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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM N-17f-2
Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
1. Investment Company Act File Number: Date examination completed:
811-3219 November 22, 2000
2. State identification Number:
AL AK AZ AR CA CO
CT DE DC FL GA HI
ID IL IN IA KS KY
LA ME MD MA MI MN
MS MO MT NE NV NH
NJ NM NY NC ND OH
OK OR PA RI SC SD
TN TX UT VT VA WA
WV WI WY PUERTO RICO
Other (specify):
3. Exact name of investment company as specified in registration statement:
AXP Variable Portfolio - Income Series, Inc.
4. Name under which business is conducted, if different from above:
5. Address of principal place of business (number,street,city,state,zip code):
200 AXP Financial Center, Minneapolis, MN 55474
<PAGE>
INSTRUCTIONS
This Form must be completed by investment companies that have custody of
securities or similar investments.
Investment Company
1. All items must be completed by the investment company.
2. Give this Form to the independent public accountant who, in compliance with
Rule 17f-2 under the Act and applicable state law, examines securities and
similar investments in the custody of the investment company.
Accountant
3. Submit this Form to the Securities and Exchange Commission and appropriate
state securities administrators when filing the certificate of accounting
required by Rule 17f-2 under the Act and applicable state law. File the original
and one copy with the Securities and Exchange Commission's principal office in
Washington, D. C., one copy with the regional office for the region in which the
investment company's principal business operations are conducted, and one copy
with the appropriate state administrator(s), if applicable.
THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT
Note: The estimated average burden hours are made solely for purposes of the
Paperwork Reduction Act, and are not derived from a comprehensive or even a
representative survey or study of the costs of SEC rules and forms. Direct any
comments concerning the accuracy of the estimated average burden hours for
compliance with SEC rules and forms to Kenneth A. Fogash. Duputy Executive
Director, U.S. Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and Gary Waxman, Clearance Officer, Office of Management
and Budget, Room 3208 New Executive Office Building, Washington, D.C. 20503.
<PAGE>
Independent Auditors' Report
To the Board of Directors of
AXP Variable Portfolio - Income Series, Inc.:
We have examined management's assertion, included in the accompanying Management
Statement Regarding Compliance with Certain Provisions of the Investment Company
Act of 1940, that AXP Variable Portfolio Bond Fund, AXP Variable Portfolio -
Global Bond Fund, AXP Variable Portfolio - Federal Income Fund, and AXP Variable
Portfolio - Extra Income Fund of AXP Variable Portfolio - Income Series, Inc.
(the Funds) complied with the provisions of subsection (b) and (c) of Rule 17f-2
under the Investment Company Act of 1940 as of August 31, 2000 and during the
period June 30, 2000 (the date of our last examination) through August 31, 2000.
Management is responsible for the Funds' compliance with those provisions. Our
responsibility is to express an opinion on management's assertion about the
Funds' compliance based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Funds' compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of August 31, 2000 and the period from June 30, 2000 through August
31, 2000, with respect to securities transactions:
o Count and inspection of all securities located in the vault, if any, of
American Express Trust Company, the Custodian;
o Confirmation of all securities, if any, held by institutions in book entry
form (Norwest Bank Minnesota, N.A., The Bank of New York, State Street Bank
and Trust Company, and The Depository Trust Company);
o Confirmation or examination of underlying documentation of all securities
purchased but not received, hypothecated, pledged, placed in escrow, or out
for transfer with brokers, pledges and/or transfer agents;
o Reconciliation of all such securities to the books and records of the Funds
and the Custodian; and
o Test of selected security transactions since the date of our last report.
We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Funds' compliance with
the specified requirements.
In our opinion, management's assertion that AXP Variable Portfolio - Income
Series, Inc. was in compliance with the above mentioned provisions of Rule 17f-2
of the Investment Company Act of 1940 as of August 31, 2000 and for the period
from June 30, 2000 through August 31, 2000 is fairly stated in all material
respects.
This report is intended solely for the information and use of management AXP
Variable Portfolio - Income Series, Inc. and the Securities and Exchange
Commission and should not be used for any other purpose and is not intended to
be and should not be used by anyone other than these specified parties.
/s/ KPMG LLP
Minneapolis, MN
November 22, 2000
<PAGE>
Management Statement Regarding Compliance With Certain
Provisions of the Investment Company Act of 1940
We, as members of management of AXP Variable Portfolio - Bond Fund, AXP
Variable Portfolio Global Bond Fund, AXP Variable Portfolio - Federal
Income Fund, and AXP Variable Portfolio Extra Income Fund of AXP Variable
Portfolio - Income Series, Inc. (the Funds) are responsible for complying
with the requirements of subsections (b) and (c) of Rule 17f-2, Custody of
Investments by Registered Management Investment Companies, of the
Investment Company Act of 1940. We are also responsible for establishing
and maintaining effective internal controls over compliance with those
requirements. We have performed an evaluation of the Funds' compliance with
the requirements of subsections (b) and (c) of Rule 17f-2 as of August 31,
2000 and from June 30, 2000 through August 31, 2000.
Based on this evaluation, we assert that the Funds were in compliance with
the requirements of subsections (b) and (c) of Rule 17f-2 of the Investment
Company Act of 1940 as of August 31, 2000 and from June 30, 2000 through
August 31, 2000, with respect to securities reflected in the investment
account of the Funds.
AMERICAN EXPRESS FINANCIAL CORPORATION
By: /s/ John M. Knight
John M. Knight, Vice President-Investment Accounting
