fluctuating security prices. Past
performance is no guarantee of future results.<PAGE>
PAGE 12
Independent auditors' report
___________________________________________________________________
The board of directors and shareholders
IDS Selective Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Selective Fund, Inc. as of November 30, 1995, and the
related statement of operations for the year then ended and the
statements of changes in net assets for each of the years in the
two-year period ended November 30, 1995, and the financial
highlights for each of the years in the ten-year period ended
November 30, 1995. These financial statements and the financial
highlights are the responsibility of fund management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Investment securities held in custody are
confirmed to us by the custodian. As to securities purchased and
sold but not received or delivered and securities on loan, we
request confirmations from brokers, and where replies are not
received, we carry out other appropriate auditing procedures. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of IDS
Selective Fund, Inc. at November 30, 1995, and the results of its
operations for the year then ended and the changes in its net
assets for each of the years in the two-year period ended November
30, 1995, 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
January 5, 1996<PAGE>
PAGE 13
<TABLE>
<CAPTION>
Statement of assets and liabilities
IDS Selective Fund, Inc.
Nov. 30, 1995
______________________________________________________________________________________________________________
Assets
______________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $1,577,445,592) $1,704,527,689
Dividends and accrued interest receivable 25,165,945
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 7) 304,273
U.S. government securities held as collateral (Note 5) 101,344,419
_____________________________________________________________________________________________________________
Total assets 1,831,342,326
_____________________________________________________________________________________________________________
Liabilities
____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 2,637,754
Dividends payable to shareholders 839,673
Payable for investment securities purchased 9,972,000
Payable upon return of securities loaned (Note 5) 113,650,169
Accrued investment management services fee 47,253
Accrued distribution fee 2,893
Accrued service fee 14,850
Accrued transfer agency fee 8,693
Accrued administrative services fee 4,445
Other accrued expenses 318,555
_____________________________________________________________________________________________________________
Total liabilities 127,496,285
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,703,846,041
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 1,788,556
Additional paid-in capital 1,564,600,147
Undistributed net investment income 2,530,909
Accumulated net realized gain (Note 1) 7,530,072
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies (Note 7) 127,396,357
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,703,846,041
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $1,490,495,781
Class B $ 71,739,925
Class Y $ 141,610,335
Net asset value per share of outstanding capital stock: Class A shares 156,460,478 $ 9.53
Class B shares 7,530,528 $ 9.53
Class Y shares 14,864,594 $ 9.53
See accompanying notes to financial statements. <PAGE>
PAGE 14
Financial statements
Statement of operations
IDS Selective Fund, Inc.
Year ended Nov. 30, 1995
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
Income:
Interest $112,694,319
Dividends 186,975
_____________________________________________________________________________________________________________
Total income 112,881,294
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 7,840,014
Distribution fee
Class A 191,949
Class B 177,140
Transfer agency fee 1,718,092
Incremental transfer agency fee - Class B 2,079
Service fee
Class A 1,733,052
Class B 41,271
Administrative services fee 532,177
Compensation of directors 31,068
Compensation of officers 13,219
Custodian fees 171,801
Postage 138,514
Registration fees 163,000
Reports to shareholders 153,745
Audit fees 35,000
Administrative 11,072
Other 26,435
_____________________________________________________________________________________________________________
Total expenses 12,979,628
Earnings credit on cash balances (Note 2) (12,808)
_____________________________________________________________________________________________________________
Total net expenses 12,966,820
_____________________________________________________________________________________________________________
Investment income -- net 99,914,474
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions
(including gain of $60,129 from foreign currency transactions) (Note 3) 7,691,662
Net realized loss on closed option contracts written (Note 8) (46,720)
_____________________________________________________________________________________________________________
Net realized gain on investments and foreign currency 7,644,942
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (Note 7) 173,013,840
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 180,658,782
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $280,573,256
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE 15
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Selective Fund, Inc.
Year ended Nov. 30,
_____________________________________________________________________________________________________________
Operations and distributions 1995 1994
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 99,914,474 $ 102,344,658
Net realized gains on investments and foreign currency 7,644,942 21,139,491
Net change in unrealized appreciation or depreciation of investments 173,013,840 (202,860,707)
and on translation of assets and liabilities in foreign currencies
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations 280,573,256 (79,376,558)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (91,687,959) (102,415,375)
Class B (1,325,265) --
Class Y (5,767,587) --
Excess distribution of net investment income
Class A -- (378,787)
Net realized gains
Class A (20,000,191) (26,487,582)
Excess distribution of realized gains (Note 1)
Class A -- (42,963)
_____________________________________________________________________________________________________________
Total distributions (118,781,002) (129,324,707)
_____________________________________________________________________________________________________________
Capital share transactions (Note 4)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 207,511,368 196,126,624
Class B shares 74,256,461 --
Class Y shares 146,334,859 --
Reinvestment of distributions at net asset value
Class A shares 83,864,001 99,112,296
Class B shares 1,205,720 --
Class Y shares 5,694,035 --
Payments for redemptions
Class A shares (352,508,286) (421,007,405)
Class B shares (Note 2) (6,231,036) --
Class Y shares (20,194,720) --
_____________________________________________________________________________________________________________
Increase (decrease) in net assets from capital share transactions 139,932,402 (125,768,485)
_____________________________________________________________________________________________________________
Total increase (decrease) in net assets 301,724,656 (334,469,750)
Net assets at beginning of year 1,402,121,385 1,736,591,135
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$2,530,909 and $(378,787)) $1,703,846,041 $1,402,121,385
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 16
Notes to financial statements
IDS Selective 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, which the
Fund began offering on March 20, 1995, may be subject to a
contingent deferred sales charge. Class B shares automatically
convert to Class A after eight years. Class Y shares, which the
Fund also began offering on March 20, 1995, 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.
Significant accounting policies followed by the Fund are summarized
below:
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,
including illiquid securities, are valued at fair value according
to methods selected in good faith by the board of directors.
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 Fund 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 Fund also may buy and sell put and call <PAGE>
PAGE 17
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 Fund gives up the opportunity of profit if the
market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying
an option is that the Fund pays a premium whether or not the option
is exercised. The Fund 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 Fund 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 Fund may buy and sell futures contracts traded on any
U.S. or foreign exchange. The Fund 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 Fund 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 Fund 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 Fund 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, <PAGE>
PAGE 18
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 Fund 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 Fund and the
resulting unrealized appreciation or depreciation are determined
using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the other
party will not complete the obligations of the contract.
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 shareholders, no
provision for income or excise taxes is required.
Net investment income (loss) and net realized gains (losses) 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. The effect on dividend distributions of certain book-to-
tax differences is presented as "excess distributions" in the
statement of changes in net assets. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized
gains (losses) were recorded by the Fund.
On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, undistributed net investment
income has been increased by $1,776,033 and accumulated net
realized gain has been decreased by $1,776,033.
Dividends to shareholders
Dividends from net investment income, declared daily and payable
monthly, are reinvested in additional shares of the Fund at net
asset value or payable in cash. Capital gains, when available, are
distributed along with the last income dividend of the calendar
year.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend<PAGE>
PAGE 19
date. For U.S. dollar denominated bonds, interest income includes
level-yield amortization of premium and discount. For foreign
bonds, except for issue discount, the Fund does not amortize
premium and discount.
___________________________________________________________________
2. Expenses and sales charges
Under terms of a prior agreement that ended March 19, 1995, the
Fund paid AEFC a fee for managing its investments, recordkeeping
and other specified services. The fee was a percentage of the
Fund's average daily net assets consisting of a group asset charge
in reducing percentages from 0.46% to 0.32% annually on the
combined net assets of all non-money market funds in the IDS MUTUAL
FUND GROUP and an individual annual asset charge of 0.13% of
average daily net assets.
Also under the terms of a prior agreement, the Fund paid AEFC a
distribution fee at an annual rate of $6 per shareholder account
and a transfer agency fee at an annual rate of $15.50 per
shareholder account.
Effective March 20, 1995, when the Fund began offering multiple
classes of shares, the Fund entered into agreements with AEFC for
managing it's portfolio, providing administrative services and
serving as transfer agent as follows: Under its Investment
Management Services Agreement, AEFC determines which securities
will be purchased, held or sold. The management fee is a percentage
of the Fund's average daily net assets in reducing percentages from
0.52% to 0.395% annually.
Under an 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 0.025% annually.
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 $15.50
o Class B $16.50
o Class Y $15.50
Also effective March 20, 1995, the Fund entered into agreements
with American Express Financial Advisors Inc. for distribution and
shareholder servicing-related services as follows: 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 <PAGE>
PAGE 20
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 Inc.
for distributing Fund shares were $3,869,488 for Class A and
$10,703 for Class B for the year ended Nov. 30, 1995.
During the year ended Nov. 30, 1995, the Fund's custodian and
transfer agency fees were reduced by $12,808 as a result of
earnings credits from overnight cash balances.
The Fund has a retirement plan for its independent directors. Upon
retirement, directors receive monthly payments equal to one-half of
the retainer fee for as many months as they served as directors up
to 120 months. There are no death benefits. The plan is not funded
but the Fund recognizes the cost of payments during the time the
directors serve on the board. The retirement plan expense amounted
to $6,951 for the year ended Nov. 30, 1995.
___________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $663,127,751 and $358,130,085,
respectively, for the year ended Nov. 30, 1995. Realized gains and
losses are determined on an identified cost basis.
___________________________________________________________________
4. Capital share transactions
Transactions in shares of capital stock for the years indicated are
as follows:
<TABLE><CAPTION>
Year ended Nov. 30, 1995 Year ended
11/30/94
Class A Class B* Class Y* Class A
________________________________________________________________________________________
<S> <C> <C> <C> <C>
Sold 23,080,473 8,072,716 16,445,854 21,519,839
Issued for reinvested 9,414,149 129,691 618,114 10,813,989
distributions
Redeemed (39,632,200) (671,879) (2,199,374) (46,537,712)
_________________________________________________________________________________________
Net increase (decrease) (7,137,578) 7,530,528 14,864,594 (14,203,884)
_________________________________________________________________________________________
*Inception date was March 20, 1995.
<PAGE>
PAGE 21
___________________________________________________________________
5. Lending of portfolio securities
At Nov. 30, 1995, securities valued at $112,466,340 were on loan to
brokers. For collateral, the Fund received $12,305,750 in cash and
U.S. government securities valued at $100,344,419. Income from
securities lending amounted to $214,506 for the year ended Nov. 30,
1995. The risks to the Fund of securities lending are that the
borrower may not provide additional collateral when required or
return the securities when due.
___________________________________________________________________
6. Illiquid Securities
At Nov. 30, 1995, investments in securities included issues that
are illiquid. The Fund currently limits investments in illiquid
securities to 10% of the net assets, at market value, at the time
of purchase. The aggregate value of such securities at Nov. 30,
1995 was $8,175,257 representing 0.5% of the net assets. Pursuant
to guidelines adopted by the Fund's board of directors, certain
unregistered securities are determined to be liquid and are not
included within the 10% limitation specified above.
___________________________________________________________________
7. Foreign currency contract
At Nov. 30, 1995, the Fund had entered into one foreign currency
exchange contract that obligates the Fund to deliver currency at a
specified future date. The unrealized appreciation and/or
depreciation on this contract is included in the accompanying
financial statements. The terms of the open contract are as
follows:
Currency to be Currency to be Unrealized
Exchange date delivered received appreciation
______________________________________________________________________________
Feb. 12, 1996 22,567,167 $15,963,194 $304,273
Deutsche Mark U.S. Dollar
___________________________________________________________________
8. Option contracts written
The number of contracts and premium amounts associated with
covered call option contracts written is as follows:
Fiscal year ended Nov. 30, 1995
_____________________________
Contracts Premium
___________________________________________
Balance Nov. 30, 1994 -- $ --
Opened 800 619,220
Closed (800) (619,220)
___________________________________________
Balance Nov. 30, 1995 -- $ --
<PAGE>
PAGE 22
___________________________________________________________________
9. Financial highlights
"Financial highlights" showing per share data and selected
information is presented on pages 7 and 8 of the prospectus.<PAGE>
PAGE 23
</TABLE>
<TABLE>
<CAPTION>
Investments in securities
IDS Selective Fund, Inc. (Percentages represent value of
Nov. 30, 1995 investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bonds (94.9%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (32.4%)
U.S. Treasury 6.875% 1999 $ 60,000,000 (b) $ 62,699,400
7.25 1996-04 42,000,000 43,708,980
7.50 2001-16 143,300,000 162,442,950
8.00 2021 35,000,000 (b) 42,710,150
8.625 1997 50,745,000 53,387,292
Resolution Funding Corp
Zero Coupon 7.61 2017 79,000,000 (c) 19,638,610
7.89 2016 70,900,000 (b,c) 18,911,502
7.98 2016 47,000,000 (c) 12,494,480
8.11 2016 35,073,000 (c) 9,025,686
8.12 2004 7,899,000 (c) 4,764,519
8.18 2005 13,000,000 (c) 7,231,510
8.19 2014 48,000,000 (c) 14,953,440
8.20 2005 38,048,000 (c) 21,862,761
8.27 2014 10,000,000 (c) 3,016,700
8.35 2006 48,000,000 (c) 25,711,680
8.94 2006 25,000,000 (c) 13,594,500
8.95 2006 68,000,000 (c) 35,345,040
_____________
Total 551,499,200
_____________________________________________________________________________________________________________________________
Mortgage-backed securities (10.8%)
Federal Home Loan Mtge Corp 7.50 2024 19,396,175 19,747,634
8.00 2016-25 13,907,684 14,311,795
8.50 2017-22 12,567,105 13,075,767
9.00 2020-21 7,202,398 7,530,859
Collateralized Mtge Obligation 8.50 2019 11,168,731 11,265,117
Federal Housing Admin 7.43 2024 9,327,094 9,609,822
Federal Natl Mtge Assn 6.50 2023 13,670,900 13,389,017
10.00 2002 148 156
Collateralized Mtge Obligation 8.00 2021 13,219,009 13,536,530
8.50 2019 5,130,888 5,346,334
Principal Only 9.50 2018 1,715,073 (e) 1,372,058
9.89 2020 2,629,671 (e) 2,198,983
Trust Series Z 6.00 2024 18,876,409 (d) 15,464,876
Govt Natl Mtge Assn 8.00 1922-24 37,436,004 38,757,869
9.00 1924-25 10,968,374 11,575,035
Collateralized Mtge Obligation Trust 7.75 2012 2,526,810 2,567,820
Prudential Bache
Collateralized Mtge Obligation 7.965 2019 4,061,637 4,188,320
WestAm
Collateralized Mtge Obligation 8.95 2018 123,406 122,695
______________
Total 184,060,531
_____________________________________________________________________________________________________________________________
Financial (10.1%)
Banks and savings & loans (3.5%)
BankAmerica
Sub Nts 7.50 2002 8,810,000 9,410,754
Boatmen's Bancshares
Sub Nts 9.25 2001 8,950,000 10,360,788
See accompanying notes to investments in securities.<PAGE>
PAGE 24
First Bank System 6.875 2007 8,550,000 8,753,319
First Chicago
Sr Nts 9.00 1999 7,900,000 8,658,953
NCNB
Sub Nts 9.125 2001 10,000,000 11,433,600
Standard Credit Card 8.625 2002 10,000,000 10,417,188
______________
Total 59,034,602
_____________________________________________________________________________________________________________________________
Financial services (5.5%)
Aristar
Sr Deb 8.875 1998 10,520,000 11,225,261
Beneficial 9.125 1998 10,000,000 10,676,500
General Electric Capital
Reset Nt 8.65 2018 15,000,000 (f) 15,173,100
General Motors Acceptance 5.95 1998 8,000,000 8,010,800
7.00 2000 14,300,000 14,810,224
Greyhound Financial 7.95 1999 9,600,000 10,184,160
Salomon 7.75 2000 5,000,000 5,200,550
8.91 1998 8,400,000 8,792,952
SunAmerica 9.95 2012 8,000,000 10,039,360
______________
Total 94,112,907
_____________________________________________________________________________________________________________________________
Insurance (1.1%)
Berkley (WR) 8.70 2022 10,000,000 11,556,000
Nationwide Trust
Credit Sensitive Nt 9.875 2025 6,500,000 (g) 7,560,475
_____________
Total 19,116,475
_____________________________________________________________________________________________________________________________
Industrial (11.5%)
Aerospace & defense (0.7%)
United Technologies 8.875 2019 10,000,000 12,366,100
_____________________________________________________________________________________________________________________________
Automotive & related (1.1%)
Ford Capital 9.00 1996 9,700,000 9,851,029
General Motors 8.875 2003 7,050,000 8,038,763
____________
Total 17,889,792
_____________________________________________________________________________________________________________________________
Beverages & tobacco (0.6%)
Philip Morris 8.10 1996 10,000,000 10,166,300
_____________________________________________________________________________________________________________________________
Chemicals (0.7%)
Dow Chemical 8.85 2021 10,000,000 12,068,400
_____________________________________________________________________________________________________________________________
Ecological services & equipment (0.5%)
Browning-Ferris Inds 9.25 % 2021 7,000,000 8,887,270
____________________________________________________________________________________________________________________________
Electronics (0.3%)
Harris 10.375 2018 3,900,000 4,374,084
_____________________________________________________________________________________________________________________________
Energy (2.3%)
PDV Amer 7.875 2003 16,500,000 15,693,810
Texaco Capital
Gtd Deb 7.50 2043 12,000,000 12,786,960
USX 9.375 2022 9,200,000 10,787,920
______________
Total 39,268,690
_____________________________________________________________________________________________________________________________
Energy Equipment and Services (0.5%)
Foster Wheeler 6.75 2005 8,000,000 8,045,520
_____________________________________________________________________________________________________________________________
Health care (0.8%)
Schering-Plough
Zero Coupon 7.31 1996 15,000,000 (c,g) 14,197,800
<PAGE>
PAGE 25
_____________________________________________________________________________________________________________________________
Industrial equipment & services (1.3%)
Case 7.25 2005 10,000,000 10,428,400
Deere 8.95 2019 10,000,000 12,048,000
_____________
Total 22,476,400
_____________________________________________________________________________________________________________________________
Media (1.4%)
Tele-communications
Sr Deb 7.875 2013 5,000,000 5,015,750
9.875 2022 5,000,000 5,980,950
Time Warner Entertainment 8.375 2033 12,000,000 12,671,520
_____________
Total 23,668,220
_____________________________________________________________________________________________________________________________
Paper & packaging (1.3%)
Georgia-Pacific
8.625 2025 10,000,000 11,032,000
Credit Sensitive Nt 9.85 1997 10,000,000 10,528,400
_____________
21,560,400
_____________________________________________________________________________________________________________________________
Transportation (1.1%)
AMR 9.75 2021 2,500,000 2,945,550
10.00 2021 8,000,000 9,614,480
10.20 2020 5,000,000 6,106,450
______________
Total 18,666,480
_____________________________________________________________________________________________________________________________
Utilities (11.8%)
Electric (8.8%)
Arizona Public Service
1st Mtge 8.75 2024 5,000,000 5,753,600
Sale Lease-Backed Obligation 8.00 2015 9,000,000 9,495,270
Cajun Electric Power Cooperative
Mtge Trust 8.92 2019 4,960,000 5,532,930
Commonwealth Edison 6.50 2000 9,000,000 9,066,780
8.375 2023 10,000,000 10,762,400
Long Island Lighting 9.625 2024 10,000,000 10,280,200
Ohio Edison 8.75 2022 11,000,000 12,433,850
Public Service Electric & Gas
1st Mtge 8.50 2022 13,720,000 14,627,852
RGS Funding
Sale Lease-Backed Obligation 9.82 2022 9,941,260 12,721,133
Salton Sea Funding 7.84 2010 10,000,000 (g) 10,359,800
San Diego Gas & Electric
1st Mtge 9.625 2020 9,950,000 11,877,912
Southern California Edison
1st Mtge 8.875 2023 21,000,000 21,856,170
Texas Utilities Electric
1st Mtge 9.75 2021 13,000,000 15,136,290
______________
Total 149,904,187
_____________________________________________________________________________________________________________________________
Telephone (3.0%)
BellSouth Telecommunications 7.00 1995 10,000,000 10,317,800
GTE 10.25 2020 2,000,000 2,357,480
GTE South
1st Mtge 9.375 2030 13,975,000 14,698,905
New York Tel 9.375 2031 7,000,000 8,232,630
Pacific Bell 8.50 2031 15,000,000 16,230,600
______________
Total 51,837,415
_____________________________________________________________________________________________________________________________
Foreign (17.2%)(h)
ABN Amro Bank
(U.S. Dollar) 7.75 2023 12,000,000 12,844,560
Alcan Aluminum
(U.S. Dollar) 8.875 2022 9,600,000 11,052,288
<PAGE>
PAGE 26
Austria Republic Euro
(U.S. Dollar) 10.00 1998 5,000,000 5,455,450
Bank of China
(U.S. Dollar) 8.25 2014 7,100,000 6,999,890
Bundes Republic
(U.S. Dollar) 7.50 2004 20,000,000 15,022,200
City of Helsinki
Sr Nts
(U.S.Dollar) 8.00 2006 2,000,000 (i) 1,967,500
8.65 2006 1,500,000 (i) 1,500,525
8.75 2006 1,500,000 (i) 1,511,175
9.00 2007 1,650,000 (i) 1,669,057
9.15 2006 1,500,000 (i) 1,527,000
Euratom Euro
(U.S. Dollar) 7.75 1997 6,100,000 6,233,407
Government of Australia
(U.S. Dollar) 6.686 2004 6,600,000 5,159,550
Guang Dong Enterprise
(U.S. Dollar) 8.75 2003 15,000,000 (g) 14,193,000
Intl Bank Reconstruction & Development
(U.S. Dollar) 12.375 2002 6,000,000 8,148,840
Intl Finance Euro
(U.S. Dollar) 8.25 1996 8,000,000 8,110,000
Japan Finance
(U.S. Dollar) 9.25 1998 25,950,000 28,232,043
KFW Intl Finance
(U.S. Dollar) 8.50 1999 10,000,000 10,979,700
Kingdom of Denmark Euro
(U.S. Dollar) 7.25 1996 8,000,000 8,088,720
Korea Electric Power
(U.S. Dollar) 7.75 2013 14,000,000 14,653,800
8.00 2002 9,000,000 9,742,050
Magna Intl
(U.S. Dollar) 5.00 2002 2,500,000 2,559,375
Peoples Republic China
(U.S. Dollar) 6.50 2004 7,000,000 (b) 6,834,450
Petronas
(U.S. Dollar) 7.75 2015 10,000,000 (g) 10,715,400
Poland
(U.S. Dollar) 3.25 2014 11,500,000 (f) 7,424,688
Province of Quebec
(U.S. Dollar) 11.00 2015 6,550,000 7,934,539
Republic of Columbia
(U.S. Dollar) 7.25 2004 13,400,000 12,956,594
Republic of Italy
(U.S. Dollar) 6.875 2023 23,200,000 22,082,456
Rodamco
(U.S. Dollar) 7.30 2005 10,000,000 10,521,400
Telekom Malaysia
(U.S. Dollar) 7.875 2025 10,000,000 (g) 10,873,100
Tokyo Electric Power Euro
(U.S. Dollar) 6.125 2003 21,500,000 21,297,685
United Kingdom Treasury
(U.S. Dollar) 12.248 2003 4,400,000 6,976,376
______________
Total 293,266,818
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $1,489,385,046) $1,616,467,591
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 27
<TABLE>
<CAPTION>
Short-term securities (5.1%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.1%)
Federal Home Loan Mtge Disc Note
12-20-95 5.70% $2,200,000 $ 2,193,416
_____________________________________________________________________________________________________________________________
Commercial paper (5.0%)
Avco Financial Services
12-08-95 5.74 4,600,000 4,594,893
01-24-96 5.75 4,800,000 4,758,960
CAFCO
12-22-95 5.75 6,000,000 5,979,980
Commerzbank U.S. Finance
12-20-95 5.76 5,800,000 5,782,460
Exxon Asset Management
01-10-96 5.73 4,500,000 (j) 4,471,600
Lincoln Natl
12-01-95 5.75 2,100,000 (j) 2,100,000
12-21-95 5.76 4,800,000 (j) 4,784,720
Merrill Lynch
12-08-95 5.78 700,000 699,217
Motorola
12-28-95 5.75 1,400,000 1,393,994
Natl Bank Detroit Canada
12-13-95 5.75 4,800,000 4,790,848
Pfizer
12-07-95 5.74 4,100,000 (j) 4,096,105
Reed Elsevier
01-02-96 5.78 5,700,000 (j) 5,670,917
SAFECO Credit
01-30-96 5.76 900,000 891,003
Siemens
12-15-95 5.73 4,800,000 4,789,360
12-28-95 5.75 1,600,000 1,593,148
Toyota Motor Credit
12-01-95 5.73 1,900,000 1,900,000
12-15-95 5.75 6,900,000 6,884,651
12-18-95 5.76 5,600,000 5,584,847
Wachovia Bank
12-07-95 5.75 9,500,000 9,499,998
12-12-95 5.75 5,600,000 5,599,981
_____________
Total 85,866,682
_______________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $88,060,546) $ 88,060,098
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,577,445,592)(k) $1,704,527,689
<PAGE>
PAGE 28
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Security is partially or fully on loan. See Note 5 to the financial statements.
(c) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition.
(d) This security is a collateralized mortgage obligation that pays no interest or principal during its initial accrual period
until payment of previous series within the trust have been paid off. Interest is accrued at an effective yield; similar
to a zero coupon bond.
(e) Principal only represents securities that entitle holders to receive only principal payments on the underlying mortgages.
The yield to maturity of a principal only is sensitive to the rate of principal payments on the underlying mortgage assets.
A slow (rapid) rate of principal repayments may have an adverse (positive) effect on yield to maturity. Interest rate
disclosed represents current yield based upon the current cost basis and estimated timing of future cash flows.
(f) Interest rate varies to reflect current market conditions; rate shown is the effective rate on Nov. 30, 1995.
(g) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended.
This security has been determined to be liquid under guidelines established by the board of directors.
(h) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the
currency indicated.
(i) Identifies issues considered to be illiquid, (see Note 6 to the financial statements). Information concerning such
security holdings at Nov. 30, 1995, is as follows:
Security Acquisition Cost
date
City of Helsinki 02-07-95 $1,859,160
City of Helsinki 02-07-95 1,462,155
City of Helsinki 02-07-95 1,472,805
City of Helsinki 02-07-95 1,638,450
City of Helsinki 02-07-95 1,497,750
(j) 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 of directors.
(k) On Nov. 30, 1995, the cost of securities for federal income tax purposes was $1,575,054,413
and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $131,511,677
Unrealized depreciation (2,038,401)
____________________________________________________________________________________________
Net unrealized appreciation $129,473,276
____________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 29
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposits (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
Income investments
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income. Secondary
objective is capital growth. Risk varies by bond quality.
IDS Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to
seek high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in long-term, high-yielding corporate fixed-income
securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) cornucopia
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher
rated, lower risk bond categories, or the equivalent, and in
government bonds.
(icon of) greek column
<PAGE>
PAGE 30
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the
timely payment of principal and interest by the U.S. government,
its agencies and instrumentalities. Seeks a high level of current
income and safety of principal consistent with its type of
investments.
(icon of) federal building
Tax-exempt income investments
These funds provide tax-free income by investing in municipal
bonds. The income is generally free from federal income tax. Risk
varies by bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in medium- and lower-quality municipal bonds and
notes. Lower-quality securities generally involve greater risk of
principal and income.
(icon of) shield with basket of apples enclosed
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to
provide income to residents of each respective state that is exempt
from federal, state and local income taxes. (New York is the only
state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government
units, with at least 75% in the four highest rated, lowest risk
bond categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to
the timely payment of principal and interest. The insurance <PAGE>
PAGE 31
feature minimizes credit risk of the fund but does not guarantee
the market value of the fund's shares.
(icon of) shield with eagle head
Growth and income investments
These funds focus on securities of medium to large, well-
established companies that offer long-term growth of capital and
reasonable income from dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20% of
its assets in the U.S. market.
(icon of) three flags
IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income investments
and money market securities to seek a maximum total return through
a combination of growth of capital and current income.
(icon of) bird in a nest
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of capital and
income.
(icon of) three apple trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Stock Fund
Invests in common stock of companies representing many sectors of
the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers<PAGE>
PAGE 32
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) electrical cord
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high
current income and, secondarily, to benefit from the growth
potential offered by stock investments.
(icon of) four puzzle pieces
IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice
Growth investments
Funds in this group seek capital growth, primarily from common
stocks. They are high risk mutual funds with a potential for high
reward.
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Growth Fund
Invests primarily in companies that have above-average potential
for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
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PAGE 33
IDS Global Growth Fund
Invests in stocks of companies throughout the world that are
positioned to meet market needs in a changing world economy. These
companies offer above-average potential for long-term growth.
(icon of) world
IDS New Dimensions Fund
Invests primarily in companies with significant growth potential
due to superiority in technology, marketing or management. The
fund frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
Specialty growth investment
This fund aggressively seeks capital growth as a hedge against
inflation.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic
companies that explore for, mine and process or distribute gold and
other precious metals. This is the most aggressive and most
speculative IDS mutual fund.
(icon of) cart of precious gems
For more complete information about any of these funds, including
charges and expenses, you can obtain a prospectus by contacting
your financial advisor or writing to American Express Shareholder
Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it
carefully before you invest or send money.
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PAGE 34
Federal income tax information
IDS Selective Fund, Inc.
___________________________________________________________________
The Fund is required by the Internal Revenue Code of
1986 to tell its shareholders about the tax treatment
of the dividends it pays during its fiscal year.
Some of the dividends listed below were reported to you
on a Form 1099-DIV, Dividends and Distributions, last
January. Dividends paid to you since the end of last
year will be reported to you on a tax statement sent
next January. Shareholders should consult a tax
advisor on how to report distributions for state and
local purposes.
IDS Selective Fund, Inc.
Fiscal year ended Nov. 30, 1995
Class A
Income distributions
taxable as dividend income,
0.17% qualifying for deduction by corporations.
Payable date Per share
Dec. 28, 1994 $0.04495
Jan. 25, 1995 0.04275
Feb. 23, 1995 0.04641
March 27, 1995 0.05293
April 26, 1995 0.04993
May 25, 1995 0.04787
June 26, 1995 0.05236
July 26, 1995 0.04854
Aug. 25, 1995 0.04862
Sept. 25, 1995 0.04928
Oct. 26, 1995 0.04882
Nov. 27, 1995 0.05053
Total $0.58299
Capital gain distribution
taxable as long-term capital gain.
Payable date Per share
Dec. 28, 1994 $0.12345
Total distributions $0.70644
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PAGE 35
Class B
Income distributions
taxable as dividend income,
0.17% qualifying for deduction by corporations.
March 27, 1995 $0.05222
April 26, 1995 0.04487
May 25, 1995 0.04226
June 26, 1995 0.04604
July 26, 1995 0.04345
Aug. 25, 1995 0.04301
Sept. 25, 1995 0.04337
Oct. 26, 1995 0.04285
Nov. 27, 1995 0.04428
Total distributions $0.40235
Class Y
Income distributions
taxable as dividend income,
0.17% qualifying for deduction by corporations.
March 27, 1995 $0.05327
April 26, 1995 0.05103
May 25, 1995 0.04888
June 26, 1995 0.05360
July 26, 1995 0.05046
Aug. 25, 1995 0.04993
Sept. 25, 1995 0.05065
Oct. 26, 1995 0.05021
Nov. 27, 1995 0.05196
Total distributions $0.45999<PAGE>
PAGE 36
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchToneR phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 671-1630
AMERICAN
EXPRESS
FINANCIAL
ADVISORS
IDS Selective Fund
IDS Tower 10
Minneapolis, MN 55440-0010
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PAGE 37
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report and
prospectus are placed
in a blue strip at the
top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report and prospectus. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
