-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, EE8uGqCzPPuLtUtT56xSilmVtdi96cf9C38HeHtknzfCys8921Xy6TN4g+UTJVHy LB57rwkc8gFdsM1xCgA7Og== 0000820027-95-000379.txt : 19950721 0000820027-95-000379.hdr.sgml : 19950721 ACCESSION NUMBER: 0000820027-95-000379 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950720 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IDS SELECTIVE FUND INC CENTRAL INDEX KEY: 0000052407 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 410839316 STATE OF INCORPORATION: MN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-00499 FILM NUMBER: 95555041 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 FORMER COMPANY: FORMER CONFORMED NAME: INVESTORS SELECTIVE FUND INC DATE OF NAME CHANGE: 19841002 N-30D 1 SEL SEMI 5/31/95 PAGE IDS Selective Fund 1995 semiannual report (icon of) skyline The goals of IDS Selective Fund, Inc. are current income and the preservation of capital by investing in investment grade bonds. Distributed by American Express Financial Advisors Inc. (icon of) skyline A quest for Quality Not all bonds are created equal. A bond's quality depends on the ability of its issuer to make the interest and principal payments owed to the bondholders. The quality is determined by independent rating agencies, which assign a credit rating (in the form of a letter grade) to each bond. Since its establishment in 1945, Selective Fund has concentrated its investments in the four highest investment grades. Along the way, investors have enjoyed a steady stream of interest income with minimal risk to their principal. 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 20 Directors and officers 28 IDS mutual funds 29 PAGE To our shareholders (picture of) William R. Pearce President of the fund (picture of) Ray Goodner Portfolio manager From the president As I indicated in the fund's annual report, new agreements between the fund and American Express Financial Corporation were approved by shareholders in November 1994. The new agreements became effective when the fund began offering multiple classes of shares on March 20, 1995. The advantage of offering more than a single class of shares is that investors may choose how they wish to pay sales charges. These charges compensate your American Express financial advisor (formerly called your IDS planner), who is committed to providing you with outstanding services. Adding new classes of mutual fund shares does make the presentation of financial information in this report more complex. However, we will continue our effort to make the reports easier to read and understand. Meanwhile, your American Express financial advisor is available to answer your questions. William R. Pearce From the portfolio manager The bond market staged a robust rally during the first half of IDS Selective Fund's fiscal year (December 1994 through May 1995). Thanks largely to a long maturity level in the portfolio, the fund took advantage of the positive environment, giving Class A shareholders a double-digit gain for the six-month period. (Please note that the fund's net asset value was reduced last December by a capital gain distribution to shareholders, which is included in the total return for the period.) The rally in the bond market corresponded almost exactly with the beginning of the fiscal year. The decline in long-term interest rates, always bonds' best friend, began in mid-November 1994. Because falling rates boost bond values, the market immediately started moving higher and maintained a steady advance through the spring. This marked a sharp reversal from the rising-rate trend that dominated nearly all of 1994 and drove down bond prices so dramatically. Favorable factors What had bothered the bond market earlier - a fear that an over-heated economy would soon lead to a rise in the inflation rate - was put aside during the period as inflation reports remained unthreatening. In that light, longer-term bonds looked increasingly attractive to investors and as they rushed back into the market, yields continued to decline. Our strategy during the six months centered on extending the average maturity of the bonds in the portfolio to increase the fund's ability to benefit from the interest-rate drop. (The longer the maturity, the greater a security's price-sensitivity to a change in rates. ) In addition, we reduced cash reserves, preferring to have more money at work in higher- yielding securities. Beyond that, we maintained an exposure to dollar-denominated foreign bonds, especially in Asia, which also proved to be productive. Korean bonds, in particular, provided a boost when the bonds we held were upgraded in quality. Slower economy may extend rally It appears clear at this writing that U.S. economic growth has slowed down from its surge in 1994, though not to the point of recession. This trend has its roots in a slowdown in consumer spending, which, if it continues, should ultimately help keep inflation at bay in the months ahead. That, in turn, would serve to restrain a potential rise in long-term interest rates and probably even lead to further decline. Congress' determination to reduce the federal deficit also fosters a positive environment for bonds. As we enter the second half of the year, there is increasing sentiment that the Federal Reserve will soon reverse course and lower short-term interest rates. This seems premature, given the Fed's well-demonstrated desire to combat inflation. Therefore, should the Fed not lower rates this summer, such a signal would likely extend the favorable environment for bond performance. Ray Goodner Class A 6-month performance (All figures per share) Net asset value (NAV) __________________________ May 31, 1995 $ 9.24 __________________________ Nov. 30, 1994 $ 8.57 __________________________ Increase $ 0.67 __________________________ Distributions Dec. 1, 1994-May 31, 1995 __________________________ From income $ 0.29 __________________________ From capital gains $ 0.12 __________________________ Total distributions $ 0.41 __________________________ Total return** +12.9%*** __________________________ Class B March 20, 1995-May 31, 1995 __________________________ (All figures per share) Net asset value (NAV) __________________________ May 31, 1995 $ 9.24 __________________________ March 20, 1995* $ 8.79 __________________________ Increase $ 0.45 __________________________ Distributions March 20, 1995*-May 31, 1995 __________________________ From income $ 0.14 __________________________ From capital gains $ -- __________________________ Total distributions $ 0.14 __________________________ Total return** + 6.7%*** __________________________ Class Y March 20, 1995-May 31, 1995 __________________________ (All figures per share) Net asset value (NAV) __________________________ May 31, 1995 $ 9.24 __________________________ March 20, 1995* $ 8.79 __________________________ Increase $ 0.45 __________________________ Distributions March 20, 1995*-May 31, 1995 __________________________ From income $ 0.15 __________________________ From capital gains $ -- __________________________ Total distributions $ 0.15 __________________________ Total return** +6.8%*** __________________________ *Commencement of operations. **The prospectus discusses the effects of the sales charge on the various classes. ***The total return is a hypothetical investment in the fund with all distributions reinvested. PAGE
IDS Selective Fund, Inc. Your fund's ten largest holdings (Pie chart) The ten holdings listed here make up 12.13% of the fund's net assets Percent Value (of fund's net assets) (as of May 31, 1994) Japan Finance 1.82% $28,259,810 9.25% 1998 Southern California Edison 1.49 23,036,370 8.875% 1st Mortgage 2023 Tokyo Electric Power Euro 1.34 20,705,144 6.125% 2003 Republic of Italy 1.27 19,709,360 6.875% 2023 Province of Quebec 1.25 19,404,548 11% 2015 Pacific Bell 1.02 15,862,500 8.50% 2031 GTE South 1.00 15,541,737 9.375% 1st Mortgage 2030 General Electric Capital .99 15,364,650 8.65% Reset Note 1996 Texas Utilities Electric .98 15,164,370 9.75% 1st Mortgage 2021 PDV America .97 14,964,015 7.875% 2003 Excludes U.S. Treasury and government agencies holdings that total 43% of the fund's net assets.
PAGE
Statement of assets and liabilities IDS Selective Fund, Inc. May 31, 1995 ______________________________________________________________________________________________________________ Assets ______________________________________________________________________________________________________________ (Unaudited) Investments in securities, at value (Note 1) (identified cost $1,443,460,490) $1,526,173,950 Dividends and accrued interest receivable 25,346,648 Receivable for investment securities sold 11,714,251 Receivable for foreign currency contracts held, at value (Notes 1 and 7) 10,214,193 U.S. government securities held as collateral (Note 5) 90,822,739 _____________________________________________________________________________________________________________ Total assets 1,664,271,781 _____________________________________________________________________________________________________________ Liabilities ____________________________________________________________________________________________________________ Disbursements in excess of cash on demand deposit 1,930,289 Dividends payable to shareholders 1,644,027 Payable for foreign currency contracts held, at value (Notes 1 and 7) 10,107,922 Payable upon return of securities loaned (Note 5) 100,280,739 Accrued investment management services fee 150,860 Accrued distribution fees 4,634 Accrued service fee 41,417 Accrued transfer agency fee 29,668 Accrued administrative services fee 14,238 Other accrued expenses 254,166 _____________________________________________________________________________________________________________ Total liabilities 114,457,960 _____________________________________________________________________________________________________________ Net assets applicable to outstanding capital stock $1,549,813,821 _____________________________________________________________________________________________________________ Represented by _____________________________________________________________________________________________________________ Capital stock -- authorized 10,000,000,000 shares of $.01 par value; $ 1,677,164 Additional paid-in capital 1,461,376,224 Undistributed net investment income 308,087 Accumulated net realized gain (Note 1) 3,632,615 Unrealized appreciation (Note 7) 82,819,731 _____________________________________________________________________________________________________________ Total -- representing net assets applicable to outstanding capital stock $1,549,813,821 _____________________________________________________________________________________________________________ Net assets applicable to outstanding shares: Class A $1,415,013,755 Class B $ 17,282,141 Class Y $ 117,517,925 Net asset value per share of outstanding capital stock: Class A shares 153,128,396 $ 9.24 Class B shares 1,870,007 $ 9.24 Class Y shares 12,717,810 $ 9.24 See accompanying notes to financial statements. PAGE Financial statements Statement of operations IDS Selective Fund, Inc. Six months ended May 31, 1995 _____________________________________________________________________________________________________________ Investment income _____________________________________________________________________________________________________________ Income: (Unaudited) Interest $ 54,039,685 Dividends 143,850 _____________________________________________________________________________________________________________ Total income 54,183,535 _____________________________________________________________________________________________________________ Expenses (Note 2): Investment management services fee 3,710,107 Distribution fee Class A 191,949 Class B 12,119 Transfer agency fee 828,106 Incremental transfer agency fee - Class B 183 Service fee Class A 407,362 Class B 2,939 Administrative services fee 143,040 Compensation of directors 15,559 Compensation of officers 9,070 Custodian fees 80,721 Postage 59,016 Registration fees 48,166 Reports to shareholders 17,592 Audit fees 16,000 Administrative 9,380 Other 12,115 _____________________________________________________________________________________________________________ Total expenses 5,563,424 _____________________________________________________________________________________________________________ Investment income -- net 48,620,111 _____________________________________________________________________________________________________________ Realized and unrealized gain (loss) -- net _____________________________________________________________________________________________________________ Net realized gain on security and foreign currency transactions (including gain of $3,842 from foreign currency transactions) (Note 3) 2,009,639 Net realized loss on closed option contracts written (Note 8) (34,345) _____________________________________________________________________________________________________________ Net realized gain on investments and foreign currency 1,975,294 Net change in unrealized appreciation or depreciation 128,437,214 _____________________________________________________________________________________________________________ Net gain on investments and foreign currency 130,412,508 _____________________________________________________________________________________________________________ Net increase in net assets resulting from operations $179,032,619 _____________________________________________________________________________________________________________ See accompanying notes to financial statements. /TABLE PAGE
Financial statements Statements of changes in net assets IDS Selective Fund, Inc. _____________________________________________________________________________________________________________ Operations and distributions May 31, 1995 Nov. 30, 1994 _____________________________________________________________________________________________________________ Six months ended Year ended (Unaudited) Investment income -- net $ 48,620,111 $ 102,344,658 Net realized gain on investments and foreign currency 1,975,294 21,139,491 Net change in unrealized appreciation or depreciation 128,437,214 (202,860,707) _____________________________________________________________________________________________________________ Net increase (decrease) in net assets resulting from operations 179,032,619 (79,376,558) _____________________________________________________________________________________________________________ Distributions to shareholders from: Net investment income Class A (46,006,556) (102,415,375) Class B (85,256) -- Class Y (1,841,425) -- Excess distribution of net investment income Class A -- (378,787) Net realized gain Class A (20,000,191) (26,487,582) Excess distribution of realized gain (Note 1) Class A (3,842) (42,963) _____________________________________________________________________________________________________________ Total distributions (67,937,270) (129,324,707) _____________________________________________________________________________________________________________ Capital share transactions (Note 4) _____________________________________________________________________________________________________________ Proceeds from sales Class A shares (Note 2) 103,886,374 196,126,624 Class B shares 17,063,211 -- Class Y shares 116,020,696 -- Reinvestment of distributions at net asset value Class A shares 49,951,759 99,112,296 Class B shares 78,941 -- Class Y shares 1,451,348 -- Payments for redemptions Class A shares (245,838,241) (421,007,405) Class B shares (Note 2) (455,270) -- Class Y shares (5,561,731) -- _____________________________________________________________________________________________________________ Increase (decrease) in net assets from capital share transactions 36,597,087 (125,768,485) _____________________________________________________________________________________________________________ Total increase (decrease) in net assets 147,692,436 (334,469,750) Net assets at beginning of period 1,402,121,385 1,736,591,135 _____________________________________________________________________________________________________________ Net assets at end of period (including undistributed net investment income of $308,087 and $(378,787)) $1,549,813,821 $1,402,121,385 _____________________________________________________________________________________________________________ See accompanying notes to financial statements.
PAGE Notes to financial statements IDS Selective Fund, Inc. (Unaudited as to May 31, 1995) __________________________________________________________________________ 1. Summary of significant accounting policies The fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The fund offers Class A, Class B and Class Y shares. Class A shares are sold with a front-end sales charge. Class B shares, which the fund began offering on March 20, 1995, may be subject to a contingent deferred sales charge. Class B shares automatically convert to Class A after eight years. Class Y shares, which the fund also began offering on March 20, 1995, have no sales charge and are offered only to qualifying institutional investors. All classes of shares have identical voting, dividend, liquidation and other rights, and the same terms and conditions, except that the level of distribution fee, transfer agency fee and service fee (class specific expenses) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. Significant accounting policies followed by the fund are summarized below: Valuation of securities All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price; securities for which market quotations are not readily available, including illiquid securities, are valued at fair value according to methods selected in good faith by the board of directors. Determination of fair value involves, among other things, reference to market indexes, matrixes and data from independent brokers. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. Option transactions In order to produce incremental earnings, protect gains, and facilitate buying and selling of securities for investment purposes, the fund may buy or write options traded on any U.S. or foreign exchange or in the over- the-counter market where the completion of the obligation is dependent upon the credit standing of the other party. The fund also may buy and sell put and call 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 interest rate futures contracts traded on any U.S. or foreign exchange. The fund also may buy or write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility that there may be an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Upon entering into a futures contract, the fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The fund recognizes a realized gain or loss when the contract is closed or expires. Foreign currency translations and foreign currency contracts Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars at the closing rate of exchange. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the statement of operations, net realized gains or losses from foreign currency transactions may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement dates on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The fund may enter into forward foreign currency exchange contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The fund is subject to the credit risk that the other party will not complete the obligations of the contract. Federal taxes Since the fund's policy is to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders, no provision for income or excise taxes is required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of the deferral of losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. The effect on dividend distributions of certain book- to-tax differences is presented as "excess distributions" in the statement of changes in net assets. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the fund. Dividends to shareholders Dividends from net investment income, declared daily and payable monthly, are reinvested in additional shares of the fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the last income dividend of the calendar year. Other Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date. For U.S. dollar denominated bonds, interest income includes level-yield amortization of premium and discount. For foreign bonds, except for issue discount, the fund does not amortize premium and discount. __________________________________________________________________________ 2. Expenses and sales charges Under terms of a prior agreement that ended March 19, 1995, the fund paid American Express Financial Corporation a fee for managing its investments, recordkeeping and other specified services. The fee was a percentage of the fund's average daily net assets consisting of a group asset charge in reducing percentages from 0.46% to 0.32% annually on the combined net assets of all non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual asset charge of 0.13% of average daily net assets. Also under the terms of a prior agreement, the fund paid American Express Financial Corporation a distribution fee at an annual rate of $6 per shareholder account and a transfer agency fee at an annual rate of $15.50 per shareholder account. The transfer agency fee was reduced by earnings on monies pending shareholder redemptions. Effective March 20, 1995, when the fund began offering multiple classes of shares, the fund entered into agreements with American Express Financial Corporation for managing it's portfolio, providing administrative services and serving as transfer agent as follows: Under its Investment Management Services Agreement, American Express Financial Corporation determines which securities will be purchased, held or sold. The management fee is a percentage of the fund's average daily net assets in reducing percentages from 0.52% to 0.395% annually. Under an Administrative Services Agreement, the fund pays American Express Financial Corporation for administration and accounting services at a percentage of the fund's average daily net assets in reducing percentages from 0.05% to 0.025% annually. Under a separate Transfer Agency Agreement, American Express Financial Corporation maintains shareholder accounts and records. The fund pays American Express Financial Corporation 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 the Distribution Agreement, 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. American Express Financial Corporation will assume and pay any expenses (except taxes and brokerage commissions) that exceed the most restrictive applicable state expense limitation. Sales charges by American Express Financial Advisors Inc. for distributing fund shares were $1,660,478 for Class A and $90 for Class B for the six months ended May 31, 1995. The fund has a retirement plan for its independent directors. Upon retirement, directors receive monthly payments equal to one-half of the retainer fee for as many months as they served as directors up to 120 months. There are no death benefits. The plan is not funded but the fund recognizes the cost of payments during the time the directors serve on the board. The retirement plan expense amounted to $4,262 for the six months ended May 31, 1995. __________________________________________________________________________ 3. Securities transactions Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $429,888,828 and $259,052,248, respectively, for the six months ended May 31, 1995. Realized gains and losses are determined on an identified cost basis. __________________________________________________________________________
4. Share transactions Transactions in shares of capital stock during each period were as follows: Six months ended May 31, 1995 Year ended 11/30/94 Class A Class B* Class Y* Class A ________________________________________________________________________________________ Sold 11,908,902 1,912,548 13,178,266 21,519,839 Issued for reinvested distributions 5,762,368 8,702 161,407 10,813,989 Redeemed (28,140,930) (51,243) (621,863) (46,537,712) _________________________________________________________________________________________ Net increase (decrease) (10,469,660) 1,870,007 12,717,810 (14,203,884) _________________________________________________________________________________________ *Commencement of operations was March 20, 1995.
_________________________________________________________________________ 5. Lending of portfolio securities At May 31, 1995, securities valued at $89,237,922 were on loan to brokers. For collateral, the fund received $9,458,000 in cash and U.S. government securities valued at $90,822,739. Income from securities lending amounted to $87,342 for the six months ended May 31, 1995. The risks to the fund of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. PAGE 6. Illiquid Securities At May 31, 1995, investments in securities included issues that are illiquid. The fund currently limits investments in illiquid securities to 10% of the net assets, at market value, at the time of purchase. The aggregate value of such securities at May 31, 1995 was $8,055,483, representing 0.5% of the net assets. Pursuant to guidelines adopted by the fund's board of directors, certain unregistered securities are determined to be liquid and are not included within the 10% limitation specified above. ______________________________________________________________________________ 7. Foreign currency contracts At May 31, 1995, the fund had entered into one foreign currency exchange contract that obligates the fund to deliver currency at a specified future date. The net unrealized appreciation of $106,271 on this contract is included in the accompanying financial statements. The terms of the open contracts are as follows:
U.S. Dollar value U.S. Dollar value Currency to be as of Currency to be as of Exchange date delivered May 31, 1995 received May 31, 1995 ____________________________________________________________________________________________________ June 1, 1995 6,371,208 $10,107,922 10,214,193 $10,214,193 British Pound U.S. Dollar ______________________________________________________________________________ 8. Option contracts written The number of contracts and premium amounts associated with covered call option contracts written is as follows: Six months ended May 31, 1995 _____________________________ Contracts Premium ___________________________________________ Balance Nov. 30, 1994 -- $ -- Opened 500 414,470 Closed (500) (414,470) ___________________________________________ Balance May 31, 1995 -- $ -- ___________________________________________________________ 9. Financial highlights PAGE
IDS Selective Fund, Inc. The table below shows certain important financial information for evaluating the fund's results. Fiscal period ended Nov. 31, Per share income and capital changes* 1995** 1994 1993 1992 1991 1990 Classes A B Y Net asset value, $8.57 $8.79 $8.79 $9.77 $9.20 $8.93 $8.41 $8.69 beginning of period Income from investment operations: Net investment income .29 .14 .15 .60 .63 .66 .69 .70 Net gains (losses) .79 .45 .45 (1.05) .69 .27 .52 (.30) (both realized and unrealized) Total from investment 1.08 .59 .60 (.45) 1.32 .93 1.21 .40 operations Less distributions: Dividends from net (.29) (.14) (.15) (.60) (.64) (.66) (.69) (.68) investment income Distributions from (.12) -- -- (.15) (.11) -- -- -- realized gains Total distributions (.41) (.14) (.15) (.75) (.75) (.66) (.69) (.68) Net asset value, $9.24 $9.24 $9.24 $8.57 $9.77 $9.20 $8.93 $8.41 end of period Ratios/supplemental data 1995** 1994 1993 1992 1991 1990 Classes A B Y Net assets, end of period $1,415 $17 $118 $1,402 $1,737 $1,541 $1,403 $1,196 (in millions) Ratio of expenses to .78%+ 1.67%+ .71%+ .72% .72% .74% .77% .76% average daily net assets Ratio of net income 6.80%+ 6.01%+ 7.84%+ 6.53% 6.57% 7.32% 7.94% 8.58% to average daily net assets Portfolio turnover rate 21% 21% 21% 30% 30% 62% 59% 54% (excluding short-term securities) Total return++ 12.9%+++ 6.7% 6.8% (4.7%) 14.8% 10.8% 15.0% 4.8% *For a share outstanding throughout the period. Rounded to the nearest cent. **Six months ended May 31, 1995 for Class A and commencement of operations March 20, 1995 for Class B and Class Y (Unaudited). +Adjusted to an annual basis. ++Total return does not reflect payment of a sales charge. +++For the fiscal period ended May 31, 1995 the annualized total return is 25.8%.
PAGE
Investments in securities IDS Selective Fund, Inc. (Percentages represent value of May 31, 1995 (Unaudited) investments compared to net assets) _____________________________________________________________________________________________________________________________ Bonds (92.1%) _____________________________________________________________________________________________________________________________ Issuer Coupon Maturity Principal Value(a) rate year amount _____________________________________________________________________________________________________________________________ U.S. government obligations (30.0%) U.S. Treasury 6.875% 1999 $60,000,000 $ 61,814,400 7.25 1996 30,000,000 30,593,700 7.50 2001 37,900,000 (b) 40,590,521 7.50 2016 65,450,000 70,812,319 8.00 2021 35,000,000 (b) 40,168,800 8.625 1997 50,745,000 53,590,272 Resolution Funding Corp Zero Coupon 7.61 2017 79,000,000 (c) 16,994,480 Zero Coupon 7.89 2016 70,900,000 (b,c) 16,350,851 Zero Coupon 7.98 2016 47,000,000 (c) 10,846,190 Zero Coupon 8.11 2016 35,073,000 (c) 7,814,615 Zero Coupon 8.12 2004 7,899,000 (c) 4,410,960 Zero Coupon 8.18 2005 13,000,000 (c) 6,602,310 Zero Coupon 8.19 2014 48,000,000 (c) 13,162,080 Zero Coupon 8.20 2005 38,048,000 (c) 20,021,999 Zero Coupon 8.27 2014 10,000,000 (c) 2,638,700 Zero Coupon 8.35 2006 48,000,000 (c) 23,495,040 Zero Coupon 8.94 2006 25,000,000 (c) 12,439,750 Zero Coupon 8.95 2006 68,000,000 (c) 32,208,880 _____________ Total 464,555,867 _____________________________________________________________________________________________________________________________ Mortgage-backed securities (13.0%) Federal Home Loan Mtge Corp 7.00 1995-25 9,875,577 9,746,009 7.50 2024 19,913,540 20,044,173 8.00 1995-17 13,839 14,085 8.50 1995-17 591,410 609,335 8.50 1995-19 366,412 377,518 8.50 1995-22 12,426,746 12,873,363 8.50 1995-25 14,705,601 15,050,300 9.00 1995-20 4,902,595 5,091,051 9.00 2021 2,884,387 3,013,290 Collateralized Mtge Obligation 8.50 2019 12,000,000 12,253,080 Federal Housing Admin 7.43 2024 9,399,789 9,311,666 Federal Natl Mtge Assn 6.50 1995-23 14,002,585 13,512,509 Collateralized Mtge Obligation 8.00 2021 12,702,370 12,944,605 8.50 2019 7,976,355 8,301,471 Principal Only 9.50 2018 1,896,946 (e) 1,505,701 Principal Only 9.89 2020 2,629,671 (e) 2,085,539 Trust Series Z 6.00 2024 18,320,607 (d) 13,620,821 See accompanying notes to investments in securities. PAGE Govt Natl Mtge Assn 8.00 1995-24 32,116,479 32,979,770 8.00 1995-22 2,221,942 2,281,668 8.00 1995-23 4,500,082 4,621,044 9.00 1995-24 9,409,027 9,885,406 9.00 1995-25 4,290,916 4,508,165 Collateralized Mtge Obligation Trust 7.75 2012 3,106,803 3,164,310 Prudential Bache Collateralized Mtge Obligation 7.965 2019 4,233,459 4,327,061 WestAm Collateralized Mtge Obligation 8.95 2018 123,406 127,412 ______________ Total 202,249,352 _____________________________________________________________________________________________________________________________ Financial (10.4%) Banks and savings & loans (3.2%) BankAmerica Sub Nts 7.50 2002 8,810,000 9,189,623 Boatmen's Bancshares Sub Nts 9.25 2001 8,950,000 10,108,667 First Chicago Sr Nts 9.00 1999 7,900,000 8,548,511 NCNB Sub Nts 9.125 2001 10,000,000 11,168,500 Standard Credit Card 8.63 2002 10,000,000 10,756,250 ______________ Total 49,771,551 _____________________________________________________________________________________________________________________________ Financial services (6.0%) Aristar Sr Deb 8.875 1998 10,520,000 11,189,914 Beneficial 9.125 1998 10,000,000 10,672,900 General Electric Capital Reset Nt 8.65 1996 15,000,000 (f) 15,364,650 General Motors Acceptance 5.95 1998 8,000,000 7,872,240 7.00 2000 14,300,000 14,457,872 Greyhound Financial 7.95 1999 9,600,000 10,081,344 Salomon 7.75 2000 5,000,000 5,087,400 8.91 1998 8,400,000 8,771,280 SunAmerica 9.95 2012 8,000,000 9,557,200 ______________ Total 93,054,800 _____________________________________________________________________________________________________________________________ Insurance (1.2%) Berkley (WR) 8.70 2022 10,000,000 10,941,800 Nationwide Trust Credit Sensitive Nt 9.875 2025 6,500,000 (g) 7,508,605 _____________ Total 18,450,405 _____________________________________________________________________________________________________________________________ Industrial (10.2%) Aerospace & defense (0.8%) United Technologies 8.875 2019 10,000,000 11,629,500 _____________________________________________________________________________________________________________________________ Automotive & related (1.1%) Ford Capital Gtd Nts 9.00 1996 9,700,000 9,987,217 General Motors 8.875 2003 7,050,000 7,844,112 ____________ Total 17,831,329 PAGE _____________________________________________________________________________________________________________________________ Beverages & tobacco (0.7%) Philip Morris 8.10 1996 10,000,000 10,221,600 _____________________________________________________________________________________________________________________________ Chemicals (0.7%) Dow Chemical 8.85 2021 10,000,000 11,499,500 _____________________________________________________________________________________________________________________________ Ecological services & equipment (0.5%) Browning-Ferris Inds 9.25 % 2021 7,000,000 8,316,700 ____________________________________________________________________________________________________________________________ Electronics (0.3%) Harris 10.375 2018 3,900,000 4,375,137 _____________________________________________________________________________________________________________________________ Energy (2.4%) PDV Amer 7.875 2003 16,500,000 14,964,015 Texaco Capital Gtd Deb 7.50 2043 12,000,000 12,139,080 USX 9.375 2022 9,200,000 10,289,740 ______________ Total 37,392,835 _____________________________________________________________________________________________________________________________ Health care (0.8%) Schering-Plough Zero Coupon 7.31 1996 15,000,000 (c,g) 13,729,950 _____________________________________________________________________________________________________________________________ Industrial equipment & services (0.8%) Deere 8.95 2019 10,000,000 11,747,600 _____________________________________________________________________________________________________________________________ Media (1.4%) Tele-communications Sr Deb 7.875 2013 5,000,000 4,617,500 Sr Deb 9.875 2022 5,000,000 5,539,750 Time Warner Entertainment 8.375 2033 12,000,000 11,655,000 _____________ Total 21,812,250 _____________________________________________________________________________________________________________________________ Paper & packaging (0.7%) Georgia-Pacific Credit Sensitive Nts 9.85 1997 10,000,000 10,601,700 _____________________________________________________________________________________________________________________________ Transportation (1.2%) AMR 9.75 2021 2,500,000 2,808,225 10.00 2021 8,000,000 9,189,920 10.20 2020 5,000,000 5,836,500 ______________ Total 17,834,645 _____________________________________________________________________________________________________________________________ Utilities (11.7%) Electric (9.0%) Arizona Public Service 1st Mtge 8.75 2024 5,000,000 5,436,250 Sale Lease-Backed Obligation 8.00 2015 9,000,000 8,636,040 Cajun Electric Power Cooperative Mtge Trust 8.92 2019 4,960,000 5,427,133 Commonwealth Edison 6.50 2000 9,000,000 8,899,830 8.375 2023 10,000,000 10,436,300 Long Island Lighting 9.625 2024 10,000,000 10,091,700 Ohio Edison 8.75 2022 11,000,000 12,428,460 Public Service Electric & Gas 1st Mtge 8.50 2022 13,859,000 14,716,456 RGS Funding Sale Lease-Backed Obligation 9.82 2022 9,941,878 11,790,073 San Diego Gas & Electric 1st Mtge 9.625 2020 9,950,000 11,561,005 Southern California Edison 1st Mtge 8.875 2023 21,000,000 23,036,370 Texas Utilities Electric 1st Mtge 9.75 2021 13,000,000 15,164,370 1st Mtge 10.35 2018 1,500,000 1,612,785 ______________ Total 139,236,772 _____________________________________________________________________________________________________________________________ Telephone (2.7%) GTE 10.25 2020 2,000,000 2,310,140 GTE South 1st Mtge 9.375 2030 13,975,000 15,541,737 New York Tel 9.375 2031 7,000,000 7,813,750 Pacific Bell 8.50 2031 15,000,000 15,862,500 ______________ Total 41,528,127 _____________________________________________________________________________________________________________________________ Foreign (15.6%)(h) ABN Amro Bank (U.S. Dollar) 7.75 2023 12,000,000 12,234,480 Aegon Euro Cv (U.S. Dollar) 4.75 2004 2,350,000 2,784,750 Alcan Aluminium (U.S. Dollar) 8.875 2022 9,600,000 10,713,792 Austria Republic Euro (U.S. Dollar) 10.00 1998 5,000,000 5,464,410 City of Helsinki Sr Nts (U.S.Dollar) 8.00 2006 2,000,000 (i) 1,891,600 8.65 2006 1,500,000 (i) 1,487,400 8.75 2006 1,500,000 (i) 1,498,050 9.00 2007 1,650,000 (i) 1,660,808 9.15 2006 1,500,000 (i) 1,517,625 Euratom Euro (U.S. Dollar) 7.75 1997 6,100,000 6,237,250 Guang Dong Enterprise (U.S. Dollar) 8.75 2003 15,000,000 (g) 13,503,300 Intl Bank Reconstruction & Development (U.S. Dollar) 12.375 2002 6,000,000 8,084,520 Intl Finance Euro (U.S. Dollar) 8.25 1996 8,000,000 8,170,000 Japan Finance (U.S. Dollar) 9.25 1998 25,950,000 28,259,810 KFW Intl Finance (U.S. Dollar) 8.50 1999 10,000,000 10,857,900 Kingdom of Denmark Euro (U.S. Dollar) 7.25 1996 8,000,000 8,104,000 Korea Electric Power (U.S. Dollar) 7.75 2013 14,000,000 13,785,380 8.00 2002 9,000,000 9,555,930 Peoples Republic China (U.S. Dollar) 6.50 2004 13,976,000 (b) 13,126,818 Province of Quebec (U.S. Dollar) 11.00 2015 16,150,000 19,404,548 Republic of Columbia (U.S. Dollar) 7.25 2004 13,400,000 12,596,000 Republic of Italy (U.S. Dollar) 6.875 2023 22,000,000 19,709,360 Rodamco (U.S. Dollar) 7.30 2005 10,000,000 10,233,100 Tokyo Electric Power Euro (U.S. Dollar) 6.125 2003 21,500,000 20,705,144 ______________ Total 241,585,975 _____________________________________________________________________________________________________________________________ Total bonds (Cost: $1,345,243,535) $1,427,425,595 _____________________________________________________________________________________________________________________________
Preferred stocks (0.3%) _____________________________________________________________________________________________________________________________ Issuer Shares Value(a) _____________________________________________________________________________________________________________________________ First Chicago 2.875% Cm Cv 60,000 $ 3,382,500 Sonoco Products 2.25% Cv 24,700 1,383,200 ____________________________________________________________________________________________________________________________ Total preferred stocks (Cost: $4,234,300) $ 4,765,700 _____________________________________________________________________________________________________________________________
Short-term securities (6.1%) _____________________________________________________________________________________________________________________________ Issuer Annualized Amount Value(a) yield on payable date of at purchase maturity _____________________________________________________________________________________________________________________________ U.S. government agencies (1.0%) Federal Home Loan Bank Disc Note 06-12-95 5.89% $ 200,000 $ 199,641 Federal Home Loan Mtge Disc Notes 06-20-95 5.89 2,950,000 2,940,876 06-20-95 5.90 3,610,000 3,598,816 Federal Natl Mtge Assn Disc Note 06-12-95 5.92 8,585,000 8,569,549 ______________ Total 15,308,882 _____________________________________________________________________________________________________________________________ Certificate of deposit (0.2%) Natl Bank of Detroit 06-27-95 5.97 3,600,000 3,600,000 _____________________________________________________________________________________________________________________________ PAGE Commercial paper (4.9%) BellSouth Telecommunications 06-13-95 5.97 4,200,000 4,191,698 Cargill 06-27-95 5.96 4,300,000 4,281,584 Cargill Global Funding 06-26-95 5.97 4,200,000 (j) 4,182,675 CIT Group Holdings 07-12-95 5.98 3,800,000 3,774,293 Coca-Cola 06-01-95 6.12 6,500,000 6,500,000 Corporate Asset Funding 06-05-95 5.98 8,700,000 8,694,248 06-27-95 5.98 2,800,000 2,787,988 Deutsche Bank Financial 06-12-95 5.98 5,000,000 4,990,910 Dun & Bradstreet 06-01-95 6.15 1,300,000 1,300,000 Intel 06-30-95 5.95 6,500,000 6,469,002 Kredietbank- North Amer Finance 06-07-95 5.98 7,200,000 7,192,866 Lilly (Eli) 06-19-95 5.98 5,900,000 (j) 5,882,447 Pfizer 06-26-95 5.98 700,000 (j) 697,113 Pitney Bowes Credit 06-21-95 5.97 2,200,000 2,192,740 St. Paul Companies 07-10-95 5.98 3,700,000 (j) 3,676,231 Toyota Motor 06-28-95 5.95 6,200,000 6,172,472 USL Capital 07-07-95 5.99 2,100,000 2,087,506 _____________ Total 75,073,773 _______________________________________________________________________________________________________________________________ Total short-term securities (Cost: $93,982,655) $ 93,982,655 _____________________________________________________________________________________________________________________________ Total investments in securities (Cost: $1,443,460,490)(k) $1,526,173,950 _____________________________________________________________________________________________________________________________ Notes to investments in securities _____________________________________________________________________________________________________________________________ (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Security is partially or fully on loan. See Note 5 to the financial statements. (c) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the date of acquisition. (d) This security is a collateralized mortgage obligation that pays no interest or principal during its initial accrual period until payment of previous series within the trust have been paid off. Interest is accrued at an effective yield; similar to a zero coupon bond. (e) Principal only represents securities that entitle holders to receive only principal payments on the underlying mortgages. The yield to maturity of a principal only is sensitive to the rate of principal payments on the underlying mortgage assets. A slow (rapid) rate of principal repayments may have an adverse (positive) effect on yield to maturity. Interest rate disclosed represents current yield based upon the current cost basis and estimated timing of future cash flows. (f) Interest rate varies to reflect current market conditions; rate shown is the effective rate on May 31, 1995. (g) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the board of directors. (h) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. (i) Identifies issues considered to be illiquid, (see Note 6 to the financial statements). Information concerning such security holdings at May 31, 1995, is as follows: Security Acquisition Cost date City of Helsinki 02-07-95 $1,859,160 City of Helsinki 02-07-95 1,462,155 City of Helsinki 02-07-95 1,472,805 City of Helsinki 02-07-95 1,638,450 City of Helsinki 02-07-95 1,497,750 (j) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board of directors. (k) On May 31, 1995, the cost of securities for federal income tax purposes was approximately $1,441,460,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $92,807,000 Unrealized depreciation (8,093,000) ____________________________________________________________________________________________ Net unrealized appreciation $84,714,000 ____________________________________________________________________________________________
PAGE Directors and officers Directors and officers of the fund _____________________________________________________________________ President and interested director William R. Pearce President of all funds in the IDS MUTUAL FUND GROUP. _____________________________________________________________________ Independent directors 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. Donald M. Kendall Former chairman and chief executive officer, PepsiCo, Inc. Melvin R. Laird Senior counsellor for national and international affairs, The Reader's Digest Association, Inc. Lewis W. Lehr Former chairman and chief executive officer, Minnesota Mining and Manufacturing Company (3M). Edson W. Spencer Former chairman and chief executive officer, Honeywell, Inc. Wheelock Whitney Chairman, Whitney Management Company. C. Angus Wurtele Chairman of the board and chief executive officer, The Valspar Corporation. _____________________________________________________________________ Interested directors who are officers and/or employees of American Express Financial Corporation William H. Dudley Executive vice president, American Express Financial Corporation. David R. Hubers President and chief executive officer, American Express Financial Corporation. John R. Thomas Senior vice president, American Express Financial Corporation. _____________________________________________________________________ Officers who also are officers and or/employees of American Express Financial Corporation 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 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) cornucopia IDS Bond Fund Invests mainly in corporate bonds, at least 50% in the higher rated, lower risk bond categories, or the equivalent, and in government bonds. (icon of) greek column IDS Selective Fund Invests in high-quality corporate bonds and other highly rated debt instruments including government securities and short-term investments. Seeks current income and preservation of capital. (icon of) skyline IDS Federal Income Fund Invests primarily in securities issued or guaranteed as to the timely payment of principal and interest by the U.S. government, its agencies and instrumentalities. Seeks a high level of current income and safety of principal consistent with its type of investments. (icon of) federal building Tax-exempt income investments These funds provide tax-free income by investing in municipal bonds. The income is generally free from federal income tax. Risk varies by bond quality. IDS High Yield Tax-Exempt Fund Invests primarily in medium- and lower-quality municipal bonds and notes. Lower-quality securities generally involve greater risk of principal and income. (icon of) shield with basket of apples enclosed IDS State Tax-Exempt Funds (CA, MA, MI, MN, NY, OH) Invests primarily in high- and medium-grade municipal securities to provide income to residents of each respective state that is exempt from federal, state and local income taxes. (New York is the only state that is exempt at the local level.) (icon of) shield with U.S. enclosed IDS Tax-Exempt Bond Fund Invests mainly in bonds and notes of state or local government units, with at least 75% in the four highest rated, lowest risk bond categories. (icon of) shield with Greek column IDS Insured Tax-Exempt Fund Invests primarily in municipal securities that are insured as to the timely payment of principal and interest. The insurance feature minimizes credit risk of the fund but does not guarantee the market value of the fund's shares. (icon of) shield with eagle head Growth and income investments These funds focus on securities of medium to large, well-established companies that offer long-term growth of capital and reasonable income from dividends and interest. Moderate risk. IDS International Fund Invests primarily in common stocks of foreign companies that offer potential for superior growth. The fund may invest up to 20% of its assets in the U.S. market. (icon of) three flags IDS Managed Retirement Fund Invests in a combination of common stocks, fixed-income investments and money market securities to seek a maximum total return through a combination of growth of capital and current income. (icon of) bird in a nest IDS Equity Select Fund Invests primarily in a combination of moderate growth stocks, higher-yielding equities and bonds. Seeks growth of capital and income. (icon of) three apple trees IDS Blue Chip Advantage Fund Invests in selected stocks from a major market index. Securities purchased are those recommended by our research analysts as the best from each industry represented on the index. Offers potential for long-term growth as well as dividend income. (icon of) ribbon IDS Stock Fund Invests in common 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) electrical cord IDS Diversified Equity Income Fund Invests primarily in high-yielding common stocks to seek high current income and, secondarily, to benefit from the growth potential offered by stock investments. (icon of) four puzzle pieces IDS Mutual Invests in a balance between common stocks and senior securities (preferred stocks and bonds). Seeks a balance of growth of capital and current income. (icon of) scale of justice Growth investments Funds in this group seek capital growth, primarily from common stocks. They are high risk mutual funds with a potential for high reward. IDS Discovery Fund Invests in small- and medium-size, growth-oriented companies emphasizing technological innovation and productivity enhancement. Buys and holds larger growth-oriented stocks. (icon of) ship IDS Strategy Aggressive Fund Invests primarily in common stocks of companies that are selected for their potential for above-average growth. Above-average means that their growth potential is better, in the opinion of the portfolio's investment manager, than the Standard & Poor's Corporation (S&P) 500 Stock Index. (icon of) chess piece IDS Growth Fund Invests primarily in companies that have above-average potential for long-term growth as a result of new management, marketing opportunities or technological superiority. (icon of) flower IDS Global Growth Fund Invests in stocks of companies throughout the world that are positioned to meet market needs in a changing world economy. These companies offer above-average potential for long-term growth. (icon of) world IDS New Dimensions Fund Invests primarily in companies with significant growth potential due to superiority in technology, marketing or management. The fund frequently changes its industry mix. (icon of) dimension IDS Progressive Fund Invests primarily in undervalued common stocks. The fund holds stocks for the long term with the goal of capital growth. (icon of) shooting star Specialty growth investment This fund aggressively seeks capital growth as a hedge against inflation. IDS Precious Metals Fund Invests primarily in the securities of foreign or domestic companies that explore for, mine and process or distribute gold and other precious metals. This is the most aggressive and most speculative IDS mutual fund. (icon of) cart of precious gems For more complete information about any of these funds, including charges and expenses, you can obtain a prospectus by contacting your financial advisor or writing to American Express Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534. Read it carefully before you invest or send money. 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 Selective Fund IDS Tower 10 Minneapolis, MN 55440-0010 -----END PRIVACY-ENHANCED MESSAGE-----