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PAGE 1
1996 ANNUAL REPORT
IDS Equity Select Fund
(prospectus enclosed)
(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.
(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.)
AMERICAN
EXPRESS
Financial
Advisors
Distributed by American Express Financial Advisors Inc.
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PAGE 2
(Icon of) three pine trees
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-
size 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.
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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.
1996 annual report
From the president 4
From the portfolio manager 4
The Fund's ten largest holdings 6
Making the most of the Fund 7
The Fund's long-term performance 8
Independent auditors' report 9
Financial statements 10
Notes to financial statements 13
Investments in securities 23
IDS mutual funds 26
Federal income tax information 30
1996 prospectus
The Fund in brief 3p
Goals 3p
Investment policies and risks 3p
Manager and distributor 3p
Portfolio manager 3p
Alternative purchase arrangements 3p
Sales charge and Fund expenses 4p
Performance 6p
Financial highlights 6p
Total returns 8p
Investment policies and risks 10p
Facts about investments and their risks 10p
Alternative investment option 16p
Valuing Fund shares 17p
How to purchase, exchange or redeem shares 18p
Alternative purchase arrangements 18p
How to purchase shares 20p
How to exchange shares 23p
How to redeem shares 24p
Reductions and waivers of the sales charge 29p
Special shareholder services 34p
Services 34p
Quick telephone reference 34p
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PAGE 4
Distributions and taxes 35p
Dividend and capital gain distributions 35p
Reinvestments 36p
Taxes 36p
How to determine the correct TIN 38p
How the Fund is organized 39p
Shares 39p
Voting rights 39p
Shareholder meetings 39p
Board members and officers 39p
Investment manager 41p
Administrator and transfer agent 42p
Distributor 42p
About American Express Financial Corporation 44p
General information 44p
Appendix 45p
Descriptions of derivative instruments 45p
(This annual report is not part of the prospectus)<PAGE>
PAGE 5
To our shareholders
(photo of) William R. Pearce, President of the Fund
(photo of) Joseph M. Barsky, Portfolio manager
From the president
If you're an experienced investor, you know that the past two years
have been unusually strong ones in many worldwide 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 periodically review
their long-term goals and examine 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 favorable investment environment and sharp stock selection
resulted in a highly productive fiscal year for IDS Equity Select
Fund. For the 12 months-December 1995 through November 1996-
investors in Class A shares realized a total return of 29.5%. The
gain exceeded that of the stock market as a whole, as measured by
the Standard & Poor's 500 stock index, and unmanaged group of
stocks commonly used as a proxy for overall market performance. (A
substantial portion of the Fund's return for the fiscal year came
in the form of a capital gain, which was paid to shareholders in
December 1995 and reduced the Fund's net asset value by a like
amount at that time.)
Stocks respond to
good fundamentals
The stock market displayed remarkable vigor at times over the past
12 months, as it continued to enjoy support from positive
fundamentals: moderate but steady economic growth, a low inflation
rate, low long-term interest rates and generally healthy corporate
profits. Stocks' strongest advances came in January/February and
September through November, the latter move more than making up for
a modest mid-summer slump.
The Fund's performance was quite consistent during the fiscal year,
as it recorded gains in 10 of the 12 months. To the Fund's
benefit, mid-size stocks, which had lagged the gains of larger,
blue-chip issues for much of the previous two years, began to
gather some momentum as the period progressed. Still, it was
important to own the right stocks, as the market was highly
selective about which issues would be rewarded.
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PAGE 6
A wide range of winners
Looking at the Fund's major areas of investment, financial services
stocks, including those of banks and insurance companies, were
strong contributors to performance much of the year, while
retailing stocks generated good gains early in the period.
Industrials, a substantial and long-time core group in the
portfolio that includes building material, machinery, metal, paper
and chemical producers, provided less generous but overall positive
results. Although not large portions of the portfolio, stocks of
technology and energy-related companies were often very strong
performers for the Fund. Also enhancing performance was the low
level of cash reserves in the portfolio (about 5% or less of
assets), which proved to be a good strategy given the far-better
returns available from most stock investments.
As for the current fiscal year, I expect companies with above-
average revenue growth to have an advantage, especially if the
economy shows signs of strengthening. Based on that, I have begun
to emphasize investments in so-called "cyclical" companies,
including railroads and metal producers. While it seems unlikely
that the stock market will be able to repeat its powerful
performance in each of the past two year, barring a major negative
turn in the investment environment, I think good stock selection
can continue to yield positive results. In the meantime, I look
forward to updating you on the Fund's progress six months from now.
Joseph M. Barsky
Class A
12-month performance
(All figures per share)
Net asset value (NAV)
Nov. 30, 1996 $14.71
Nov. 30, 1995 $12.35
Increase $ 2.36
Distributions
Dec. 1, 1995 - Nov. 30, 1996
From income $ 0.06
From capital gains $ 0.95
Total distribution $ 1.01
Total Return* +29.5%**
Class B
12-month performance
(all figures per share)
Net asset value (NAV)
Nov. 30, 1996 $14.63
Nov. 30, 1995 $12.31
Increase $ 2.32
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PAGE 7
Distributions
Dec. 1, 1995 - Nov. 30, 1996
From income $ ---
From capital gains $ 0.95
Total distribution $ 0.95
Total Return* +28.6%**
Class Y
12-month performance
(all figures per share)
Net asset value (NAV)
Nov. 30, 1996 $14.72
Nov. 30, 1995 $12.35
Increase $ 2.37
Distributions
Dec. 1, 1995 - Nov. 30, 1996
From income $ 0.08
From capital gains $ 0.95
Total distribution $ 1.03
Total Return* +29.8%**
*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.
(This annual report is not part of the prospectus.)
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PAGE 8
<TABLE>
<CAPTION>
IDS Equity Select Fund, Inc.
The Fund's ten largest holdings
The ten holdings listed here make up 19.46% of the Fund's net assets
Percent Value
(of Fund's net assets) (as of Nov. 30, 1996)
<S> <C> <C>
Tyco Intl 2.40% $20,531,250
A diverse, New England-based producer of packaging, cable
manufacturing, fire extinguishing systems, alarms and controls,
and simple electronic parts.
ACE 2.37 20,256,250
A diversified insurance company. Its primary business is insuring
asset, liability and reassurance.
Sherwin-Williams 2.16 18,443,750
A leading producer and marketer of consumer and industrial paints
and coatings.
Illinois Tool Works 2.01 17,150,000
A highly-regarded industrial manufacturer, with a broad,
leading-edge base of capital goods and consumer component products.
Crown Cork & Seal 1.86 15,900,000
A leading producer of packaging materials, including metal cans and
plastic containers.
SmithKline Beecham ADR 1.82 15,496,875
One of the worlds largest pharmaceutical and health-care companies,
providing a wide range of prescription, over-the-counter drugs and
clinical laboratory services.
Harcourt General 1.76 15,021,875
A publishing company with specialty retailing through its ownership
of Neiman Marcus and Bergdorf Goodman. The company also has
operations in career transition and related professional services.
Pep Boys-Manny Moe & Jack 1.72 14,650,000
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.
Solectron 1.71 14,625,000
An independent provider of customized manufacturing services to
electronics original equipment manufacturers. This company provides
a wide variety of pre-manufacturing, manufacturing and post-
manufacturing services.
ConAgra 1.65 14,078,125
This company is engaged in a variety of basic food businesses,
feed and fertilizer, grain processing, merchandising and
agricultural chemicals.
</TABLE>
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PAGE 9
Making the most of the Fund
Build you 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
March 100 17 5.88 XXXXXx
April 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...
(arrow in table pointing to September) 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.
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.
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PAGE 10
The Fund's long-term performance
How your $10,000 has grown in IDS Equity Select Fund
34,988
$30,000 Equity
S&P 500 Select
Stock Index Fund
Class A
$20,000 Lipper Growth & Income
Fund Index
$9,500
'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96
Average annual total return
(as of Nov. 30, 1996)
1 year Since Inception 5 years 10 years
Class A +23.07% __% +14.83% +13.32%
Class B* +24.64% +26.59% __% __%
Class Y* +29.75% +29.72% __% __%
*Inception date was March 20, 1995.
On the graph above you can see how the Fund's total return compared
to two widely cited performance indexes, the S&P 500 and the Lipper
Growth & Income Fund Index. In comparing Equity Select Fund (Class
A) to the two indexes, 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
indexes. Class B and Class Y are not shown. The performance of
Class B and Class Y will vary from the performance of Class A based
on differences in sales charges and fees. If you were actually to
buy either individual stocks or growth 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.
Average annual total return figures reflect the deduction of the
maximum 5% sales charge. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future
results.
Assumes: Holding period from 12/1/86 to 11/30/96. Returns do not
reflect taxes payable on distributions. Reinvestment of all income
and capital gain distributions for the Fund, with a value of
$20,347. Also see "Performance" in the Fund's current prospectus.
Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of
common stocks, is frequently used as a general measure of market
performance. However, the S&P 500 companies are generally larger
than those in which the Fund invests.
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PAGE 11
Lipper Growth and Income Fund Index, an unmanaged index, published
by Lipper Analytical Services, Inc., includes 30 funds that are
generally similar to the Fund, although some funds in the index may
have somewhat different investment policies or objectives.
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Independent auditors' report
The board and shareholders
IDS Equity Select Fund, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of IDS Equity Select Fund, Inc. as of
November 30, 1996, 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 then ended, and the financial highlights for each of the years
in the ten-year period ended November 30, 1996. 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 Equity Select Fund, Inc. at
November 30, 1996, and the results of its operations, changes in its net assets,
and the financial highlights for the periods stated in the first paragraph
above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 3, 1997
<PAGE>
Financial statements
Statement of assets and liabilities
IDS Equity Select Fund,Inc.
Nov. 30, 1996
Assets
Investments in securities, at value (Note 1)
(identified cost $610,954,407) $874,981,696
Cash in bank on demand deposit 1,668,110
Dividends and accrued interest receivable 882,275
Receivable for investment securities sold 1,969,548
Unrealized appreciation on foreign currency contracts
held, at value (Notes 1 and 4) 2,380
U.S. government securities held as collateral (Note 5) 7,437,647
Total assets $886,941,656
Liabilities
Payable for investment securities purchased 8,745,540
Payable upon return of securities loaned (Note 5) 24,063,647
Accrued investment management services fee 50,219
Accrued distribution fee 743
Accrued service fee 8,138
Accrued transfer agency fee 6,266
Accrued administrative services fee 1,771
Other accrued expenses 105,672
Total liabilities 32,981,996
Net assets applicable to outstanding capital stock $853,959,660
Represented by
Capital stock -- authorized 10,000,000,000 shares of
$.01 par value $ 580,439
Additional paid-in-capital 480,184,271
Undistributed net investment income 681,392
Accumulated net realized gain (Note 1) 108,487,236
Unrealized appreciation of investments and on
translation of assets and liabilities in foreign
currencies 264,026,322
Total -- representing net assets applicable to
outstanding capital stock $853,959,660
Net assets applicable to outstanding shares:
Class A $832,367,450
Class B $ 18,265,190
Class Y $ 3,327,020
Net asset value per share of outstanding capital stock:
Class A shares 56,569,496 $ 14.71
Class B shares 1,248,377 $ 14.63
Class Y shares 226,033 $ 14.72
See accompanying notes to financial statements.
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Statement of operations
IDS Equity Select Fund, Inc.
Year ended Nov. 30, 1996
Investment income
Income:
Dividends (net of foreign taxes withheld of $42,327) $ 8,668,166
Interest 1,692,320
Total income 10,360,486
Expenses (Note 2):
Investment management services fee 4,015,412
Distribution fee -- Class B 62,234
Transfer agency fee 657,873
Incremental transfer agency fee -- Class B 1,182
Service fee
Class A 1,233,669
Class B 14,516
Administrative services fee 283,330
Compensation of board members 4,923
Compensation of officers 6,586
Custodian fees 67,247
Postage 29,510
Registration fees 48,845
Reports to shareholders 21,392
Audit fees 24,250
Administrative 5,292
Other 4,437
Total expenses 6,480,698
Earnings credits on cash balances (Note 2) (11,728)
Total net expenses 6,468,970
Investment income -- net 3,891,516
Realized and unrealized gain -- net
Net realized gain on security and foreign currency
transactions (including loss of $2,984 from foreign
currency transactions) (Note 3) 108,411,004
Net change in unrealized appreciation or depreciation
of investments and on translation of assets and
liabilities in foreign currencies 84,207,057
Net gain on investments and foreign currencies 192,618,061
Net increase in net assets resulting from operations $196,509,577
See accompanying notes to financial statements.
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Financial statements
Statements of changes in net assets
IDS Equity Select Fund, Inc.
Year ended Nov. 30,
Operations and distributions 1996 1995
Investment income -- net $ 3,891,516 $ 5,846,941
Net realized gain on investments and foreign
currencies 108,411,004 51,890,316
Net change in unrealized appreciation or
depreciation of investments and on translation
of assets and liabilities in foreign currencies 84,207,057 91,992,076
Net increase in net assets resulting from operations 196,509,577 149,729,333
Distributions to shareholders from:
Net investment income
Class A (3,834,204) (6,443,371)
Class B (226) (4,112)
Class Y (20,808) (32,268)
Net realized gain
Class A (51,429,889) (27,566,617)
Class B (273,902) --
Class Y (215,425) --
Total distributions (55,774,454) (34,046,368)
Capital share transactions
(Note 6)
Proceeds from sales
Class A shares (Note 2) 33,397,264 23,789,273
Class B shares 13,301,146 3,058,093
Class Y shares 463,955 3,753,044
Reinvestment of distributions at net asset value
Class A shares 52,201,141 32,178,616
Class B shares 272,845 4,094
Class Y shares 236,233 32,267
Payments for redemptions
Class A shares (65,523,965) (77,433,209)
Class B shares (Note 2) (737,685) (132,946)
Class Y shares (928,668) (1,437,317)
Increase (decrease) in net assets from capital share
transactions 32,682,266 (16,188,085)
Total increase in net assets 173,417,389 99,494,880
Net assets at beginning of year 680,542,271 581,047,391
Net assets at end of year $853,959,660 $680,542,271
(including undistributed net investment income of
$681,392 and $686,538)
See accompanying notes to financial statements.
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Notes to financial statements
IDS Equity Select Fund, Inc.
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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 and/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.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net income has been decreased by $41,424 and
accumulated net realized gain has been increased by $78,423 resulting in a net
reclassification adjustment to decrease additional paid-in-capital by $36,999.
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>
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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. 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
$162,486 for the year ended Nov. 30, 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. Under a Plan and Agreement of Distribution, the Fund pays a
distribution fee at an annual rate of 0.75% of the Fund's average daily net
assets attributable to Class B shares for distribution-related services.
Under a Shareholder Service Agreement, the Fund pays a fee for service provided
to shareholders by financial advisors and other servicing agents. The fee is
calculated at a rate of 0.175% of the Fund's average daily net assets
attributable to Class A and Class B shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $680,441 for Class A and $5,615 for Class B for
the year ended Nov. 30, 1996. The Fund also pays custodian fees to American
Express Trust Company, an affiliate of AEFC.
During the year ended Nov. 30, 1996, the Fund's custodian and transfer agency
fees were reduced by $11,728 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 period. The total liability for the plan is
$21,129, 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 $458,199,701 and $469,121,870, respectively, for the
year ended Nov. 30, 1996. Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $103,970 for the
year ended Nov. 30, 1996.
- -----------------------------------------------------------------------
4. Foreign currency contracts
At Nov. 30, 1996, the Fund had entered into one foreign currency exchange
contract that obligate the Fund to deliver currency at a specified future date.
The unrealized appreciation (see Summary of significant accounting policies) on
this contract is included in the accompanying financial statements. The terms of
the open contract are as follows:
Currency to Currency Unrealized
Exchange be delivered to be appreciation
date received
-------------------------------------------------
Dec. 2, 1996 2,653,020 1,969,548 $2,380
Canadian U.S. Dollar
Dollar
- -----------------------------------------------------------------------
5. Lending of portfolio securities
At Nov. 30, 1996, securities valued at $23,578,124 were on
loan to brokers. For collateral, the Fund received
$16,626,000 in cash and U.S. government securities valued
at $7,437,647. Income from securities lending amounted to
$85,177 for the year ended Nov. 30, 1996. The risks to the
Fund of securities lending are that the borrower may not
provide additional collateral when required or return
securities when due.
<PAGE>
- -------------------------------------------------------------------
6. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Year ended Nov. 30, 1996
Class A Class B Class Y
- ---------------------------------------------------------------
Sold 2,598,052 1,025,364 36,969
Issued for reinvested 4,499,539 23,715 20,329
distributions
Redeemed (5,154,984) (57,140) (73,661)
- ---------------------------------------------------------------
Net increase(decrease) 1,942,607 991,939 (16,363)
- ---------------------------------------------------------------
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.
- -------------------------------------------------------------------
7. Financial highlights
"Financial highlights" showing per share data and selecting information is
presented on pages 6 and 7 of the prospectus.
<PAGE>
Investments in securities
IDS Equity Select Fund, Inc. (Percentages represent value of
Nov. 30, 1996 investments compared to net assets)
- --------------------------------------------------------------------------------
Common stocks (97.6%)
- --------------------------------------------------------------------------------
Issuer Shares Value (a)
- --------------------------------------------------------------------------------
Aerospace & defense (3.7%)
Boeing 110,000 $ 10,931,250
Thiokol 200,000 9,200,000
United Technologies 85,000 11,921,250
------------
Total 32,052,500
- --------------------------------------------------------------------------------
Automotive & related (1.2%)
Danaher 225,000 10,068,750
- --------------------------------------------------------------------------------
Banks and savings & loans (4.0%)
First Union 165,000 12,601,875
KeyCorp 200,000 10,475,000
Washington Mutual 250,000 10,875,000
------------
Total 33,951,875
- --------------------------------------------------------------------------------
Beverages & tobacco (1.4%)
Anheuser-Busch 275,000 11,653,125
- --------------------------------------------------------------------------------
Building materials & construction (6.4%)
Clayton Homes 450,000 7,312,500
Lennar 310,000 8,060,000
Sherwin-Williams 325,000 18,443,750
Tyco Intl 375,000 20,531,250
------------
Total 54,347,500
- --------------------------------------------------------------------------------
Chemicals (5.2%)
Betz Laboratories 225,000 13,021,875
Hanna (MA) 450,000 9,506,250
Pall 375,000 9,796,875
Praxair 250,000 12,156,250
------------
Total 44,481,250
- --------------------------------------------------------------------------------
Communications equipment & services (1.7%)
ADC Telecommunications 240,000 (b) 8,700,000
Andrew 100,000 (b,d) 5,787,500
------------
Total 14,487,500
- --------------------------------------------------------------------------------
Computers & office equipment (9.3%)
Ceridian 175,000 (b) 8,421,875
Cisco Systems 150,000 (b) 10,181,250
Compaq Computer 125,000 (b) 9,906,250
Computer Associates Intl 125,000 8,218,750
Hewlett-Packard 79,900 4,304,613
Manugistics Group 200,000 (b) 7,450,000
Parametric Technology 225,000 (b) 12,234,375
Sabre Group Holdings 150,000 (b) 4,387,500
Solectron 250,000 (b) 14,625,000
------------
Total 79,729,613
- --------------------------------------------------------------------------------
Electronics (1.8%)
Adaptec 350,000 (b) 13,037,500
Molex 50,000 1,950,000
------------
Total 14,987,500
- --------------------------------------------------------------------------------
Energy (3.1%)
Enron Oil & Gas 350,000 9,318,750
Tosco 175,000 13,321,875
Union Pacific Resources Group 125,000 3,734,375
------------
Total 26,375,000
- --------------------------------------------------------------------------------
Energy equipment & services (2.8%)
Fluor 200,000 13,600,000
Transocean Offshore 175,000 10,543,750
------------
Total 24,143,750
- --------------------------------------------------------------------------------
Financial services (0.9%)
Morgan Stanley 125,000 7,515,625
- --------------------------------------------------------------------------------
Food (4.3%)
ConAgra 265,000 14,078,125
Pioneer Hi-Bred Intl 155,000 10,811,250
Sysco 350,000 11,943,750
------------
Total 36,833,125
- --------------------------------------------------------------------------------
Health care (5.6%)
American Home Products 150,000 9,637,500
Amgen 125,000 (b) 7,609,375
Baxter Intl 200,000 8,500,000
Guidant 175,000 9,253,125
Merck 150,000 12,450,000
------------
Total 47,450,000
- --------------------------------------------------------------------------------
Health care services (1.3%)
Tenet Healthcare 500,000 11,187,500
- --------------------------------------------------------------------------------
Household products (0.3%)
Dial 200,000 2,825,000
- --------------------------------------------------------------------------------
Industrial equipment & services (6.2%)
AGCO 250,000 6,968,750
Deere 225,000 10,040,625
Illinois Tool Works 200,000 17,150,000
Teleflex 200,000 9,900,000
USA Waste Service 275,000 (b) 8,868,750
------------
Total 52,928,125
- --------------------------------------------------------------------------------
Industrial transportation (1.6%)
Burlington Northern Santa Fe 75,000 6,740,625
Union Pacific 125,000 7,281,250
------------
Total 14,021,875
- --------------------------------------------------------------------------------
Insurance (5.9%)
ACE 350,000 20,256,250
Progressive Corp Ohio 150,000 10,462,500
TIG Holdings 300,000 9,150,000
UNUM 147,400 10,483,825
------------
Total 50,352,575
- --------------------------------------------------------------------------------
Leisure time & entertainment (1.1%)
Carnival Cl A 300,000 9,487,500
- --------------------------------------------------------------------------------
Media (3.9%)
Belo (AH) Cl A 225,000 8,690,625
Gannett 75,000 5,887,500
Harcourt General 275,000 15,021,875
Time Warner 100,000 4,075,000
------------
Total 33,675,000
- --------------------------------------------------------------------------------
Metals (4.1%)
Martin Marietta Materials 500,000 11,750,000
Phelps Dodge 30,000 2,178,750
Reynolds Metals 50,000 2,975,000
UCAR Intl 200,000 (b) 7,575,000
Worthington Inds 550,000 10,931,250
------------
Total 35,410,000
- --------------------------------------------------------------------------------
Multi-industry conglomerates (2.8%)
Emerson Electric 135,000 13,246,875
Westinghouse Electric 550,000 (d) 10,312,500
------------
Total 23,559,375
- --------------------------------------------------------------------------------
Paper & packaging (1.9%)
Crown Cork & Seal 300,000 15,900,000
- --------------------------------------------------------------------------------
Retail (10.8%)
American Stores 225,000 8,971,875
Federated Dept Stores 325,000 (b) 11,090,625
Home Depot 100,000 5,212,500
Kohl's 275,000 (b) 10,965,625
Lands' End 300,000 (b) 8,212,500
Pep Boys--Manny, Moe & Jack 400,000 14,650,000
Revco DS 300,000 (b) 10,350,000
Richfood Holdings 277,500 7,215,000
Safeway 275,000 (b,d)11,171,875
United Auto Group 175,000 (b) 4,046,875
------------
Total 91,886,875
- --------------------------------------------------------------------------------
Textiles & apparel (1.6%)
Nike Cl B 100,000 5,687,500
Unifi 275,000 8,353,125
------------
Total 14,040,625
- --------------------------------------------------------------------------------
Foreign (4.7%) (c)
Baan 135,000 (b) 4,809,375
Renaissance Energy 271,000 (b) 9,625,104
Schlumberger 100,000 10,400,000
SmithKline Beecham ADR 225,000 15,496,875
------------
Total 40,331,354
- --------------------------------------------------------------------------------
Total common stocks
(Cost: $569,655,627) $833,682,917
- --------------------------------------------------------------------------------
Short-term securities (4.8%)
- --------------------------------------------------------------------------------
Issuer Annualized Amount Value (a)
yield on payable at
date of maturity
purchase
- --------------------------------------------------------------------------------
U.S. government agencies (0.2%)
Federal Home Loan Mtge Corp Disc Nts
12-11-96 5.24% 100,000 $ 99,841
12-12-96 5.23 1,600,000 1,597,216
------------
Total 1,697,057
- --------------------------------------------------------------------------------
Commerical paper (4.6%)
CAFCO
12-04-96 5.28 3,500,000 3,497,958
Cargill
12-06-96 5.26 3,500,000 3,496,943
Ciesco LP
12-05-96 5.27 600,000 599,563
12-23-96 5.27 4,300,000 4,285,577
Dean Witter
01-07-97 5.35 3,500,000 3,480,346
Gateway Fuel
12-09-96 5.27 5,500,000 5,492,795
Paccar
12-02-96 5.27 1,800,000 1,799,475
12-10-96 5.31 2,193,000 2,189,771
12-30-96 5.29 5,500,000 5,475,846
Reed Elsevier
12-06-96 5.28 1,000,000 (e) 999,123
St. Paul Companies
12-09-96 5.27 4,000,000 (e) 3,994,760
Sandoz
12-06-96 5.27 1,100,000 (e) 1,099,038
SmithKline Beecham
12-23-96 5.30 2,700,000 2,690,892
Transamerica Financial
12-05-96 5.27 500,000 499,635
------------
Total 39,601,722
- --------------------------------------------------------------------------------
Total short-term securities
(Cost: $41,298,780) $ 41,298,779
- --------------------------------------------------------------------------------
Total investments in securities
(Cost: $610,954,407) (f) $874,981,696
- --------------------------------------------------------------------------------
Notes to investments in securities
- --------------------------------------------------------------------------------
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) Security is partially or fully on loan. See Note 4 to the financial
statements.
(e) 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 other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(f) At Nov. 30, 1996, the cost of securities for federal income tax
purposes was $610,954,407 and the aggregate gross unrealized appreciation and
depreciation
Unrealized appreciation $265,691,143
Unrealized depreciation (1,663,854)
------------
Net unrealized appreciation $264,027,289
<PAGE>
PAGE 12
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing
primarily in foreign securities. Foreign investments may be
subject to currency fluctuations and political and economic risks
of the countries in which the investments are made. They are high
risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies
in developing countries throughout the world that are believed to
offer growth potential. Seeks to provide long-term growth of
capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of 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 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 Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets
throughout the world, including the U.S. Seeks to provide a
balance of growth of capital and current income.
(icon of) scale holding two worlds
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of
U.S. and foreign issuers to seek high total return through income
and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common
stocks. They are high risk mutual funds with a potential for high
reward.
<PAGE>
PAGE 13
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. A highly aggressive and speculative fund
that seeks long-term growth of capital.
(icon of) cart of precious gems
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 Small Company Index Fund
Invests in all or a representative group of the equity securities
comprising the S&P SmallCap 600 Index, as it strives to provide
long-term capital appreciation.
(icon of) office building
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 Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of
companies included in the S&P 500 Index that are believed to have
strong growth potential. The Portfolio is managed using a research
methodology by the Research Department of AEFC. Goal is long-term
appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have
above-average potential for long-term growth as a result of new
management, marketing opportunities or technological superiority.
(icon of) trees
<PAGE>
PAGE 14
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of 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
Growth & income funds
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.
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 Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity
securities, U.S. and foreign debt securities, foreign equity
securities and money market instruments. The Fund provides
diversification among these major investment categories and has a
target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of
companies representing many sectors of the economy. Seeks current
income and growth of capital.
(icon of) building with columns
<PAGE>
PAGE 15
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 in a Portfolio comprised primarily of 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 Portfolio which seeks to 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
Income funds
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 Extra Income Fund
Invests in a Portfolio comprised mainly of 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) coins
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 16
IDS Selective Fund
Invests in a Portfolio comprised primarily of 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 in a Portfolio comprised primarily of 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 enclosed
Tax-exempt income funds
These funds provide tax-free income by investing in municipal
bonds. The income is generally free from federal income tax, but a
portion of the income may be subject to state and local taxes.
Risk varies by bond quality.
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 enclosed
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 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
<PAGE>
PAGE 17
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of 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 Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities
with intermediate-term maturities issued by state and local
government units. Goal is to seek a high level of current income
exempt from federal taxes.
(icon of) shield with a tree enclosed
Money market funds
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. An investment in these funds is
neither insured nor guaranteed by the U.S. government, and there
can be no assurance that these funds will be able to maintain a
stable net asset value of $1.00 per share. 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
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 18
Federal income tax information
IDS Equity Select 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 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 Equity Select Fund, Inc.
Fiscal year ended Nov. 30, 1996
Class A
Income distributions
taxable as dividend income, 40.33% qualifying for deduction by
corporations.
Payable date Per share
Dec. 28, 1995 $0.01802
March 29, 1996 0.01207
June 28, 1996 0.01746
Sept. 27, 1996 0.02032
Total $0.06787
Capital gain distribution
taxable for long-term capital gain.
Payable date Per share
Dec. 28, 1995 $0.94550
Total distributions $1.01337
The distribution of $0.96352 per share, payable
Dec. 28, 1995, consisted of $0.01802 from net
investment income and $0.94550 from net long-term
capital gains.
Class B
Income distributions
taxable as dividend income, 40.33% qualifying for deductions by
corporations.
Payable date Per share
Dec. 28, 1995 $0.00078
<PAGE>
PAGE 19
Capital gain distribution
taxable for long-term capital gain.
Payable date Per share
Dec. 28, 1995 $0.94550
Total distributions $0.94628
The distribution of $0.94628 per share, payable
Dec. 28, 1995, consisted of $0.00078 from net
investment income and $0.94550 from net long-term
capital gains.
Class Y
Income distributions
taxable as dividend income, 40.33% qualifying for deduction by
corporations.
Payable date Per share
Dec. 28, 1995 $0.02323
March 29, 1996 0.01720
June 28, 1996 0.02286
Sept. 27, 1996 0.02573
Total $0.08902
Capital gain distribution
taxable for long-term capital gain.
Payable date Per share
Dec. 28, 1995 $0.94550
Total distributions $1.03452
The distribution of $0.96873 per share, payable
Dec. 28, 1995, consisted of $0.02323 from net
investment income and $0.94550 from net long-term
capital gains.
<PAGE>
PAGE 20
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 Equity Select Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 21
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 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. 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.
