Independent Auditors' Report on Internal Accounting Control
The Board of Directors and Shareholders AXP Variable Portfolio -- Income Series,
Inc.:
In planning and performing our audits of the financial statements of AXP VP--
Federal Income Fund (fund within AXP Variable Portfolio -- Income Series, Inc.)
for the period from September 15, 1999 (date the fund became available) to
August 31, 2000 and AXP VP -- Bond Fund, AXP VP -- Extra Income Fund, and AXP VP
-- Global Bond Fund, (funds within AXP Variable Portfolio -- Income Series,
Inc.) for the year ended August 31, 2000, we considered their internal control,
including control activities for safeguarding securities, in order to determine
our auditing procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of Form N-SAR, not to
provide assurance on the internal control.
The management of AXP Variable Portfolio -- Income Series, Inc. is responsible
for establishing and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally, controls that are
relevant to an audit pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in conformity with
generally accepted accounting principles. Those controls include the
safeguarding of assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of the internal control would not necessarily disclose all
matters in the internal control that might be material weaknesses under
standards established by the American Institute of Certified Public Accountants.
A material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud in amounts that would
be material in relation to the financial statements being audited may occur and
not be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving the
internal control and its operation, including controls for safeguarding
securities, that we consider to be a material weakness as defined above.
This report is intended solely for the information and use of management, the
Board of Directors of AXP Variable Portfolio -- Income Series, Inc., and the
Securities and Exchange Commission and is not intended to be and should not be
used by anyone other than these specified parties.
KPMG LLP
Minneapolis, Minnesota
October 6, 2000
