1996 semiannual report
IDS
Equity Select
Fund
(icon of three pine trees)
The goals of IDS Equity Select Fund, Inc. are growth of
capital and income. The Fund invests primarily in moderate
growth stocks, higher yielding equities and debt securities.
Distributed by American Express Financial Advisors Inc.
Budding blue chips
When most people think of stocks, they tend to focus on the
notable names in American business - the blue chips, as
they're known. But there's another group of companies that
though smaller and less well-known, boast impressive business
histories. These mid-sized companies, which we call
"budding blue chips," are the foundation of Equity Select Fund.
Often, they enjoy a dominant position in their business.
For an investor, this means an opportunity to participate in
the growth that's likely for these companies and the
potential for rising stock prices.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 24
Board members and officers 28
IDS mutual funds 29
To our shareholders
William R. Pearce
President of the Fund
(picture of William R. Pearce)
Joe Barsky
Portfolio manager
(picture of Joe Barsky)
From the president
If you're an experienced investor, you know that the 1990s
have contained some unusually strong periods 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 more important
if there's a major change in your financial situation or in
the financial markets.
William R. Pearce
From the portfolio manager
A surge by small- and mid-cap stocks set the stage for a
market-beating performance by IDS Equity Select Fund during
the first half of the fiscal year. For the six months - December
1995 through May 1996 - the Fund's total return of 13.5% for
Class A shares exceeded that of the stock market, as measured
by the Standard & Poor's 500 stock index, an unmanaged group
of stocks commonly used as a proxy for overall market
performance. (Please note that a substantial portion of the
Fund's gain came in the form of a capital gain, which was
paid to shareholders last December and reduced the Fund's
net asset value by a like amount at that time.)
The Fund's performance was quite consistent during the period,
as it recorded gains in each of the six months. To the Fund's
benefit, the comeback by small- and mid-cap stocks, which had
lagged the gains of larger, blue-chip issues for much of the
past two years, began shortly after the start of the period.
Retailing leads
portfolio higher
Looking at stock sectors, I maintained considerable exposure
to retailing companies, a group that had been in the doldrums
for some time and tempered Fund performance in 1995.
Persistence paid off, however, as several of the holdings
generated excellent gains during the past six months.
Among the winners were Albertson's, Safeway, Pep Boys
(the largest holding in the portfolio), Land's End
and Home Depot.
Other above-average performers for the Fund were
technology stocks (another sector to which the Fund
had substantial exposure) such as Cisco Systems and
Parametric Technology, as well as media stocks,
including Harcourt General. On the other side of
the ledger, stocks of home-building-related companies,
which suffered from a rise in long-term interest rates,
were among the portfolio's relatively poor performers.
As for portfolio changes, I increased the exposure to
retailing and media stocks over the period, and reduced
the holdings among banks. I kept the level of cash
reserves very low (about 3% of the portfolio) during
the six months, which proved to be appropriate given
the much-higher returns available from investments in stocks.
A stock-picker's market?
At this point (mid-June), the underpinnings of the stock
market remain pretty strong: The economy continues to roll
along; inflation has yet to shoot up; and cash flow into
the stock market is still at record-setting levels. On the
other hand, long-term interest rates have risen sharply in
1996, and that could present a hurdle for stocks before
the year is out.
But even if the market does lose momentum, I think sharp
stock-picking can still result in positive performance
in the months ahead. Currently, I am maintaining a
well-diversified portfolio, highlighted by an emphasis
on retailing, technology and media stocks, which I
believe are in good position to benefit from the
investment environment ahead. In the meantime, I look
forward to reporting on the Fund's progress at the end of
the fiscal year.
Joseph M. Barsky
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1996 $12.92
Nov. 30, 1995 $12.35
Increase $ .57
Distributions
Nov. 30, 1995 - May 31, 1996
From income $0.03
From capital gains $0.95
Total distribution $0.98
Total return* +13.5%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1996 $12.86
Nov. 30, 1995 $12.31
Increase $ .55
Distributions
Nov. 30, 1995 - May 31, 1996
From income $ --
From capital gains $ 0.95
Total distribution $ 0.95
Total return* +13.1%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
May 31, 1996 $12.93
Nov. 30, 1995 $12.35
Increase $ .58
Distributions
Nov. 30, 1995 - May 31, 1996
From income $ 0.04
From capital gains $ 0.95
Total distribution $ 0.99
Total return* +13.6%**
*The prospectus discusses the
effect of sales charges, if
any, on the various classes.
**The total return is a hypothetical
investment in the Fund with all
distributions reinvested.
<PAGE>
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<TABLE>
<CAPTION>
IDS Equity Select Fund, Inc.
Your Fund's ten largest holdings
The ten holdings listed here make up 17.83% of the Fund's net assets
__________________________________________________________________________________________
Percent Value
(of Fund's net assets) (as of May 31, 1996)
__________________________________________________________________________________________
<S> <C> <C>
Pep Boys-Manny Moe & Jack 1.97% $14,850,000
Engaged principally in the retail sale of automotive parts and
accessories, automotive maintenance and service, and the installation
of parts sold through its 500 chain stores.
Tyco Intl 1.97 14,812,500
A diverse, New England-based producer of packaging, cable
manufacturing, fire extinguishing systems, alarms and controls, and
simple electronic parts.
Sherwin-Williams 1.94 14,584,375
A leading producer and marketer of consumer and industrial paints
and coatings.
Harcourt General 1.89 14,210,000
The principal businesses of Harcourt General, Inc., are publishing and
specialty retailing through its ownership of Neiman Marcus and
Bergdorf Goodman. The company also has operations in career
transition and related professional services.
Illinois Tool Works 1.78 13,400,000
A highly-regarded industrial manufacturer, with a broad, leading-edge
base of capital goods and consumer component products.
Albertson's 1.72 12,959,375
An Idaho-based operator of supermarkets and combination food/drug
stores that is the fourth largest U.S. food retailer.
Fluor 1.65 12,397,500
A leading, worldwide engineering and construction company serving
energy, natural resource, processing, industrial, commercial and
utility markets.
Crown Cork & Seal 1.65 12,388,750
A leading producer of packing materials, including metal cans and
plastic containers.
Home Depot 1.63 12,270,000
Sells a broad range of building materials and home-improvement
products via retail warehouse stores. The company focuses on the
do-it-yourself and home remodeler.
First Union 1.63 12,225,000
A bank holding company engaged in general banking business.
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Equity Select Fund, Inc.
May 31, 1996
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
(Unaudited)
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $549,509,039) $751,444,569
Cash in bank on demand deposit 68,723
Dividends and accrued interest receivable 1,051,132
Receivable for investment securities sold 1,187,136
_____________________________________________________________________________________________________________
Total assets 753,751,560
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Payable for investment securities purchased 1,356,525
Accrued investment management services fee 31,232
Accrued distribution fee 153
Accrued service fee 3,574
Accrued transfer agency fee 1,806
Accrued administrative services fee 786
Other accrued expenses 169,857
_____________________________________________________________________________________________________________
Total liabilities 1,563,933
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $752,187,627
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 582,122
Additional paid-in capital 482,353,093
Undistributed net investment income 923,116
Accumulated net realized gain (Note 1) 66,393,392
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies 201,935,904
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $752,187,627
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $741,459,611
Class B $ 7,587,618
Class Y $ 3,140,398
Net asset value per share of outstanding capital stock: Class A shares 57,379,285 $ 12.92
Class B shares 589,949 $ 12.86
Class Y shares 242,946 $ 12.93
See accompanying notes to financial statements.
<PAGE>
PAGE
Financial statements
Statement of operations
IDS Equity Select Fund, Inc.
Six months ended May 31, 1996
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Dividends (net of foreign taxes withheld of $17,769) $ 4,434,701
Interest 656,571
_____________________________________________________________________________________________________________
Total income 5,091,272
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 1,878,753
Distribution fee -- Class B 18,896
Transfer agency fee 332,914
Incremental transfer agency fee -- Class B 438
Service fee
Class A 596,809
Class B 4,442
Administrative services fee 143,606
Compensation of board members 4,923
Compensation of officers 3,504
Custodian fees 31,525
Postage 49,074
Registration fees 39,864
Reports to shareholders 47,585
Audit fees 12,125
Administrative 2,975
Other 5,206
_____________________________________________________________________________________________________________
Total expenses 3,172,639
Earnings credits on cash balances (Note 2) (8,805)
_____________________________________________________________________________________________________________
Total net expenses 3,163,834
_____________________________________________________________________________________________________________
Investment income -- net 1,927,438
_____________________________________________________________________________________________________________
Realized and unrealized gain -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions
(including a loss of $388 from foreign currency transactions) (Note 3) 66,395,583
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies 22,116,639
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 88,512,222
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $90,439,660
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Equity Select Fund, Inc.
_____________________________________________________________________________________________________________
Operations and distributions May 31, 1996 Nov. 30, 1995
Six months ended Year ended
(Unaudited)
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 1,927,438 $ 5,846,941
Net realized gain on investments and foreign currency 66,395,583 51,890,316
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies 22,116,639 91,992,076
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 90,439,660 149,729,333
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (1,681,574) (6,443,371)
Class B -- (4,112)
Class Y (9,286) (32,268)
Net realized gain
Class A (51,429,889) (27,566,617)
Class B (273,902) --
Class Y (215,425) --
_____________________________________________________________________________________________________________
Total distributions (53,610,076) (34,046,368)
_____________________________________________________________________________________________________________
Capital share transactions (Note 5)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 14,716,689 23,789,273
Class B shares 4,069,957 3,058,093
Class Y shares 217,714 3,753,044
Reinvestment of distributions at net asset value
Class A shares 50,190,993 32,178,616
Class B shares 272,370 4,094
Class Y shares 224,711 32,267
Payments for redemptions
Class A shares (34,168,956) (77,433,209)
Class B shares (Note 2) (262,468) (132,946)
CLass Y shares (445,238) (1,437,317)
_____________________________________________________________________________________________________________
Increase (decrease) in net assets from capital share transactions 34,815,772 (16,188,085)
_____________________________________________________________________________________________________________
Total increase in net assets 71,645,356 99,494,880
Net assets at beginning of period 680,542,271 581,047,391
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$923,116 and $686,538) $752,187,627 $680,542,271
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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Notes to financial statements
IDS Equity Select Fund, Inc.
(Unaudited as to May 31, 1996)
______________________________________________________________________________
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 invests
primarily in moderate growth stocks, higher yielding equities and debt
securities. 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.
Significant accounting policies followed by the Fund 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, including illiquid securities, 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.
<PAGE>
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
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.
<PAGE>
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 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. 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
Dividends from net investment income, declared and paid each calendar quarter,
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 date and interest
income, including level-yield amortization of premium and discount, is accrued
daily.
<PAGE>
______________________________________________________________________________
2. Expenses and sales charges
Effective March 20, 1995, the Fund entered into agreements with AEFC for
managing its portfolio, providing administrative services and serving as
transfer agent as follows: Under its Investment Management Services Agreement,
American Express Financial Corporation (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 0.53% to 0.40% annually.
The fee is adjusted upward or downward by a performance incentive adjustment
based on the Fund's average daily net assets over a rolling 12-month period as
measured against the change in the Lipper Growth and Income Fund Index. The
maximum adjustment is 0.08% of the Fund's average daily net assets after
deducting 1% from the performance difference. If the performance difference is
less than 1%, the adjustment will be zero. The adjustment increased the fee by
$28,464 for the six months ended May 31, 1996.
Under an Administration 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 0.04% to 0.02% 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
o Class B $16
o Class Y $15
Also effective March 20, 1995, the Fund entered into agreements with American
Express Financial Advisors Inc. for distribution and shareholder servicing-
related services 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.
<PAGE>
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 Inc. for
distributing Fund shares were $332,685 for Class A and $838 for Class B for
the six months ended May 31, 1996. The Fund also pays custodian fees to
American Express Trust Company, an affiliate of AEFC.
During the six months ended May 31, 1996, the Fund's custodian and transfer
agency fees were reduced by $8,805 as a result of earnings credits from
overnight cash balances.
Prior to April 30, 1996, the Fund had a retirement plan for its independent
board members. The plan was terminated on April 30, 1996. The retirement plan
expense amounted to $4,923 for the six months ended May 31, 1996. The total
liability for the plan is $35,568, which will be paid out at some future date.
<PAGE>
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $237,303,172 and $251,184,383, respectively, for the
six months ended May 31, 1996. Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $53,615 for
the six months ended May 31, 1996.
Income from securities lending amounted to $13,909 for the six months ended
May 31, 1996. 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.
______________________________________________________________________________
4. Illiquid securities
At May 31, 1996, 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 May 31, 1996 was $10,575,200 representing 1.4% of net assets.
Pursuant to guidelines adopted by the Fund's board, certain unregistered
securities are determined to be liquid and are not included within the 10%
limitation specified above.
_____________________________________________________________________________
5. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
<TABLE>
<CAPTION>
Six months ended May 31, 1996
Class A Class B Class Y
_________________________________________________________________________
<S> <C> <C> <C>
Sold 1,197,268 331,215 17,578
Issued for reinvested 4,347,981 23,674 19,460
distributions
Redeemed (2,792,853) (21,378) (36,488)
_________________________________________________________________________
Net increase 2,752,396 333,511 550
_________________________________________________________________________
Year ended Nov. 30, 1995
Class A Class B* Class Y*
_________________________________________________________________________
Sold 2,198,887 267,313 358,846
Issued for reinvested 3,206,669 357 2,889
distributions
Redeemed (7,156,868) (11,232) (119,339)
__________________________________________________________________________
Net increase (decrease) (1,751,312) 256,438 242,396
__________________________________________________________________________
*Inception date was March 20, 1995.
__________________________________________________________________________
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
6. Financial highlights
The table below shows certain important financial
information for evaluating the Fund's results
Fiscal period ended Nov. 30,
Per share income and capital changes*
Class A
1996*** 1995 1994** 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $12.35 $10.31 $12.04 $11.19 $10.18 $8.82
beginning of year
Income from investment operations:
Net investment income .03 .10 .10 .11 .13 .18
Net gains (losses) 1.52 2.55 (.64) 1.31 1.69 1.75
(both realized
and unrealized)
Total from investment 1.55 2.65 (.54) 1.42 1.82 1.93
operations
Less distributions:
Dividends from net (.03) (.12) (.09) (.11) (.14) (.20)
investment income
Distributions from (.95) (.49) (1.10) (.46) (.67) (.37)
realized gains
Total distributions (.98) (.61) (1.19) (.57) (.81) (.57)
Net asset value, $12.92 $12.35 $10.31 $12.04 $11.19 $10.18
end of year Ratios/supplemental data
Class A
1996*** 1995 1994** 1993 1992 1991
Net assets, end of $741 $674 $581 $617 $475 $400
year (in millions)
Ratio of expenses to .88%+ .84% .71% .77% .74% .67%
average daily net assets
Ratio of net income .54%+ .94% .90% 1.00% 1.22% 1.82%
to average
daily net assets
Portfolio turnover rate 34% 62% 46% 41% 42% 46%
(excluding short-term
securities)
Total return++ 13.5% 27.1% (5.3%) 13.2% 19.2% 22.9%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**On Nov. 10, 1994, the Fund's name changed from IDS Equity Plus Fund, Inc.
to IDS Equity Select Fund, Inc.
***Six months ended May 31, 1996 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
Fiscal period ended Nov. 30,
Per share income and capital changes*
Class B Class Y
1996*** 1995** 1996*** 1995**
<S> <C> <C> <C> <C>
Net asset value, $12.31 $10.37 $12.35 $10.37
beginning of period
Income from investment operations:
Net investment income (.02) .05 .05 .08
Net gains 1.52 1.95 1.52 2.00
(both realized
and unrealized)
Total from investment 1.50 2.00 1.57 2.08
operations
Less distributions:
Dividends from net -- (.06) (.04) (.10)
investment income
Distributions from (.95) -- (.95) --
realized gains
Total distributions (.95) (.06) (.99) (.10)
Net asset value, $12.86 $12.31 $12.93 $12.35
end of period
Ratios/supplemental data
Class B Class Y
1996 1995 1996 1995
Net assets, end of $8 $3 $3 $3
period (in millions)
Ratio of expenses to 1.66%+ 1.68%+ .72%+ .70%+
average daily net assets
Ratio of net income (.23%)+ .08%+ .71%+ 1.08%+
to average
daily net assets
Portfolio turnover rate 34% 62% 34% 62%
(excluding short-term
securities)
Total return++ 13.1% 19.3% 13.6% 20.0%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class B and Class Y.
***Six months ended May 31, 1996 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales
charge.
</TABLE>
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<TABLE>
<CAPTION>
Investments in securities
IDS Equity Select Fund, Inc. (Percentages represent value of
May 31, 1996 (Unaudited) investments compared to net assets)
Common stocks (96.6%)
Issuer Shares Value (a)
<S> <C> <C>
Aerospace & defense (3.8%)
Boeing 135,000 $11,508,750
Thiokol 175,000 7,196,875
United Technologies 90,000 9,843,750
Total 28,549,375
Automotive & related (4.0%)
Danaher 200,000 8,300,000
Goodyear Tire & Rubber 220,000 11,110,000
Worthington Inds 550,000 11,068,750
Total 30,478,750
Banks and savings & loans (1.9%)
First Union 200,000 12,225,000
TCF Financial 70,000 2,397,500
Total 14,622,500
Beverages & tobacco (1.0%)
Anheuser-Busch 110,000 7,837,500
Building materials & construction (7.5%)
Clayton Homes 500,000 9,625,000
Lennar 300,000 7,462,500
Martin Marietta Materials 425,000 10,253,125
Sherwin-Williams 325,000 14,584,375
Tyco Intl 375,000 14,812,500
Total 56,737,500
Chemicals (5.4%)
Betz Laboratories 190,000 8,716,250
Hanna (MA) 300,000 10,312,500
Pall 390,000 10,432,500
Praxair 275,000 11,171,875
Total 40,633,125
Communications equipment & services (1.8%)
ADC Telecommunications 155,000 (b) 7,130,000
Andrew 114,450 (b) 6,208,912
Total 13,338,912
Computers & office equipment (7.7%)
Ceridian 175,000 (b) 9,253,125
Cisco Systems 180,000 (b) 9,855,000
Computer Associates Intl 90,000 6,547,500
Hewlett-Packard 75,000 8,006,250
Manugistics Group 283,300 (b) 4,461,975
Parametric Technology 250,000 (b) 11,437,500
Solectron 200,000 (b) 8,675,000
Total 58,236,350
Electronics (0.5%)
Adaptec 60,000 (b) 3,592,500
Energy (2.1%)
Diamond Shamrock 125,000 4,109,375
Enron Oil & Gas 275,000 6,943,750
Tosco 100,000 4,950,000
Total 16,003,125
Energy equipment & services (2.7%)
Fluor 190,000 12,397,500
Weatherford Enterra 250,000 (b) 7,875,000
Total 20,272,500
Financial services (2.6%)
Morgan Stanley 160,000 7,920,000
Salomon 275,000 11,515,625
Total 19,435,625
Food (4.0%)
ConAgra 265,000 11,295,625
Pioneer Hi-Bred 150,000 8,475,000
Sysco 301,600 10,292,100
Total 30,062,725
Health care (6.5%)
Amgen 100,000 (b) 5,950,000
Beckman Instruments 225,000 8,184,375
Biomet 350,000 (b) 4,900,000
Merck 185,000 11,955,625
Pharmacia & Upjohn 160,000 6,540,000
SmithKline Beecham ADR 225,000 11,475,000
Total 49,005,000
Health care services (1.2%)
Tenet Healthcare 426,100 (b) 9,161,150
Industrial equipment & services (3.1%)
Illinois Tool Works 200,000 13,400,000
Teleflex 215,000 9,916,875
Total 23,316,875
Industrial transportation (1.9%)
Trinity Inds 200,000 6,925,000
Union Pacific 100,000 7,012,500
Total 13,937,500
Insurance (4.1%)
Progressive Corp Ohio 150,000 6,937,500
TIG Holdings 350,000 10,500,000
Travelers/Aetna Property Casualty 164,000 (b) 4,469,000
UNUM 150,000 8,850,000
Total 30,756,500
Media (5.2%)
A.H. Belo Series A 100,000 3,825,000
Gannett 65,000 4,533,750
Harcourt General 280,000 14,210,000
McGraw-Hill 250,000 11,718,750
Time Warner 125,000 5,046,875
Total 39,334,375
Metals (2.4%)
ALCOA 147,600 9,095,850
UCAR Intl 200,000 (b) 8,550,000
Total 17,645,850
Multi-industry conglomerates (2.8%)
Emerson Electric 135,000 11,559,375
Westinghouse Electric 500,000 9,187,500
Total 20,746,875
Paper & packaging (1.7%)
Crown Cork & Seal 265,000 12,388,750
Retail (12.8%)
Albertson's 325,000 12,959,375
Federated Department Stores 200,000 (b) 6,925,000
Home Depot 240,000 12,270,000
K mart 500,000 (b) 5,812,500
Kohl's 250,000 (b) 8,281,250
Lands' End 300,000 (b) 6,562,500
Nordstrom 225,000 11,475,000
Pep Boys -- Manny, Moe & Jack 450,000 14,850,000
Richfood Holdings Cl A 151,000 5,058,500
Safeway 350,000 (b) 11,812,500
Total 96,006,625
Textiles & apparel (0.8%)
Jones Apparel Group 70,000 (b) 3,570,000
Unifi 100,000 2,775,000
Total 6,345,000
Foreign (9.1%)
ACE 100,000 4,900,000
Baan 140,000 (b) 5,040,000
BBC Brown Boveri 5,000 5,973,010
Daimler-Benz ADR 75,000 4,087,500
EXEL 100,000 6,937,500
Renaissance Energy 271,000 (b) 7,170,356
Renaissance Energy 54,000 (b,e) 1,428,780
Schlumberger 100,000 8,337,500
SGS-Thomson Microelectronics 250,000 (b) 10,500,000
Telebras ADR 50,000 3,218,750
Tempest Reinsurance 80,000 (b,d) 10,575,200
Total 68,168,596
Total common stocks
(Cost : $524,678,053) 726,613,583
</TABLE> <TABLE>
<CAPTION>
Short-term securities (3.3%)
Issuer Annualized Amount Value (a)
yield on payable
date of at
purchase maturity
<S> <C> <C> <C>
U.S. government agency (0.6%)
Federal Home Loan Mtge Corp Disc Nt
06-20-96 5.22% 4,200,000 4,188,473
Commercial paper (2.7%)
A.I. Credit
06-17-96 5.28 3,200,000 3,192,519
BOC Group
06-21-96 5.30 3,500,000 3,489,733
Cargill Global Funding
06-26-96 5.29 1,000,000 (f) 996,340
Dean Witter, Discover & Co.
Ford Motor Credit
07-12-96 5.33 1,300,000 1,292,168
Mobil Australia Finance (Delaware)
06-18-96 5.30 4,200,000 (f) 4,189,528
Pacific Mutual Life
06-12-96 5.31 2,600,000 2,595,798
Reed Elsevier
07-02-96 5.29 1,100,000 (f) 1,095,008
St. Paul Companies
06-14-96 5.31 800,000 (f) 798,472
Toyota Motor Credit
06-17-96 5.31 800,000 798,119
Total 18,447,686
Total short-term securities
(Cost: $24,830,986) 22,636,159
Total investments in securities
(Cost: $549,509,039) (g) 749,249,742
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) Identifies issue considered to be illiquid (See Note 5 to the financial statements.)
Information concerning such holdings at May 31, 1996 is as follows:
Security Acquistion Cost
date
Tempest Reinsurance 09-13-93 8,000,000
(e) Represents security sold under Rule 144A and 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.
(f) Commercial paper sold within terms of a private placement memorandum, exempt
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers
in that program or othre "accredited investors." This security has been determined to be
liquid under guidelines established by the board.
(g) At May 31, 1996, the cost of securities for federal income tax purposes was approximately
$549,509,000 and the approximate aggregate gross unrealized appreciation and depreciation
Unrealized appreciation $203,447,000
Unrealized depreciation (1,511,000)
Net unrealized appreciation $201,936,000
</TABLE>
PAGE
Board members and officers
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.
Anne P. Jones
Attorney and telecommunications consultant.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Readers'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.
<PAGE>
PAGE
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 deposit (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) two coins<PAGE>
PAGE
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
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the timely
payment of principal and interest by the U.S. government, its agencies
and instrumentalities. Seeks a high level of current income and
safety of principal consistent with its type of investments.
(icon of) shield with eagle head
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<PAGE>
PAGE
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
feature minimizes credit risk of the fund but does not guarantee
the market value of the fund's shares.
(icon of) shield with star
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 U.S. equity securities, U.S. and foreign debt
securities, foreign equity securities and money market
instruments. The fund provides diversification among these
major investments categories and has a target mix that
represents the way the fund's investments will be allocated
over the long term.
(icon of) bird in a nest
<PAGE>
PAGE
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Stock Fund
Invests in common stocks 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
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high current
income and, secondarily, to benefit from the growth potential offered
by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice<PAGE>
PAGE
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
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
<PAGE>
PAGE
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.
<PAGE>
PAGE
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 (TouchTone 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 Equity Select Fund
IDS Tower 10
Minneapolis, MN 55440-0010
