IDS INVESTMENT SERIES INC, 485BPOS, 1995-11-29

IDS INVESTMENT SERIES INC
485BPOS, 1995-11-29

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<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. _____

Post-Effective Amendment No. 96 (File No. 2-11328)

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 40 (File No. 811-54)

IDS INVESTMENT SERIES, INC.
IDS Tower 10, Minneapolis, Minnesota 55440-0010

Leslie L. Ogg
901 S. Marquette Avenue, Suite 2810
Minneapolis, MN 55402-3268
(612) 330-9283

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
X on Nov. 29, 1995 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i) of Rule 485
75 days after filing pursuant to paragraph (a)(ii)
on (date) pursuant to paragraph (a)(ii) of rule 485

If appropriate, check the following box:

This Post-Effective Amendment designates a new effective date
for a previously filed Post-Effective Amendment.

Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Section 24f
of the Investment Company Act of 1940. Registrant's Rule 24f-2
Notice for its most recent fiscal year will be filed on or about
Nov. 29, 1995.
<PAGE>
PAGE 2
IDS MUTUAL Cross reference sheet showing the location in its
prospectus and the Statement of Additional Information of the
information called for by the items enumerated in Parts A and B of
Form N-1A.

Negative answers omitted from prospectus are so indicated.
<TABLE><CAPTION>
PART A PART B
Section Section in
Item No. in Prospectus Item No. Statement of Additional Information
<S> <C> <C> <C>
1 Cover page of prospectus 10 Cover page of SAI

2(a) Sales charge and Fund expenses 11 Table of Contents
(b) The Fund in brief
(c) The Fund in brief 12 NA

3(a) Financial highlights 13(a) Additional Investment Policies; all
(b) NA appendices except Dollar-Cost Averaging
(c) Performance (b) Additional Investment Policies
(d) Financial highlights (c) Additional Investment Policies
(d) Portfolio Transactions
4(a) The Fund in brief; Investment policies and
risks; How the Fund is organized 14(a) Directors and officers of the Fund;**
(b) Investment policies and risks Directors and officers
(c) Investment policies and risks (b) Directors and Officers
(c) Directors and Officers
5(a) Directors and officers; Directors and
officers of the Fund (listing) 15(a) NA
(b)(i) Investment manager and transfer agent; (b) NA
About American Express Financial (c) Directors and Officers
Corporation -- General Information
(b)(ii) Investment manager and transfer agent 16(a)(i) How the Fund is organized; About American
(b)(iii) Investment manager and transfer agent Express Financial Corporation**
(c) Portfolio manager (a)(ii) Agreements: Investment Management Services
(d) Investment manager and transfer agent Agreement, Plan and Supplemental
(e) Investment manager and transfer agent Agreement of Distribution
(f) Distributor (a)(iii) Agreements: Investment Management Services Agreement
(g) Investment manager and transfer agent; (b) Agreements: Investment Management Services Agreement
About American Express Financial (c) NA
Corporation -- General Information (d) Agreements: Administrative Services
Agreement, Shareholder Service Agreement
5A(a) * (e) NA
(b) * (f) Agreements: Distribution Agreement
(g) NA
6(a) Shares; Voting rights (h) Custodian; Independent Auditors
(b) NA (i) Agreements: Transfer Agency Agreement; Custodian
(c) NA
(d) Voting rights 17(a) Portfolio Transactions
(e) Cover page; Special shareholder services (b) Brokerage Commissions Paid to Brokers Affiliated
(f) Dividends and capital gains distributions; with American Express Financial Corporation
Reinvestments (c) Portfolio Transactions
(g) Taxes (d) Portfolio Transactions
(h) Alternative sales arrangements; Special (e) Portfolio Transactions
considerations regarding master/feeder
structure 18(a) Shares; Voting rights**
(b) NA
7(a) Distributor
(b) Valuing Fund shares 19(a) Investing in the Fund
(c) How to purchase, exchange or redeem shares (b) Valuing Fund Shares; Investing in the Fund
(d) How to purchase shares (c) NA
(e) NA
(f) Distributor 20 Taxes

8(a) How to redeem shares 21(a) Agreements: Distribution Agreement
(b) NA (b) Agreements: Distribution Agreement
(c) How to purchase shares: Three ways to invest (c) NA
(d) How to purchase, exchange or redeem shares:
Redemption policies -- "Important..." 22(a) Performance Information (for money market
funds only)
9 None (b) Performance Information (for all funds except
money market funds)

23 Financial Statements
*Designates information is located in annual report.
**Designates location in prospectus.
/TABLE
<PAGE>
PAGE 3
IDS DIVERSIFIED EQUITY INCOME FUND Cross reference sheet showing
the location in its prospectus and the Statement of Additional
Information of the information called for by the items enumerated
in Parts A and B of Form N-1A.

2(a) Sales charge and Fund expenses 11 Table of Contents
(b) The Fund in brief
(c) The Fund in brief 12 NA

23 Financial Statements
*Designates information is located in annual report.
**Designates location in prospectus.
/TABLE
<PAGE>
PAGE 4
IDS Mutual

Prospectus
Nov. 29, 1995

The goal of IDS Mutual, a part of IDS Investment Series, Inc., is
to provide a balance of growth of capital and current income. The
Fund divides its investments between common stocks and senior
securities (bonds and preferred stocks).

This prospectus contains facts that can help you decide if the Fund
is the right investment for you. Read it before you invest and
keep it for future reference.

Additional facts about the Fund are in a Statement of Additional
Information (SAI), filed with the Securities and Exchange
Commission. The SAI, dated Nov. 29, 1995, is incorporated here by
reference. For a free copy, contact American Express Shareholder
Service.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENTS IN THE FUND
INVOLVE INVESTMENT RISK INCLUDING POSSIBLE LOSS OF PRINCIPAL.

American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
612-671-3733
TTY: 800-846-4852
<PAGE>
PAGE 5

The Fund in brief
Goal
Types of Fund investments and their risks
Proposed conversion to master/feeder structure
Manager and distributor
Portfolio managers
Alternative purchase arrangements

Sales charge and Fund expenses

Performance
Financial highlights
Total returns

Investment policies and risks
Facts about investments and their risks
Valuing Fund shares

How to purchase, exchange or redeem shares
Alternative purchase arrangements
How to purchase shares
How to exchange shares
How to redeem shares
Reductions and waivers of the sales charge

Special shareholder services
Services
Quick telephone reference

Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN

How the Fund is organized
Shares
Voting rights
Shareholder meetings
Special considerations regarding master/feeder structure
Directors and officers
Investment manager and transfer agent
Distributor

About American Express Financial Corporation
General information

Appendix
Descriptions of derivative instruments
<PAGE>
PAGE 6
The Fund in brief

Goal

IDS Mutual (the Fund) seeks to provide shareholders with a balance
of growth of capital and current income. Because any investment
involves risk, achieving this goal cannot be guaranteed. Only
shareholders can change the goal.

Types of Fund investments and their risks

The Fund is a diversified mutual fund that balances its investments
between common stocks and senior securities (preferred stocks and
debt securities) issued by U.S. and foreign companies. No more
than 65% of the Fund's total assets will be invested in common
stocks and no less than 35% in senior securities, convertible
securities, derivative instruments and money market instruments.
Some of the Fund's investments may be considered speculative and
involve additional investment risks.

Proposed conversion to master/feeder structure

Subject to certain contingencies, the Fund intends to invest all of
its assets in the Balanced Portfolio (the Portfolio) of Growth and
Income Trust (the Trust) rather than directly investing in and
managing its own portfolio of securities. The Portfolio will have
the same investment objective as the Fund. The Fund anticipates
this conversion will occur in early 1996.

Manager and distributor

The Fund is managed by American Express Financial Corporation
(AEFC), a provider of financial services since 1894. AEFC
currently manages more than $45 billion in assets for the IDS
MUTUAL FUND GROUP. Shares of the Fund are sold through American
Express Financial Advisors Inc., a wholly owned subsidiary of AEFC.
After the Fund converts to the master/feeder structure, the
Portfolio in which the Fund invests will be managed by AEFC with
the same portfolio managers.

Portfolio managers

Edward Labenski joined AEFC in 1975 and serves as president -- IDS
Fixed-Income Advisors of IDS Advisory Group, Inc. and senior
portfolio manager. He has managed the fixed income portfolio of
this Fund since 1987.

Tom Medcalf joined AEFC in 1977 and serves as vice president and
senior portfolio manager. He has managed the equity portfolio of
this Fund since 1983. He also serves as portfolio manager of IDS
Equity Value Fund.

<PAGE>
PAGE 7

Alternative purchase arrangements

The Fund offers its shares in three classes. Class A shares are
subject to a sales charge at the time of purchase. Class B shares
are subject to a contingent deferred sales charge (CDSC) on
redemptions made within six years of purchase and an annual
distribution (12b-1) fee. Class Y shares are sold without a sales
charge to qualifying institutional investors.

Sales charge and Fund expenses

Shareholder transaction expenses are incurred directly by an
investor on the purchase or redemption of Fund shares. Fund
operating expenses are paid out of Fund assets for each class of
shares. Operating expenses are reflected in the Fund's daily share
price and dividends, and are not charged directly to shareholder
accounts.

Shareholder transaction expenses
Class A Class B Class Y
Maximum sales charge on purchases*
(as a percentage of offering price).......5% 0% 0%
Maximum deferred sales charge
imposed on redemptions (as a
percentage of original purchase price)....0% 5% 0%

Annual Fund operating expenses**
(% of average daily net assets):

Class A Class B Class Y
Management fee 0.50% 0.50% 0.50%
12b-1 fee 0.00% 0.75% 0.00%
Other expenses*** 0.38% 0.40% 0.20%
Total 0.88% 1.65% 0.70%

*This charge may be reduced depending on your total investments in
IDS funds. See "Reductions of the sales charge."

**Expenses for Class A are based on actual expenses for the last
fiscal year, restated to reflect current fees. Expenses for Class
B and Class Y are based on the actual annualized expenses for the
period from March 20, 1995 to Sept. 30, 1995.

***Other expenses include an administrative services fee, a
shareholder services fee for Class A and Class B, a transfer agency
fee and other non-advisory expenses.

Example: Suppose for each year for the next 10 years, Fund
expenses are as above and annual return is 5%. If you sold your
shares at the end of the following years, for each $1,000 invested,
you would pay total expenses of:

<PAGE>
PAGE 8

1 year 3 years 5 years 10 years
Class A $59 $77 $ 96 $153
Class B $67 $92 $110 $175**
Class B* $17 $52 $ 90 $175**
Class Y $ 7 $22 $ 39 $ 87

*Assuming Class B shares are not redeemed at the end of the period.
**Based on conversion of Class B shares to Class A shares after
eight years.

This example does not represent actual expenses, past or future.
Actual expenses may be higher or lower than those shown. Expense
information in this table for Class A shares has been restated to
reflect estimates of Fund expenses from changes in fees approved by
shareholders in November 1994. Because Class B pays annual
distribution (12b-1) fees, long-term shareholders of Class B may
indirectly pay an equivalent of more than a 6.25% sales charge, the
maximum permitted by the National Association of Securities
Dealers.

Performance

Financial highlights
<TABLE>
<CAPTION>
IDS Mutual

Fiscal year ended Sept. 30,
Per share income and capital changes*
Class A

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Net asset value, $11.89 $13.13 $12.62 $12.00 $10.39 $13.15 $11.57 $12.71 $11.79 $10.79
beginning of year
Income from investment operations:
Net investment income .58 .56 .55 .61 .66 .72 .73 .76 .76 .87

Net gains (losses) 1.29 (.56) 1.39 .91 2.01 (2.01) 1.58 (.70) 2.12 2.13
(both realized
and unrealized)

Total from investment 1.87 -- 1.94 1.52 2.67 (1.29) 2.31 .06 2.88 3.00
operations
Less distributions:
Dividends from net (.55) (.56) (.55) (.60) (.67) (.73) (.73) (.76) (.77) (.86)
investment income

Distributions from (.51) (.68) (.88) (.30) (.39) (.74) -- (.44) (1.19) (1.14)
realized gains

Total distributions (1.05) (1.24) (1.43) (.90) (1.06) (1.47) (.73) (1.20) (1.96) (2.00)

Net asset value, $12.69 $11.89 $13.13 $12.62 $12.00 $10.39 $13.15 $11.57 $12.71 $11.79
end of year Ratios/supplemental data

1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

Net assets, end of $2,596 $2,999 $2,788 $2,222 $1,889 $1,496 $1,687 $1,441 $1,544 $1,242
year (in millions)

Ratio of expenses to .83% .79% .79% .78% .71% .69% .67% .63% .63% .59%
average daily net assets

<PAGE>
PAGE 9
Ratio of net income 4.58% 4.57% 4.41% 4.99% 5.81% 6.04% 5.94% 6.49% 5.78% 6.91%
to average
daily net assets

Portfolio turnover rate 38% 69% 48% 50% 47% 37% 46% 60% 52% 91%
(excluding short-term
securities)

Total return** 16.8% (0.1%) 16.7% 13.3% 26.9% (10.8%) 20.5% 0.8% 24.7% 28.2%

*For a share outstanding throughout the year. Rounded to the nearest cent.
**Total return does not reflect payment of a sales charge.
</TABLE>

IDS Mutual
<TABLE>
<CAPTION> Performance
Financial highlights

Fiscal period ended Sept. 30,
Per share income and capital changes*
Class B** Class Y**
1995 1995
<S> <C> <C>
Net asset value, $11.67 $11.67
beginning of period
Income from investment operations:
Net investment income .25 .32

Net gains 1.11 1.11
(both realized
and unrealized)

Total from investment 1.36 1.43
operations
Less distributions:
Dividends from net (.37) (.41)
investment income

Net asset value, $12.66 $12.69
end of period
Ratios/supplemental data

1995 1995

Net assets, end of $33 $876
period (in millions)

Ratio of expenses to 1.65%+ .70%+
average daily net assets

Ratio of net income 3.94%+ 4.58%+
to average
daily net assets

Portfolio turnover rate 38% 38%
(excluding short-term
securities)

Total return*** 11.7% 12.2%

*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class B and Class Y.
***Total return does not reflect payment of a sales charge.
+Adjusted to an annual basis.
</TABLE>

The information in this table has been audited by KPMG Peat Marwick
LLP, independent auditors. The independent auditors' report and
additional information about the performance of the Fund are
contained in the Fund's annual report which, if not included with
this prospectus, may be obtained without charge.

<PAGE>
PAGE 10
Total returns

Total return is the sum of all of your returns for a given period,
assuming you reinvest all distributions. It is calculated by
taking the total value of shares you own at the end of the period
(including shares acquired by reinvestment), less the price of
shares you purchased at the beginning of the period.

Average annual total return is the annually compounded rate of
return over a given time period (usually two or more years). It is
the total return for the period converted to an equivalent annual
figure.

Average annual total returns as of Sept. 30, 1995

Purchase 1 year 5 years 10 years
made ago ago ago
Mutual:
Class A +10.97% +13.20% +12.40%

S&P 500 +22.61% +15.92% +15.39%

Lipper Balanced
Fund Index +16.85% +12.70% +12.04%

Cumulative total returns as of Sept. 30, 1995

Purchase 1 year 5 years 10 years
made ago ago ago
Mutual:
Class A +10.97% +85.88% +221.86%

S&P 500 +22.61% +109.36% +318.36%

Lipper Balanced
Fund Index +16.90% +81.79% +211.65%

These examples show total returns from hypothetical investments in
Class A shares of the Fund. These returns are compared to those of
popular indexes for the same periods. Total returns for Class A,
Class B and Class Y for the period from March 20, 1995 to Sept. 30,
1995 were +6.53%, +6.70% and +12.23%, respectively. March 20, 1995
was the inception date for Class B and Class Y. Total return for
Class A is shown for comparative purposes. The performance of
Class B and Class Y will vary from the performance of Class A based
on differences in sales charges and fees. Past performance for
Class Y for the periods prior to March 20, 1995 may be calculated
based on the performance of Class A, adjusted to reflect
differences in sales charges although not other differences in
expenses.

For purposes of calculation, information about the Fund assumes:
o a sales charge of 5% for Class A shares
o redemption at the end of the period and deduction of the
applicable contingent deferred sales charge for Class B shares
o no sales charge for Class Y shares
<PAGE>
PAGE 11
o no adjustments for taxes an investor may have paid on the
reinvested income and capital gains
o a period of widely fluctuating securities prices. Returns
shown should not be considered a representation of the Fund's
future performance.

The Fund invests in common stocks that may be different from those
in the indexes. The indexes reflect reinvestment of all
distributions and changes in market prices, but exclude brokerage
commissions or other fees.

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.

Lipper Balanced Fund Index, published by Lipper Analytical
Services, Inc., includes 10 funds that are generally similar to the
Fund, although some funds in the index may have somewhat different
investment policies or objectives.

Investment policies and risks

The Fund balances its investments between common stocks and senior
securities (preferred stocks and bonds). The Fund buys common
stocks that it believes offer both current income and growth
potential. The Fund buys senior securities for stability of value
and regular income. No more than 65% of the Fund's total assets
will be invested in common stocks and no less than 35% in senior
securities, convertible securities, derivative instruments and
money market instruments. Common stocks comprised 53.2% of the
Fund's total assets on Sept. 30, 1995.

Subject to certain contingencies, the Fund intends in early 1996 to
achieve its investment objective by investing all of its assets in
the Portfolio of the Trust, which is a separate investment company.
The Portfolio has the same investment objectives, policies and
restrictions as the Fund. The board of directors of the Fund
believes that by investing all of its assets in the Portfolio, the
Fund will be in a position to realize directly or indirectly
certain economies of scale inherent in managing a larger asset
base. When the Fund converts to the master/feeder structure, the
policies described below will apply to both the Fund and the
Portfolio.

The various types of investments the portfolio managers use to
achieve investment performance are described in more detail in the
next section and in the SAI.

Facts about investments and their risks

Common stocks: Common stocks are subject to market fluctuations.
Stocks of larger, established companies that pay dividends may be
less volatile than the stock market as a whole.

Preferred stocks: If a company earns a profit, it generally must
pay its preferred stockholders a dividend at a pre-established
rate.<PAGE>
PAGE 12
Convertible securities: These securities generally are preferred
stocks or bonds that can be exchanged for other securities, usually
common stock, at prestated prices. When the trading price of the
common stock makes the exchange likely, the convertible securities
trade more like common stock.

Debt securities: The price of bonds generally falls as interest
rates increase, and rises as interest rates decrease. The price of
an investment-grade bond also fluctuates if its credit rating is
upgraded or downgraded. Prices of bonds below investment grade may
react more to the ability of the issuing company to pay interest
and principal when due. These bonds have greater price
fluctuations and are more likely to experience a default. The Fund
will not invest more than 5% of its net assets in bonds below
investment grade. Securities that are subsequently downgraded in
quality may continue to be held by the Fund and will be sold only
when the Fund's investment manager believes it is advantageous to
do so.

Foreign investments: Securities of foreign companies and
governments may be traded in the United States, but often they are
traded only on foreign markets. Frequently, there is less
information about foreign companies and less government supervision
of foreign markets. Foreign investments are subject to political
and economic risks of the countries in which the investments are
made, including the possibility of seizure or nationalization of
companies, imposition of withholding taxes on income, establishment
of exchange controls or adoption of other restrictions that might
affect an investment adversely. If an investment is made in a
foreign market, the local currency may be purchased using a forward
contract in which the price of the foreign currency in U.S. dollars
is established on the date the trade is made, but delivery of the
currency is not made until the securities are received. As long as
the Fund holds foreign currencies or securities valued in foreign
currencies, the price of a Fund share will be affected by changes
in the value of the currencies relative to the U.S. dollar.
Because of the limited trading volume in some foreign markets,
efforts to buy or sell a security may change the price of the
security, and it may be difficult to complete the transaction. The
Fund may invest up to 25% of its total assets in foreign
investments.

Derivative instruments: The portfolio manager may use derivative
instruments in addition to securities to achieve investment
performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash
reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce
transaction costs, or to pursue higher investment returns.
Derivative instruments are characterized by requiring little or no
initial payment and a daily change in price based on or derived
from a security, a currency, a group of securities or currencies or
an index. A number of strategies or combination of instruments can
be used to achieve the desired investment performance
characteristics. A small change in the value of the underlying
security, currency or index will cause a sizable gain or loss in <PAGE>
PAGE 13
the price of the derivative instrument. Derivative instruments
allow the portfolio manager to change the investment performance
characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other
parties and inability to close such instruments. The Fund will use
derivative instruments only to achieve the same investment
performance characteristics it could achieve by directly holding
those securities and currencies permitted under the investment
policies. The Fund will designate cash or appropriate liquid
assets to cover its portfolio obligations. No more than 5% of the
Fund's net assets can be used at any one time for good faith
deposits on futures and premiums for options on futures that do not
offset existing investment positions. The Fund is not limited as
to the percentage of its assets that may be invested in permissible
investments, including derivatives, except as otherwise explicitly
provided in this prospectus or the SAI. For descriptions of these
and other types of derivative instruments, see the Appendix to this
prospectus and the SAI.

Securities and derivative instruments that are illiquid: A
security or derivative instrument is illiquid if it cannot be sold
quickly in the normal course of business. Some investments cannot
be resold to the U.S. public because of their terms or government
regulations. All securities and derivative instruments, however,
can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. The
portfolio manager will follow guidelines established by the board
and consider relevant factors such as the nature of the security
and the number of likely buyers when determining whether a security
is illiquid. No more than 10% of the Fund's net assets will be
held in securities and derivative instruments that are illiquid.

Money market instruments: Short-term debt securities rated in the
top two grades or the equivalent are used to meet daily cash needs
and at various times to hold assets until better investment
opportunities arise. Generally less than 25% of the Fund's total
assets are in these money market instruments. However, for
temporary defensive purposes these investments could exceed that
amount for a limited period of time.

The investment policies described above may be changed by the board
of directors.

Lending portfolio securities: The Fund may lend its securities to
earn income so long as borrowers provide collateral equal to the
market value of the loans. The risks are that borrowers will not
provide collateral when required or return securities when due.
Unless shareholders approve otherwise, loans may not exceed 30% of
the Fund's net assets.

Valuing Fund shares

The public offering price is the net asset value (NAV) plus the
sales charge for Class A. It is the NAV for Class B and Class Y.

<PAGE>
PAGE 14

The NAV is the value of a single fund share. The NAV usually
changes daily, and is calculated at the close of business, normally
3 p.m. Central time, each business day (any day the New York Stock
Exchange is open).

To establish the net assets, all securities are valued as of the
close of each business day. In valuing assets:

o Securities (except bonds) and assets with available market
values are valued on that basis.

o Securities maturing in 60 days or less are valued at amortized
cost.

o Bonds and assets without readily available market values are
valued according to methods selected in good faith by the
board of directors.

How to purchase, exchange or redeem shares

Alternative purchase arrangements

Class B No initial sales 0.175% of average Shares convert to
charge; maximum CDSC daily net assets Class A after eight
of 5% declines to 0% years; CDSC waived in
after six years; 12b-1 certain circumstances
fee of 0.75% of average
daily net assets

Class Y None None Available only to
certain qualifying
institutional
investors
</TABLE>
Conversion of Class B shares to Class A shares - Eight calendar
years after Class B shares were originally purchased, Class B
shares will convert to Class A shares and will no longer be subject
to a distribution fee. The conversion will be on the basis of
relative net asset values of the two classes, without the
imposition of any sales charge. Class B shares purchased through
reinvested dividends and distributions will convert to Class A
shares in a pro-rata portion as Class B shares purchased other than<PAGE>
PAGE 15
through reinvestment.

Considerations in determining whether to purchase Class A or Class
B shares - You should consider the information below in determining
whether to purchase Class A or Class B shares. The sales charges
and distribution fee (included in "Ongoing expenses") are
structured so that you will have approximately the same total
return at the end of eight years regardless of which class you
chose.

Sales charges on purchase or redemption

If you purchase Class A If you purchase Class B
shares shares

o You will not have all o All of your money is
of your purchase price invested in shares of
invested. Part of your stock. However, you will
purchase price will go pay a sales charge if you
to pay the sales charge. redeem your shares within
You will not pay a sales six years of purchase.
charge when you redeem
your shares.

o You will be able to o No reductions of the
take advantage of sales charge are
reductions in the sales available for large
charge. purchases.

If your investments in IDS funds total $250,000 or more, you are
better off paying the reduced sales charge in Class A than paying
the higher fees in Class B. If you qualify for a waiver of the
sales charge, you should purchase Class A shares.

Ongoing expenses

If you purchase Class A If you purchase Class B
shares shares

o Your shares will have o The distribution and
a lower expense ratio transfer agency fees for
than Class B shares Class B will cause your
because Class A does not shares to have a higher
pay a distribution fee expense ratio and to pay
and the transfer agency lower dividends than
fee for Class A is lower Class A shares. After
than the fee for Class B. eight years, Class B
As a result, Class A shares shares will convert to
will pay higher dividends Class A shares and will
than Class B shares. no longer be subject to
higher fees.

You should consider how long you plan to hold your shares and
whether the accumulated higher fees and CDSC on Class B shares
prior to conversion would be less than the initial sales charge on
Class A shares. Also consider to what extent the difference would
be offset by the lower expenses on Class A shares. To help you in
<PAGE>
PAGE 16
this analysis, the example in the "Sales charge and Fund expenses"
section of the prospectus illustrates the charges applicable to
each class of shares.

Class Y shares - Class Y shares are offered to certain
institutional investors. Class Y shares are sold without a front-
end sales charge or a CDSC and are not subject to either a service
fee or a distribution fee. The following investors are eligible to
purchase Class Y shares:

o Qualified employee benefit plans* if the plan:
- uses a daily transfer recordkeeping service offering
participants daily access to IDS funds and has
- at least $10 million in plan assets or
- 500 or more participants; or
- does not use daily transfer recordkeeping and has
- at least $3 million invested in funds of the IDS MUTUAL
FUND GROUP or
- 500 or more participants.

o Trust companies or similar institutions, and charitable
organizations that meet the definition in Section 501(c)(3) of
the Internal Revenue Code.* These must have at least $10
million invested in funds of the IDS MUTUAL FUND GROUP.

o Nonqualified deferred compensation plans* whose participants
are included in a qualified employee benefit plan described
above.

* Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.

How to purchase shares

If you're investing in this Fund for the first time, you'll need to
set up an account. Your financial advisor will help you fill out
and submit an application. Once your account is set up, you can
choose among several convenient ways to invest.

Important: When opening an account, you must provide AEFC with
your correct Taxpayer Identification Number (Social Security or
Employer Identification number). See "Distributions and taxes."

When you purchase shares for a new or existing account, the price
you pay per share is determined at the close of business on the day
your investment is received and accepted at the Minneapolis
headquarters.

Purchase policies:

o Investments must be received and accepted in the Minneapolis
headquarters on a business day before 3 p.m. Central time to
be included in your account that day and to receive that day's
share price. Otherwise your purchase will be processed the
next business day and you will pay the next day's share price.

<PAGE>
PAGE 17
o The minimums allowed for investment may change from time to
time.

o Wire orders can be accepted only on days when your bank, AEFC,
the Fund and Norwest Bank Minneapolis are open for business.

o Wire purchases are completed when wired payment is received
and the Fund accepts the purchase.

o AEFC and the Fund are not responsible for any delays that
occur in wiring funds, including delays in processing by the
bank.

o You must pay any fee the bank charges for wiring.

o The Fund reserves the right to reject any application for any
reason.

o If your application does not specify which class of shares you
are purchasing, it will be assumed that you are investing in
Class A shares.
<TABLE><CAPTION>
Three ways to invest

1
<S> <C> <C>
By regular accountSend your check and applicationMinimum amounts
(or your name and account numberInitial investment: $2,000
if you have an established account)Additional
to: investments: $ 100
American Express Financial Advisors Inc.Account balances: $ 300*
P.O. Box 74 Qualified retirement
Minneapolis, MN 55440-0074 accounts: none

Your financial advisor will help
you with this process.

2
By scheduled Contact your financial advisorMinimum amounts
investment planto set up one of the followingInitial investment: $100
scheduled plans: Additional
investments: $100/mo.
o automatic payroll deductionAccount balances: none
(on active plans of
o bank authorization monthly payments)

o direct deposit of
Social Security check

o other plan approved by the Fund

3
By wire If you have an established account,If this information is not
you may wire money to: included, the order may be
rejected and all money
Norwest Bank Minneapolis received by the Fund, less
Routing No. 091000019 any costs the Fund or AEFC
Minneapolis, MN incurs, will be returned
Attn:Domestic Wire Dept. promptly.

Give these instructions: Minimum amounts
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your name).

*If your account balance falls below $300, you will be asked in writing to bring it up to $300 or establish a scheduled
investment plan. If you don't do so within 30 days, your shares can be redeemed and the proceeds mailed to you.
</TABLE>
<PAGE>
PAGE 18
How to exchange shares

You can exchange your shares of the Fund at no charge for shares of
the same class of any other publicly offered fund in the IDS MUTUAL
FUND GROUP available in your state. Exchanges into IDS Tax-Free
Money Fund must be made from Class A shares. For complete
information, including fees and expenses, read the prospectus
carefully before exchanging into a new fund.

If your exchange request arrives at the Minneapolis headquarters
before the close of business, your shares will be redeemed at the
net asset value set for that day. The proceeds will be used to
purchase new fund shares the same day. Otherwise, your exchange
will take place the next business day at that day's net asset
value.

For tax purposes, an exchange represents a redemption and purchase
and may result in a gain or loss. However, you cannot create a tax
loss (or reduce a taxable gain) by exchanging from the Fund within
91 days of your purchase. For further explanation, see the SAI.

How to redeem shares

You can redeem your shares at any time. American Express
Shareholder Service will mail payment within seven days after
receiving your request.

When you redeem shares, the amount you receive may be more or less
than the amount you invested. Your shares will be redeemed at net
asset value, minus any applicable sales charge, at the close of
business on the day your request is accepted at the Minneapolis
headquarters. If your request arrives after the close of business,
the price per share will be the net asset value, minus any
applicable sales charge, at the close of business on the next
business day.

A redemption is a taxable transaction. If the Fund's net asset
value when you redeem shares is more or less than the cost of your
shares, you will have a gain or loss, which can affect your tax
liability. Redeeming shares held in an IRA or qualified retirement
account may subject you to certain federal taxes, penalties and
reporting requirements. Consult your tax advisor.
<TABLE><CAPTION>
Two ways to request an exchange or redemption of shares

1
<S> <C>
By letter Include in your letter:
o the name of the fund(s)
o the class of shares to be exchanged or redeemed
o your account number(s) (for exchanges, both funds must be registered in the same
ownership)
o your Taxpayer Identification Number (TIN)
o the dollar amount or number of shares you want to exchange or redeem
o signature of all registered account owners
o for redemptions, indicate how you want your money delivered to you
o any paper certificates of shares you hold

<PAGE>
PAGE 19
Regular mail:
American Express Shareholder Service
Attn: Redemptions
P.O. Box 534
Minneapolis, MN 55440-0534

Express mail:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402

2
By phone
American Express Telephoneo The Fund and AEFC will honor any telephone exchange or redemption request believed to be
Transaction Service: authentic and will use reasonable procedures to confirm that they are. This includes
800-437-3133 or asking identifying questions and tape recording calls. If reasonable
612-671-3800 procedures are not followed, the Fund or AEFC will be liable for any loss resulting from
fraudulent requests.
o Phone exchange and redemption privileges automatically apply to all accounts except
custodial, corporate or qualified retirement accounts unless you request these privileges
NOT apply by writing American Express Shareholder Service. Each registered owner must sign
the request.
o AEFC answers phone requests promptly, but you may experience delays when call volume is
high. If you are unable to get through, use mail procedure as an alternative.
o Acting on your instructions, your financial advisor may conduct telephone transactions
on your behalf.
o Phone privileges may be modified or discontinued at any time.

Minimum amount
Redemption:$100

Maximum amount
Redemption: $50,000
</TABLE>
Exchange policies:

o You may make up to three exchanges within any 30-day period,
with each limited to $300,000. These limits do not apply to
scheduled exchange programs and certain employee benefit plans or
other arrangements through which one shareholder represents the
interests of several. Exceptions may be allowed with pre-approval
of the Fund.

o Exchanges must be made into the same class of shares of the new
fund.

o If your exchange creates a new account, it must satisfy the
minimum investment amount for new purchases.

o Once we receive your exchange request, you cannot cancel it.

o Shares of the new fund may not be used on the same day for
another exchange.

o If your shares are pledged as collateral, the exchange will be
delayed until written approval is obtained from the secured party.

o AEFC and the Fund reserve the right to reject any exchange,
limit the amount, or modify or discontinue the exchange privilege,
to prevent abuse or adverse effects on the Fund and its
shareholders. For example, if exchanges are too numerous or too
large, they may disrupt the Fund's investment strategies or
increase its costs.<PAGE>
PAGE 20
Redemption policies:

o A "change of mind" option allows you to change your mind after
requesting a redemption and to use all or part of the proceeds to
purchase new shares in the same class from which you redeemed. If
you reinvest in Class A, you will purchase the new shares at net
asset value rather than the offering price on the date of a new
purchase. If you reinvest in Class B, any CDSC you paid on the
amount you are reinvesting also will be reinvested. To take
advantage of this option, send a written request within 30 days of
the date your redemption request was received. Include your
account number and mention this option. This privilege may be
limited or withdrawn at any time, and it may have tax consequences.

o A telephone redemption request will not be allowed within 30
days of a phoned-in address change.

Important: If you request a redemption of shares you recently
purchased by a check or money order that is not guaranteed, the
Fund will wait for your check to clear. It may take up to 10 days
from the date of purchase before a check is mailed to you. (A
check may be mailed earlier if your bank provides evidence
satisfactory to the Fund and AEFC that your check has cleared.)

<TABLE><CAPTION>
Three ways to receive payment when you redeem shares

1
<S> <C>
By regular or express mail o Mailed to the address on record.
o Payable to names listed on the account.

NOTE: The express mail delivery charges
you pay will vary depending on the
courier you select.

2
By wire o Minimum wire redemption: $1,000.
o Request that money be wired to your bank.
o Bank account must be in the same
ownership as the IDS fund account.

NOTE: Pre-authorization required. For
instructions, contact your financial
advisor or American Express Shareholder Service.

3
By scheduled payout plan o Minimum payment: $50.
o Contact your financial advisor or American Express
Shareholder Service to set up regular
payments to you on a monthly, bimonthly,
quarterly, semiannual or annual basis.
o Purchasing new shares while under a payout
plan may be disadvantageous because of
the sales charges.
</TABLE>
<PAGE>
PAGE 21
Reductions and waivers of the sales charge
Class A - initial sales charge alternative

On purchases of Class A shares, you pay a 5% sales charge on the
first $50,000 of your total investment and less on investments
after the first $50,000:

Total investment Sales charge as a
percent of:*

Public Net
offering amount
price invested

Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

* To calculate the actual sales charge on an investment greater
than $50,000 and less than $1,000,000, amounts for each applicable
increment must be totaled. See the SAI.

Reductions of the sales charge on Class A shares

Your sales charge may be reduced, depending on the totals of:

o the amount you are investing in this Fund now,

o the amount of your existing investment in this Fund, if any, and

o the amount you and your immediate family (spouse or unmarried
children under 21) are investing or have in other funds in the IDS
MUTUAL FUND GROUP that carry a sales charge.

Other policies that affect your sales charge:

o IDS Tax-Free Money Fund and Class A shares of IDS Cash
Management Fund do not carry sales charges. However, you may count
investments in these funds if you acquired shares in them by
exchanging shares from IDS funds that carry sales charges.

o IRA purchases or other employee benefit plan purchases made
through a payroll deduction plan or through a plan sponsored by an
employer, association of employers, employee organization or other
similar entity, may be added together to reduce sales charges for
all shares purchased through that plan.

o If you intend to invest $1 million over a period of 13 months,
you can reduce the sales charges in Class A by filing a letter of
intent.

For more details, see the SAI.

<PAGE>
PAGE 22
Waivers of the sales charge for Class A shares

Sales charges do not apply to:

o Current or retired trustees, directors, officers or employees of
the Fund or AEFC or its subsidiaries, their spouses and unmarried
children under 21.

o Current or retired American Express financial advisors, their
spouses and unmarried children under 21.

o Qualified employee benefit plans* using a daily transfer
recordkeeping system offering participants daily access to IDS
funds.

(Participants in certain qualified plans for which the initial
sales charge is waived may be subject to a deferred sales charge of
up to 4% on certain redemptions. For more information, see the
SAI.)

o Shareholders who have at least $1 million invested in funds of
the IDS MUTUAL FUND GROUP. If the investment is redeemed in the
first year after purchase, a CDSC of 1% will be charged on the
redemption.

o Purchases made within 30 days after a redemption of shares (up
to the amount redeemed):
- of a product distributed by American Express Financial
Advisors in a qualified plan subject to a deferred sales
charge or
- in a qualified plan where American Express Trust Company has a
recordkeeping, trustee, investment management or investment
servicing relationship.

Send the Fund a written request along with your payment, indicating
the amount of the redemption and the date on which it occurred.

o Purchases made with dividend or capital gain distributions from
another fund in the IDS MUTUAL FUND GROUP that has a sales charge.

o Purchases made through American Express Strategic Portfolio
Service (total amount of all investments made in the Strategic
Portfolio Service must be at least $50,000).

o Purchases made under the University of Texas System ORP.

*Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.

Class B - contingent deferred sales charge alternative

Where a CDSC is imposed on a redemption, it is based on the amount
of the redemption and the number of calendar years, including the
year of purchase, between purchase and redemption. The following
table shows the declining scale of percentages that apply to
redemptions during each year after a purchase:<PAGE>
PAGE 23
If a redemption is The percentage rate
made during the for the CDSC is:

First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%

If the amount you are redeeming reduces the current net asset value
of your investment in Class B shares below the total dollar amount
of all your purchase payments during the last six years (including
the year in which your redemption is made), the CDSC is based on
the lower of the redeemed purchase payments or market value.

The following example illustrates how the CDSC is applied. Assume
you had invested $10,000 in Class B shares and that your investment
had appreciated in value to $12,000 after 15 months, including
reinvested dividend and capital gain distributions. You could
redeem any amount up to $2,000 without paying a CDSC ($12,000
current value less $10,000 purchase amount). If you redeemed
$2,500, the CDSC would apply only to the $500 that represented part
of your original purchase price. The CDSC rate would be 4% because
a redemption after 15 months would take place during the second
year after purchase.

Because the CDSC is imposed only on redemptions that reduce the
total of your purchase payments, you never have to pay a CDSC on
any amount you redeem that represents appreciation in the value of
your shares, income earned by your shares or capital gains. In
addition, when determining the rate of any CDSC, your redemption
will be made from the oldest purchase payment you made. Of course,
once a purchase payment is considered to have been redeemed, the
next amount redeemed is the next oldest purchase payment. By
redeeming the oldest purchase payments first, lower CDSCs are
imposed than would otherwise be the case.

Waivers of the contingent deferred sales charge

The CDSC on Class B shares will be waived on redemptions of shares:

o In the event of the shareholder's death,
o Purchased by any trustee, director, officer or employee of a fund
or AEFC or its subsidiaries,
o Purchased by any American Express financial advisor,
o Held in a trusteed employee benefit plan,
o Held in IRAs or certain qualified plans for which American
Express Trust Company acts as custodian, such as Keogh plans, tax-
sheltered custodial accounts or corporate pension plans, provided
that the shareholder is:
- at least 59-1/2 years old, and
<PAGE>
PAGE 24
- taking a retirement distribution (if the redemption is part
of a transfer to an IRA or qualified plan in a product
distributed by American Express Financial Advisors, or a
custodian-to-custodian transfer to a product not distributed
by American Express Financial Advisors, the CDSC will not be
waived), or
- redeeming under an approved substantially equal periodic
payment arrangement.

For investors in Class A shares who have over $1 million invested
in one year, the 1% CDSC on redemption of those shares will be
waived in the same circumstances described for Class B.

Special shareholder services

Services

To help you track and evaluate the performance of your investments,
AEFC provides these services:

Quarterly statements listing all of your holdings and transactions
during the previous three months.

Yearly tax statements featuring average-cost-basis reporting of
capital gains or losses if you redeem your shares along with
distribution information - which simplifies tax calculations.

A personalized mutual fund progress report detailing returns on
your initial investment and cash-flow activity in your account. It
calculates a total return to reflect your individual history in
owning Fund shares. This report is available from your financial
advisor.

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<PAGE>
PAGE 25
Distributions and taxes

As a shareholder you are entitled to your share of the Fund's net
income and any gains realized on its investments. The Fund
distributes dividends and capital gain distributions to qualify as
a regulated investment company and to avoid paying corporate income
and excise taxes. Dividend and capital gains distributions will
have tax consequences you should know about.

Dividend and capital gain distributions

The Fund's income from dividends and interest, and any net realized
short-term gain, are distributed to you at the end of each calendar
quarter as dividends. The Fund realizes long-term capital gains
whenever it sells securities held for more than one year for a
higher price than it paid for them. Net realized long-term capital
gains, if any, are distributed at the end of the calendar year as
capital gain distributions. Before they're distributed, both net
investment income and net long-term capital gains are included in
the value of each share. After they're distributed, the value of
each share drops by the per-share amount of the distribution. (If
your distributions are reinvested, the total value of your holdings
will not change.)

Dividends paid by each class will be calculated at the same time,
in the same manner and in the same amount, except the expenses
attributable solely to Class A, Class B and Class Y will be paid
exclusively by that class. Class B shareholders will receive lower
per share dividends than Class A and Class Y shareholders because
expenses for Class B are higher than for Class A or Class Y. Class
A shareholders will receive lower per share dividends than Class Y
shareholders because expenses for Class A are higher than for Class
Y.

Reinvestments

Dividends and capital gain distributions are automatically
reinvested in additional shares in the same class of the Fund,
unless:

o you request the Fund in writing or by phone to pay
distributions to you in cash, or

o you direct the Fund to invest your distributions in any
publicly available IDS fund for which you've previously opened
an account. You pay no sales charge on shares purchased
through reinvestment from this Fund into any IDS fund.

The reinvestment price is the net asset value at close of business
on the day the distribution is paid. (Your quarterly statement
will confirm the amount invested and the number of shares
purchased.)

<PAGE>
PAGE 26
If you choose cash distributions, you will receive only those
declared after your request has been processed.

If the U.S. Postal Service cannot deliver the checks for the cash
distributions, we will reinvest the checks into your account at the
then-current net asset value and make future distributions in the
form of additional shares.

Taxes

Distributions are subject to federal income tax and also may be
subject to state and local taxes. Distributions are taxable in the
year the Fund pays them regardless of whether you take them in cash
or reinvest them.

Each January, you will receive a tax statement showing the kinds
and total amount of all distributions you received during the
previous year. You must report distributions on your tax returns,
even if they are reinvested in additional shares.

"Buying a dividend" creates a tax liability. This means buying
shares shortly before a net investment income or a capital gain
distribution. You pay the full pre-distribution price for the
shares, then receive a portion of your investment back as a
distribution, which is taxable.

Redemptions and exchanges subject you to a tax on any capital gain.
If you sell shares for more than their cost, the difference is a
capital gain. Your gain may be either short term (for shares held
for one year or less) or long term (for shares held for more than
one year).

Your Taxpayer Identification Number (TIN) is important. As with
any financial account you open, you must list your current and
correct Taxpayer Identification Number (TIN) -- either your Social
Security or Employer Identification number. The TIN must be
certified under penalties of perjury on your application when you
open an account at AEFC.

If you don't provide the TIN, or the TIN you report is incorrect,
you could be subject to backup withholding of 31% of taxable
distributions and proceeds from certain sales and exchanges. You
also could be subject to further penalties, such as:

o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information

You also could be subject to backup withholding because you failed
to report interest or dividends on your tax return as required.

<PAGE>
PAGE 27
<TABLE><CAPTION>
How to determine the correct TIN

Use the Social Security or
For this type of account: Employer Identification number
of:
<S> <C>
Individual or joint account The individual or individuals
listed on the account

Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors
Act)

A living trust The grantor-trustee (the person
who puts the money into the
trust)

An irrevocable trust, pension The legal entity (not the
trust or estate personal representative or
trustee, unless no legal entity
is designated in the account
title)

Sole proprietorship or The owner or partnership
partnership

Corporate The corporation

Association, club or The organization
tax-exempt organization
</TABLE>
For details on TIN requirements, ask your financial advisor or
local American Express Financial Advisors office for Federal Form
W-9, "Request for Taxpayer Identification Number and
Certification."

Important: This information is a brief and selective summary of
certain federal tax rules that apply to this Fund. Tax matters are
highly individual and complex, and you should consult a qualified
tax advisor about your personal situation.

How the Fund is organized

IDS Investment Series, Inc., of which IDS Mutual is a part, is an
open-end management company, as defined in the Investment Company
Act of 1940. Originally incorporated on Jan. 18, 1940 in Nevada,
IDS Investment Series, Inc. changed its state of incorporation on
June 13, 1986 by merging into a Minnesota corporation incorporated
on April 7, 1986. The Fund headquarters are at 901 S. Marquette
Ave., Suite 2810, Minneapolis, MN 55402-3268.

<PAGE>
PAGE 28
Shares

IDS Investment Series, Inc. currently is composed of two funds,
each issuing its own series of capital stock: IDS Diversified
Equity Income Fund and IDS Mutual. Each fund is owned by its
shareholders. Each fund issues shares in three classes - Class A,
Class B and Class Y. Each class has different sales arrangements
and bears different expenses. Each class represents interests in
the assets of a fund. Par value is 1 cent per share. Both full
and fractional shares can be issued.

The shares of each fund making up IDS Investment Series, Inc.
represent an interest in that fund's assets only (and profits or
losses), and, in the event of liquidation, each share of a fund
would have the same rights to dividends and assets as every other
share of that fund.

IDS Mutual no longer issues stock certificates.

Voting rights

As a shareholder, you have voting rights over the Fund's management
and fundamental policies. You are entitled to one vote for each
share you own. Each class has exclusive voting rights with respect
to the provisions of the Fund's distribution plan that pertain to a
particular class and other matters for which separate class voting
is appropriate under applicable law.

Shareholder meetings

The Fund does not hold annual shareholder meetings. However, the
directors may call meetings at their discretion, or on demand by
holders of 10% or more of the outstanding shares, to elect or
remove directors.

Special considerations regarding master/feeder structure

An investor in the Fund should be aware that, subject to certain
contingencies, the Fund intends to achieve its investment objective
in early 1996 by investing its assets in the Portfolio of the
Trust, which has an identical investment objective to the Fund.
This arrangement is commonly known as a master/feeder structure.
The Trust is a separate investment company. Therefore, the Fund's
interest in securities owned by the Portfolio will be indirect.
The board has considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio. The board
believes that this approach offers opportunities for economies of
scale. In determining to convert to a master/feeder structure, the
board considered whether the aggregate of the fees of the Fund and
the Portfolio will be more or less than if the Fund invested
directly in the securities to be held by the Portfolio. The board
negotiated certain expense reimbursement arrangements with AEFC to
mitigate the impact of increases in aggregate costs, and believes <PAGE>
PAGE 29
that any additional costs not covered by such arrangements will be
outweighed by the anticipated benefits to the Fund and its
shareholders of conversion to a master/feeder structure.

The investment objective, policies and restrictions of the
Portfolio are described under the captions "Investment policies and
risks" and "Facts about investments and their risks."

To date, AEFC has sponsored and advised only traditionally
structured funds that invest directly in a portfolio of securities
and retain their own investment manager. Funds that invest all
their assets in interests in a separate investment company are a
relatively new development in the mutual fund industry and may be
subject to additional regulations and risks.

In addition to selling units to the Fund, the Portfolio may sell
units to other affiliated and non-affiliated mutual funds and to
institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a
proportionate share of the Portfolio's expenses. However, the
other investors investing in the Portfolio are not required to sell
their shares at the same price as the Fund due to variations in
sales commissions and other operating expenses. Therefore,
investors in the Fund should be aware that these differences may
result in differences in returns experienced by investors in the
different funds that invest in the same Portfolio.

The Fund may withdraw (completely redeem) all its assets from the
Portfolio at any time if the board determines that it is in the
best interest of the Fund to do so. In the event the Fund
withdraws all of its assets from the Portfolio, the board would
consider what action might be taken, including investing all assets
of the Fund in another pooled investment entity or retaining an
investment advisor to manage the Fund's assets in accordance with
its investment objective. The investment objective of the Fund and
its Portfolio can only be changed with shareholder approval. If
the objective of the Portfolio changes and shareholders of the Fund
do not approve a parallel change in the Fund's investment
objective, the Fund would seek an alternative investment vehicle
for the Fund or retain an investment advisor on its behalf.

Certain changes in the Portfolio's fundamental objectives, policies
and restrictions could require the Fund to redeem its interest in
the Portfolio. Any such withdrawal could result in a distribution
of in-kind portfolio securities (as opposed to cash distribution).
If securities are distributed, the Fund could incur brokerage, tax<PAGE>
PAGE 30
or other charges in converting the securities to cash. In
addition, a distribution in kind may result in a less diversified
portfolio of investments or adversely affect the liquidity of the
Fund.

Wherever the Fund as an investor in the Portfolio is requested to
vote on matters pertaining to the Portfolio, the Fund will hold a
meeting of Fund shareholders and will vote its units in the
Portfolio for or against such matters proportionately to the
instructions to vote for or against such matters received from Fund
shareholders. The Fund will vote shares for which it receives no
voting instructions in the same proportion as the shares for which
it receives voting instructions. See "Investment manager and
transfer agent" for a complete description of the management and
other expenses associated with the Fund's investment in the
Portfolio.

Directors and officers

Shareholders elect a board of directors that oversees the
operations of the Fund and chooses its officers. Its officers are
responsible for day-to-day business decisions based on policies set
by the board. The board has named an executive committee that has
authority to act on its behalf between meetings. The directors
also serve on the boards of all of the other funds in the IDS
MUTUAL FUND GROUP, except for Mr. Dudley, who is a director of all
publicly offered funds.

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.<PAGE>
PAGE 31
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 AEFC

William H. Dudley
Executive vice president, AEFC.

David R. Hubers
President and chief executive officer, AEFC.

John R. Thomas
Senior vice president, AEFC.

Officers who also are officers and/or employees of AEFC

Peter J. Anderson
Vice president of all funds in the IDS MUTUAL FUND GROUP.

Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.

Other officer

Leslie L. Ogg
Vice president, general counsel and secretary of all funds in the
IDS MUTUAL FUND GROUP.

Refer to the SAI for the directors' and officers' biographies.

Investment manager and transfer agent

The Fund pays AEFC for managing its portfolio, providing
administrative services and serving as transfer agent (handling
shareholder accounts).

Under its Investment Management Services Agreement, AEFC determines
which securities will be purchased, held or sold (subject to the
direction and control of the Fund's board of directors). Under the
<PAGE>
PAGE 32
current agreement, effective March 20, 1995, the Fund pays AEFC a
fee for these services based on the average daily net assets of the
Fund, as follows:

Assets Annual rate
(billions) at each asset level

First $1.0 0.530%
Next 1.0 0.505
Next 1.0 0.480
Next 3.0 0.455
Over 6.0 0.430

This fee may be increased or decreased by a performance adjustment
based on a comparison of performance of Class A shares of the Fund
to the Lipper Balanced Fund Index. The maximum adjustment is 0.08%
of the Fund's average daily net assets on an annual basis.

Upon the implementation of the new fund structure, AEFC will
provide these services to the Portfolio at the same annual rate
currently paid by the Fund.

For the fiscal year ended Sept. 30, 1995, under the current and
prior agreements, the Fund paid AEFC a total investment management
fee of 0.51% of its average daily net assets. Under the Agreement,
the Fund also pays taxes, brokerage commissions and nonadvisory
expenses.

Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at an annual rate of 0.04%
decreasing in gradual percentages to 0.02% as assets increase.

In addition, 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

Distributor

The Fund has an exclusive distribution agreement with American
Express Financial Advisors Inc., a wholly owned subsidiary of AEFC.
Financial advisors representing American Express Financial Advisors
provide information to investors about individual investment
programs, the Fund and its operations, new account applications,
exchange and redemption requests. The cost of these services is
paid partially by the Fund's sales charges.

Persons who buy Class A shares pay a sales charge at the time of
purchase. Prior to March 20, 1995, the date when the fund began
offering more than one class of shares, the Fund paid an account-
based distribution fee. That fee is part of Class A's total
expenses shown below and was 0.03% of average daily net assets for
the fiscal year ended Sept. 30, 1995. Persons who buy Class B<PAGE>
PAGE 33
shares are subject to a contingent deferred sales charge on
redemption in the first six years and pay an asset-based sales
charge (also known as a 12b-1 plan) of 0.75% of the Fund's average
daily net assets. For the fiscal period beginning March 20, 1995
and ending Sept. 30, 1995, the asset-based sales charge paid by
Class B shareholders was 0.75% of the average daily net assets.
Class Y shares are sold without a sales charge and without an
asset-based sales charge.

Financial advisors may receive different compensation for selling
Class A, Class B and Class Y shares. Portions of the sales charge
also may be paid to securities dealers who have sold the Fund's
shares or to banks and other financial institutions. The amounts
of those payments range from 0.8% to 4.0% of the Fund's offering
price depending on the monthly sales volume.

Under a Shareholder Service Agreement, the Fund also 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.

Total expenses paid by the Fund's Class A shares for the fiscal
year ended Sept. 30, 1995, restated to reflect current agreements,
were 0.88% of its average daily net assets. For the fiscal period
beginning March 20, 1995 and ending Sept. 30, 1995, expenses for
Class B and Class Y were 1.65% and 0.70% respectively.

Total fees and expenses (excluding taxes and brokerage commissions)
cannot exceed the most restrictive applicable state expense
limitation.

About American Express Financial Corporation

General information

The AEFC family of companies offers not only mutual funds but also
insurance, annuities, investment certificates and a broad range of
financial management services.

Besides managing investments for all publicly offered funds in the
IDS MUTUAL FUND GROUP, AEFC also manages investments for itself and
its subsidiaries, IDS Certificate Company and IDS Life Insurance
Company. Total assets under management on Sept. 30, 1995 were more
than $124 billion.

American Express Financial Advisors serves individuals and
businesses through its nationwide network of more than 175 offices
and more than 7,800 advisors.

Other AEFC subsidiaries provide investment management and related
services for pension, profit sharing, employee savings and
endowment funds of businesses and institutions.

<PAGE>
PAGE 34
AEFC is located at IDS Tower 10, Minneapolis, MN 55440-0010. It is
a wholly owned subsidiary of American Express Company, a financial
services company with headquarters at American Express Tower, World
Financial Center, New York, NY 10285. The Fund may pay brokerage
commissions to broker-dealer affiliates of American Express and
AEFC.

<PAGE>
PAGE 35
Appendix

Descriptions of derivative instruments

What follows are brief descriptions of derivative instruments the
Fund may use. At various times the Fund may use some or all of
these instruments and is not limited to these instruments. It may
use other similar types of instruments if they are consistent with
the Fund's investment goal and policies. For more information on
these instruments, see the SAI.

Options and futures contracts. An option is an agreement to buy or
sell an instrument at a set price during a certain period of time.
A futures contract is an agreement to buy and sell an instrument
for a set price on a future date. The Fund may buy and sell
options and futures contracts to manage its exposure to changing
interest rates, security prices and currency exchange rates.
Options and futures may be used to hedge the Fund's investments
against price fluctuations or to increase market exposure.

Asset-backed and mortgage-backed securities. Asset-backed
securities include interests in pools of assets such as motor
vehicle installment sale contracts, installment loan contracts,
leases on various types of real and personal property, receivables
from revolving credit (credit card) agreements or other categories
of receivables. Mortgage-backed securities include collateralized
mortgage obligations and stripped mortgage-backed securities.
Interest and principal payments depend on payment of the underlying
loans or mortgages. The value of these securities may also be
affected by changes in interest rates, the market's perception of
the issuers and the creditworthiness of the parties involved. The
non-mortgage related asset-backed securities do not have the
benefit of a security interest in related collateral. Stripped
mortgage-backed securities include interest only (IO) and principal
only (PO) securities. Cash flows and yields on IOs and POs are
extremely sensitive to the rate of principal payments on the
underlying mortgage loans or mortgage-backed securities.

Indexed securities. The value of indexed securities is linked to
currencies, interest rates, commodities, indexes or other financial
indicators. Most indexed securities are short- to intermediate-
term fixed income securities whose values at maturity or interest
rates rise or fall according to the change in one or more specified
underlying instruments. Indexed securities may be more volatile
than the underlying instrument itself.

Inverse floaters. Inverse floaters are created by underwriters
using the interest payment on securities. A portion of the
interest received is paid to holders of instruments based on
current interest rates for short-term securities. The remainder,
minus a servicing fee, is paid to holders of inverse floaters. As
interest rates go down, the holders of the inverse floaters receive
more income and an increase in the price for the inverse floaters.
As interest rates go up, the holders of the inverse floaters
receive less income and a decrease in the price for the inverse
floaters.
<PAGE>
PAGE 36
Structured products. Structured products are over-the-counter
financial instruments created specifically to meet the needs of one
or a small number of investors. The instrument may consist of a
warrant, an option or a forward contract embedded in a note or any
of a wide variety of debt, equity and/or currency combinations.
Risks of structured products include the inability to close such
instruments, rapid changes in the market and defaults by other
parties.

<PAGE>
PAGE 37
IDS Diversified Equity Income Fund

Prospectus
Nov. 29, 1995

The primary goal of IDS Diversified Equity Income Fund, a part of
IDS Investment Series, Inc., is to provide a high level of income.
Its secondary goal is to provide capital growth. The Fund invests
mainly in dividend-paying stocks.

This prospectus contains facts that can help you decide if the Fund
is the right investment for you. Read it before you invest and
keep it for future reference.

American Express Shareholder Service
P.O. Box 534
Minneapolis, MN
55440-0534
612-671-3733
TTY: 800-846-4852
<PAGE>
PAGE 38

The Fund in brief
Goals
Types of Fund investments and their risks
Proposed conversion to master/feeder structure
Manager and distributor
Portfolio manager
Alternative purchase arrangements

Sales charge and Fund expenses

Performance
Financial highlights
Total returns

Investment policies and risks
Facts about investments and their risks
Valuing Fund shares

How to purchase, exchange or redeem shares
Alternative purchase arrangements
How to purchase shares
How to exchange shares
How to redeem shares
Reductions and waivers of the sales charge

Special shareholder services
Services
Quick telephone reference

Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN

How the Fund is organized
Shares
Voting rights
Shareholder meetings
Special considerations regarding master/feeder structure
Directors and officers
Investment manager and transfer agent
Distributor

About American Express Financial Corporation
General information

Appendices
Description of corporate bond ratings
Descriptions of derivative instruments
<PAGE>
PAGE 39
The Fund in brief

Goals

IDS Diversified Equity Income Fund (the Fund) seeks to provide
shareholders with a high level of current income and, as a
secondary goal, steady growth of capital. Because any investment
involves risk, achieving these goals cannot be guaranteed. Only
shareholders can change the goals.

Types of Fund investments and their risks

The Fund is a diversified mutual fund that invests primarily in
dividend-paying stocks. The Fund also invests in other common
stocks, foreign securities, convertible securities, debt
securities, derivative instruments and money market instruments.
Some of the Fund's investments may be considered speculative and
involve additional investment risks.

Proposed conversion to master/feeder structure

Subject to certain contingencies, the Fund intends to invest all of
its assets in the Equity Income Portfolio (the Portfolio) of Growth
and Income Trust (the Trust) rather than directly investing in and
managing its own portfolio of securities. The Portfolio will have
the same investment objective as the Fund. The Fund anticipates
this conversion will occur in early 1996.

Manager and distributor

Portfolio manager

Keith Tufte joined AEFC in 1990 and serves as portfolio manager.
He was appointed to manage this Fund in September 1994. He also
manages IDS Wealth Management yield portfolios. Prior to joining
AEFC, he was vice president and analyst at J.P. Morgan Investment
Management.

Alternative purchase arrangements

<PAGE>
PAGE 40
Sales charge and Fund expenses

Annual Fund operating expenses**
(% of average daily net assets):

Class A Class B Class Y
Management fee 0.52% 0.52% 0.52%
12b-1 fee 0.00% 0.75% 0.00%
Other expenses*** 0.46% 0.50% 0.28%
Total 0.98% 1.77% 0.80%

*This charge may be reduced depending on your total investments in
IDS funds. See "Reductions of the sales charge."

**Expenses for Class A are based on actual expenses for the last
fiscal year, restated to reflect current fees. Expenses for Class
B and Class Y are based on actual annualized expenses for the
period from March 20, 1995 to Sept. 30, 1995.

***Other expenses include an administrative services fee, a
shareholder services fee for Class A and Class B, a transfer agency
fee and other non-advisory expenses.

1 year 3 years 5 years 10 years
Class A $59 $80 $102 $165
Class B $68 $96 $116 $188**
Class B* $18 $56 $ 96 $188
Class Y $ 8 $26 $ 44 $ 99

*Assuming Class B shares are not redeemed at the end of the period.
**Based on conversion of Class B shares to Class A shares after
eight years.

<PAGE>
PAGE 41

Performance

Financial highlights
<TABLE><CAPTION>
IDS Diversified Equity Income Fund

Performance
Financial highlights

Fiscal period ended Sept. 30,
Per share income and capital changes*
Class A
1995 1994 1993 1992 1991**
<S> <C> <C> <C> <C> <C>
Net asset value, $7.66 $7.73 $6.48 $5.98 $5.00
beginning of period
Income from investment operations:

Net investment income .30 .27 .28 .31 .30

Net gains .53 .20 1.31 .58 .98
(both realized
and unrealized)

Total from investment .83 .47 1.59 .89 1.28
operations
Less distributions:

Dividends from net (.29) (.27) (.28) (.30) (.30)
investment income

Distributions from (.31) (.27) (.06) (.09) --
realized gains

Total distributions (.60) (.54) (.34) (.39) (.30)

Net asset value, $7.89 $7.66 $7.73 $6.48 $5.98
end of period
Ratios/supplemental data

1995 1994 1993 1992 1991**

Net assets, end of $1,091 $936 $487 $162 $23
period (in millions)

Ratio of expenses to .94% .88% .96% 1.08%+ .90%+
average daily net assets

Ratio of net income 3.95% 3.75% 3.94% 4.79%+ 5.97%+
to average
daily net assets

Portfolio turnover rate 98% 95% 73% 34% 74%
(excluding short-term
securities)

Total return*** 11.8% 6.3% 25.0% 15.4% 25.9%

*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date. Period from Oct. 15, 1990 to Sept. 30, 1991.
***Total return does not reflect payment of a sales charge.<PAGE>
PAGE 42
+During the periods ended Sept. 30, 1991 and 1992, AEFC reimbursed the Fund
for expenses in excess of 0.9% of its average daily net assets, on an
annual basis. Had AEFC not done so, the ratios of expenses and net
investment income would have been 1.34% and 5.53% for 1991 and 1.13%
and 4.74% for 1992.
</TABLE>
<TABLE><CAPTION>
IDS Diversified Equity Income Fund

Performance
Financial highlights

Fiscal period ended Sept. 30,
Per share income and capital changes*
Class B** Class Y**
1995 1995
<S> <C> <C>
Net asset value, $7.13 $7.13
beginning of period
Income from investment operations:
Net investment income .19 .22

Net gains .74 .74
(both realized
and unrealized)

Total from investment .93 .96
operations
Less distributions:
Dividends from net (.17) (.20)
investment income

Net asset value, $7.89 $7.89
end of period
Ratios/supplemental data

1995 1995

Net assets, end of $32 $26
period (in millions)

Ratio of expenses to 1.77%+ .80%+
average daily net assets

Ratio of net income 3.00%+ 3.95%+
to average
daily net assets

Portfolio turnover rate 98% 98%
(excluding short-term
securities)

Total return*** 13.1% 13.6%

The information in this table has been audited by KPMG Peat Marwick LLP,
independent auditors. The independent auditors' report and additional
information about the performance of the Fund are contained in the Fund's
annual report which, if not included with this prospectus, may be obtained
without charge.
</TABLE>[CAPTION]
Total returns

<PAGE>
PAGE 43

Average annual total returns as of Sept. 30, 1995

Purchase 1 year Since
made ago inception*
Diversified
Equity Income:
Class A +6.23% +15.57%

S&P 500 +22.61% +16.06%

Lipper Equity
Income Fund
Index +18.80% +15.10%

*Oct. 15, 1990

Cumulative total returns as of Sept. 30, 1995

Purchase 1 year Since
made ago inception*
Diversified
Equity Income:
Class A +6.23% +105.03%

S&P 500 +22.61% +109.36%

Lipper Equity
Income Fund
Index +18.80% +101.02%

*Oct. 15, 1990

These examples show total returns from hypothetical investments in
Class A shares of the Fund. These returns are compared to those of
popular indexes for the same periods. Total returns for Class A,
Class B and Class Y for the period from March 20, 1995 to Sept. 30,
1995, were 7.79%, 8.06 and 13.56% respectively. March 20, 1995 was
the inception date for Class B and Class Y. Total return for Class
A is shown for comparative purposes. The performance of Class B
and Class Y will vary from the performance of Class A based on
differences in sales charges and fees. Past performance for Class
Y for the periods prior to March 20, 1995 may be calculated based
on the performance of Class A, adjusted to reflect differences in
sales charges although not other differences in expenses.

For purposes of calculation, information about the Fund assumes:
o a sales charge of 5% for Class A shares
o redemption at the end of the period and deduction of the
applicable contingent deferred sales charge for Class B shares
o no sales charge for Class Y shares
o no adjustments for taxes an investor may have paid on the
reinvested income and capital gains<PAGE>
PAGE 44
o a period of widely fluctuating securities prices. Returns
shown should not be considered a representation of the Fund's
future performance.

The Fund includes primarily common stocks that may be different
from those in the indexes. The indexes reflect reinvestment of all
distributions and changes in market prices, but exclude brokerage
commissions or other fees.

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.

Lipper Equity Income Fund 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.

Investment policies and risks

Under normal market conditions, the Fund will invest at least 65%
of its net assets in dividend-paying common and preferred stocks.
Often these stocks are issued by established companies in the
utilities, financial, consumer and energy sectors of the economy.
In selecting stocks, the investment manager will look at factors
such as the current dividend, the present price of the security,
the ability of the company to maintain and increase the dividend,
and the likelihood the company will continue to grow.

The other assets of the Fund will be invested in other common
stocks, foreign securities, convertible securities, debt
securities, derivative instruments and money market instruments.

The various types of investments the portfolio manager uses to
achieve investment performance are described in more detail in the
next section and in the SAI.

Facts about investments and their risks

Common stocks: Common stocks are subject to market fluctuations.
Stocks of larger, established companies that pay dividends may be
less volatile than the stock market as a whole.
<PAGE>
PAGE 45
Preferred stocks: If a company earns a profit, it generally must
pay its preferred stockholders a dividend at a pre-established
rate.

Convertible securities: These securities generally are preferred
stocks or bonds that can be exchanged for other securities, usually
common stock, at prestated prices. When the trading price of the
common stock makes the exchange likely, the convertible securities
trade more like common stock.

The price of bonds below investment grade may react more to the
ability of a company to pay interest and principal when due than to
changes in interest rates. They have greater price fluctuations,
are more likely to experience a default, and sometimes are referred
to as "junk bonds." Reduced market liquidity for these bonds may
occasionally make it more difficult to value them. In valuing
bonds the Fund relies both on independent rating agencies and the
investment manager's credit analysis. Securities that are
subsequently downgraded in quality may continue to be held by the
Fund and will be sold only when the Fund's investment manager
believes it is advantageous to do so. No more than 20% of the
Fund's net assets may be invested in bonds below investment grade
unless the bonds are convertible securities.

For the fiscal year ended Sept. 30, 1995, the Fund held less than
5% of its average daily net assets in bonds rated below investment
grade.

Debt securities sold at a deep discount: Some bonds are sold at
deep discounts because they do not pay interest until maturity.
They include zero coupon bonds and PIK (pay-in-kind) bonds. To
comply with tax laws, the Fund has to recognize a computed amount
of interest income and pay dividends to shareholders even though no
cash has been received. In some instances, the Fund may have to
sell securities to have sufficient cash to pay the dividends.

Foreign investments: Securities of foreign companies and
governments may be traded in the United States, but often they are
traded only on foreign markets. Frequently, there is less
information about foreign companies and less government supervision
of foreign markets. Foreign investments are subject to political
and economic risks of the countries in which the investments are
made, including the possibility of seizure or nationalization of
companies, imposition of withholding taxes on income, establishment
of exchange controls or adoption of other restrictions that might
affect an investment adversely. If an investment is made in a
foreign market, the local currency may be purchased using a forward
contract in which the price of the foreign currency in U.S. dollars
is established on the date the trade is made, but delivery of the
currency is not made until the securities are received. As long as
the Fund holds foreign currencies or securities valued in foreign
currencies, the value of those assets will be affected by changes
in the value of the currencies relative to the U.S. dollar. <PAGE>
PAGE 46
Because of the limited trading volume in some foreign markets,
efforts to buy or sell a security may change the price of the
security, and it may be difficult to complete the transaction. The
Fund may invest up to 25% of its total assets in foreign
investments.

Derivative instruments: The portfolio manager may use derivative
instruments in addition to securities to achieve investment
performance. Derivative instruments include futures, options and
forward contracts. Such instruments may be used to maintain cash
reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce
transaction costs, or to pursue higher investment returns.
Derivative instruments are characterized by requiring little or no
initial payment and a daily change in price based on or derived
from a security, a currency, a group of securities or currencies,
or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance
characteristics. A small change in the value of the underlying
security, currency or index will cause a sizable gain or loss in
the price of the derivative instrument. Derivative instruments
allow the portfolio manager to change the investment performance
characteristics very quickly and at lower costs. Risks include
losses of premiums, rapid changes in prices, defaults by other
parties, and inability to close such instruments. The Fund will
use derivative instruments only to achieve the same investment
performance characteristics it could achieve by directly holding
those securities and currencies permitted under the investment
policies. The Fund will designate cash or appropriate liquid
assets to cover its portfolio obligations. No more than 5% of the
Fund's net assets can be used at any one time for good faith
deposits on futures and premiums for options on futures that do not
offset existing investment positions. The Fund is not limited as
to the percentage of its assets that may be invested in permissible
investments, including derivatives, except as otherwise explicitly
provided in this prospectus or the SAI. For descriptions of these
and other types of derivative instruments, see the Appendix to this
prospectus and the SAI.

Securities and derivative instruments that are illiquid: A
security or derivative instrument is illiquid if it cannot be sold
quickly in the normal course of business. Some investments cannot
be resold to the U.S. public because of their terms or government
regulations. All securities and derivative instruments, however,
can be sold in private sales, and many may be sold to other
institutions and qualified buyers or on foreign markets. The
portfolio manager will follow guidelines established by the board
of directors and consider relevant factors such as the nature of
the security and the number of likely buyers when determining
whether a security is illiquid. No more than 10% of the Fund's net
assets will be held in securities and derivative instruments that
are illiquid.

Money market instruments: Short-term debt securities rated in the
top two grades or the equivalent are used to meet daily cash needs
and at various times to hold assets until better investment
opportunities arise. Generally less than 25% of the Fund's total
assets are in these money market instruments. However, for<PAGE>
PAGE 47
temporary defensive purposes these investments could exceed that
amount for a limited period of time.

The investment policies described above may be changed by the board
of directors.

Valuing Fund shares

The public offering price is the net asset value (NAV) plus the
sales charge for Class A. It is the NAV for Class B and Class Y.

To establish the net assets, all securities are valued as of the
close of each business day. In valuing assets:

o Securities (except bonds) and assets with available market
values are valued on that basis.

o Securities maturing in 60 days or less are valued at amortized
cost.

o Bonds and assets without readily available market values are
valued according to methods selected in good faith by the
board of directors.

How to purchase, exchange or redeem shares

Alternative purchase arrangements

The Fund offers three different classes of shares - Class A, Class
B and Class Y. The primary differences among the classes are in
the sales charge structures and in their ongoing expenses. These
differences are summarized in the table below. You may choose the
class that best suits your circumstances and objectives.
<TABLE><CAPTION>
Sales charge and
distribution
(12b-1) fee Service fee Other information
<S> <C> <C> <C>
Class A Maximum initial 0.175% of average Initial sales charge
sales charge of daily net assets waived or reduced
5%; no 12b-1 fee for certain purchases
<PAGE>
PAGE 48
Class B No initial sales 0.175% of average Shares convert to
charge; maximum CDSC daily net assets Class A after eight
of 5% declines to 0% years; CDSC waived in
after six years; 12b-1 certain circumstances
fee of 0.75% of average
daily net assets

Class Y None None Available only to
certain qualifying
institutional
investors
</TABLE>
Conversion of Class B shares to Class A shares - Eight calendar
years after Class B shares were originally purchased, Class B
shares will convert to Class A shares and will no longer be subject
to a distribution fee. The conversion will be on the basis of
relative net asset values of the two classes, without the
imposition of any sales charge. Class B shares purchased through
reinvested dividends and distributions will convert to Class A
shares in a pro-rata portion as the Class B shares purchased other
than through reinvestment.

Sales charges on purchase or redemption

If you purchase Class A If you purchase Class B
shares shares

o You will be able to o No reductions of the
take advantage of sales charge are
reductions in the sales available for large
charge. purchases.

If you purchase Class A If you purchase Class B
shares shares

You should consider how long you plan to hold your shares and
whether the accumulated higher fees and CDSC on Class B shares
prior to conversion would be less than the initial sales charge on
Class A shares. Also consider to what extent the difference would
be offset by the lower expenses on Class A shares. To help you in
this analysis, the example in the "Sales charge and Fund expenses"
section of the prospectus illustrates the charges applicable to
each class of shares.

o Nonqualified deferred compensation plans* whose participants
are included in a qualified employee benefit plan described
above.

* Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.
<PAGE>
PAGE 50

How to purchase shares

Important: When opening an account, you must provide AEFC with
your correct Taxpayer Identification Number (Social Security or
Employer Identification number). See "Distributions and taxes."

Purchase policies:

o The minimums allowed for investment may change from time to
time.

o Wire orders can be accepted only on days when your bank, AEFC,
the Fund and Norwest Bank Minneapolis are open for business.

o Wire purchases are completed when wired payment is received
and the Fund accepts the purchase.

o AEFC and the Fund are not responsible for any delays that
occur in wiring funds, including delays in processing by the
bank.

o You must pay any fee the bank charges for wiring.

o The Fund reserves the right to reject any application for any
reason.

o If your application does not specify which class of shares you
are purchasing, it will be assumed that you are investing in
Class A shares.
<TABLE><CAPTION>
Three ways to invest

Your financial advisor will help
you with this process.
<PAGE>
PAGE 51
2
By scheduled Contact your financial advisorMinimum amounts
investment planto set up one of the followingInitial investment: $100
scheduled plans: Additional
investments: $100/mo.
o automatic payroll deductionAccount balances: none
(on active plans of
o bank authorization monthly payments)

o direct deposit of
Social Security check

o other plan approved by the Fund

Give these instructions: Minimum amounts
Credit IDS Account #00-30-015 Each wire investment: $1,000
for personal account # (your
account number) for (your name).

How to redeem shares

You can redeem your shares at any time. American Express
Shareholder Service will mail payment within seven days after
receiving your request.

<TABLE><CAPTION>
Two ways to request an exchange or redemption of shares

Regular mail:
American Express Shareholder Service
Attn: Redemptions
P.O. Box 534
Minneapolis, MN 55440-0534

Express mail:
American Express Shareholder Service
Attn: Redemptions
733 Marquette Ave.
Minneapolis, MN 55402

2
By phone
American Express Telephoneo The Fund and AEFC will honor any telephone exchange or redemption request believed to be
Transaction Service: authentic and will use reasonable procedures to confirm that they are. This includes
800-437-3133 or asking identifying questions and tape recording calls. If reasonable
612-671-3800 procedures are not followed, the Fund or AEFC will be liable for any loss resulting from
fraudulent requests.
o Phone exchange and redemption privileges automatically apply to all accounts except
custodial, corporate or qualified retirement accounts unless you request these privileges
NOT apply by writing American Express Shareholder Service. Each registered owner must sign
the request.
o AEFC answers phone requests promptly, but you may experience delays when call volume is
high. If you are unable to get through, use mail procedure as an alternative.
o Acting on your instructions, your financial advisor may conduct telephone transactions on
your behalf.
o Phone privileges may be modified or discontinued at any time.

Minimum amount
Redemption:$100

Maximum amount
Redemption: $50,000
</TABLE>
Exchange policies:

o Exchanges must be made into the same class of shares of the new
fund.
<PAGE>
PAGE 53
o If your exchange creates a new account, it must satisfy the
minimum investment amount for new purchases.

o Once we receive your exchange request, you cannot cancel it.

o Shares of the new fund may not be used on the same day for
another exchange.

o If your shares are pledged as collateral, the exchange will be
delayed until written approval is obtained from the secured party.

Redemption policies:

o A telephone redemption request will not be allowed within 30
days of a phoned-in address change.

<TABLE><CAPTION>
Three ways to receive payment when you redeem shares

1
<S> <C>
By regular or express mail o Mailed to the address on record.
o Payable to names listed on the account.

NOTE: The express mail delivery charges
you pay will vary depending on the
courier you select.

2
By wire o Minimum wire redemption: $1,000.
o Request that money be wired to your bank.
o Bank account must be in the same
ownership as the IDS fund account.

NOTE: Pre-authorization required. For
instructions, contact your financial
advisor or American Express Shareholder Service.<PAGE>
PAGE 54
3
By scheduled payout plan o Minimum payment: $50.
o Contact your financial advisor or American Express
Shareholder Service to set up regular
payments to you on a monthly, bimonthly,
quarterly, semiannual or annual basis.
o Purchasing new shares while under a payout
plan may be disadvantageous because of
the sales charges.
</TABLE>
Reductions and waivers of the sales charge
Class A - initial sales charge alternative

On purchases of Class A shares, you pay a 5% sales charge on the
first $50,000 of your total investment and less on investments
after the first $50,000:

Total investment Sales charge as a
percent of:*

Public Net
offering amount
price invested

Up to $50,000 5.0% 5.26%
Next $50,000 4.5 4.71
Next $400,000 3.8 3.95
Next $500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

* To calculate the actual sales charge on an investment greater
than $50,000 and less than $1,000,000, amounts for each applicable
increment must be totaled. See the SAI.

Reductions of the sales charge on Class A shares

Your sales charge may be reduced, depending on the totals of:

o the amount you are investing in this Fund now,

o the amount of your existing investment in this Fund, if any, and

o the amount you and your immediate family (spouse or unmarried
children under 21) are investing or have in other funds in the IDS
MUTUAL FUND GROUP that carry a sales charge.

Other policies that affect your sales charge:

o If you intend to invest $1 million over a period of 13 months,
you can reduce the sales charges in Class A by filing a letter of
intent.

For more details, see the SAI.

Waivers of the sales charge for Class A shares

Sales charges do not apply to:

o Current or retired trustees, directors, officers or employees of
the Fund or AEFC or its subsidiaries, their spouses and unmarried
children under 21.

o Current or retired American Express financial advisors, their
spouses and unmarried children under 21.

o Qualified employee benefit plans* using a daily transfer
recordkeeping system offering participants daily access to IDS
funds.

(Participants in certain qualified plans for which the initial
sales charge is waived may be subject to a deferred sales charge of
up to 4% on certain redemptions. For more information, see the
SAI.)

Send the Fund a written request along with your payment, indicating
the amount of the redemption and the date on which it occurred.

o Purchases made with dividend or capital gain distributions from
another fund in the IDS MUTUAL FUND GROUP that has a sales charge.

o Purchases made through American Express Strategic Portfolio
Service (total amount of all investments made in the Strategic
Portfolio Service must be at least $50,000).

o Purchases made under the University of Texas System ORP.

*Eligibility must be determined in advance by American Express
Financial Advisors. To do so, contact your financial advisor.
<PAGE>
PAGE 56
Class B - contingent deferred sales charge alternative

If a redemption is The percentage rate
made during the for the CDSC is:

First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%

Waivers of the contingent deferred sales charge

The CDSC on Class B shares will be waived on redemptions of shares:

o In the event of the shareholder's death,
o Purchased by any trustee, director, officer or employee of a fund
or AEFC or its subsidiaries,
o Purchased by any American Express financial advisor,
o Held in a trusteed employee benefit plan,
o Held in IRAs or certain qualified plans for which American
Express Trust Company acts as custodian, such as Keogh plans, tax-
sheltered custodial accounts or corporate pension plans, provided<PAGE>
PAGE 57
that the shareholder is:
- at least 59-1/2 years old, and
- taking a retirement distribution (if the redemption is part
of a transfer to an IRA or qualified plan in a product
distributed by American Express Financial Advisors, or a
custodian-to-custodian transfer to a product not distributed
by American Express Financial Advisors, the CDSC will not be
waived), or
- redeeming under an approved substantially equal periodic
payment arrangement.

For investors in Class A shares who have over $1 million invested
in one year, the 1% CDSC on redemption of those shares will be
waived in the same circumstances described for Class B.

Special shareholder services

Services

To help you track and evaluate the performance of your investments,
AEFC provides these services:

Quarterly statements listing all of your holdings and transactions
during the previous three months.

Yearly tax statements featuring average-cost-basis reporting of
capital gains or losses if you redeem your shares along with
distribution information - which simplifies tax calculations.

Quick telephone reference

American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733

TTY Service
For the hearing impaired
800-846-4852

Dividend and capital gain distributions

Reinvestments

Dividends and capital gain distributions are automatically
reinvested in additional shares in the same class of the Fund,
unless:

o you request the Fund in writing or by phone to pay
distributions to you in cash, or

The reinvestment price is the net asset value at close of business
on the day the distribution is paid. (Your quarterly statement
will confirm the amount invested and the number of shares
purchased.)

If you choose cash distributions, you will receive only those
declared after your request has been processed.

If the U.S. Postal Service cannot deliver the checks for the cash
distributions, we will reinvest the checks into your account at the<PAGE>
PAGE 59
then-current net asset value and make future distributions in the
form of additional shares.

Taxes

You also could be subject to backup withholding because you failed
to report interest or dividends on your tax return as required.
<TABLE><CAPTION>
How to determine the correct TIN

Use the Social Security or
For this type of account: Employer Identification number
of:
<S> <C>
Individual or joint account The individual or individuals
listed on the account
<PAGE>
PAGE 60
Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors
Act)

A living trust The grantor-trustee (the person
who puts the money into the
trust)

An irrevocable trust, pension The legal entity (not the
trust or estate personal representative or
trustee, unless no legal entity
is designated in the account
title)

Sole proprietorship or The owner or partnership
partnership

Corporate The corporation

How the Fund is organized

IDS Investment Series, Inc., of which IDS Diversified Equity Income
Fund is a part, is an open-end management investment company, as
defined in the Investment Company Act of 1940. Originally
incorporated on Jan. 18, 1940 in Nevada, IDS Investment Series,
Inc. changed its state of incorporation on June 13, 1986 by merging
into a Minnesota corporation incorporated on April 7, 1986. The
Fund headquarters are at 901 S. Marquette Ave., Suite 2810,
Minneapolis, MN 55402-3268.

The shares of each fund making up IDS Investment Series, Inc.
represent an interest in that fund's assets only (and profits or
losses), and, in the event of liquidation, each share of a fund<PAGE>
PAGE 61
would have the same rights to dividends and assets as every other
share of that fund.

Voting rights

As a shareholder, you have voting rights over the Fund's management
and fundamental policies. You are entitled to one vote for each
share you own.

Each class has exclusive voting rights with respect to the
provisions of the Fund's distribution plan that pertain to a
particular class and other matters for which separate class voting
is appropriate under applicable law.

Shareholder meetings

Special considerations regarding master/feeder structure

An investor in the Fund should be aware that, subject to certain
contingencies, the Fund intends to achieve its investment objective
in early 1996 by investing its assets in the Portfolio of the
Trust, which has an identical investment objective to the Fund.
This arrangement is commonly known as a master/feeder structure.
The Trust is a separate investment company. Therefore, the Fund's
interest in securities owned by the Portfolio will be indirect.
The board has considered the advantages and disadvantages of
investing the assets of the Fund in the Portfolio. The board
believes that this approach offers opportunities for economies of
scale. In determining to convert to a master/feeder structure, the
board considered whether the aggregate of the fees of the Fund and
the Portfolio will be more or less than if the Fund invested
directly in the securities to be held by the Portfolio. The board
negotiated certain expense reimbursement arrangements with AEFC to
mitigate the impact of increases in aggregate costs, and believes
that any additional costs not covered by such arrangements will be
outweighed by the anticipated benefits to the Fund and its
shareholders of conversion to a master/feeder structure.

The investment objective, policies and restrictions of the
Portfolio are described under the captions "Investment policies and
risks" and "Facts about investments and their risks."

To date, AEFC has sponsored and advised only traditionally
structured funds that invest directly in a portfolio of securities
and retain their own investment manager. Funds which invest all
their assets in interests in a separate investment company are a
relatively new development in the mutual fund industry and may be
subject to additional regulations and risks.

In addition to selling units to the Fund, the Portfolio may sell
units to other affiliated and non-affiliated mutual funds and to
institutional investors. Such investors will invest in the
Portfolio on the same terms and conditions and will pay a
proportionate share of the Portfolio's expenses. However, the<PAGE>
PAGE 62
other investors investing in the Portfolio are not required to sell
their shares at the same price as the Fund due to variations in
sales commissions and other operating expenses. Therefore,
investors in the Fund should be aware that these differences may
result in differences in returns experienced by investors in the
different funds that invest in the same Portfolio.

Investors in the Fund should be aware that smaller funds investing
in the Portfolio may be adversely affected by the actions of larger
funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience
higher prorated operating expenses, thereby producing lower
returns. Additionally, the Portfolio may become less diverse,
resulting in increased portfolio risk, and experience decreasing
economies of scale. Institutional investors in the Portfolio that
have a greater pro rata ownership than the Fund could have
effective voting control over the operation of the Portfolio.
Certain changes in the Portfolio's fundamental objectives, policies
and restrictions could require the Fund to redeem its interest in
the Portfolio. Any such withdrawal could result in a distribution
of in-kind portfolio securities (as opposed to cash distribution).
If securities are distributed, the Fund could incur brokerage, tax
or other charges in converting the securities to cash. In
addition, a distribution in kind may result in a less diversified
portfolio of investments or adversely affect the liquidity of the
Fund.

Directors and officers

Shareholders elect a board of directors that oversees the
operations of the Fund and chooses its officers. Its officers are
responsible for day-to-day business decisions based on policies set
by the board. The board has named an executive committee that has<PAGE>
PAGE 63
authority to act on its behalf between meetings. The directors
also serve on the boards of all of the other funds in the IDS
MUTUAL FUND GROUP, except for Mr. Dudley, who is a director of all
publicly offered funds.

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 AEFC

William H. Dudley
Executive vice president, AEFC.

David R. Hubers
President and chief executive officer, AEFC.

John R. Thomas
Senior vice president, AEFC.
<PAGE>
PAGE 64

Officers who also are officers and/or employees of AEFC

Peter J. Anderson
Vice president of all funds in the IDS MUTUAL FUND GROUP.

Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.

Other officer

Leslie L. Ogg
Vice president, general counsel and secretary of all funds in the
IDS MUTUAL FUND GROUP.

Refer to the SAI for the directors' and officers' biographies.

Investment manager and transfer agent

The Fund pays AEFC for managing its portfolio, providing
administrative services and serving as transfer agent (handling
shareholder accounts).

Under its Investment Management Services Agreement, AEFC determines
which securities will be purchased, held or sold (subject to the
direction and control of the Fund's board of directors). Under the
current agreement, effective March 20, 1995, the Fund pays AEFC a
fee for these services based on the average daily net assets of the
Fund, as follows:

Assets Annual rate
(billions) at each asset level

First $0.50 0.530%
Next 0.50 0.505
Next 1.0 0.480
Next 1.0 0.455
Next 3.0 0.430
Over 6.0 0.400

Upon the implementation of the new fund structure, AEFC will
provide these services to the Portfolio at the same annual rate
currently paid by the Fund.

For the fiscal year ended Sept. 30, 1995, under the current and
prior agreements, the Fund paid AEFC a total investment management
fee of 0.52% of its average daily net assets. Under the Agreement,
the Fund also pays taxes, brokerage commissions and nonadvisory
expenses.

Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at an annual rate of 0.04%
decreasing in gradual percentages to 0.02% as assets increase.

In addition, 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:

<PAGE>
PAGE 65
o Class A $15
o Class B $16
o Class Y $15

Distributor

Persons who buy Class A shares pay a sales charge at the time of
purchase. Prior to March 20, 1995, the date when the fund began
offering more than one class of shares, the Fund paid an account-
based distribution fee. That fee is part of Class A's total
expenses shown below and was 0.03% of average daily net assets for
the fiscal year ended Sept. 30, 1995. Persons who buy Class B
shares are subject to a contingent deferred sales charge on
redemption in the first six years and pay an asset-based sales
charge (also known as a 12b-1 plan) of 0.75% of the Fund's average
daily net assets. For the fiscal period beginning March 20, 1995
and ending Sept. 30, 1995, the asset-based sales charge paid by
Class B shareholders was 0.75% of the average daily net assets.
Class Y shares are sold without a sales charge and without an
asset-based sales charge.

Total expenses paid by the Fund's Class A shares for the fiscal
year ended Sept. 30, 1995, restated to reflect current agreements
were 0.98% of its average daily net assets. For the fiscal period
beginning March 20, 1995 and ending Sept. 30, 1995, expenses for
Class B and Class Y were 1.77% and 0.80% respectively.

Total fees and expenses (excluding taxes and brokerage commissions)
cannot exceed the most restrictive applicable state expense
limitation.

About American Express Financial Corporation

General information

The AEFC family of companies offers not only mutual funds but also
insurance, annuities, investment certificates and a broad range of
financial management services.<PAGE>
PAGE 66

American Express Financial Advisors serves individuals and
businesses through its nationwide network of more than 175 offices
and more than 7,800 advisors.

Other AEFC subsidiaries provide investment management and related
services for pension, profit sharing, employee savings and
endowment funds of businesses and institutions.

AEFC is located at IDS Tower 10, Minneapolis, MN 55440-0010. It is
a wholly owned subsidiary of American Express Company, a financial
services company with headquarters at American Express Tower, World
Financial Center, New York, NY 10285. The Fund may pay brokerage
commissions to broker-dealer affiliates of American Express and
AEFC.

<PAGE>
PAGE 67
Appendix A

Description of corporate bond ratings

Bond ratings concern the quality of the issuing corporation. They
are not an opinion of the market value of the security. Such
ratings are opinions on whether the principal and interest will be
repaid when due. A security's rating may change which could affect
its price. Ratings by Moody's Investors Service, Inc. are Aaa, Aa,
A, Baa, Ba, B, Caa, Ca and C. Ratings by Standard & Poor's
Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.

Aaa/AAA - Judged to be of the best quality and carry the smallest
degree of investment risk. Interest and principal are secure.

Aa/AA - Judged to be high-grade although margins of protection for
interest and principal may not be quite as good as Aaa or AAA rated
securities.

A - Considered upper-medium grade. Protection for interest and
principal is deemed adequate but may be susceptible to future
impairment.

Baa/BBB - Considered medium-grade obligations. Protection for
interest and principal is adequate over the short-term; however,
these obligations may have certain speculative characteristics.

Ba/BB - Considered to have speculative elements. The protection of
interest and principal payments may be very moderate.

B - Lack characteristics of more desirable investments. There may
be small assurance over any long period of time of the payment of
interest and principal.

Caa/CCC - Are of poor standing. Such issues may be in default or
there may be risk with respect to principal or interest.

Ca/CC - Represent obligations that are highly speculative. Such
issues are often in default or have other marked shortcomings.

C - Are obligations with a higher degree of speculation. These
securities have major risk exposures to default.

D - Are in payment default. The D rating is used when interest
payments or principal payments are not made on the due date.

Non-rated securities will be considered for investment when they
possess a risk comparable to that of rated securities consistent
with the Fund's objectives and policies. When assessing the risk
involved in each non-rated security, the Fund will consider the
financial condition of the issuer or the protection afforded by the
terms of the security.
<PAGE>
PAGE 68
Definitions of zero-coupon and pay-in-kind securities

A zero-coupon security is a security that is sold at a deep
discount from its face value and makes no periodic interest
payments. The buyer of such a security receives a rate of return
by gradual appreciation of the security, which is redeemed at face
value on the maturity date.

A pay-in-kind security is a security in which the issuer has the
option to make interest payments in cash or in additional
securities. The securities issued as interest usually have the
same terms, including maturity date, as the pay-in-kind securities.

<PAGE>
PAGE 69
Appendix B

Descriptions of derivative instruments

Asset-backed and mortgage-backed securities. Asset-backed
securities include interests in pools of assets such as motor
vehicle installment sale contracts, installment loan contracts,
leases on various types of real and personal property, receivables
from revolving credit (credit card) agreements or other categories
of receivables. Mortgage-backed securities include collateralized
mortgage obligations and stripped mortgage-backed securities.
Interest and principal payments depend on payment of the underlying
loans or mortgages. The value of these securities may also be
affected by changes in interest rates, the market's perception of
the issuers and the creditworthiness of the parties involved. The
non-mortgage related asset-backed securities do not have the
benefit of a security interest in the related collateral. Stripped
mortgage-backed securities include interest only (IO) and principal
only (PO) securities. Cash flows and yields on IOs and POs are
extremely sensitive to the rate of principal payments on the
underlying mortgage loans or mortgage-backed securities.

Structured products. Structured products are over-the-counter
financial instruments created specifically to meet the needs of one
or a small number of investors. The instrument may consist of a
warrant, an option or a forward contract embedded in a note or any
of a wide variety of debt, equity and/or currency combinations.
Risks of structured products include the inability to close such
instruments, rapid changes in the market and defaults by other
parties.
<PAGE>
PAGE 70

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS INVESTMENT SERIES, INC.
IDS MUTUAL

Nov. 29, 1995

This Statement of Additional Information (SAI) is not a prospectus.
It should be read together with the prospectus and the financial
statements contained in the Annual Report which may be obtained
from your American Express financial advisor or by writing to
American Express Shareholder Service, P.O. Box 534, Minneapolis, MN
55440-0534.

This SAI is dated Nov. 29, 1995, and it is to be used with the
prospectus dated Nov. 29, 1995, and the Annual Report for the
fiscal year ended Sept. 30, 1995.
<PAGE>
PAGE 71
TABLE OF CONTENTS

Goal and Investment Policies.........................See Prospectus

Additional Investment Policies................................p. 3

Portfolio Transactions........................................p. 6

Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation........................p. 8

Performance Information.......................................p. 10

Valuing Fund Shares...........................................p. 11

Investing in the Fund.........................................p. 12

Redeeming Shares..............................................p. 16

Pay-out Plans.................................................p. 17

Exchanges.....................................................p. 18

Taxes.........................................................p. 19

Agreements....................................................p. 19

Directors and Officers........................................p. 23

Custodian.....................................................p. 27

Independent Auditors..........................................p. 28

Financial Statements..............................See Annual Report

Prospectus....................................................p. 28

Appendix A: Description of Bond Ratings and Additional
Information on Investment Policies...............p. 29

Appendix B: Foreign Currency Transactions....................p. 31

Appendix C: Options and Futures Contracts....................p. 36

Appendix D: Mortgage-Backed Securities.......................p. 43

Appendix E: Dollar-Cost Averaging............................p. 44
<PAGE>
PAGE 72
ADDITIONAL INVESTMENT POLICIES

Subject to certain contingencies, the Fund intends in late 1995 or
early 1996 to achieve its goals by investing all of its assets in
Balanced Portfolio (the "Portfolio") of the Growth and Income Trust
(the "Trust"), a separate investment company, rather than by
directly investing in and managing its own portfolio of securities.
The Portfolio has the same investment objectives, policies and
restrictions as the Fund.

Fundamental investment restrictions adopted by a Fund or Portfolio
cannot be changed without the approval of a majority of the
outstanding voting securities of the Fund or Portfolio, as defined
in the Investment Company Act of 1940. Whenever a Fund is
requested to vote on a change in the investment restrictions of the
corresponding Portfolio, the Fund will hold a meeting of Fund
shareholders and will cast the Fund's vote as instructed by the
shareholders.

These are investment policies in addition to those presented in the
prospectus. The policies below are fundamental policies of the
Fund and the Portfolio and may be changed only with shareholder
approval. Unless holders of a majority of the outstanding voting
securities agree to make the change, the Fund will not:

'Act as an underwriter (sell securities for others). However,
under the securities laws, the Fund may be deemed to be an
underwriter when it purchases securities directly from the issuer
and later resells them.

'Borrow money or property, except as a temporary measure for
extraordinary or emergency purposes, in an amount not exceeding
one-third of the market value of its total assets (including
borrowings) less liabilities (other than borrowings) immediately
after the borrowing. The Fund has not borrowed in the past and has
no present intention to borrow.

'Make cash loans if the total commitment amount exceeds 5% of the
Fund's total assets.

'Concentrate in any one industry. According to the present
interpretation by the Securities and Exchange Commission (SEC),
this means no more than 25% of the Fund's total assets, based on
current market value at time of purchase, can be invested in any
one industry.

'Purchase more than 10% of the outstanding voting securities of an
issuer.

'Invest more than 5% of its total assets in securities of any one
company, government or political subdivision thereof, except the
limitation will not apply to investments in securities issued by
the U.S. government, its agencies or instrumentalities, and except
that up to 25% of the Fund's total assets may be invested without
regard to this 5% limitation.
<PAGE>
PAGE 73

'Buy or sell real estate, unless acquired as a result of ownership
of securities or other instruments, except this shall not prevent
the Fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real
estate business or real estate investment trusts. For purposes of
this policy, real estate includes real estate limited partnerships.

'Buy or sell physical commodities unless acquired as a result of
ownership of securities or other instruments, except this shall not
prevent the Fund from buying or selling options and futures
contracts or from investing in securities or other instruments
backed by, or whose value is derived from, physical commodities.

'Make a loan of any part of its assets to American Express
Financial Corporation (AEFC), to the directors and officers of AEFC
or to its own directors and officers.

'Purchase securities of an issuer if the directors and officers of
the Fund and of American Express Financial Corporation (AEFC) hold
more than a certain percentage of the issuer's outstanding
securities. If the holdings of all directors and officers of the
Fund and of AEFC who own more than 0.5% of an issuer's securities
are added together, and if in total they own more than 5%, the Fund
will not purchase securities of that issuer.

'Lend Fund securities in excess of 30% of its net assets. The
current policy of the Fund's board is to make these loans, either
long- or short-term, to broker-dealers. In making such loans the
Fund gets the market price in cash, U.S. government securities,
letters of credit or such other collateral as may be permitted by
regulatory agencies and approved by the board. If the market price
of the loaned securities goes up, the Fund will get additional
collateral on a daily basis. The risks are that the borrower may
not provide additional collateral when required or return the
securities when due. During the existence of the loan, the Fund
receives cash payments equivalent to all interest or other
distributions paid on the loaned securities. A loan will not be
made unless the investment manager believes the opportunity for
additional income outweighs the risks.

Unless changed by the board, the Fund will not:

'Buy on margin or sell short, but it may make margin payments in
connection with transactions in futures contracts.

'Invest in a company to control or manage it.

'Pledge or mortgage its assets beyond 15% of total assets. If the
Fund were ever to do so, valuation of the pledged or mortgaged
assets would be based on market values. For purposes of this
restriction, collateral arrangements for margin deposits on futures
contracts are not deemed to be a pledge of assets.

<PAGE>
PAGE 74

'Invest more than 5% of its total assets in securities of
companies, including any predecessors, that have a record of less
than three years continuous operations.

'Invest more than 10% of its total assets in securities of
investment companies.

'Invest more than 5% of its net assets in warrants. Under one
state's law no more than 2% of the Fund's net assets may be
invested in warrants not listed on the New York or American Stock
Exchange.

'Invest in exploration or development programs, such as oil, gas or
mineral leases.

'Invest more than 10% of its assets in securities and derivative
instruments that are illiquid. For purposes of this policy
illiquid securities include some privately placed securities,
public securities and Rule 144A securities that for one reason or
another may no longer have a readily available market, repurchase
agreements with maturities greater than seven days, non-negotiable
fixed-time deposits and over-the-counter options. For purposes of
complying with Ohio law, the Portfolio will not invest more than
15% of its total assets in a combination of illiquid securities,
144A securities and securities of companies, including any
predecessor, that has a record of less than three years continuous
operations.

In determining the liquidity of Rule 144A securities, which are
unregistered securities offered to qualified institutional buyers,
and interest-only and principal-only fixed mortgage-backed
securities (IOs and POs) issued by the U.S. government or its
agencies and instrumentalities, the investment manager, under
guidelines established by the board, will consider any relevant
factors including the frequency of trades, the number of dealers
willing to purchase or sell the security and the nature of
marketplace trades.

In determining the liquidity of commercial paper issued in
transactions not involving a public offering under Section 4(2) of
the Securities Act of 1933, the investment manager, under
guidelines established by the board, will evaluate relevant factors
such as the issuer and the size and nature of its commercial paper
programs, the willingness and ability of the issuer or dealer to
repurchase the paper, and the nature of the clearance and
settlement procedures for the paper.

The Fund may make contracts to purchase securities for a fixed
price at a future date beyond normal settlement time (when-issued
securities or forward commitments). Under normal market
conditions, the Fund does not intend to commit more than 5% of its
total assets to these practices. The Fund does not pay for the
securities or receive dividends or interest on them until the
contractual settlement date. The Fund will designate cash or <PAGE>
PAGE 75
liquid high-grade debt securities at least equal in value to its
commitments to purchase the securities. When-issued securities or
forward commitments are subject to market fluctuations and they may
affect the Fund's total assets the same as owned securities.

The Fund may maintain a portion of its assets in cash and cash-
equivalent investments. The cash-equivalent investments the fund
may use are short-term U.S. and Canadian government securities and
negotiable certificates of deposit, non-negotiable fixed-time
deposits, bankers' acceptances and letters of credit of banks or
savings and loan associations having capital, surplus and undivided
profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent
in the instance of a foreign branch of a U.S. bank) at the date of
investment. Any cash-equivalent investments in foreign securities
will be subject to the limitations on foreign investments described
in the prospectus. The Fund also may purchase short-term corporate
notes and obligations rated in the top two classifications by
Moody's Investors Service, Inc. (Moody's) or Standard & Poor's
Corporation (S&P) or the equivalent and may use repurchase
agreements with broker-dealers registered under the Securities
Exchange Act of 1934 and with commercial banks. A risk of a
repurchase agreement is that if the seller seeks the protection of
the bankruptcy laws, the Fund's ability to liquidate the security
involved could be impaired.

Notwithstanding any of the Fund's other investment policies, the
Fund may invest its assets in an open-end management investment
company having substantially the same investment objectives,
policies and restrictions as the Fund for the purpose of having
those assets managed as part of a combined pool.

For a description of bond ratings and additional information on
investment policies, see Appendix A. For a discussion about
foreign currency transactions, see Appendix B. For a discussion on
options and futures contracts, see Appendix C. For a discussion on
mortgage-backed securities, see Appendix D.

PORTFOLIO TRANSACTIONS

Subject to policies set by the board, AEFC is authorized to
determine, consistent with the Fund's investment goal and policies,
which securities will be purchased, held or sold. In determining
where the buy and sell orders are to be placed, AEFC has been
directed to use its best efforts to obtain the best available price
and the most favorable execution except where otherwise authorized
by the board. In selecting broker-dealers to execute transactions,
AEFC may consider the price of the security, including commission
or mark-up, the size and difficulty of the order, the reliability,
integrity, financial soundness and general operation and execution
capabilities of the broker, the broker's expertise in particular
markets, and research services provided by the broker.

<PAGE>
PAGE 76

AEFC has a strict Code of Ethics that prohibits its affiliated
personnel from engaging in personal investment activities that
compete with or attempt to take advantage of planned portfolio
transactions for any fund in the IDS MUTUAL FUND GROUP. AEFC
carefully monitors compliance with its Code of Ethics.

On occasion, it may be desirable to compensate a broker for
research services or for brokerage services by paying a commission
that might not otherwise be charged or a commission in excess of
the amount another broker might charge. The board has adopted a
policy authorizing AEFC to do so to the extent authorized by law,
if AEFC determines, in good faith, that such commission is
reasonable in relation to the value of the brokerage or research
services provided by a broker or dealer, viewed either in the light
of that transaction or AEFC's overall responsibilities to the funds
in the IDS MUTUAL FUND GROUP and other funds for which it acts as
investment advisor.

Research provided by brokers supplements AEFC's own research
activities. Such services include economic data on, and analysis
of, U.S. and foreign economies; information on specific industries;
information about specific companies, including earnings estimates;
purchase recommendations for stocks and bonds; portfolio strategy
services; political, economic, business and industry trend
assessments; historical statistical information; market data
services providing information on specific issues and prices; and
technical analysis of various aspects of the securities markets,
including technical charts. Research services may take the form of
written reports, computer software or personal contact by telephone
or at seminars or other meetings. AEFC has obtained, and in the
future may obtain, computer hardware from brokers, including but
not limited to personal computers that will be used exclusively for
investment decision-making purposes, which include the research,
portfolio management and trading functions and other services to
the extent permitted under an interpretation by the SEC.

When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge,
AEFC must follow procedures authorized by the board. To date,
three procedures have been authorized. One procedure permits AEFC
to direct an order to buy or sell a security traded on a national
securities exchange to a specific broker for research services it
has provided. The second procedure permits AEFC, in order to
obtain research, to direct an order on an agency basis to buy or
sell a security traded in the over-the-counter market to a firm
that does not make a market in that security. The commission paid
generally includes compensation for research services. The third
procedure permits AEFC, in order to obtain research and brokerage
services, to cause the Fund to pay a commission in excess of the
amount another broker might have charged. AEFC has advised the
Fund it is necessary to do business with a number of brokerage
firms on a continuing basis to obtain such services as the handling
of large orders, the willingness of a broker to risk its own money <PAGE>
PAGE 77
by taking a position in a security, and the specialized handling of
a particular group of securities that only certain brokers may be
able to offer. As a result of this arrangement, some portfolio
transactions may not be effected at the lowest commission, but AEFC
believes it may obtain better overall execution. AEFC has assured
the Fund that under all three procedures the amount of commission
paid will be reasonable and competitive in relation to the value of
the brokerage services performed or research provided.

All other transactions shall be placed on the basis of obtaining
the best available price and the most favorable execution. In so
doing, if in the professional opinion of the person responsible for
selecting the broker or dealer, several firms can execute the
transaction on the same basis, consideration will be given by such
person to those firms offering research services. Such services
may be used by AEFC in providing advice to all the funds in the IDS
MUTUAL FUND GROUP even though it is not possible to relate the
benefits to any particular fund or account.

Each investment decision made for the Fund is made independently
from any decision made for another fund in the IDS MUTUAL FUND
GROUP or other account advised by AEFC or any AEFC subsidiary.
When the Fund buys or sells the same security as another fund or
account, AEFC carries out the purchase or sale in a way the Fund
agrees in advance is fair. Although sharing in large transactions
may adversely affect the price or volume purchased or sold by the
Fund, the Fund hopes to gain an overall advantage in execution.
AEFC has assured the Fund it will continue to seek ways to reduce
brokerage costs.

On a periodic basis, AEFC makes a comprehensive review of the
broker-dealers and the overall reasonableness of their commissions.
The review evaluates execution, operational efficiency and research
services.

The Fund paid total brokerage commissions of $2,934,605 for the
fiscal year ended Sept. 30, 1995, $5,041,263 for fiscal year 1994,
and $3,735,894 for fiscal year 1993. Substantially all firms
through whom transactions were executed provide research services.
In fiscal year 1995, transactions amounting to $98,549,000, on
which $213,906 in commissions were imputed or paid, were
specifically directed to firms in exchange for research services.

As of the fiscal year ended Sept. 30, 1995, the Fund held
securities of its regular brokers or dealers or of the parent of
those brokers or dealers that derived more than 15% of gross
revenue from securities-related activities as presented below:

Value of Securities
Owned at End of
Name of Issuer Fiscal Year
Bank America $23,950,000
Nations Bank 33,625,000
Salomon Brothers 6,397,930
Merrill Lynch 4,187,299
<PAGE>
PAGE 78

The portfolio turnover rate was 38% in the fiscal year ended Sept.
30, 1995, and 69% in fiscal year 1994.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AMERICAN
EXPRESS FINANCIAL CORPORATION

Affiliates of American Express Company (American Express) (of which
AEFC is a wholly owned subsidiary) may engage in brokerage and
other securities transactions on behalf of the Fund according to
procedures adopted by the Fund's board and to the extent consistent
with applicable provisions of the federal securities laws. AEFC
will use an American Express affiliate only if (i) AEFC determines
that the Fund will receive prices and executions at least as
favorable as those offered by qualified independent brokers
performing similar brokerage and other services for the Fund and
(ii) the affiliate charges the Fund commission rates consistent
with those the affiliate charges comparable unaffiliated customers
in similar transactions and if such use is consistent with terms of
the Investment Management Services Agreement.

AEFC may direct brokerage to compensate an affiliate. AEFC will
receive research on South Africa from New Africa Advisors, a
wholly-owned subsidiary of Sloan Financial Group. AEFC owns 100%
of IDS Capital Holdings Inc. which in turn owns 40% of Sloan
Financial Group. New Africa Advisors will send research to AEFC
and in turn AEFC will direct trades to a particular broker. The
broker will have an agreement to pay New Africa Advisors. All
transactions will be on a best execution basis. Compensation
received will be reasonable for the services rendered.

Information about brokerage commissions paid by the Fund for the
last three fiscal years to brokers affiliated with AEFC is
contained in the following table:
<TABLE><CAPTION>
For the Fiscal Year Ended Sept. 30,

1995 1994 1993
Aggregate Percent of Aggregate Aggregate
Dollar Aggregate Dollar Dollar Dollar
Amount of Percent of Amount of Amount of Amount of
Nature Commissions Aggregate Transactions Commissions Commissions
of Paid to Brokerage Involving Payment Paid to Paid to
Broker Affiliation Broker Commissions of Commissions Broker Broker
<S> <C> <C> <C> <C> <C> <C>
Lehman
Brothers, Inc. (1) None None None $110,985 $137,793

American
Enterprise
Investment
Services, Inc. (2) $71,051 2.42% 3.84% 503,949 305,550

The Robinson-
Humphrey
Company, Inc. (1) None None None 19,472 14,000
</TABLE>
(1) Under common control with AEFC as a subsidiary of American
Express until May 31, 1994.
(2) Wholly owned subsidiary of AEFC.
(3) Under common control with AEFC as an indirect subsidiary of
American Express until July 30, 1993.
<PAGE>
PAGE 79
PERFORMANCE INFORMATION

The Fund may quote various performance figures to illustrate past
performance. An explanation of these and any other methods used by
the Fund to compute performance follows below.

Average annual total return

The Fund may calculate average annual total return for a class for
certain periods by finding the average annual compounded rates of
return over the period that would equate the initial amount
invested to the ending redeemable value, according to the following
formula:

P(1+T)n = ERV

where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)

Aggregate total return

The Fund may calculate aggregate total return for a class for
certain periods representing the cumulative change in the value of
an investment in the Fund over a specified period of time according
to the following formula:
ERV - P
P

where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the
end of the period (or fractional portion thereof)

In its sales material and other communications, the Fund may quote,
compare or refer to rankings, yields or returns as published by
independent statistical services or publishers and publications
such as The Bank Rate Monitor National Index, Barron's, Business
Week, Donoghue's Money Market Fund Report, Financial Services Week,
Financial Times, Financial World, Forbes, Fortune, Global Investor,
Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report,
Sylvia Porter's Personal Finance, USA Today, U.S. News and World
Report, The Wall Street Journal and Wiesenberger Investment
Companies Service.

<PAGE>
PAGE 80
VALUING FUND SHARES

The value of an individual share for each class is determined by
using the net asset value before shareholder transactions for the
day. On Oct. 2, 1995, the first business day following the end of
the fiscal year, the computation looked like this:

<TABLE><CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
<S> <C> <C> <C>
Class A $2,598,373,340 divided by 204,596,326 equals $12.70
Class B 33,086,501 2,611,405 12.67
Class Y 876,899,072 69,047,171 12.70
</TABLE>
In determining net assets before shareholder transactions, the
Fund's securities are valued as follows as of the close of business
of the New York Stock Exchange:

'Securities, except bonds other than convertibles, traded on a
securities exchange for which a last-quoted sales price is readily
available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.

'Securities traded on a securities exchange for which a last-quoted
sales price is not readily available are valued at the mean of the
closing bid and asked prices, looking first to the bid and asked
prices on the exchange where the security is primarily traded and,
if none exist, to the over-the-counter market.

'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.

'Securities included in the NASDAQ National Market System for which
a last-quoted sales price is not readily available, and other
securities traded over-the-counter but not included in the NASDAQ
National Market System are valued at the mean of the closing bid
and asked prices.

'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.

'Foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually
different from the close of the New York Stock Exchange (the
"Exchange"). Foreign securities quoted in foreign currencies are
translated into U.S. dollars at the current rate of exchange.
Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange that will
not be reflected in the computation of the Fund's net asset value.
If events materially affecting the value of such securities occur
during such period, these securities will be valued at their fair
value according to procedures decided upon in good faith by the
fund's board.

<PAGE>
PAGE 81
'Short-term securities maturing more than 60 days from the
valuation date are valued at the readily available market price or
approximate market value based on current interest rates. Short-
term securities maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at
amortized cost using the market value on the 61st day before
maturity. Short-term securities maturing in 60 days or less at
acquisition date are valued at amortized cost. Amortized cost is
an approximation of market value determined by systematically
increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium,
so that the carrying value is equal to maturity value on the
maturity date.

'Securities without a readily available market price, bonds other
than convertibles and other assets are valued at fair value as
determined in good faith by the board. The board is responsible
for selecting methods it believes provide fair value. When
possible, bonds are valued by a pricing service independent from
the Fund. If a valuation of a bond is not available from a pricing
service, the bond will be valued by a dealer knowledgeable about
the bond if such a dealer is available.

The New York Stock Exchange, AEFC and the Fund will be closed on
the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

INVESTING IN THE FUND

Sales Charge

Shares of the Fund are sold at the public offering price determined
at the close of business on the day an application is accepted.
The public offering price is the net asset value of one share plus
a sales charge, if applicable. For Class B and Class Y, there is
no initial sales charge so the public offering price is the same as
the net asset value. For Class A, the public offering price for an
investment of less than $50,000, made Oct. 2, 1995, was determined
by dividing the net asset value of one share, $12.70 by 0.95 (1.00-
0.05 for a maximum 5% sales charge) for a public offering price of
$13.37 The sales charge is paid to American Express Financial
Advisors by the person buying the shares.

<PAGE>
PAGE 82
Class A - Calculation of the Sales Charge

Sales charges are determined as follows:

Within each increment,
sales charge as a
percentage of:
Public Net
Amount of Investment Offering Price Amount Invested

First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 400,000 3.8 3.95
Next 500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

Sales charges on an investment greater than $50,000 and less than
$1,000,000 are calculated for each increment separately and then
totaled. The resulting total sales charge, expressed as a
percentage of the public offering price and of the net amount
invested, will vary depending on the proportion of the investment
at different sales charge levels.

For example, compare an investment of $60,000 with an investment of
$85,000. The $60,000 investment is composed of $50,000 that incurs
a sales charge of $2,500 (5.0% x $50,000) and $10,000 that incurs a
sales charge of $450 (4.5% x $10,000). The total sales charge of
$2,950 is 4.92% of the public offering price and 5.17% of the net
amount invested.

In the case of the $85,000 investment, the first $50,000 also
incurs a sales charge of $2,500 (5.0% x $50,000) and $35,000 incurs
a sales charge of $1,575 (4.5% x $35,000). The total sales charge
of $4,075 is 4.79% of the public offering price and 5.04% of the
net amount invested.

The following table shows the range of sales charges as a
percentage of the public offering price and of the net amount
invested on total investments at each applicable level.
<TABLE><CAPTION>
On total investment, sales
charge as a percentage of
Public Net
Offering Price Amount Invested
Amount of Investment ranges from:
<S> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 999,999 3.80-2.00 3.95-2.04
$1,000,000 or more 0.00 0.00
</TABLE>
<PAGE>
PAGE 83
The initial sales charge is waived for certain qualified plans that
meet the requirements described in the prospectus. Participants in
these qualified plans may be subject to a deferred sales charge on
certain redemptions. The deferred sales charge on certain
redemptions will be waived if the redemption is a result of a
participant's death, disability, retirement, attaining age 59 1/2,
loans or hardship withdrawals. The deferred sales charge varies
depending on the number of participants in the qualified plan and
total plan assets as follows:

Deferred Sales Charge

Number of Participants

Total Plan Assets 1-99 100 or more

Less than $1 million 4% 0%

$1 million or more 0% 0%
_________________________________________________________

Class A - Reducing the Sales Charge

Sales charges are based on the total amount of your investments in
the Fund. The amount of all prior investments plus any new
purchase is referred to as your "total amount invested." For
example, suppose you have made an investment of $20,000 and later
decide to invest $40,000 more. Your total amount invested would be
$60,000. As a result, $10,000 of your $40,000 investment qualifies
for the lower 4.5% sales charge that applies to investments of more
than $50,000 to $100,000.

The total amount invested includes any shares held in the Fund in
the name of a member of your immediate family (spouse and unmarried
children under 21). For instance, if your spouse already has
invested $20,000 and you want to invest $40,000, your total amount
invested will be $60,000 and therefore you will pay the lower
charge of 4.5% on $10,000 of the $40,000.

Until a spouse remarries, the sales charge is waived for spouses
and unmarried children under 21 of deceased trustees, directors,
officers or employees of the Fund or AEFC or its subsidiaries and
deceased advisors.

The total amount invested also includes any investment you or your
immediate family already have in the other publicly offered funds
in the IDS MUTUAL FUND GROUP where the investment is subject to a
sales charge. For example, suppose you already have an investment
of $25,000 in IDS Growth Fund and $5,000 in this Fund. If you
invest $40,000 more in this Fund, your total amount invested in the
funds will be $70,000 and therefore $20,000 of your $40,000
investment will incur a 4.5% sales charge.

<PAGE>
PAGE 84
Finally, Individual Retirement Account (IRA) purchases, or other
employee benefit plan purchases made through a payroll deduction
plan or through a plan sponsored by an employer, association of
employers, employee organization or other similar entity, may be
added together to reduce sales charges for shares purchased through
that plan.

Class A - Letter of Intent (LOI)

If you intend to invest $1 million over a period of 13 months, you
can reduce the sales charges in Class A by filing a LOI. The
agreement can start at any time and will remain in effect for 13
months. Your investment will be charged normal sales charges until
you have invested $1 million. At that time, your account will be
credited with the sales charges previously paid. If you do not
invest $1 million by the end of 13 months, there is no penalty,
you'll just miss out on the sales charge adjustment. A LOI is not
an option (absolute right) to buy shares.

Here's an example. You file a LOI to invest $1 million and make an
investment of $100,000 at that time. You pay the normal 5% sales
charge on the first $50,000 and 4.5% sales charge on the next
$50,000 of this investment. Let's say you make a second investment
of $900,000 (bringing the total up to $1 million) one month before
the 13-month period is up. AEFC makes an adjustment at the point
that you reach $1 million. The adjustment is made by crediting
your account with sales charges previously paid.

Systematic Investment Programs

After you make your initial investment of $2,000 or more, you can
arrange to make additional payments of $100 or more on a regular
basis. These minimums do not apply to all systematic investment
programs. You decide how often to make payments - monthly,
quarterly, or semiannually. You are not obligated to make any
payments. You can omit payments or discontinue the investment
program altogether. The Fund also can change the program or end it
at any time. If there is no obligation, why do it? Putting money
aside is an important part of financial planning. With a
systematic investment program, you have a goal to work for.

How does this work? Your regular investment amount will purchase
more shares when the net asset value per share decreases, and fewer
shares when the net asset value per share increases. Each purchase
is a separate transaction. After each purchase your new shares
will be added to your account. Shares bought through these
programs are exactly the same as any other fund shares. They can
be bought and sold at any time. A systematic investment program is
not an option or an absolute right to buy shares.

The systematic investment program itself cannot ensure a profit,
nor can it protect against a loss in a declining market. If you
decide to discontinue the program and redeem your shares when their
net asset value is less than what you paid for them, you will incur
a loss.<PAGE>
PAGE 85
For a discussion on dollar-cost averaging, see Appendix E.

Automatic Directed Dividends

Dividends, including capital gain distributions, paid by another
fund in the IDS MUTUAL FUND GROUP subject to a sales charge, may be
used to automatically purchase shares in the same class of this
Fund without paying a sales charge. Dividends may be directed to
existing accounts only. Dividends declared by a fund are exchanged
to this Fund the following day. Dividends can be exchanged into
one fund but cannot be split to make purchases in two or more
funds. Automatic directed dividends are available between accounts
of any ownership except:

Between a non-custodial account and an IRA, or 401(k) plan account
or other qualified retirement account of which American Express
Trust Company acts as custodian;

Between two American Express Trust Company custodial accounts with
different owners (for example, you may not exchange dividends from
your IRA to the IRA of your spouse);

Dividends may be directed from accounts established under the
Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors
Act (UTMA) only into other UGMA or UTMA accounts with identical
ownership.

The Fund's investment goal is described in its prospectus along
with other information, including fees and expense ratios. Before
exchanging dividends into another fund, you should read its
prospectus. You will receive a confirmation that the automatic
directed dividend service has been set up for your account.

REDEEMING SHARES

You have a right to redeem your shares at any time. For an
explanation of redemption procedures, please see the prospectus.

During an emergency, the board can suspend the computation of net
asset value, stop accepting payments for purchase of shares or
suspend the duty of the Fund to redeem shares for more than seven
days. Such emergency situations would occur if:

'The New York Stock Exchange closes for reasons other than the
usual weekend and holiday closings or trading on the Exchange is
restricted, or

'Disposal of the Fund's securities is not reasonable practicable or
it is not reasonably practicable for the Fund to determine the fair
value of its net assets, or<PAGE>
PAGE 86
'The SEC, under the provisions of the Investment Company Act of
1940, as amended, declares a period of emergency to exist.

Should the Fund stop selling shares, the board may make a deduction
from the value of the assets held by the Fund to cover the cost of
future liquidations of the assets so as to distribute fairly these
costs among all shareholders.

PAY-OUT PLANS

You can use any of several pay-out plans to redeem your investment
in regular installments. If you redeem Class B shares you may be
subject to a contingent deferred sales charge as discussed in the
prospectus. While the plans differ on how the pay-out is figured,
they all are based on the redemption of the investment. Net
investment income dividends and any capital gain distributions will
automatically be reinvested, unless you elect to receive them in
cash. If you are redeeming a tax-qualified plan account for which
American Express Trust Company acts as custodian, you can elect to
receive your dividends and other distributions in cash when
permitted by law. If you redeem an IRA or a qualified retirement
account, certain restrictions, federal tax penalties and special
federal income tax reporting requirements may apply. You should
consult your tax advisor about this complex area of the tax law.

Applications for a systematic investment in a class of the Fund
subject to a sales charge normally will not be accepted while a
pay-out plan for any of those funds is in effect. Occasional
investments, however, may be accepted.

To start any of these plans, please write or call American Express
Shareholder Service, P.O. Box 534, Minneapolis, MN 55440-0534,
612-671-3733. Your authorization must be received in the
Minneapolis headquarters at least five days before the date you
want your payments to begin. The initial payment must be at least
$50. Payments will be made on a monthly, bimonthly, quarterly,
semiannual or annual basis. Your choice is effective until you
change or cancel it.

The following pay-out plans are designed to take care of the needs
of most shareholders in a way AEFC can handle efficiently and at a
reasonable cost. If you need a more irregular schedule of
payments, it may be necessary for you to make a series of
individual redemptions, in which case you'll have to send in a
separate redemption request for each pay-out. The Fund reserves
the right to change or stop any pay-out plan and to stop making
such plans available.

Plan #1: Pay-out for a fixed period of time

If you choose this plan, a varying number of shares will be
redeemed at regular intervals during the time period you choose.
This plan is designed to end in complete redemption of all shares
in your account by the end of the fixed period.<PAGE>
PAGE 87
Plan #2: Redemption of a fixed number of shares

If you choose this plan, a fixed number of shares will be redeemed
for each payment and that amount will be sent to you. The length
of time these payments continue is based on the number of shares in
your account.

Plan #3: Redemption of a fixed dollar amount

If you decide on a fixed dollar amount, whatever number of shares
is necessary to make the payment will be redeemed in regular
installments until the account is closed.

Plan #4: Redemption of a percentage of net asset value

Payments are made based on a fixed percentage of the net asset
value of the shares in the account computed on the day of each
payment. Percentages range from 0.25% to 0.75%. For example, if
you are on this plan and arrange to take 0.5% each month, you will
get $50 if the value of your account is $10,000 on the payment
date.

EXCHANGES

If you buy shares in the Fund and then exchange into another fund,
it is considered a sale and subsequent purchase of shares. Under
the tax laws, if this exchange is done within 91 days, any sales
charge waived on Class A shares on a subsequent purchase of shares
applies to the new shares acquired in the exchange. Therefore, you
cannot create a tax loss or reduce a tax gain attributable to the
sales charge when exchanging shares within 91 days.

Retirement Accounts

You may be able to defer taxes on current income from a fund by
investing through an IRA, 401(k) plan account or other qualified
retirement account. If you have a nonqualified investment in the
Fund and you wish to move part or all of those shares to an IRA or
qualified retirement account in the Fund, you can do so without
paying a sales charge. However, this type of exchange is
considered a sale of shares and may result in a gain or loss for
tax purposes. In addition, this type of exchange may result in an
excess contribution under IRA or qualified plan regulations if the
amount exchanged plus the amount of the initial sales charge
applied to the amount exchanged exceeds annual contribution
limitations. For example, if you were to exchange $2,000 in Class
A shares from a nonqualified account to an IRA without considering
the 5% ($100) initial sales charge applicable to that $2,000, you
may be deemed to have exceeded current IRA annual contribution
limitations. You should consult your tax advisor for further
details about this complex subject.

<PAGE>
PAGE 88
TAXES

Net investment income dividends received should be treated as
dividend income for federal income tax purposes. Corporate
shareholders are generally entitled to a deduction equal to 70% of
that portion of the Fund's dividend that is attributable to
dividends the Fund received from domestic (U.S.) securities. For
the fiscal year ended Sept. 30, 1995, 43.63% of the Fund's net
investment income dividends qualified for the corporate deduction.

Capital gain distributions received by individual and corporate
shareholders, if any, should be treated as long-term capital gains
regardless of how long they owned their shares. Short-term capital
gains earned by the Fund are paid to shareholders as part of their
ordinary income dividend and are taxable.

Under federal tax law, by the end of a calendar year the Fund must
declare and pay dividends representing 98% of ordinary income for
that calendar year and 98% of net capital gains (both long-term and
short-term) for the 12-month period ending Oct. 31 of that calendar
year. The Fund is subject to an excise tax equal to 4% of the
excess, if any, of the amount required to be distributed over the
amount actually distributed. The Fund intends to comply with
federal tax law and avoid any excise tax.

The Fund may be subject to U.S. taxes resulting from holdings in a
passive foreign investment company (PFIC). A foreign corporation
is a PFIC when 75% or more of its gross income for the taxable year
is passive income or if 50% or more of the average value of its
assets consists of assets that produce or could produce passive
income. The Fund has no current intention to invest in PFICs.

This is a brief summary that relates to federal income taxation
only. Shareholders should consult their tax advisor as to the
application of federal, state and local income tax laws to Fund
distributions.

AGREEMENTS

Investment Management Services Agreement

The Fund has an Investment Management Services Agreement with AEFC.
For its services, AEFC is paid a fee based on the following
schedule:

Assets Annual rate at
(billions) each asset level

First $1.0 0.530%
Next 1.0 0.505
Next 1.0 0.480
Next 3.0 0.455
Over 3.0 0.430

<PAGE>
PAGE 89

On Sept. 30, 1995, the daily rate applied to the Fund's net assets
was equal to 0.498% on an annual basis. The fee is calculated for
each calendar day on the basis of net assets as of the close of
business two business days prior to the day for which the
calculation is made.

Before the fee based on the asset charge is paid, it is adjusted
for investment performance. The adjustment, determined monthly,
will be calculated using the percentage point difference between
the change in the net asset value of one Class A share of the Fund
and the change in the Lipper Balanced Fund Index (Index). The
performance of one Class A share of the Fund is measured by
computing the percentage difference between the opening and closing
net asset value of one Class A share of the Fund, as of the last
business day of the period selected for comparison, adjusted for
dividend or capital gain distributions which are treated as
reinvested at the end of the month during which the distribution
was made. The performance of the Index for the same period is
established by measuring the percentage difference between the
beginning and ending Index for the comparison period. The
performance is adjusted for dividend or capital gain distributions
(on the securities which comprise the Index), which are treated as
reinvested at the end of the month during which the distribution
was made. One percentage point will be subtracted from the
calculation to help assure that incentive adjustments are
attributable to AEFC's management abilities rather than random
fluctuations and the result multiplied by 0.01%. That number will
be multiplied times the Fund's average net assets for the
comparison period and then divided by the number of months in the
comparison period to determine the monthly adjustment.

Where the Fund's Class A share performance exceeds that of the
Index, the base fee will be increased. Where the performance of
the Index exceeds the performance of Class A shares, the base fee
will be decreased. The maximum monthly increase or decrease will
be 0.08% of the Fund's average net assets on an annual basis.

The 12 month comparison period rolls over with each succeeding
month, so that it always equals 12 months, ending with the month
for which the performance adjustment is being computed. The
adjustment decreased the fee by $102,475 for the fiscal year ended
Sept. 30, 1995.

The management fee is paid monthly. Under the prior and current
agreements, the total amount paid was $16,124,106 for the fiscal
year ended Sept. 30, 1995, $15,892,139 for fiscal year 1994, and
$13,866,592 for fiscal year 1993.

Under the current Agreement, the Fund also pays taxes, brokerage
commissions and nonadvisory expenses, which include custodian fees;
audit and certain legal fees; fidelity bond premiums; registration
fees for shares; Fund office expenses; consultants' fees;
compensation of directors, officers and employees; corporate filing
<PAGE>
PAGE 90
fees; organizational expenses; expenses incurred in connection with
lending securities of the Fund; and expenses properly payable by
the Fund, approved by the board. Under the prior and current
agreements, the Fund paid nonadvisory expenses of $1,306,758 for
the fiscal year ended Sept. 30, 1995, $1,470,303 for fiscal year
1994, and $1,124,623 for fiscal year 1993.

Administrative Services Agreement

The Fund has an Administrative Services Agreement with AEFC. Under
this agreement, the Fund pays AEFC for providing administration and
accounting services. The fee is calculated as follows:

Assets Annual rate
(billions) each asset level

First $1.0 0.040%
Next 1.0 0.035
Next 1.0 0.030
Next 3.0 0.025
Over 6.0 0.020

On Sept. 30, 1995, the daily rate applied to the Fund's net assets
was equal to 0.034% on an annual basis. The fee is calculated for
each calendar day on the basis of net assets as of the close of
business two business days prior to the day for which the
calculation is made.

Transfer Agency Agreement

The Fund has a Transfer Agency Agreement with AEFC. This agreement
governs AEFC's responsibility for administering and/or performing
transfer agent functions, for acting as service agent in connection
with dividend and distribution functions and for performing
shareholder account administration agent functions in connection
with the issuance, exchange and redemption or repurchase of the
Fund's shares. Under the agreement, AEFC will earn a fee from the
Fund determined by multiplying the number of shareholder accounts
at the end of the day by a rate determined for each class per year
and dividing by the number of days in the year. The rate for Class
A and Class Y is $15 per year and for Class B is $16 per year. The
fees paid to AEFC may be changed from time to time upon agreement
of the parties without shareholder approval. The Fund paid fees of
$4,404,393 under the transfer agency agreement for the fiscal year
ended Sept. 30, 1995.

Distribution Agreement

Under a Distribution Agreement, sales charges deducted for
distributing Fund shares are paid to American Express Financial
Advisors daily. These charges amounted to $3,942,864 for the
fiscal year ended Sept. 30, 1995. After paying commissions to <PAGE>
PAGE 91
personal financial advisors, and other expenses, the amount
retained was $2,846,475. The amounts were $6,860,759 and
$2,497,534 for fiscal year 1994, and $8,228,920 and $3,014,712 for
fiscal year 1993.

Additional information about commissions and compensation for the
fiscal year ended Sept. 30, 1995, is contained in the following
table:

<TABLE><CAPTION>
(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation
<S> <C> <C> <C> <C>
AEFC None None $71,051* $867,655**

American
Express
Financial
Advisors $3,942,864 None None None
</TABLE>
*For further information see "Brokerage Commissions Paid to Brokers
Affiliated with AEFC."
**Distribution fees paid pursuant to the Plan and Agreement of
Distribution.

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.

Plan and Agreement of Distribution

For Class B shares, to help American Express Financial Advisors
defray the cost of distribution and servicing, not covered by the
sales charges received under the Distribution Agreement, the Fund
and American Express Financial Advisors entered into a Plan and
Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing the Fund's Class B shares except
compensation to the sales force. A substantial portion of the
costs are not specifically identified to the Class B shares of any
one fund in the IDS MUTUAL FUND GROUP. Under the Plan, American
Express Financial Advisors is paid a fee at an annual rate of 0.75%
of the Fund's average daily net assets attributable to Class B
shares.

The Plan must be approved annually by the board, including a
majority of the disinterested directors, if it is to continue for
more than a year. At least quarterly, the board must review
written reports concerning the amounts expended under the Plan and <PAGE>
PAGE 92
the purposes for which such expenditures were made. The Plan and
any agreement related to it may be terminated at any time by vote
of a majority of directors who are not interested persons of the
Fund and have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan, or
by vote of a majority of the outstanding voting securities of Class
B shares of the Fund or by American Express Financial Advisors.
The Plan (or any agreement related to it) will terminate in the
event of its assignment, as that term is defined in the Investment
Company Act of 1940, as amended. The Plan may not be amended to
increase the amount to be spent for distribution without
shareholder approval, and all material amendments to the Plan must
be approved by a majority of the directors, including a majority of
the directors who are not interested persons of the Fund and who do
not have a financial interest in the operation of the Plan or any
agreement related to it. The selection and nomination of
disinterested directors is the responsibility of the other
disinterested directors. No director who is not an interested
person has any direct or indirect financial interest in the
operation of the Plan or any related agreement. The Fund paid fees
under the Plan agreement of $55,191 for Class B shares for the
fiscal period ended Sept. 30, 1995.

Total fees and nonadvisory expenses cannot exceed the most
restrictive applicable state limitation. Currently, the most
restrictive applicable state expense limitation, subject to
exclusion of certain expenses, is 2.5% of the first $30 million of
the Fund's average daily net assets, 2% of the next $70 million and
1.5% of average daily net assets over $100 million, on an annual
basis. At the end of each month, if the fees and expenses of the
Fund exceed this limitation for the Fund's fiscal year in progress,
AEFC will assume all expenses in excess of the limitation. AEFC
then may bill the Fund for such expenses in subsequent months up to
the end of that fiscal year, but not after that date. No interest
charges are assessed by AEFC for expenses it assumes. The fund
paid total fees and nonadvisory expenses of $25,633,557 for the
fiscal year ended Sept. 30, 1995.

DIRECTORS AND OFFICERS

The following is a list of the Fund's directors who, except for Mr.
Dudley, also are directors of all other funds in the IDS MUTUAL
FUND GROUP. Mr. Dudley is a director of all publicly offered
funds. All shares have cumulative voting rights with respect to
the election of directors.

Lynne V. Cheney+'
Born in 1941.
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.

<PAGE>
PAGE 93
Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockheed-Martin, the Interpublic Group of Companies, Inc.
(advertising), and FPL Group, Inc. (holding company for Florida
Power and Light).

William H. Dudley+**
Born in 1932.
2900 IDS Tower
Minneapolis, MN

Executive vice president and director of AEFC.

Robert F. Froehlke+
Born in 1922.
1201 Yale Place
Minneapolis, MN

Former president of all funds in the IDS MUTUAL FUND GROUP.
Director, the ICI Mutual Insurance Co., Institute for Defense
Analyses, Marshall Erdman and Associates, Inc. (architectural
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.

David R. Hubers**
Born in 1943.
2900 IDS Tower
Minneapolis, MN

President, chief executive officer and director of AEFC.
Previously, senior vice president, finance and chief financial
officer of AEFC.

Heinz F. Hutter+
Born in 1929.
P.O. Box 5724
Minneapolis, MN

President and chief operating officer, Cargill, Incorporated
(commodity merchants and processors) from February 1991 to
September 1994. Executive vice president from 1981 to February
1991.

Anne P. Jones+
Born in 1935.
5716 Bent Branch Rd.
Bethesda, MD

Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.

<PAGE>
PAGE 94
Donald M. Kendall'
Born in 1921.
PepsiCo, Inc.
Purchase, NY

Former chairman and chief executive officer, PepsiCo, Inc.

Melvin R. Laird+
Born in 1922.
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.

Senior counsellor for national and international affairs, The
Reader's Digest Association, Inc. Chairman of the board, COMSAT
Corporation, former nine-term congressman, secretary of defense and
presidential counsellor. Director, Martin Marietta Corp.,
Metropolitan Life Insurance Co., The Reader's Digest Association,
Inc., Science Applications International Corp., Wallace Reader's
Digest Funds and Public Oversight Board (SEC Practice Section,
American Institute of Certified Public Accountants).

Lewis W. Lehr'
Born in 1921.
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN

Former chairman of the board and chief executive officer, Minnesota
Mining and Manufacturing Company (3M). Director, Jack Eckerd
Corporation (drugstores). Advisory Director, Peregrine Inc.
(microelectronics).

William R. Pearce+*
Born in 1927.
901 S. Marquette Ave.
Minneapolis, MN

President of all funds in the IDS MUTUAL FUND GROUP since June
1993. Former vice chairman of the board, Cargill, Incorporated
(commodity merchants and processors).

Edson W. Spencer
Born in 1926.
4900 IDS Center
80 S. 8th St.
Minneapolis, MN

President, Spencer Associates Inc. (consulting). Chairman of the
board, Mayo Foundation (healthcare). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise
Cascade Corporation (forest products) and CBS Inc. Member of
International Advisory Councils, Robert Bosch (Germany) and NEC
(Japan).
<PAGE>
PAGE 95
John R. Thomas**
Born in 1937.
2900 IDS Tower
Minneapolis, MN

Senior vice president and director of AEFC.

Wheelock Whitney+
Born in 1926.
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN

Chairman, Whitney Management Company (manages family assets).

C. Angus Wurtele
Born in 1934.
1101 S. 3rd St.
Minneapolis, MN

Chairman of the board and chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging),
Donaldson Company (air cleaners & mufflers) and General Mills, Inc.
(consumer foods).

The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.

Officers who are also officers and/or employees of AEFC.

Peter J. Anderson
Born in 1942.
IDS Tower 10
Minneapolis, MN

Vice president-investments of all funds in the IDS MUTUAL FUND
GROUP. Director and senior vice president-investments of AEFC.

Melinda S. Urion
Born in 1953.
IDS Tower 10
Minneapolis, MN

Treasurer of all funds in the IDS MUTUAL FUND GROUP. Vice
president and corporate controller of AEFC. Director and executive
vice president and controller of IDS Life Insurance Company.

<PAGE>
PAGE 96

Besides Mr. Pearce, who is president, the Fund's other officer is:

Leslie L. Ogg
Born in 1938.
901 S. Marquette Ave.
Minneapolis, MN

Vice president, general counsel and secretary of all funds in the
IDS MUTUAL FUND GROUP.

Members of the board who are not officers of the Fund or of AEFC
receive an annual fee of $4,000. They also receive attendance and
other fees, the cost of which the Fund shares with the other funds
in the IDS MUTUAL FUND GROUP. These fees include attendance of
meetings of the Contracts Committee, $750; meetings of the Audit,
Board, Executive or Investment Review Committees, $500; meetings of
the Personnel Committee, $300; out-of-state, $500; and Chair of the
Contracts Committee, $5,000. Expenses for attending those meetings
are also reimbursed. Upon retirement age, or earlier if for
approved reasons, the independent directors receive monthly
payments equal to 1/2 of the annual fee divided by 12 for as many
months as the director served on the board up to 120 months or
until the date of death. There are no death benefits and the plan
is not funded.

During the fiscal year ended Sept. 30, 1995, the members of the
board, for attending up to 27 meetings, received the following
compensation:

<TABLE><CAPTION>
Compensation Table

Pension or
Aggregate retirement Estimated Total cash
compensation benefits annual compensation
from the accrued as benefit upon from the IDS
Board member Fund Fund expenses retirement MUTUAL FUND GROUP
<S> <C> <C> <C> <C>
Lynne V. Cheney $4,225 $1,152 $2,000 $69,000
Robert F. Froehlke 4,269 4,554 2,000 70,700
Heinz F. Hutter 4,170 1,614 967 66,800
Anne P. Jones 4,251 1,149 2,000 70,000
Donald M. Kendall 4,151 9,135 2,000 66,000
Melvin R. Laird 4,243 4,192 2,000 69,700
Lewis W. Lehr 4,236 6,276 1,950 69,400
Edson W. Spencer 4,323 3,020 1,067 73,000
Wheelock Whitney 4,244 2,300 2,000 69,700
C. Angus Wurtele 4,164 1,575 1,983 66,500
</TABLE>
On Sept. 30, 1995, the Fund's directors and officers as a group
owned less than 1% of the outstanding shares. During the fiscal
year ended Sept. 30, 1995, no director or officer earned more than
$60,000 from this Fund. All directors and officers as a group
earned $94,419, including $34,967 of retirement plan benefits, from
this Fund.

CUSTODIAN

The Fund's securities and cash are held by American Express Trust
Company, 1200 Northstar Center West, 625 Marquette Ave.,
Minneapolis, MN 55402-2307, through a custodian agreement. The <PAGE>
PAGE 97
custodian is permitted to deposit some or all of its securities in
central depository systems as allowed by federal law.

The custodian has entered into a sub-custodian arrangement with the
Morgan Stanley Trust Company (Morgan Stanley), One Pierrepont
Plaza, Eighth Floor, Brooklyn, NY 11201-2775. As part of this
arrangement, securities purchased outside the United States are
maintained in the custody of various foreign branches of Morgan
Stanley or in such other financial institutions as may be permitted
by law and by the Fund's sub-custodian agreement.

INDEPENDENT AUDITORS

The financial statements contained in the Annual Report to
shareholders for the fiscal year ended Sept. 30, 1995, were audited
by independent auditors, KPMG Peat Marwick LLP, 4200 Norwest
Center, 90 S. Seventh St., Minneapolis, MN 55402-3900. The
independent auditors also provide other accounting and tax-related
services as requested by the Fund.

FINANCIAL STATEMENTS

The Independent Auditors' Report and the Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1995 Annual Report to
shareholders, pursuant to Section 30(d) of the Investment Company
Act of 1940, as amended, are hereby incorporated in this SAI by
reference. No other portion of the Annual Report, however, is
incorporated by reference.

PROSPECTUS

The prospectus for IDS Mutual dated Nov. 29, 1995, is hereby
incorporated in this SAI by reference.

<PAGE>
PAGE 98
APPENDIX A

DESCRIPTION OF BOND RATINGS AND ADDITIONAL INFORMATION ON
INVESTMENT POLICIES

BOND RATINGS

The ratings concern the quality of the issuing corporation. They
are not an opinion of the market value of the security. Such
ratings are opinions on whether the principal and interest will be
repaid when due. A security's rating may change which could affect
its price.

Ratings by Moody's Investors Service, Inc. are Aaa, Aa, A, Baa, Ba,
B, Caa, Ca, and C.

Aaa are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally
strong position of such issues.

Aaa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risk
appear somewhat larger than the Aaa securities.

A possess many favorable investment attributes and are to be
considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to
impairment some time in the future.

Baa are considered as medium-grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.

Ba are judged to have speculative elements; their future cannot be
considered as well-assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

<PAGE>
PAGE 99
B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be
small.

Caa are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal or
interest.

Ca represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.

C are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any
real investment standing.

Ratings by Standard & Poor's Corporation are AAA, AA, A, BBB, BB,
B, CCC, CC, C and D.

AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA has a very strong capacity to pay interest and repay principal
and differs from the highest rated issues only in small degree.

A has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in
higher-rated categories.

BBB is regarded as having adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher-rated
categories.

BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties
or exposure to adverse business, financial, or economic conditions
which could lead to inadequate capacity to meet timely interest and
principal payments. The BB rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied
BBB- rating.

B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely
impair capacity or willingness to pay interest and repay principal.
The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.

<PAGE>
PAGE 100
CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of
principal. In the event of adverse business, financial, or
economic conditions, it is not likely to have the capacity to pay
interest and repay principal. The CCC rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.

CC typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.

C typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC- rating. The C rating may be
used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.

D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the due
date, even if the applicable grace period has not expired, unless
S&P believes that such payments will be made during such grace
period. The D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.

Definitions of Zero-Coupon and Pay-In-Kind Securities

FOREIGN CURRENCY TRANSACTIONS

Since investments in foreign countries usually involve currencies
of foreign countries, and since the Fund may hold cash and cash-
equivalent investments in foreign currencies, the value of the
Fund's assets as measured in U.S. dollars may be affected favorably
or unfavorably by changes in currency exchange rates and exchange
control regulations. Also, the Fund may incur costs in connection
with conversions between various currencies.

Spot Rates and Forward Contracts. The Fund conducts its foreign
currency exchange transactions either at the spot (cash) rate
prevailing in the foreign currency exchange market or by entering
into forward currency exchange contracts (forward contracts) as a
hedge against fluctuations in future foreign exchange rates. A
forward contract involves an obligation to buy or sell a specific
currency at a future date, which may be any fixed number of days
from the contract date, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks)
and their customers. A forward contract generally has no deposit
requirements. No commissions are charged at any stage for trades.

The Fund may enter into forward contracts to settle a security
transaction or handle dividend and interest collection. When the
Fund enters into a contract for the purchase or sale of a security
denominated in a foreign currency or has been notified of a
dividend or interest payment, it may desire to lock in the price of
the security or the amount of the payment in dollars. By entering
into a forward contract, the Fund will be able to protect itself
against a possible loss resulting from an adverse change in the
relationship between different currencies from the date the
security is purchased or sold to the date on which payment is made
or received or when the dividend or interest is actually received.

The Fund also may enter into forward contracts when management of
the Fund believes the currency of a particular foreign country may
suffer a substantial decline against another currency. It may
enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of
some or all of the Fund's securities denominated in such foreign
currency. The precise matching of forward contract amounts and the
value of securities involved generally will not be possible since
the future value of such securities in foreign currencies more than
likely will change between the date the forward contract is entered
into and the date it matures. The projection of short-term
currency market movements is extremely difficult and successful
execution of a short-term hedging strategy is highly uncertain.
The Fund will not enter into such forward contracts or maintain a
net exposure to such contracts when consummating the contracts
would obligate the Fund to deliver an amount of foreign currency in
excess of the value of the Fund's securities or other assets
denominated in that currency.<PAGE>
PAGE 102
The Fund will designate cash or securities in an amount equal to
the value of the Fund's total assets committed to consummating
forward contracts entered into under the second circumstance set
forth above. If the value of the securities declines, additional
cash or securities will be designated on a daily basis so that the
value of the cash or securities will equal the amount of the Fund's
commitments on such contracts.

At maturity of a forward contract, the Fund may either sell the
security and make delivery of the foreign currency or retain the
security and terminate its contractual obligation to deliver the
foreign currency by purchasing an offsetting contract with the same
currency trader obligating it to buy, on the same maturity date,
the same amount of foreign currency.

If the Fund retains the security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described
below) to the extent there has been movement in forward contract
prices. If the Fund engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign
currency. Should forward prices decline between the date the Fund
enters into a forward contract for selling foreign currency and the
date it enters into an offsetting contract for purchasing the
foreign currency, the Fund will realize a gain to the extent the
price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to buy. Should forward prices increase,
the Fund will suffer a loss to the extent the price of the currency
it has agreed to buy exceeds the price of the currency it has
agreed to sell.

It is impossible to forecast what the market value of securities
will be at the expiration of a contract. Accordingly, it may be
necessary for the Fund to buy additional foreign currency on the
spot market (and bear the expense of such purchase) if the market
value of the security is less than the amount of foreign currency
the Fund is obligated to deliver and a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it
may be necessary to sell on the spot market some of the foreign
currency received on the sale of the portfolio security if its
market value exceeds the amount of foreign currency the fund is
obligated to deliver.

The Fund's dealing in forward contracts will be limited to the
transactions described above. This method of protecting the value
of the Fund's securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices
of the securities. It simply establishes a rate of exchange that
can be achieved at some point in time. Although such forward
contracts tend to minimize the risk of loss due to a decline in
value of hedged currency, they tend to limit any potential gain
that might result should be the value of such currency increase.

<PAGE>
PAGE 103
Although the Fund values its assets each business day in terms of
U.S. dollars, it does not intend to convert its foreign currencies
into U.S. dollars on a daily basis. It will do so from time to
time, and shareholders should be aware of currency conversion
costs. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference
(spread) between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the
dealer.

Options on Foreign Currencies. The Fund may buy put and call
options and write covered call and options on foreign currencies
for hedging purposes. For example, a decline in the dollar value
of a foreign currency in which securities are denominated will
reduce the dollar value of such securities, even if their value in
the foreign currency remains constant. In order to protect against
such diminutions in the value of securities, the Fund may buy put
options on the foreign currency. If the value of the currency does
decline, the Fund will have the right to sell such currency for a
fixed amount in dollars and will thereby offset, in whole or in
part, the adverse effect on its portfolio which otherwise would
have resulted.

As in the case of other types of options, however, the benefit to
the Fund derived from purchases of foreign currency options will be
reduced by the amount of the premium and related transaction costs.
In addition, where currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could sustain
losses on transactions in foreign currency options which would
require it to forego a portion or all of the benefits of
advantageous changes in such rates.

The Fund may write options on foreign currencies for the same types
of hedging purposes. For example, where the Fund anticipates a
decline in the dollar value of foreign-denominated securities due
to adverse fluctuations in exchange rates it could, instead of
purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most
likely not be exercised and the diminution in value of securities
will be fully or partially offset by the amount of the premium
received.

As in the case of other types of options, however, the writing of a
foreign currency option will constitute only a partial hedge up to
the amount of the premium, and only if rates move in the expected
direction. If this does not occur, the option may be exercised and
the Fund would be required to buy or sell the underlying currency
at a loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, the Fund also
may be required to forego all or a portion of the benefits which
might otherwise have been obtained from favorable movements on
exchange rates.
<PAGE>
PAGE 104
All options written on foreign currencies will be covered. An
option written on foreign currencies is covered if the Fund holds
currency sufficient to cover the option or has an absolute and
immediate right to acquire that currency without additional cash
consideration upon conversion of assets denominated in that
currency or exchange of other currency held in its portfolio. An
option writer could lose amounts substantially in excess of its
initial investments, due to the margin and collateral requirements
associated with such positions.

Options on foreign currencies are traded through financial
institutions acting as market-makers, although foreign currency
options also are traded on certain national securities exchanges,
such as the Philadelphia Stock Exchange and the Chicago Board
Options Exchange, subject to SEC regulation. In an over-the-
counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there
are no daily price fluctuation limits, and adverse market movements
could therefore continue to an unlimited extent over a period of
time. Although the purchaser of an option cannot lose more than
the amount of the premium plus related transaction costs, this
entire amount could be lost.

Foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options
Clearing Corporation (OCC), thereby reducing the risk of
counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more
readily available than in the over-the-counter market, potentially
permitting the fund to liquidate open positions at a profit prior
to exercise or expiration, or to limit losses in the event of
adverse market movements.

The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of availability of a liquid
secondary market described above, as well as the risks regarding
adverse market movements, margining of options written, the nature
of the foreign currency market, possible intervention by
governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-
counter market. For example, exercise and settlement of such
options must be made exclusively through the OCC, which has
established banking relationships in certain foreign countries for
the purpose. As a result, the OCC may, if it determines that
foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would
result in undue burdens on OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.

<PAGE>
PAGE 105
Foreign Currency Futures and Related Options. The Fund may enter
into currency futures contracts to sell currencies. It also may
buy put and write covered call options on currency futures.
Currency futures contracts are similar to currency forward
contracts, except that they are traded on exchanges (and have
margin requirements) and are standardized as to contract size and
delivery date. Most currency futures call for payment of delivery
in U.S. dollars. The Fund may use currency futures for the same
purposes as currency forward contracts, subject to Commodity
Futures Trading Commission (CFTC) limitations, including the
limitation on the percentage of assets that may be used, described
in the prospectus. All futures contracts are aggregated for
purposes of the percentage limitations.

Currency futures and options on futures values can be expected to
correlate with exchange rates, but will not reflect other factors
that may affect the values of the Fund's investments. A currency
hedge, for example, should protect a Yen-denominated bond against a
decline in the Yen, but will not protect the Fund against price
decline if the issuer's creditworthiness deteriorates. Because the
value of the Fund's investments denominated in foreign currency
will change in response to many factors other than exchange rates,
it may not be possible to match the amount of a forward contract to
the value of the Fund's investments denominated in that currency
over time.

The Fund will hold securities or other options or futures positions
whose values are expected to offset its obligations. The Fund will
not enter into an option or futures position that exposes the Fund
to an obligation to another party unless it owns either (i) an
offsetting position in securities or (ii) cash, receivables and
short-term debt securities with a value sufficient to cover its
potential obligations.

<PAGE>
PAGE 106
APPENDIX C

OPTIONS AND FUTURES CONTRACTS

The Fund may buy or write options traded on any U.S. or foreign
exchange or in the over-the-counter market. The Fund may enter
into interest rate futures contracts and stock index futures
contracts traded on any U.S. or foreign exchange. The Fund also
may buy or write put and call options on these futures and on stock
indexes. Options in the over-the-counter market will be purchased
only when the investment manager believes a liquid secondary market
exists for the options and only from dealers and institutions the
investment manager believes present a minimal credit risk. Some
options are exercisable only on a specific date. In that case, or
if a liquid secondary market does not exist, the Fund could be
required to buy or sell securities at disadvantageous prices,
thereby incurring losses.

OPTIONS. An option is a contract. A person who buys a call option
for a security has the right to buy the security at a set price for
the length of the contract. A person who sells a call option is
called a writer. The writer of a call option agrees to sell the
security at the set price when the buyer wants to exercise the
option, no matter what the market price of the security is at that
time. A person who buys a put option has the right to sell a
security at a set price for the length of the contract. A person
who writes a put option agrees to buy the security at the set price
if the purchaser wants to exercise the option, no matter what the
market price of the security is at that time. An option is covered
if the writer owns the security (in the case of a call) or sets
aside the cash or securities of equivalent value (in the case of a
put) that would be required upon exercise.

The price paid by the buyer for an option is called a premium. In
addition the buyer generally pays a broker a commission. The
writer receives a premium, less another commission, at the time the
option is written. The cash received is retained by the writer
whether or not the option is exercised. A writer of a call option
may have to sell the security for a below-market price if the
market price rises above the exercise price. A writer of a put
option may have to pay an above-market price for the security if
its market price decreases below the exercise price. The risk of
the writer is potentially unlimited, unless the option is covered.

Options can be used to produce incremental earnings, protect gains
and facilitate buying and selling securities for investment
purposes. The use of options and futures contracts may benefit the
Fund and its shareholders by improving the Fund's liquidity and by
helping to stabilize the value of its net assets.

Buying options. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. Options are used as a trading technique to
take advantage of any disparity between the price of the underlying<PAGE>
PAGE 107
security in the securities market and its price on the options
market. It is anticipated the trading technique will be utilized
only to effect a transaction when the price of the security plus
the option price will be as good or better than the price at which
the security could be bought or sold directly. When the option is
purchased, the Fund pays a premium and a commission. It then pays
a second commission on the purchase or sale of the underlying
security when the option is exercised. For record keeping and tax
purposes, the price obtained on the purchase of the underlying
security will be the combination of the exercise price, the premium
and both commissions. When using options as a trading technique,
commissions on the option will be set as if only the underlying
securities were traded.

Put and call options also may be held by the Fund for investment
purposes. Options permit the Fund to experience the change in the
value of a security with a relatively small initial cash
investment.

The risk the Fund assumes when it buys an option is the loss of the
premium. To be beneficial to the Fund, the price of the underlying
security must change within the time set by the option contract.
Furthermore, the change must be sufficient to cover the premium
paid, the commissions paid both in the acquisition of the option
and in a closing transaction or in the exercise of the option and
sale (in the case of a call) or purchase (in the case of a put) of
the underlying security. Even then, the price change in the
underlying security does not ensure a profit since prices in the
option market may not reflect such a change.

Writing covered options. The Fund will write covered options when
it feels it is appropriate and will follow these guidelines:

'Underlying securities will continue to be bought or sold solely on
the basis of investment considerations consistent with the Fund's
goal.

'All options written by the Fund will be covered. For covered call
options if a decision is made to sell the security, or for put
options if a decision is made to buy the security, the Fund will
attempt to terminate the option contract through a closing purchase
transaction.

'The Fund will write options only as permitted under federal or
state laws or regulations, such as those that limit the amount of
total assets subject to the options. While no limit has been set
by the Fund, it will conform to the requirements of those states.
For example, California limits the writing of options to 50% of the
assets of a fund.

Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the Fund is
<PAGE>
PAGE 108
taxed as a regulated investment company under the Internal Revenue
Code, any gains on options and other securities held less than
three months must be limited to less than 30% of its annual gross
income.

If a covered call option is exercised, the security is sold by the
Fund. The premium received upon writing the option is added to the
proceeds received from the sale of the security. The Fund will
recognize a capital gain or loss based upon the difference between
the proceeds and the security's basis. Premiums received from
writing outstanding call options are included as a deferred credit
in the Statement of Assets and Liabilities and adjusted daily to
the current market value.

Options on many securities are listed on options exchanges. If the
Fund writes listed options, it will follow the rules of the options
exchange. Options are valued at the close of the New York Stock
Exchange. An option listed on a national exchange, CBOE or NASDAQ
will be valued at the last quoted sales price or, if such a price
is not readily available, at the mean of the last bid and ask
prices.

Options on certain securities are not actively traded on any
exchange, but may be entered into directly with a dealer. When the
Fund writes such an option, the Custodian will segregate assets as
appropriate to cover the option. These options may be more
difficult to close. If the Fund is unable to effect a closing
purchase transaction, it will not be able to sell the underlying
security until the call written by the Fund expires or is
exercised.

FUTURES CONTRACTS. A futures contract is an agreement between two
parties to buy and sell a security for a set price on a future
date. Futures contracts trade in a manner similar to the way a
stock trades on a stock exchange and the commodity exchanges,
through their clearing corporations, guarantee performance of the
contracts. Futures contracts are commodity contracts listed on
commodity exchanges. They include contracts based on U.S. Treasury
bonds and on Standard & Poor's 500 Index (S&P 500 Index). In the
case of S&P 500 index futures contracts, the specified multiple is
$500. Thus, if the value of the S&P 500 Index were 150, the value
of one contract would be $75,000 (150 x $500).

Unlike other futures contracts, a stock index futures contract
specifies that no delivery of the actual stocks making up the index
will take place. Instead, settlement in cash must occur upon the
termination of the contract. For example, excluding any
transaction costs, if the Fund enters into one futures contract to
buy the S&P 500 Index at a specified future date at a contract
value of 150 and the S&P 500 Index is at 154 on that future date,
the Fund will gain $500 x (154-150) or $2,000. If the Fund enters
into one futures contract to sell the S&P 500 Index at a specified
future date at a contract value of 150 and the S&P 500 Index is at
152 on that future date, the Fund will lose $500 x (152-150) or
$1,000.<PAGE>
PAGE 109
Generally, a futures contract is terminated by entering into an
offsetting transaction. An offsetting transaction is effected by
the Fund taking an opposite position. At the time a futures
contract is made, a good faith deposit called initial margin is set
up within a segregated account at the Fund's custodian bank. Daily
thereafter, the futures contract is valued and the payment of
variation margin is required so that each day the Fund would pay
out cash in an amount equal to any decline in the contract's value
or receive cash equal to any increase. At the time a futures
contract is closed out, a nominal commission is paid, which is
generally lower than the commission on a comparable transaction in
the cash markets.

The purpose of a futures contract is to allow the Fund to gain
rapid exposure to or protect itself from changes in the market
without actually buying or selling securities. For example, if the
Fund owned long-term bonds and interest rates were expected to
increase, it might enter into futures contracts to sell securities
which would have much the same effect as selling some of the long-
term bonds it owned. If interest rates did increase, the value of
the debt securities in the portfolio would decline, but the value
of the Fund's futures contracts would increase at approximately the
same rate, thereby keeping the net asset value of the Fund from
declining as much as it otherwise would have. If, on the other
hand, the Fund held cash reserves and interest rates were expected
to decline, the Fund might enter into interest rate futures
contracts for the purchase of securities. If short-term rates were
higher than long-term rates, the ability to continue holding these
cash reserves would have a very beneficial impact on the Fund's
earnings. Even if short-term rates were not higher, the Fund would
still benefit from the income earned by holding these short-term
investments. At the same time, by entering into futures contracts
for the purchase of securities, the Fund could take advantage of
the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that
time, the futures contracts could be liquidated and the Fund's cash
reserves could then be used to buy long-term bonds on the cash
market. The Fund could accomplish similar results by selling bonds
with long maturities and investing in bonds with short maturities
when interest rates are expected to increase or by buying bonds
with long maturities and selling bonds with short maturities when
interest rates are expected to decline. But by using futures
contracts as an investment tool, given the greater liquidity in the
futures market than in the cash market, it might be possible to
accomplish the same result more easily and more quickly.

Risks of Transactions in Futures Contracts

The Fund may elect to close some or all of its contracts prior to
expiration. Although the Fund intends to enter into futures
contracts only on exchanges or board of trade where there appears
to be an active secondary market, there is no assurance that a
liquid secondary market will exist for any particular contract at
any particular time. In such event, it may not be possible to <PAGE>
PAGE 110
close a futures contract position, and in the event of adverse
price movements, the Fund would have to make daily cash payments of
variation margin. Such price movements, however, will be offset
all or in part by the price movements of the securities owned by
the Fund. Of course, there is no guarantee the price of the
securities will correlate with the price movements in the futures
contract and thus provide an offset to losses on a futures
contract.

Another risk in employing futures contracts to protect against the
price volatility of securities is that the prices of securities
subject to futures contracts may not correlate perfectly with the
behavior of the cash prices of the Fund's securities. The
correlation may be distorted because the futures market is
dominated by short-term traders seeking to profit from the
difference between a contract or security price and their cost of
borrowed funds. Such distortions are generally minor and would
diminish as the contract approached maturity.

In addition, the Fund's investment manager could be incorrect in
its expectations as to the direction or extent of various interest
rate or market movements or the time span within which the
movements take place. For example, if the Fund sold futures
contracts for the sale of securities in anticipation of an increase
in interest rates, and interest rates declined instead, the Fund
would lose money on the sale.

OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to
buy or sell futures contracts in the future. Unlike a futures
contract, which requires the parties to the contract to buy and
sell a security on a set date, an option on a futures contract
merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into
such a contract. If the holder decides not to enter into the
contract, all that is lost is the amount (premium) paid for the
option. Furthermore, because the value of the option is fixed at
the point of sale, there are no daily payments of cash to reflect
the change in the value of the underlying contract. However, since
an option gives the buyer the right to enter into a contract at a
set price for a fixed period of time, its value does change daily
and that change is reflected in the net asset value of the Fund.

The risk the Fund assumes when it buys an option is the loss of the
premium paid for the option. The risk involved in writing options
on futures contracts the Fund owns, or on securities held in its
portfolio, is that there could be an increase in the market value
of such contracts or securities. If that occurred, the option
would be exercised and the asset sold at a lower price than the
cash market price. To some extent, the risk of not realizing a
gain could be reduced by entering into a closing transaction. The
Fund could enter into a closing transaction by purchasing an option
with the same terms as the one it had previously sold. The cost to
<PAGE>
PAGE 111
close the option and terminate the Fund's obligation, however,
might be more or less than the premium received when it originally
wrote the option. Further, the Fund might not be able to close the
option because of insufficient activity in the options market.
Purchasing options also limits the use of monies that might
otherwise be available for long-term investments.

OPTIONS ON STOCK INDEXES. Options on stock indexes are securities
traded on national securities exchanges. An option on a stock
index is similar to an option on a futures contract except all
settlements are in cash. A fund exercising a put, for example,
would receive the difference between the exercise price and the
current index level. Such options would be used in the same manner
as options on futures contracts.

TAX TREATMENT. As permitted under federal income tax laws, the
Fund intends to identify futures contracts as mixed straddles and
not mark them to market, that is, not treat them as having been
sold at the end of the year at market value. Such an election may
result in the Fund being required to defer recognizing losses
incurred by entering into futures contracts and losses on
underlying securities identified as being hedged against.

Federal income tax treatment of gains or losses from transactions
in options on futures contracts and indexes will depend on whether
such option is a section 1256 contract. If the option is a non-
equity option, the Fund will either make a 1256(d) election and
treat the option as a mixed straddle or mark to market the option
at fiscal year end and treat the gain/loss as 40% short-term and
60% long-term. Certain provisions of the Internal Revenue Code may
also limit the Fund's ability to engage in futures contracts and
related options transactions. For example, at the close of each
quarter of the Fund's taxable year, at least 50% of the value of
its assets must consist of cash, government securities and other
securities, subject to certain diversification requirements. Less
than 30% of its gross income must be derived from sales of
securities held less than three months.

The IRS has ruled publicly that an exchange-traded call option is a
security for purposes of the 50%-of-assets test and that its issuer
is the issuer of the underlying security, not the writer of the
option, for purposes of the diversification requirements. In order
to avoid realizing a gain within the three-month period, the Fund
may be required to defer closing out a contract beyond the time
when it might otherwise be advantageous to do so. The Fund also
may be restricted in purchasing put options for the purpose of
hedging underlying securities because of applying the short sale
holding period rules with respect to such underlying securities.

Accounting for futures contracts will be according to generally
accepted accounting principles. Initial margin deposits will be
recognized as assets due from a broker (the Fund's agent in
acquiring the futures position). During the period the futures
contract is open, changes in value of the contract will be <PAGE>
PAGE 112
recognized as unrealized gains or losses by marking to market on a
daily basis to reflect the market value of the contract at the end
of each day's trading. Variation margin payments will be made or
received depending upon whether gains or losses are incurred. All
contracts and options will be valued at the last-quoted sales price
on their primary exchange.

<PAGE>
PAGE 113
APPENDIX D

MORTGAGE-BACKED SECURITIES

A mortgage pass-through certificate is one that represents an
interest in a pool, or group, of mortgage loans assembled by the
Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corporation (FLMC), Federal National Mortgage Association
(FNMA) or non-governmental entities. In pass-through certificates,
both principal and interest payments, including prepayments, are
passed through to the holder of the certificate. Prepayments on
underlying mortgages result in a loss of anticipated interest, and
the actual yield (or total return) to the Fund, which is influenced
by both stated interest rates and market conditions, may be
different than the quoted yield on certificates. Some U.S.
government securities may be purchased on a when-issued basis,
which means that it may take as long as 45 days after the purchase
before the securities are delivered to the fund.

Stripped Mortgage-Backed Securities. The Fund may invest in
stripped mortgage-backed securities. Generally, there are two
classes of stripped mortgage-backed securities: Interest Only (IO)
and Principal Only (PO). IOs entitle the holder to receive
distributions consisting of all or a portion of the interest on the
underlying pool of mortgage loans or mortgage-backed securities.
POs entitle the holder to receive distributions consisting of all
or a portion of the principal of the underlying pool of mortgage
loans or mortgage-backed securities. The cash flows and yields on
IOs and POs are extremely sensitive to the rate of principal
payments (including prepayments) on the underlying mortgage loans
or mortgage-backed securities. A rapid rate of principal payments
may adversely affect the yield to maturity of IOs. A slow rate of
principal payments may adversely affect the yield to maturity of
POs. If prepayments of principal are greater than anticipated, an
investor may incur substantial losses. If prepayments of principal
are slower than anticipated, the yield on a PO will be affected
more severely than would be the case with a traditional mortgage-
backed security.

Mortgage-Backed Security Spread Options. The Fund may purchase
mortgage-backed security (MBS) put spread options and write covered
MBS call spread options. MBS spread options are based upon the
changes in the price spread between a specified mortgage-backed
security and a like-duration Treasury security. MBS spread options
are traded in the OTC market and are of short duration, typically
one to two months. The Fund would buy or sell covered MBS call
spread options in situations where mortgage-backed securities are
expected to underperform like-duration Treasury securities.

<PAGE>
PAGE 114
APPENDIX E

DOLLAR-COST AVERAGING

A technique that works well for many investors is one that
eliminates random buy and sell decisions. One such system is
dollar-cost averaging. Dollar-cost averaging involves building a
portfolio through the investment of fixed amounts of money on a
regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility
of the financial markets. By using this strategy, more shares will
be purchased when the price is low and less when the price is high.
As the accompanying chart illustrates, dollar-cost averaging tends
to keep the average price paid for the shares lower than the
average market price of shares purchased, although there is no
guarantee.

While this does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many
shareholders who can continue investing through changing market
conditions to accumulate shares in a fund to meet long-term goals.

Dollar-cost averaging

___________________________________________________________________
Regular Market Price Shares
Investment of a Share Acquired
$100 $6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
$500 $25.00 103.4

Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).
<PAGE>
PAGE 115

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS INVESTMENT SERIES, INC.
IDS DIVERSIFIED EQUITY INCOME FUND

Nov. 29, 1995

This SAI is dated Nov. 29, 1995, and it is to be used with the
prospectus dated Nov. 29, 1995, and the Annual Report for the
fiscal year ended Sept. 30, 1995.
<PAGE>
PAGE 116
TABLE OF CONTENTS

Goals and Investment Policies........................See Prospectus

Additional Investment Policies................................p. 3

Portfolio Transactions........................................p. 6

Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation........................p. 8

Performance Information.......................................p. 9

Valuing Fund Shares...........................................p.11

Investing in the Fund.........................................p.12

Redeeming Shares..............................................p.16

Pay-out Plans.................................................p.17

Capital Loss Carryover........................................p.18

Taxes.........................................................p.18

Agreements....................................................p.20

Directors and Officers........................................p.23

Custodian.....................................................p.27

Independent Auditors..........................................p.28

Financial Statements..............................See Annual Report

Prospectus....................................................p.28

Appendix A: Foreign Currency Transactions....................p.29

Appendix B: Options and Futures Contracts....................p.34

Appendix C: Mortgage-Backed Securities.......................p.41

Appendix D: Dollar-Cost Averaging............................p.42
<PAGE>
PAGE 117
ADDITIONAL INVESTMENT POLICIES

Subject to certain contingencies, the Fund intends in late 1995 or
early 1996 to achieve its goals by investing all of its assets in
Equity Income Portfolio (the "Portfolio") of the Growth and Income
Trust (the "Trust"), a separate investment company rather than by
directly investing in and managing its own portfolio of securities.
The Portfolio has the same investment objectives, policies and
restrictions as the Fund.

Fundamental investment restrictions adopted by a Fund or Portfolio
cannot be changed without the approval of a majority of the
outstanding voting securities of the Fund or Portfolio, as defined
in the Investment Company Act of 1940. Whenever a Fund is
requested to vote on a change in thee investment restrictions of
the corresponding Portfolio, the Fund will hold a meeting of Fund
shareholders and will cast the Fund's vote as instructed by the
shareholders.

'Make cash loans if the total commitment amount exceeds 5% of the
Fund's total assets.

'Purchase more than 10% of the outstanding voting securities of an
issuer.

<PAGE>
PAGE 118
'Buy or sell real estate, unless acquired as a result of ownership
of securities or other instruments, except this shall not prevent
the Fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real
estate business or real estate investment trusts. For purposes of
this policy, real estate includes real estate limited partnerships.

'Lend Fund securities in excess of 30% of its net assets. The
current policy of the Fund's board of directors (the "board") is to
make these loans, either long- or short-term, to broker-dealers.
In making such loans the Fund gets the market price in cash, U.S.
government securities, letters of credit or such other collateral
as may be permitted by regulatory agencies and approved by the
board. If the market price of the loaned securities goes up, the
Fund will get additional collateral on a daily basis. The risks
are that the borrower may not provide additional collateral when
required or return the securities when due. During the existence
of the loan, the Fund receives cash payments equivalent to all
interest or other distributions paid on the loaned securities. A
loan will not be made unless the investment manager believes the
opportunity for additional income outweighs the risks.

'Concentrate in any one industry. According to the present
interpretation by the Securities and Exchange Commission (SEC),
this means no more than 25% of the Fund's total assets, based on
current market value at the time of purchase, can be invested in
any one industry.

Unless changed by the board, the Fund will not:

'Buy on margin or sell short, but it may make margin payments in
connection with transactions in futures contracts.

'Invest more than 5% of its total assets in securities of
companies, including any predecessors, that have a record of less
than three years continuous operations.

'Invest in a company to control or manage it.

'Invest in exploration or development programs, such as oil, gas or
mineral leases.
<PAGE>
PAGE 119

'Invest more than 10% of its total assets in securities of
investment companies.

'Purchase securities of an issuer if the directors and officers of
the Fund and of AEFC hold more than a certain percentage of the
issuer's outstanding securities. The holdings of all directors and
officers of the Fund and of AEFC who own more than 0.5% of an
issuer's securities are added together, and if in total they own
more than 5%, the Fund will not purchase securities of that issuer.

'Invest more than 5% of its net assets in warrants. Under one
state's law no more than 2% of the Fund's net assets may be
invested in warrants not listed on the New York or American Stock
Exchange.

'Invest more than 10% of its net assets in securities and
derivative instruments that are illiquid. For purposes of this
policy illiquid securities include some privately placed
securities, public securities and Rule 144A securities that for one
reason or another may no longer have a readily available market,
repurchase agreements with maturities greater than seven days, non-
negotiable fixed-time deposits and over-the-counter options. For
purposes of complying with Ohio law, the Fund will not invest more
than 15% of its total assets in a combination of illiquid
securities, 144A securities and securities of companies, including
any predecessor, that have a record of less than three years
continuous operations.

In determining the liquidity of Rule 144A securities, which are
unregistered securities offered to qualified institutional buyers,
and interest-only and principal-only fixed mortgage-backed
securities (IOs and POs) issued by the United States government or
its agencies and instrumentalities, the investment manager, under
guidelines established by the board, will consider any relevant
factors including the frequency of trades, the number of dealers
willing to purchase or sell the security and the nature of
marketplace trades.

The Fund may make contracts to purchase securities for a fixed
price at a future date beyond normal settlement time (when-issued
securities or forward commitments). Under normal market
conditions, the Fund does not intend to commit more than 5% of its
total assets to these practices. The Fund does not pay for the
securities or receive dividends or interest on them until the <PAGE>
PAGE 120
contractual settlement date. The Fund will designate cash or
liquid high-grade debt securities at least equal in value to its
commitments to purchase the securities. When-issued securities or
forward commitments are subject to market fluctuations and they may
affect the Fund's total assets the same as owned securities.

The Fund may maintain a portion of its assets in cash and cash-
equivalent investments. The cash-equivalent investments the Fund
may use are short-term U.S. and Canadian government securities and
negotiable certificates of deposit, non-negotiable fixed-time
deposits, bankers' acceptances and letters of credit of banks or
savings and loan associations having capital, surplus and undivided
profits (as of the date of its most recently published annual
financial statements) in excess of $100 million (or the equivalent
in the instance of a foreign branch of a U.S. bank) at the date of
investment. Any cash-equivalent investments in foreign securities
will be subject to the limitations on foreign investments described
in the prospectus. The Fund also may purchase short-term corporate
notes and obligations rated in the top two classifications by
Moody's Investors Service, Inc., (Moody's) or Standard & Poor's
Corporation (S&P) or the equivalent and may use repurchase
agreements with broker-dealers registered under the Securities
Exchange Act of 1934 and with commercial banks. A risk of a
repurchase agreement is that if the seller seeks the protection of
the bankruptcy laws, the Fund's ability to liquidate the security
involved could be impaired.

For a discussion of foreign currency transactions, see Appendix A.
For a discussion of options and futures contracts, see Appendix B.
For a discussion on mortgage-backed securities, see Appendix C.

PORTFOLIO TRANSACTIONS

<PAGE>
PAGE 121

When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge,
AEFC must follow procedures authorized by the board. To date,
three procedures have been authorized. One procedure permits AEFC
to direct an order to buy or sell a security traded on a national
securities exchange to a specific broker for research services it
has provided. The second procedure permits AEFC, in order to
obtain research, to direct an order on an agency basis to buy or
sell a security traded in the over-the-counter market to a firm
that does not make a market in that security. The commission paid
generally includes compensation for research services. The third
procedure permits AEFC, in order to obtain research and brokerage
services, to cause the Fund to pay a commission in excess of the
amount another broker might have charged. AEFC has advised the
Fund it is necessary to do business with a number of brokerage
firms on a continuing basis to obtain such services as the handling
of large orders, the willingness of a broker to risk its own money
by taking a position in a security, and the specialized handling of
a particular group of securities that only certain brokers may be
able to offer. As a result of this arrangement, some portfolio
transactions may not be effected at the lowest commission, but AEFC<PAGE>
PAGE 122
believes it may obtain better overall execution. AEFC has assured
the Fund that under all three procedures the amount of commission
paid will be reasonable and competitive in relation to the value of
the brokerage services performed or research provided.

Each investment decision made for the Fund is made independently
from any decision made for another fund in the IDS MUTUAL FUND
GROUP or other account advised by AEFC or any AEFC subsidiary.
When the Fund buys or sells the same security as another Fund or
account, AEFC carries out the purchase or sale in a way the Fund
agrees in advance is fair. Although sharing in large transactions
may adversely affect the price or volume purchased or sold by the
Fund, the Fund hopes to gain an overall advantage in execution.
AEFC has assured the Fund it will continue to seek ways to reduce
brokerage costs.

The Fund paid total brokerage commissions of $3,312,655 for the
fiscal year ended Sept. 30, 1995, $2,661,530 for fiscal year 1994,
and $930,435 for fiscal year 1993. Substantially all firms through
whom transactions were executed provide research services.

In fiscal year 1995, transactions amounting to $28,151,000, on
which $53,556 in commissions were imputed or paid, were
specifically directed to firms in exchange for research services.

Value of Securities
Owned at End of
Name of Issuer Fiscal Year
Bank America $16,465,625
First Chicago 16,126,875
Nations Bank 16,476,250

The portfolio turnover rate was 98% in the fiscal year ended Sept.
30, 1995, and 95% in fiscal year 1994.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH AMERICAN
EXPRESS FINANCIAL CORPORATION

American
Enterprise
Investment
Services, Inc. (2) $86,872 2.62% 5.63% 78,493 56,840<PAGE>
PAGE 124
The Robinson
Humphrey
Company, Inc. (3) None None None 23,875 5,056
</TABLE>
(1) Under common control with AEFC as a subsidiary of American
Express until May 31, 1994.
(2) Wholly owned subsidiary of AEFC.
(3) Under common control with AEFC as an indirect subsidiary of
American Express until July 30, 1993.

PERFORMANCE INFORMATION

The Fund may quote various performance figures to illustrate past
performance. Average annual total return and current yield
quotations used by the Fund are based on standardized methods of
computing performance as required by the SEC. An explanation of
these and any other methods used by the Fund to compute performance
follows below.

Average annual total return

Aggregate total return

<PAGE>
PAGE 125
Distribution yield

Distribution yield is calculated according to the following
formula:

D divided by POP F equals DY
30 30

where: D = sum of dividends for 30-day period
POP = sum of public offering price for 30-day period
F = annualizing factor
DY = distribution yield

The Fund's distribution yield was 1.66% for Class A, 1.74% for
Class B and 0.99% for Class Y for the 30-day period ended Sept. 29,
1995.

In its sales material and other communications, the Fund may quote,
compare or refer to rankings, yields or returns as published by
independent statistical services or publishers and publications
such as The Bank Rate Monitor National Index, Barron's, Business
Week, Donoghue's Money Market Fund Report, Financial Services Week,
Financial Times, Financial World, Forbes, Fortune, Global Investor,
Institutional Investor, Investor's Daily, Kiplinger's Personal
inance, Lipper Analytical Services, Money, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report,
Sylvia Porter's Personal Finance, USA Today, U.S. News and World
Report, The Wall Street Journal and Wiesenberger Investment
Companies Service.

VALUING FUND SHARES

<TABLE><CAPTION>
Net assets before Shares outstanding Net asset value
shareholder transactions at end of previous day of one share
<S> <C> <C> <C>
Class A $1,090,176,235 divided by 138,347,238 equals $ 7.88
Class B 31,576,200 4,007,132 7.88
Class Y 26,127,101 3,315,622 7.88
</TABLE>

In determining net assets before shareholder transactions, the
Fund's securities are valued as follows as of the close of business
of the New York Stock Exchange:

'Securities traded on a securities exchange for which a last-quoted
sales price is not readily available are valued at the mean of the <PAGE>
PAGE 126
closing bid and asked prices, looking first to the bid and asked
prices on the exchange where the security is primarily traded and,
if none exist, to the over-the-counter market.

'Securities included in the NASDAQ National Market System are
valued at the last-quoted sales price in this market.

'Futures and options traded on major exchanges are valued at the
last-quoted sales price on their primary exchange.

Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange that will
not be reflected in the computation of the Fund's net asset value.
If events materially affecting the value of such securities occur
during such period, these securities will be valued at their fair
value according to procedures decided upon in good faith by the
Fund's board.

'Short-term securities maturing more than 60 days from the
valuation date are valued at the readily available market price or
approximate market value based on current interest rates. Short-
term securities maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at
amortized cost using the market value on the 61st day before
maturity. Short-term securities maturing in 60 days or less at
acquisition date are valued at amortized cost. Amortized cost is
an approximation of market value determined by systematically
increasing the carrying value of a security if acquired at a
discount, or reducing the carrying value if acquired at a premium,
so that the carrying value is equal to maturity value on the
maturity date.

<PAGE>
PAGE 127
The New York Stock Exchange, AEFC and the Fund will be closed on
the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

INVESTING IN THE FUND

Sales Charge

Shares of the Fund are sold at the public offering price determined
at the close of business on the day an application is accepted.
The public offering price is the net asset value of one share plus
a sales charge, if applicable. For Class B and Class Y, there is
no initial sales charge so the public offering price is the same as
the net asset value. For Class A, the public offering price for an
investment of less than $50,000, made Oct. 2, 1995, was determined
by dividing the net asset value of one share, $7.88, by 0.95 (1.00-
0.05 for a maximum 5% sales charge) for a public offering price of
$8.29. The sales charge is paid to American Express Financial
Advisors by the person buying the shares.

Class A - Calculation of the Sales Charge

Sales charges are determined as follows:

Within each increment,
sales charge as a
percentage of:
Public Net
Amount of Investment Offering Price Amount Invested

First $ 50,000 5.0% 5.26%
Next 50,000 4.5 4.71
Next 400,000 3.8 3.95
Next 500,000 2.0 2.04
$1,000,000 or more 0.0 0.00

<PAGE>
PAGE 128
In the case of the $85,000 investment, the first $50,000 also
incurs a sales charge of $2,500 (5.0% x $50,000) and $35,000 incurs
a sales charge of $1,575 (4.5% x $35,000). The total sales charge
of $4,075 is 4.79% of the public offering price and 5.04% of the
net amount invested.

The following table shows the range of sales charges as a
percentage of the public offering price and of the net amount
invested on total investments at each applicable level.
<TABLE><CAPTION>
On total investment, sales
charge as a percentage of
Public Net
Offering Price Amount Invested
Amount of Investment ranges from:
<S> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 999,999 3.80-2.00 3.95-2.04
$1,000,000 or more 0.00 0.00
</TABLE>
The initial sales charge is waived for certain qualified plans that
meet the requirements described in the prospectus. Participants in
these qualified plans may be subject to a deferred sales charge on
certain redemptions. The deferred sales charge on certain
redemptions will be waived if the redemption is a result of a
participant's death, disability, retirement, attaining age 59 1/2,
loans or hardship withdrawals. The deferred sales charge varies
depending on the number of participants in the qualified plan and
total plan assets as follows:

Deferred Sales Charge

Number of Participants

Total Plan Assets 1-99 100 or more

Less than $1 million 4% 0%

$1 million or more 0% 0%
_________________________________________________________

Class A - Reducing the Sales Charge

Sales charges are based on the total amount of your investments in
the Fund. The amount of all prior investments plus any new
purchase is referred to as your "total amount invested." For
example, suppose you have made an investment of $20,000 and later
decide to invest $40,000 more. Your total amount invested would be
<PAGE>
PAGE 129
$60,000. As a result, $10,000 of your $40,000 investment qualifies
for the lower 4.5% sales charge that applies to investments of more
than $50,000 to $100,000.

Finally, Individual Retirement Account (IRA) purchases, or other
employee benefit plan purchases made through a payroll deduction
plan or through a plan sponsored by an employer, association of
employers, employee organization or other similar entity, may be
added together to reduce sales charges for shares purchased through
that plan.

Class A - Letter of Intent (LOI)

<PAGE>
PAGE 130
Systematic Investment Programs

How does this work? Your regular investment amount will purchase
more shares when the net asset value per share decreases, and fewer
shares when the net asset value per share increases. Each purchase
is a separate transaction. After each purchase your new shares
will be added to your account. Shares bought through these
programs are exactly the same as any other Fund shares. They can
be bought and sold at any time. A systematic investment program is
not an option or an absolute right to buy shares.

For a discussion on dollar-cost averaging, see Appendix D.

Automatic Directed Dividends

Between a non-custodial account and an IRA, or 401(k) plan account
or other qualified retirement account of which American Express
Trust Company acts as custodian;

Between two American Express Trust Company custodial accounts with
different owners (for example, you may not exchange dividends from
your IRA to the IRA of your spouse);

Between different kinds of custodial accounts with the same
ownership (for example, you may not exchange dividends from your
IRA to your 401(k) plan account, although you may exchange
dividends from one IRA to another IRA).<PAGE>
PAGE 131
Dividends may be directed from accounts established under the
Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors
Act (UTMA) only into other UGMA or UTMA accounts with identical
ownership.

REDEEMING SHARES

You have a right to redeem your shares at any time. For an
explanation of redemption procedures, please see the prospectus.

'The New York Stock Exchange closes for reasons other than the
usual weekend and holiday closings or trading on the Exchange is
restricted, or

'Disposal of the Fund's securities is not reasonable practicable or
it is not reasonably practicable for the Fund to determine the fair
value of its net assets, or

'The SEC, under the provisions of the Investment Company Act of
1940, as amended, declares a period of emergency to exist.

PAY-OUT PLANS

Plan #1: Pay-out for a fixed period of time

Plan #2: Redemption of a fixed number of shares

Plan #3: Redemption of a fixed dollar amount

If you decide on a fixed dollar amount, whatever number of shares
is necessary to make the payment will be redeemed in regular
installments until the account is closed.

Plan #4: Redemption of a percentage of net asset value

<PAGE>
PAGE 133

CAPITAL LOSS CARRYOVER

For federal income tax purposes, the Fund had capital loss
carryover of $24,304,930 at Sept. 30, 1995, that will expire as
follows:

2003 2004
$1,898,151 $22,406,779

It is unlikely that the board will authorize a distribution of any
net realized capital gains until the available capital loss
carryover has been offset or has expired except as required by
Internal Revenue Service rules.

TAXES

Retirement Accounts

Net investment income dividends received should be treated as
dividend income for federal income tax purposes. Corporate
shareholders are generally entitled to a deduction equal to 70% of
that portion of the Fund's dividend that is attributable to
dividends the Fund received from domestic (U.S.) securities. For
the fiscal year ended Sept. 30, 1995, 83.43% of the Fund's net
investment income dividends qualified for the corporate deduction.

<PAGE>
PAGE 134
Capital gain distributions received by individual and corporate
shareholders, if any, should be treated as long-term capital gains
regardless of how long they owned their shares. Short-term capital
gains earned by the Fund are paid to shareholders as part of their
ordinary income dividend and are taxable.

AGREEMENTS

Investment Management Services Agreement

The Fund has an Investment Management Services Agreement with AEFC.
For its services, AEFC is paid a fee based on the following
schedule:

Assets Annual rate at
(billions) each asset level

First $0.50 0.530%
Next 0.50 0.505
Next 1.0 0.480
Next 1.0 0.455
Next 3.0 0.430
Over 6.0 0.400

On Sept. 30, 1995, the daily rate applied to the Fund's assets was
equal to 0.513% on an annual basis. The fee is calculated for each
calendar day on the basis of net assets as of the close of business
two business days prior to the day for which the calculation is
made.

<PAGE>
PAGE 135

The management fee is paid monthly. Under the prior and current
agreements, the total amount paid was $5,291,578 for the fiscal
year ended Sept. 30, 1995, $3,870,081 for fiscal year 1994, and
$1,592,473 for fiscal year 1993.

Under the current Agreement, the Fund also pays taxes, brokerage
commissions and nonadvisory expenses, which include custodian fees;
audit and certain legal fees; fidelity bond premiums; registration
fees for shares; Fund office expenses; consultants' fees;
compensation of directors, officers and employees; corporate filing
fees; organizational expenses; expenses incurred in connection with
lending securities of the Fund; and expenses properly payable by
the Fund, approved by the board. Under the prior and current
agreements, the Fund paid nonadvisory expenses of $968,395 for the
fiscal year ended Sept. 30, 1995, $689,334 for fiscal year 1994,
and $391,191 for fiscal year 1993.

Administrative Services Agreement

The Fund has an Administrative Services Agreement with AEFC. Under
this agreement, the Fund pays AEFC for providing administration and
accounting services. The fee is calculated as follows:

Assets Annual rate
(billions) each asset level

First $0.50 0.040%
Next 0.50 0.035
Next 1.0 0.030
Next 1.0 0.025
Next 3.0 0.020
Over 6.0 0.020

On Sept. 30, 1995, the daily rate applied to the Fund's assets was
equal to 0.037% on an annual basis. The fee is calculated for each
calendar day on the basis of net assets as of the close of business
two business days prior to the day for which the calculation is
made.

Transfer Agency Agreement

The Fund has a Transfer Agency Agreement with AEFC. This agreement
governs AEFC's responsibility for administering and/or performing
transfer agent functions, for acting as service agent in connection
with dividend and distribution functions and for performing
shareholder account administration agent functions in connection
with the issuance, exchange and redemption or repurchase of the
Fund's shares. Under the agreement, AEFC will earn a fee from the
Fund determined by multiplying the number of shareholder accounts
at the end of the day by a rate determined for each class per year
and dividing by the number of days in the year. The rate for Class
A and Class Y is $15 per year and for Class B is $16 per year. The
<PAGE>
PAGE 136
fees paid to AEFC may be changed from time to time upon agreement
of the parties without shareholder approval. The Fund paid fees of
$1,755,397 under the Transfer Agency Agreement for the fiscal year
ended Sept. 30, 1995.

Distribution Agreement

Under a Distribution Agreement, sales charges deducted for
distributing Fund shares are paid to American Express Financial
Advisors daily. These charges amounted to $5,396,014 for the
fiscal year ended Sept. 30, 1995. After paying commissions to
personal financial advisors, and other expenses, the amount
retained was $1,641,448. The amounts were $12,190,466 and
$4,319,802 for fiscal year 1994, and $8,638,454 and $2,950,459 for
fiscal year 1993.

Additional information about commissions and compensation for the
fiscal year ended Sept. 30, 1995, is contained in the following
table:
<TABLE><CAPTION>
(1) (2) (3) (4) (5)
Net Compensation
Name of Underwriting on Redemption
Principal Discounts and and Brokerage Other
Underwriter Commissions Repurchases Commissions Compensation
<S> <C> <C> <C> <C>
AEFC None None $86,872* $378,849**

American
Express
Financial
Advisors $5,396,014 None None None
</TABLE>
*For further information see "Brokerage Commissions Paid to Brokers
Affiliated with AEFC."
**Distribution fees paid pursuant to the Plan and Agreement of
Distribution.

Shareholder Service Agreement

Plan and Agreement of Distribution

For Class B shares, to help American Express Financial Advisors
defray the cost of distribution and servicing, not covered by the
sales charges received under the Distribution Agreement, the Fund
and American Express Financial Advisors entered into a Plan and
Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing the Fund's Class B shares except
compensation to the sales force. A substantial portion of the<PAGE>
PAGE 137
costs are not specifically identified to the Class B shares of any
one fund in the IDS MUTUAL FUND GROUP. Under the Plan, American
Express Financial Advisors is paid a fee at an annual rate of 0.75%
of the Fund's average daily net assets attributable to Class B
shares.

The Plan must be approved annually by the board, including a
majority of Class B shares of the disinterested directors, if it is
to continue for more than a year. At least quarterly, the board
must review written reports concerning the amounts expended under
the Plan and the purposes for which such expenditures were made.
The Plan and any agreement related to it may be terminated at any
time by vote of a majority of directors who are not interested
persons of the Fund and have no direct or indirect financial
interest in the operation of the Plan or in any agreement related
to the Plan, or by vote of a majority of the outstanding voting
securities of Class B shares of the Fund or by American Express
Financial Advisors. The Plan (or any agreement related to it) will
terminate in the event of its assignment, as that term is defined
in the Investment Company Act of 1940, as amended. The Plan may
not be amended to increase the amount to be spent for distribution
without shareholder approval, and all material amendments to the
Plan must be approved by a majority of the directors, including a
majority of the directors who are not interested persons of the
Fund and who do not have a financial interest in the operation of
the Plan or any agreement related to it. The selection and
nomination of disinterested directors is the responsibility of the
other disinterested directors. No director who is not an
interested person has any direct or indirect financial interest in
the operation of the Plan or any related agreement. The Fund paid
fees under the Plan Agreement of $60,472 for Class B shares for the
fiscal period ended Sept. 30, 1995.

Total fees and nonadvisory expenses cannot exceed the most
restrictive applicable state limitation. Currently, the most
restrictive applicable state expense limitation, subject to
exclusion of certain expenses, is 2.5% of the first $30 million of
the Fund's average daily net assets, 2% of the next $70 million and
1.5% of average daily net assets over $100 million, on an annual
basis. At the end of each month, if the fees and expenses of the
Fund exceed this limitation for the Fund's fiscal year in progress,
AEFC will assume all expenses in excess of the limitation. AEFC
then may bill the Fund for such expenses in subsequent months up to
the end of that fiscal year, but not after that date. No interest
charges are assessed by AEFC for expenses it assumes. The Fund
paid total fees and nonadvisory expenses fees of $9,577,557 for the
fiscal year ended Sept. 30, 1995.

<PAGE>
PAGE 138
DIRECTORS AND OFFICERS

Lynne V. Cheney+'
Born in 1941.
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.

Distinguished Fellow AEI. Former Chair of National Endowment of
the Humanities. Director, The Reader's Digest Association Inc.,
Lockheed-Martin, and the Interpublic Group of Companies, Inc.
(advertising), and FPL Group, Inc. (holding company for Florida
Power and Light).

William H. Dudley+**
Born in 1932.
2900 IDS Tower
Minneapolis, MN

Executive vice president and director of AEFC.

Robert F. Froehlke+
Born in 1922.
1201 Yale Place
Minneapolis, MN

David R. Hubers**
Born in 1943.
2900 IDS Tower
Minneapolis, MN

President, chief executive officer and director of AEFC.
Previously, senior vice president, finance and chief financial
officer of AEFC.

<PAGE>
PAGE 139
Heinz F. Hutter+
Born in 1929.
P.O. Box 5724
Minneapolis, MN

President and chief operating officer, Cargill, Incorporated
(commodity merchants and processors) from February 1991 to
September 1994. Executive vice president from 1981 to February
1991.

Anne P. Jones+
Born in 1935.
5716 Bent Branch Rd.
Bethesda, MD

Attorney and telecommunications consultant. Former partner, law
firm of Sutherland, Asbill & Brennan. Director, Motorola, Inc. and
C-Cor Electronics, Inc.

Donald M. Kendall'
Born in 1921.
PepsiCo, Inc.
Purchase, NY

Former chairman and chief executive officer, PepsiCo, Inc.

Melvin R. Laird+
Born in 1922.
Reader's Digest Association, Inc.
1730 Rhode Island Ave., N.W.
Washington, D.C.

Lewis W. Lehr'
Born in 1921.
3050 Minnesota World Trade Center
30 E. Seventh St.
St. Paul, MN

<PAGE>
PAGE 140
William R. Pearce+*
Born in 1927.
901 S. Marquette Ave.
Minneapolis, MN

President of all funds in the IDS MUTUAL FUND GROUP since June
1993. Former vice chairman of the board, Cargill, Incorporated
(commodity merchants and processors).

Edson W. Spencer
Born in 1926.
4900 IDS Center
80 S. 8th St.
Minneapolis, MN

John R. Thomas**
Born in 1937.
2900 IDS Tower
Minneapolis, MN

Senior vice president and director of AEFC.

Wheelock Whitney+
Born in 1926.
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN

Chairman, Whitney Management Company (manages family assets).

C. Angus Wurtele
Born in 1934.
1101 S. 3rd St.
Minneapolis, MN

+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of
the Fund.
**Interested person by reason of being an officer, director,
employee and/or shareholder of AEFC or American Express.
<PAGE>
PAGE 141
The board also has appointed officers who are responsible for day-
to-day business decisions based on policies it has established.

Officers who also are officers and/or employees of AEFC

Peter J. Anderson
Born in 1942.
IDS Tower 10
Minneapolis, MN

Vice president-investments of all funds in the IDS MUTUAL FUND
GROUP. Director and senior vice president-investments of AEFC.

Melinda S. Urion
Born in 1953.
IDS Tower 10
Minneapolis, MN

Treasurer of all funds in the IDS MUTUAL FUND GROUP. Vice
president and corporate controller of AEFC. Director and executive
vice president and controller of IDS Life Insurance Company.

Besides Mr. Pearce, who is president, the Fund's other officer is:

Leslie L. Ogg
Born in 1938.
901 S. Marquette Ave.
Minneapolis, MN

Vice president, general counsel and secretary of all funds in the
IDS MUTUAL FUND GROUP.

Members of the board who are not officers of the Fund or directors
of AEFC receive an annual fee of $1,250. They also receive
attendance and other fees, the cost of which the Fund shares with
the other funds in the IDS MUTUAL FUND GROUP. These fees include
attendance of meetings of the Contracts Committee, $750; meetings
of the Audit, Board, Executive or Investment Review Committees,
$500; meetings of the Personnel Committee, $300; out-of-state,
$500; and Chair of the Contracts Committee, $5,000. Expenses for
attending those meetings are also reimbursed. Upon retirement age,
or earlier if for approved reasons, the independent directors
receive monthly payments equal to 1/2 of the annual fee divided by
12 for as many months as the director served on the board up to 120
months or until the date of death. There are no death benefits and
the plan is not funded.

During the fiscal year ended Sept. 30, 1995, the members of the
board, for attending up to 27 meetings, received the following
compensation:

<PAGE>
PAGE 142
<TABLE><CAPTION>
Compensation Table

Pension or
Aggregate Retirement Estimated Total cash
compensation benefits annual compensation
from the accrued as benefit upon from the IDS
Board member Fund Fund expenses retirement MUTUAL FUND GROUP
<S> <C> <C> <C> <C>
Lynne V. Cheney $1,289 $ 145 $ 625 $69,000
Robert F. Froehlke 1,332 536 625 70,700
Heinz F. Hutter 1,234 202 302 66,800
Anne P. Jones 1,315 109 625 70,000
Donald M. Kendall 1,214 0 625 66,000
Melvin R. Laird 1,307 94 625 69,700
Lewis W. Lehr 1,300 0 610 69,400
Edson W. Spencer 1,387 0 333 73,000
Wheelock Whitney 1,307 148 625 69,700
C. Angus Wurtele 1,227 197 620 66,500
</TABLE>

On Sept. 30, 1995, the Fund's directors and officers as a group
owned less than 1% of the outstanding shares. During the fiscal
year ended Sept. 30, 1995, no director or officer earned more than
$60,000 from this Fund. All directors and officers as a group
earned $41,285, including $1,431 of retirement plan benefits, from
this Fund.

CUSTODIAN

The Fund's securities and cash are held by American Express Trust
Company, 1200 Northstar Center West, 625 Marquette Ave.,
Minneapolis, MN 55402-2307, through a custodian agreement. The
custodian is permitted to deposit some or all of its securities in
central depository systems as allowed by federal law.

INDEPENDENT AUDITORS

FINANCIAL STATEMENTS

The Independent Auditors' Report and the Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1995 Annual Report to
shareholders, pursuant to Section 30(d) of the Investment Company <PAGE>
PAGE 143
Act of 1940, as amended, are hereby incorporated in this SAI by
reference. No other portion of the Annual Report, however, is
incorporated by reference.

PROSPECTUS

The prospectus for IDS Diversified Equity Income Fund dated
Nov. 29, 1995, is hereby incorporated in this SAI by reference.
<PAGE>
PAGE 144
APPENDIX A

FOREIGN CURRENCY TRANSACTIONS

The Fund also may enter into forward contracts when management of
the Fund believes the currency of a particular foreign country may
suffer a substantial decline against another currency. It may
enter into a forward contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of
some or all of the Fund's securities denominated in such foreign
currency. The precise matching of forward contract amounts and the
value of securities involved generally will not be possible since
the future value of such securities in foreign currencies more than
likely will change between the date the forward contract is entered
into and the date it matures. The projection of short-term
currency market movements is extremely difficult and successful
execution of a short-term hedging strategy is highly uncertain.
The Fund will not enter into such forward contracts or maintain a
net exposure to such contracts when consummating the contracts<PAGE>
PAGE 145
would obligate the Fund to deliver an amount of foreign currency in
excess of the value of the Fund's securities or other assets
denominated in that currency.

The Fund will designate cash or securities in an amount equal to
the value of the Fund's total assets committed to consummating
forward contracts entered into under the second circumstance set
forth above. If the value of the securities declines, additional
cash or securities will be designated on a daily basis so that the
value of the cash or securities will equal the amount of the Fund's
commitments on such contracts.

The Fund's dealing in forward contracts will be limited to the
transactions described above. This method of protecting the value
of the Fund's securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices
of the securities. It simply establishes a rate of exchange that
can be achieved at some point in time. Although such forward<PAGE>
PAGE 146
contracts tend to minimize the risk of loss due to a decline in
value of hedged currency, they tend to limit any potential gain
that might result should be the value of such currency increase.

Although the Fund values its assets each business day in terms of
U.S. dollars, it does not intend to convert its foreign currencies
into U.S. dollars on a daily basis. It will do so from time to
time, and shareholders should be aware of currency conversion
costs. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference
(spread) between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign
currency to the Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the
dealer.

Options on Foreign Currencies. The Fund may buy put and write
covered call options on foreign currencies for hedging purposes.
For example, a decline in the dollar value of a foreign currency in
which securities are denominated will reduce the dollar value of
such securities, even if their value in the foreign currency
remains constant. In order to protect against such diminutions in
the value of securities, the Fund may buy put options on the
foreign currency. If the value of the currency does decline, the
Fund will have the right to sell such currency for a fixed amount
in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have
resulted.

All options written on foreign currencies will be covered. An
option written on foreign currencies is covered if the Fund holds
currency sufficient to cover the option or has an absolute and
immediate right to acquire that currency without additional cash
consideration upon conversion of assets denominated in that
currency or exchange of other currency held in its portfolio. An
option writer could lose amounts substantially in excess of its
initial investments, due to the margin and collateral requirements
associated with such positions.

The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of availability of a liquid
secondary market described above, as well as the risks regarding
adverse market movements, margining of options written, the nature
of the foreign currency market, possible intervention by
governmental authorities and the effects of other political and
economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-
counter market. For example, exercise and settlement of such
options must be made exclusively through the OCC, which has
established banking relationships in certain foreign countries for
the purpose. As a result, the OCC may, if it determines that
foreign governmental restrictions or taxes would prevent the<PAGE>
PAGE 148
orderly settlement of foreign currency option exercises, or would
result in undue burdens on OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.

Foreign Currency Futures and Related Options. The Fund may enter
into currency futures contracts to sell currencies. It also may
buy put and write covered call options on currency futures.
Currency futures contracts are similar to currency forward
contracts, except that they are traded on exchanges (and have
margin requirements) and are standardized as to contract size and
delivery date. Most currency futures call for payment of delivery
in U.S. dollars. The Fund may use currency futures for the same
purposes as currency forward contracts, subject to Commodity
Futures Trading Commission (CFTC) limitations, including the
limitation on the percentage of assets that may be used, described
in the prospectus. All futures contracts are aggregated for
purposes of the percentage limitations.

The Fund will not use leverage in its currency options and futures
strategies. The Fund will hold securities or other options or
futures positions whose values are expected to offset its
obligations. The Fund will not enter into an option or futures
position that exposes the Fund to an obligation to another party
unless it owns either (i) an offsetting position in securities or
(ii) cash, receivables and short-term debt securities with a value
sufficient to cover its potential obligations.

<PAGE>
PAGE 149
APPENDIX B

OPTIONS AND FUTURES CONTRACTS

Options can be used to produce incremental earnings, protect gains
and facilitate buying and selling securities for investment
purposes. The use of options may benefit the Fund and its
shareholders by improving the Fund's liquidity and by helping to
stabilize the value of its net assets.

Buying options. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. Options are used as a trading technique to
take advantage of any disparity between the price of the underlying<PAGE>
PAGE 150
security in the securities market and its price on the options
market. It is anticipated the trading technique will be utilized
only to effect a transaction when the price of the security plus
the option price will be as good or better than the price at which
the security could be bought or sold directly. When the option is
purchased, the Fund pays a premium and a commission. It then pays
a second commission on the purchase or sale of the underlying
security when the option is exercised. For record keeping and tax
purposes, the price obtained on the purchase of the underlying
security will be the combination of the exercise price, the premium
and both commissions. When using options as a trading technique,
commissions on the option will be set as if only the underlying
securities were traded.

Put and call options also may be held by the Fund for investment
purposes. Options permit the Fund to experience the change in the
value of a security with a relatively small initial cash
investment.

Writing covered options. The Fund will write covered options when
it feels it is appropriate and will follow these guidelines:

'Underlying securities will continue to be bought or sold solely on
the basis of investment considerations consistent with the Fund's
goal.

'The Fund will write options only as permitted under federal or
state laws or regulations, such as those that limit the amount of
total assets subject to the options. While no limit has been set
by the Fund, it will conform to the requirements of those states.
For example, Arkansas limits the aggregate investment in options to
5% of the Fund's total assets. California limits the writing of
options to 50% of the assets of a fund.

<PAGE>
PAGE 151
Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since the Fund is
taxed as a regulated investment company under the Internal Revenue
Code, any gains on options and other securities held less than
three months must be limited to less than 30% of its annual gross
income.

Generally, a futures contract is terminated by entering into an
offsetting transaction. An offsetting transaction is effected by
the Fund taking an opposite position. At the time a futures
contract is made, a good faith deposit called initial margin is set
up within a segregated account at the Fund's custodian bank. Daily
thereafter, the futures contract is valued and the payment of
variation margin is required so that each day the Fund would pay
out cash in an amount equal to any decline in the contract's value
or receive cash equal to any increase. At the time a futures
contract is closed out, a nominal commission is paid, which is
generally lower than the commission on a comparable transaction in
the cash markets.

The purpose of a futures contract is to allow the Fund to gain
rapid exposure to or protect itself from changes in the market
without actually buying or selling securities. For example, if the
Fund owned long-term bonds and interest rates were expected to
increase, it might enter into futures contracts to sell securities
which would have much the same effect as selling some of the long-
term bonds it owned. If interest rates did increase, the value of
the debt securities in the portfolio would decline, but the value
of the Fund's futures contracts would increase at approximately the
same rate, thereby keeping the net asset value of the Fund from
declining as much as it otherwise would have. If, on the other
hand, the Fund held cash reserves and interest rates were expected
to decline, the fund might enter into interest rate futures
contracts for the purchase of securities. If short-term rates were
higher than long-term rates, the ability to continue holding these
cash reserves would have a very beneficial impact on the Fund's
earnings. Even if short-term rates were not higher, the Fund would
still benefit from the income earned by holding these short-term
investments. At the same time, by entering into futures contracts
for the purchase of securities, the Fund could take advantage of
the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that
time, the futures contracts could be liquidated and the Fund's cash
reserves could then be used to buy long-term bonds on the cash
market. The Fund could accomplish similar results by selling bonds
with long maturities and investing in bonds with short maturities
when interest rates are expected to increase or by buying bonds
with long maturities and selling bonds with short maturities when
interest rates are expected to decline. But by using futures
contracts as an investment tool, given the greater liquidity in the
futures market than in the cash market, it might be possible to
accomplish the same result more easily and more quickly.

<PAGE>
PAGE 153
Risks of Transactions in Futures Contracts

The Fund may elect to close some or all of its contracts prior to
expiration. Although the Fund intends to enter into futures
contracts only on exchanges or boards of trade where there appears
to be an active secondary market, there is no assurance that a
liquid secondary market will exist for any particular contract at
any particular time. In such event, it may not be possible to
close a futures contract position, and in the event of adverse
price movements, the Fund would have to make daily cash payments of
variation margin. Such price movements, however, will be offset
all or in part by the price movements of the securities owned by
the Fund. Of course, there is no guarantee the price of the
securities will correlate with the price movements in the futures
contract and thus provide an offset to losses on a futures
contract.

OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to
buy or sell futures contracts in the future. Unlike a futures
contract, which requires the parties to the contract to buy and
sell a security on a set date, an option on a futures contract
merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into
such a contract. If the holder decides not to enter into the
contract, all that is lost is the amount (premium) paid for the
option. Furthermore, because the value of the option is fixed at
the point of sale, there are not daily payments of cash to reflect
the change in the value of the underlying contract. However, since
an option gives the buyer the right to enter into a contract at a
set price for a fixed period of time, its value does change daily
and that change is reflected in the net asset value of the Fund.

The risk the Fund assumes when it buys an option is the loss of the
premium paid for the option. The risk involved in writing options
on futures contracts the Fund owns, or on securities held in its
<PAGE>
PAGE 154
portfolio, is that there could be an increase in the market value
of such contracts or securities. If that occurred, the option
would be exercised and the asset sold at a lower price than the
cash market price. To some extent, the risk of not realizing a
gain could be reduced by entering into a closing transaction. The
Fund could enter into a closing transaction by purchasing an option
with the same terms as the one it had previously sold. The cost to
close the option and terminate the Fund's obligation, however,
might be more or less than the premium received when it originally
wrote the option. Furthermore, the Fund might not be able to close
the option because of insufficient activity in the options market.
Purchasing options also limits the use of monies that might
otherwise be available for long-term investments.

The IRS has ruled publicly that an exchange-traded call option is a
security for purposes of the 50%-of-assets test and that its issuer
is the issuer of the underlying security, not the writer of the
option, for purposes of the diversification requirements. In order
to avoid realizing a gain within the three-month period, the Fund
may be required to defer closing out a contract beyond the time
when it might otherwise be advantageous to do so. The Fund also<PAGE>
PAGE 155
may be restricted in purchasing put options for the purpose of
hedging underlying securities because of applying the short sale
holding period rules with respect to such underlying securities.

Accounting for futures contracts will be according to generally
accepted accounting principles. Initial margin deposits will be
recognized as assets due from a broker (the Fund's agent in
acquiring the futures position). During the period the futures
contract is open, changes in value of the contract will be
recognized as unrealized gains or losses by marking to market on a
daily basis to reflect the market value of the contract at the end
of each day's trading. Variation margin payments will be made or
received depending upon whether gains or losses are incurred. All
contracts and options will be valued at the last-quoted sales price
on their primary exchange.

<PAGE>
PAGE 156
APPENDIX C

MORTGAGE-BACKED SECURITIES

A mortgage pass-through certificate is one that represents an
interest in a pool, or group, of mortgage loans assembled by the
Government National Mortgage Association (GNMA), Federal Home Loan
Mortgage Corporation (FHMC), Federal National Mortgage Association
(FNMA) or non-governmental entities. In pass-through certificates,
both principal and interest payments, including prepayments, are
passed through to the holder of the certificate. Prepayments on
underlying mortgages result in a loss of anticipated interest, and
the actual yield (or total return) to the Fund, which is influenced
by both stated interest rates and market conditions, may be
different than the quoted yield on certificates. Some U.S.
government securities may be purchased on a when-issued basis,
which means that it may take as long as 45 days after the purchase
before the securities are delivered to the fund.

<PAGE>
PAGE 157
APPENDIX D

DOLLAR-COST AVERAGING

Dollar-cost averaging

Average market price of a share over 5 periods:
$5.00 ($25.00 divided by 5).
The average price you paid for each share:
$4.84 ($500 divided by 103.4).
<PAGE>
PAGE 158

Independent auditors' report
___________________________________________________________________
The board of directors and shareholders
IDS Investment Series, Inc.:

We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Mutual (a series of IDS Investment Series, Inc.) as of
September 30, 1995, 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 ended September 30, 1995,
and the financial highlights for each of the years in the ten-year
period ended September 30, 1995. 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 but
not received 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
Mutual at September 30, 1995, and the results of its operations for
the year then ended and the changes in its net assets for each of
the years in the two-year period ended September 30, 1995, and the
financial highlights for the periods stated in the first paragraph
above, in conformity with generally accepted accounting principles.

/s/ KPMG Peat Marwick LLP

KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 3, 1995
<PAGE>
PAGE 159
<TABLE> Statement of assets and liabilities
<CAPTION>
IDS Mutual
Sept. 30, 1995
_____________________________________________________________________________________________________________

Assets
_____________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $3,182,022,766) $3,492,685,402
Dividends and accrued interest receivable 32,342,604
U.S. government securities held as collateral (Note 5) 121,409,442
_____________________________________________________________________________________________________________
Total assets 3,646,437,448
_____________________________________________________________________________________________________________

Liabilities
____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 2,445,876
Dividends payable to shareholders 3,907,216
Payable for investment securities purchased 7,626,082
Payable upon return of securities loaned (Note 5) 126,964,442
Accrued investment management services fee 126,203
Accrued distribution fee 1,315
Accrued service fee 25,013
Accrued transfer agency fee 23,151
Accrued administrative services fee 6,419
Other accrued expenses 427,662
_____________________________________________________________________________________________________________
Total liabilities 141,553,379
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $3,504,884,069
_____________________________________________________________________________________________________________

Represented by
_____________________________________________________________________________________________________________
Capital stock -- $.01 par value; (Note 1) $ 2,762,549
Additional paid-in capital 3,151,631,580
Undistributed net investment income 141,787
Accumulated net realized gain (Note 1) 39,660,918
Unrealized appreciation of investments and on translation of assets and
liabilities in foreign currencies 310,687,235
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $3,504,884,069
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $2,595,767,248
Class B $ 33,069,355
Class Y $ 876,047,466

Net asset value per share of outstanding capital stock: Class A shares 204,596,326 $ 12.69
Class B shares 2,611,405 $ 12.66
Class Y shares 69,047,171 $ 12.69

See accompanying notes to financial statements. <PAGE>
PAGE 160
Financial statements

Statement of operations
IDS Mutual
Sept. 30, 1995
_________________________________________________________________________________________________________________

Investment income
_____________________________________________________________________________________________________________
<S> <C>
Income:
Interest $ 91,296,476
Dividends (net of foreign taxes withheld of $1,422,264) 78,425,802
_____________________________________________________________________________________________________________
Total income 169,722,278
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 16,124,106
Distribution fee
Class A 812,464
Class B 55,191
Transfer agency fee 4,403,062
Incremental transfer agency fee - Class B 1,331
Service fee
Class A 2,316,914
Class B 12,878
Administrative services fee 600,853
Compensation of directors 62,298
Compensation of officers 32,121
Custodian fees 536,999
Postage 161,085
Registration fees 348,978
Reports to shareholders 94,750
Audit fees 33,750
Administrative 22,917
Other 32,867
_____________________________________________________________________________________________________________
Total expenses 25,652,564
_____________________________________________________________________________________________________________
Earnings credits on cash balances (Note 2) (19,007)
_____________________________________________________________________________________________________________
Total net expenses 25,633,557
_____________________________________________________________________________________________________________
Investment income -- net 144,088,721
_____________________________________________________________________________________________________________

Realized and unrealized gain -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions
(including gain of $1,371,220 from foreign currency transactions) (Note 3) 37,926,459
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies 320,251,829
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 358,178,288
___________________________________________________________________________________________________________
Net increase in net assets resulting from operations $502,267,009
_____________________________________________________________________________________________________________

See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE 161
<TABLE> Financial statements
<CAPTION>
Statements of changes in net assets
IDS Mutual
Year ended Sept. 30
_____________________________________________________________________________________________________________

Operations and distributions 1995 1994
_____________________________________________________________________________________________________________
<S> <C> <C>

Investment income -- net $ 144,088,721 $ 133,513,034
Net realized gain on investments and foreign currency 37,926,459 149,214,488
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies 320,251,829 (284,665,447)
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations 502,267,009 (1,937,925)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (117,584,771) (131,395,507)
Class B (432,989) --
Class Y (26,282,638 --
Net realized gain
Class A (127,571,078) (150,422,829)
Excess distribution of realized gain
Class A (1,051,260) --
Class Y (319,960) --
_____________________________________________________________________________________________________________
Total distributions (273,242,696) (281,818,336)
_____________________________________________________________________________________________________________

Capital share transactions (Note 4)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 354,292,541 664,265,348
Class B shares 32,239,278 __
Class Y shares 879,303,339 __
Reinvestment of distributions at net asset value
Class A shares 217,251,464 247,558,333
Class B shares 416,785 __
Class Y shares 26,602,598 __
Payments for redemptions
Class A shares (1,135,236,869) (417,171,236)
Class B shares (Note 2) (533,909) --
Class Y shares (97,142,295) __
_____________________________________________________________________________________________________________

Increase in net assets from capital share transactions 277,192,932 494,652,445
_____________________________________________________________________________________________________________

Total increase in net assets 506,217,245 210,896,184

Net assets at beginning of year 2,998,666,824 2,787,770,640
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$141,787 and $3,130,143) $3,504,884,069 $2,998,666,824
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 162
Notes to financial statements
IDS Mutual

___________________________________________________________________
1. Summary of significant accounting policies

The Fund is a series of IDS Investment Series, Inc. and registered
under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. IDS Investment
Series, Inc. has 10 billion authorized shares of capital stock that
can be allocated among the separate series as designated by the
board of directors. 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 and such
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) 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:

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.

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 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.
<PAGE>
PAGE 163
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.

<PAGE>
PAGE 164
On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, undistributed net investment
income has been reduced by $2,776,679, and accumulated net realized
gain has been icreased by $619,587, resulting in a net
reclassification adjustment to increase additional paid-in-capital
by $2,157,092.

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

___________________________________________________________________
2. Expenses and sales charges

Under terms of a prior agreement that ended March 19, 1995, the
Fund paid AEFC 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 0.14% of
average daily net assets. The fee was 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 Balanced 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 was less than 1%, the adjustment would have been zero.
The adjustment decreased the fee by $102,475 for the year ended
Sept. 30, 1995.

Also under terms of the prior agreement, the Fund paid AEFC a
distribution fee at an annual rate of $6 per shareholder account
and a transfer agency fee at an annual rate of $15 per shareholder
account.

During the year ended Sept. 30, 1995, the Fund's custodian and
transfer agency fees were reduced by $19,007 as a result of
earnings credits from overnight cash balances.

Effective March 20, 1995, when the Fund began offering multiple
classes of shares, the Fund entered into agreements with AEFC for
managing its portfolio, providing administrative services and
serving as transfer agent as follows: Under its Investment
Management Services Agreement, 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 performance incentive adjustment<PAGE>
PAGE 165
remains unchanged from the prior agreement. Under an Administrative
Services Agreement, the Fund pays AEFC for administration and
accounting services at a percentage of the Fund's average daily net
assets in reducing percentages from 0.04% to 0.02% annually.

Under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The Fund pays AEFC an annual fee
per shareholder account for this service as follows:

o Class A $15
o Class B $16
o Class Y $15

Also effective March 20, 1995, the Fund entered into agreements
with American Express Financial Advisors Inc. for distribution and
shareholder servicing-related services as follows: Under 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.

AEFC will assume and pay any expenses (except taxes and brokerage
commissions) that exceed the most restrictive applicable state
expense limitation.

Sales charges received by American Express Financial Advisors Inc.
for distributing Fund shares were $3,937,838 for Class A and $5,026
for Class B for the year ended Sept. 30, 1995. The Fund also pays
custodian fees to American Express Trust Company, an affiliate of
AEFC.

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 $34,967 for the year ended Sept. 30, 1995.

___________________________________________________________________
3. Securities transactions

Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,284,362,359 and
$1,070,469,963, respectively, for the year ended Sept. 30, 1995.
Realized gains and losses are determined on an identified cost
basis.

<PAGE>
PAGE 166
___________________________________________________________________
4. Capital share transactions

Transactions in shares of capital stock for the periods indicated
are as follows:
<TABLE><CAPTION>
___________________________________________________________________
Year ended Sept. 30, 1995 Year ended
9/30/94
Class A Class B* Class Y* Class A
___________________________________________________________________
<S> <C> <C> <C> <C>
Sold 30,312,458 2,621,280 74,793,637 53,618,895
Issued for
reinvested 19,120,967 33,440 2,181,788 20,162,068
distributions
Redeemed (97,099,300) (43,315) (7,928,254) (33,760,095)
___________________________________________________________________

Net increase
(decrease) (47,665,875) 2,611,405 69,047,171 40,020,868
____________________________________________________________________
* Inception date was March 20, 1995.
</TABLE>
___________________________________________________________________
5. Lending of portfolio securities

At Sept. 30, 1995, securities valued at $124,202,552 were on loan
to brokers. For collateral, the Fund received $5,555,000 in cash
and U.S. government securities valued at $121,409,442. Income from
securities lending amounted to $399,308 for the year ended Sept.
30, 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.

___________________________________________________________________
6. Illiquid securities

At Sept. 30, 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 Sept. 30,
1995, was $844,169 which represents 0.2% of 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. Financial highlight

"Financial highlights" showing per share data and selected
information is presented on pages 7 and 8 of the prospectus.

<PAGE>
PAGE 167
<TABLE>
<CAPTION> Investments in securities

IDS Mutual (Percentages represent value of
Sept. 30, 1995 investments compared to net assets)
_____________________________________________________________________________________________________________________________

Common stocks (55.3%)
_____________________________________________________________________________________________________________________________

Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Aerospace & defense (1.7%)
Raytheon 350,000 $ 29,750,000
Rockwell Intl 600,000 28,350,000
_______________
Total 58,100,000
_____________________________________________________________________________________________________________________________
Automotive & related (3.0%)
Dana 800,000 23,100,000
Ford Motor 900,000 (c) 28,012,500
General Motors 600,000 28,125,000
Genuine Parts 625,000 25,078,125
______________
Total 104,315,625
_____________________________________________________________________________________________________________________________
Banks and savings & loans (4.5%)
BankAmerica 400,000 23,950,000
First Union 500,000 25,500,000
Fleet Financial 700,000 (c) 26,425,000
NationsBank 500,000 33,625,000
Norwest 800,000 26,200,000
Republic NY 350,000 20,475,000
______________
Total 156,175,000
_____________________________________________________________________________________________________________________________
Beverages & tobacco (2.6%)
Anheuser-Busch 525,000 32,746,875
Philip Morris 375,000 31,312,500
UST 1,000,000 28,625,000
______________
Total 92,684,375
_____________________________________________________________________________________________________________________________
Building materials (0.7%)
Masco 900,000 24,750,000

_____________________________________________________________________________________________________________________________
Chemicals (4.3%)
ARCO Chemical 575,000 28,031,250
Dow Chemical 425,000 31,662,500
Ethyl 1,500,000 16,687,500

See accompanying notes to investments in securities.
<PAGE>
PAGE 168
Lubrizol 750,000 24,468,750
Olin 350,000 24,062,500
Rohm & Haas 425,000 25,659,375
______________
Total 150,571,875
_____________________________________________________________________________________________________________________________
Computers & office equipment (1.8%)
IBM 300,000 28,312,500
Xerox 250,000 33,593,750
______________
Total 61,906,250
_____________________________________________________________________________________________________________________________
Energy (3.5%)
Amoco 475,000 30,459,375
Atlantic Richfield 275,000 29,528,125
Exxon 450,000 32,512,500
Mobil 300,000 29,887,500
______________
Total 122,387,500
_____________________________________________________________________________________________________________________________
Financial services (2.9%)
Alexander Haagen Properties 535,000 6,219,375
AMLI 375,000 7,218,750
Avalon 130,200 2,652,825
CBL & Associates 400,000 8,300,000
Crown Amer 760,200 6,271,650
Equity Residential 550,000 16,568,750
Kranzco Realty 217,800 3,675,375
Mills 332,600 6,028,375
Paragon 450,000 7,706,250
Simon Properties 600,000 15,225,000
Taubman Centers 1,100,000 11,000,000
Wellsford 500,000 (i) 10,687,500
______________
Total 101,553,850
_____________________________________________________________________________________________________________________________
Furniture & appliances (1.3%)
Maytag 1,300,000 22,750,000
Stanley Works 550,000 23,856,250
______________
Total 46,606,250
_____________________________________________________________________________________________________________________________
Health care (3.1%)
Amer Home Products 375,000 31,828,125
Baxter Intl 750,000 30,843,750
Bristol-Myers Squibb 400,000 29,150,000
SmithKline Beecham 350,000 17,718,750
______________
Total 109,540,625
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 169
Health care services (0.8%)
LTC Properties 400,000 5,800,000
Meditrust 400,000 13,850,000
Omega Healthcare Investors 300,000 8,025,000
______________
Total 27,675,000
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.3%)
General Signal 358,000 10,471,500
_____________________________________________________________________________________________________________________________
Industrial transporation (2.3%)
GATX 400,000 20,700,000
Norfolk Southern 400,000 29,900,000
Union Pacific 450,000 29,812,500
______________
Total 80,412,500
_____________________________________________________________________________________________________________________________
Insurance (4.1%)
Amer General 850,000 31,768,750
Aon 750,000 30,656,250
Providian 525,000 21,787,500
St. Paul Companies 525,000 30,646,875
Travelers 550,000 29,218,750
______________
Total 144,078,125
_____________________________________________________________________________________________________________________________
Media (2.1%)
Dun & Bradstreet 425,000 24,596,875
Gannett 525,000 28,678,125
Knight-Ridder 350,000 20,518,750
______________
Total 73,793,750
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (3.3%)
General Electric 525,000 33,468,750
Minnesota Mining & Manufacturing 525,000 29,662,500
Tenneco 575,000 26,593,750
Textron 400,000 27,300,000
______________
Total 117,025,000
_____________________________________________________________________________________________________________________________
Paper & packaging (1.5%)
Union Camp 500,000 28,812,500
Westvaco 550,000 25,093,750
______________
Total 53,906,250
_____________________________________________________________________________________________________________________________
Retail (3.8%)
Dayton Hudson 324,300 24,606,262
K mart 1,250,000 18,125,000
May Department Stores 650,000 28,437,500
Melville 600,000 20,700,000
Nordstrom 350,000 14,612,500
Shopko Stores 900,000 11,137,500
TJX 1,350,000 16,031,250
______________
Total 133,650,012
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 170
Utilities-electric (0.5%)
Amer Electric 92,200 3,353,775
Duke Power 213,100 9,243,212
Northern States Power 106,300 4,823,323
Union Electric 34,300 1,281,963
______________
Total 18,702,312
_____________________________________________________________________________________________________________________________
Utilities-telephone (0.6%)
Pacific Telesis Group 650,000 19,987,500
_____________________________________________________________________________________________________________________________
Foreign (6.6%) (h)
Anglian Water 1,500,000 13,486,500
B.T.R. 4,500,000 23,215,500
English China Clay 2,500,000 14,337,500
Hanson ADR 1,700,000 27,625,000
Imperial Chemical Inds 2,250,000 28,548,000
Repsol S.A. ADR 950,000 30,162,500
Royal Dutch Petroleum 275,000 33,756,250
Severn Trent Water 1,238,015 12,265,015
Southern Water 29,044 (i) 313,908
Southern Water 1,000,000 10,808,000
Thames Water 62,842 (i) 530,261
Thames Water 1,761,051 14,859,748
Tomkins 5,500,000 21,895,500
______________
Total 231,803,682
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $1,691,638,127) $1,940,096,981
____________________________________________________________________________________________________________________________
Preferred stocks and other (1.0%)
_____________________________________________________________________________________________________________________________

Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
Atlantic Richfield
$9.00 Cv 700,000 $ 17,850,000
Reynolds Metals
3.31% Cv 300,000 15,525,000
Uirginia-Amer Wtr
5.05% Cm 2,600 (g) 218,954
Western Resources
4.25% Cm 10,000 (g) 584,590
_____________________________________________________________________________________________________________________________
Total preferred stocks and other
(Cost: $33,152,613) $ 34,178,544
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE 171
<TABLE>
<CAPTION>
Bonds (34.7%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
U.S. government obligations (12.4%)
U.S. Treasury 5.75% 2003 $15,000,000 $ 14,610,600
6.00 1997 20,000,000 20,066,600
6.25 2000 20,000,000 (c) 20,191,800
6.25 2023 50,000,000 47,594,500
6.375 1997 40,000,000 40,391,600

6.625 1997 20,000,000 20,239,000
6.75 2000 15,000,000 (c) 15,431,400
6.875 2000 20,000,000 20,664,800

7.125 1999 62,650,000 65,142,843
7.25 2016 15,000,000 16,053,150
7.50 2001 19,675,000 21,082,943
9.375 2006 13,500,000 16,682,355
10.375 2012 40,000,000 52,936,800
Govt Trust Certs Israel 9.250 2001 10,000,000 10,904,800
Resolution Funding Corp 8.125 2019 45,000,000 52,008,750
______________
Total 434,001,941
_____________________________________________________________________________________________________________________________
Mortgage-backed securities (8.5%)
Collateralized Mtge Obligation Trust 9.95 2014 5,000,000 5,318,550
Federal Home Loan Bank 7.32 1997 20,000,000 20,008,000
Federal Home Loan Mtge Corp 5.50 2009 6,093,700 5,794,743
6.50 2007 1,073,668 1,056,822
6.75 2008 3,141,846 3,063,300
8.00 2024 10,096,131 10,345,404
Collateralized Mtge Obligation 7.50 2003 7,800,000 8,052,564
8.50 2022 7,000,000 7,485,450
Inverse Floater 3.453 1997 5,287,981 (e) 4,833,373
Trust Series Z 6.00 2023 11,159,721 (f) 9,186,013
6.50 2023 19,319,818 (f) 16,419,854
8.25 2024 5,617,647 (f) 5,634,387
Federal Natl Mtge Assn 5.50 2009 8,739,883 8,311,105
6.50 2023-24 34,030,396 32,849,882
7.40 2004 33,750,000 (c) 35,863,088
7.50 2002-14 4,177,620 4,251,607
9.00 2024 10,623,349 11,121,372
Collateralized Mtge Obligation 4.50 2007 11,900,000 10,063,949
5.00 2024 6,696,553 6,171,743
Inverse Floater 5.602 2023 2,201,805 (e) 1,765,804
Trust Series Z 6.00 2024 6,596,552 (f) 5,046,494
6.50 2023 16,090,811 (f) 13,235,530
7.00 2016-22 48,073,378 (f) 45,680,597
7.50 2014 7,746,269 (f) 7,697,158
8.00 2006-20 18,573,106 (f) 19,243,433
_____________
Total 298,500,222
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 172
Financial (2.7%)
Banks and savings & loans (0.2%)
First Bank System 6.875 2007 5,750,000 5,715,040

_____________________________________________________________________________________________________________________________
Commercial finance (1.0%)
Carco Auto Master Trust
Asset-Backed Obligation 7.875 1998 6,000,000 6,073,680
GMAC 7.50 1999 8,000,000 8,231,360
Premium Auto
Asset-Backed Obligation 6.45 1998 7,000,000 7,039,480
Salomon Brothers 6.75 2006 7,000,000 6,397,930
Standard Credit Card Trust 5.95 2004 8,550,000 8,205,178
______________
Total 35,947,628
_____________________________________________________________________________________________________________________________
Financial services (0.9%)
Associates 6.00 2000 6,000,000 5,901,300
Avco Financial 7.25 1999 6,500,000 6,673,225
Corporate Property Investors 7.18 2013 1,500,000 (g) 1,426,110
General Electric Capital
Reset Nts 8.65 2018 4,000,000 (k) 4,061,400
Intl Lease Finance 5.99 1998 5,000,000 (g) 4,968,100
Nationwide Trust
Credit Sensitive Nts 9.875 2025 3,500,000 (g) 3,912,860
Property Trust Amer 7.50 2014 5,000,000 4,689,300
______________
Total 31,632,295
_____________________________________________________________________________________________________________________________
Insurance (0.6%)
Nationwide Mutual Insurance 7.50 2024 4,000,000 (g) 3,780,680
New York Life 7.50 2023 5,000,000 (g) 4,801,600
Principal Mutual 8.00 2044 7,150,000 (g) 6,799,006
SunAmerica 8.125 2023 5,150,000 5,258,408
______________
Total 20,639,694
_____________________________________________________________________________________________________________________________
Industrial (5.4%)
Aerospace & defense (0.3%)
United Technologies 8.875 2019 9,500,000 11,233,370
_____________________________________________________________________________________________________________________________
Airlines (0.7%)
AMR 6.125 2024 22,500,000 23,006,250
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 173
Beverages & tobacco (0.1%)
Coca-Cola 7.375 2093 3,000,000 3,093,840

_____________________________________________________________________________________________________________________________
Building materials (0.1%)
Owens-Corning Fiberglas 9.375 2012 3,500,000 4,001,340
_____________________________________________________________________________________________________________________________
Computers & office equipment (0.3%)
Apple Computer 6.50 2004 6,100,000 5,893,698
IBM 6.375 2000 5,100,000 5,104,488
______________
Total 10,998,186
_____________________________________________________________________________________________________________________________
Electronics (0.1%)
Harris 10.375 2018 4,000,000 4,450,080
20,858,940
_____________________________________________________________________________________________________________________________
Energy (0.6%)
Occidental Petroleum 9.25 2000 6,500,000 6,360,1202
Phillips Petroleum 7.20 2023 5,000,000 4,633,200
Standard Oil 9.00 2019 9,000,000 9,865,620
______________
Total 20,858,940
_____________________________________________________________________________________________________________________________
Food (0.6%)
Grand Met
Cv 6.50 2000 20,000,000 (g) 22,725,000
_____________________________________________________________________________________________________________________________
Health care (1.0%)
Johnson & Johnson 8.00 1998 20,000,000 20,429,800
Kaiser Foundation 9.55 2005 6,000,000 7,154,100
Schering-Plough
Zero Coupon 7.31 1996 9,300,000 (d,g) 8,677,086
______________
Total 36,260,986
_____________________________________________________________________________________________________________________________
Household products (0.1%)
Proctor & Gamble 8.00 2024 3,000,000 3,341,340
_____________________________________________________________________________________________________________________________
Media (0.4%)
Cox Communication 7.625 2025 9,000,000 9,003,690
Time Warner 8.375 2033 5,000,000 5,093,750
--------------
Total 14,097,440
_____________________________________________________________________________________________________________________________
Paper & packaging (0.9%)
Crown Cork & Seal 8.00 2023 6,000,000 6,169,380
Federal Paper Board 10.00 2011 7,000,000 8,567,230
Intl Paper 5.125 2012 13,400,000 10,869,276
Pope & Talbot 8.375 2013 4,500,000 4,252,590
______________
Total 29,858,476
<PAGE>
PAGE 174
Retail (0.2%)
Penney (JC) 9.05 2001 4,500,000 5,020,110
_____________________________________________________________________________________________________________________________
Utilities (2.8%)
Electric (1.1%)
Arizona Public Service
Sale Lease-Backed Obligation 8.00 2015 5,400,000 5,420,250
Commonwealth Edison 6.50 1997 10,000,000 10,025,200
Pacific Gas 7 Electric 8.25 2022 4,600,000 4,869,284
Pennsylvania Power & Light
1st Mtge 9.25 9019 5,000,000 5,391,650
Texas Utilities Electric
1st Mtge 7.375 2025 7,050,000 6,799,091
Wisconsin Electric Power
1st Mtge 7.75 2023 5,500,000 5,683,810
______________
Total 38,189,285
_____________________________________________________________________________________________________________________________
Telephone (1.7%)
BellSouth Tel 6.50 2005 9,000,000 (c) 8,960,490
Bell Tel Pennsylvania 7.375 2033 5,000,000 4,971,300
GTE 8.75 2021 5,000,000 5,567,900
9.375 2000 4,600,000 5,136,774
Illinois Bell Tel
1st Mtge 4.375 2003 4,600,000 3,991,926
New York Tel 4.875 2006 13,000,000 11,260,600
Pacific Bell Tel 6.625 2034 6,100,000 5,570,093
7.375 2043 7,500,000 7,454,625
U S WEST 6.625 2005 7,000,000 6,987,050

--------------

Total 59,900,758
_____________________________________________________________________________________________________________________________
Foreign (2.9%)(h)
ABN Amro Bank
(U.S. Dollar) 7.125 2093 7,000,000 6,562,500
Asian Development Bank
(U.S. Dollar) 9.125 2000 17,700,000 19,688,949
Canadian Natl Railway
(U.S. Dollar) 7.625 2023 6,000,000 5,948,040
Carter Holt Harvey
(U.S. Dollar) 7.625 2002 8,750,000 9,157,663
Govt of Canada
(Canadian Dollar) 10.50 2001 7,500,000 6,293,576
Hydro Quebec
(Canadian Dollar) 10.875 2001 10,000,000 8,418,977
Interamer Development Bank Euro
(U.S. Dollar) 9.50 2000 5,000,000 5,627,800
KFW Intl Finance
(U.S. Dollar) 8.00 2010 6,750,000 7,445,047
Legrand
(U.S. Dollar) 8.50 2025 10,000,000 11,240,700
Petronas
(U.S. Dollar) 7.75 2015 (g) 10,000,000 10,359,900
Republic of Italy
(U.S. Dollar) 6.875 2023 5,000,000 4,555,300
Republic of Poland
(U.S. Dollar) 7.75 2000 (g) 7,000,000 7,035,000

__________________
Total 102,333,452
/TABLE
<PAGE>
PAGE 175
<TABLE>
<CAPTION>
<S> <C> <C>
Total bonds
(Cost: $1,154,592,519) $ 1,215,805,673
_____________________________________________________________________________________________________________________________

Short-term securities (8.6%)
_____________________________________________________________________________________________________________________________

Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
U.S. government agency (0.1%)
Federal Home Loan Bank
Disc Notes
10-02-95 5.66% $ 1,200,000 $ 1,199,622
10-16-95 5.66 2,200,000 2,194,466
______________
Total 3,394,088
_____________________________________________________________________________________________________________________________
Commercial paper (8.5%)
A.I. Credit
10-10-95 5.75 3,000,000 2,995,233
Amer General
10-24-95 5.76 10,000,000 9,961,867
Amgen
11-17-95 5.72 7,600,000 7,542,544
Aon
10-23-95 5.76 6,300,000 6,275,553
Associates North America
10-06-95 5.78 13,400,000 13,387,181
10-12-95 5.79 5,900,000 5,888,711
10-24-95 5.75 6,300,000 6,275,976
Avco Financial
10-17-95 5.77 4,600,000 4,587,553
10-26-95 5.78 3,600,000 3,584,191
Banque Paribas Canada
12-12-95 5.73 5,000,000 4,938,334
Beneficial
10-18-95 5.78 3,600,000 3,589,668
10-25-95 5.76 4,000,000 3,984,111
CAFCO Public
10-27-95 5.73 6,300,000 (j) 6,273,068
Campbell Soup
11-30-95 5.70 5,000,000 (j) 4,949,194
Cargill
10-06-95 5.76 3,500,000 3,496,657
10-13-95 5.75 6,500,000 6,486,574
CIT Group
10-12-95 5.76 9,700,000 9,681,473
Coca-Cola
11-16-95 5.73 10,000,000 9,922,572
Colgate-Palmolive
12-04-95 5.72 4,900,000 (j) 4,846,998
Commercial Credit
10-26-95 5.77 5,500,000 5,477,239
Credit Agricole
10-16-95 5.78 4,300,000 4,287,698

<PAGE>
PAGE 176
Dresdner
10-03-95 5.74 5,000,000 4,997,617
Gateway Fuel
01-11-96 5.73 8,200,000 8,060,709
General Electric Capital
10-04-95 5.76 7,500,000 7,495,233
Lincoln Natl
11-14-95 5.69 1,500,000 (j) 1,489,425
Merrill Lynch
10-19-95 5.78 4,200,000 4,187,299
Mobile Australia Finance
10-03-95 5.77 10,100,000 (j) 10,095,169
Natl Australia Funding
10-05-95 5.64 6,800,000 6,793,752
PACCAR Financial
10-11-95 5.76 5,300,000 5,290,721
Pacific Mutual
11-07-95 5.73 8,400,000 8,349,682
Penny (JC)
10-20-95 5.76 6,600,000 6,579,027
Pfizer
10-19-95 5.75 5,500,000 (j) 5,483,425
Pitney Bowes Credit
11-02-95 5.72 5,000,000 4,973,013
Reed Elsevier
10-10-95 5.76 15,000,000 (j) 14,976,125
SAFECO Credit
10-16-95 5.75 2,700,000 2,693,136
10-18-95 5.75 5,900,000 5,883,126
10-25-95 5.75 8,300,000 8,267,030
11-17-95 5.74 3,500,000 3,470,529
St. Paul Companies
10-31-95 5.74 3,100,000 (j) 3,084,784
Sandoz
11-17-95 5.80 7,400,000 7,340,523
Southern California Gas
10-04-95 5.79 2,300,000 (j) 2,298,531
Sysco
10-11-95 5.76 2,750,000 (j) 2,744,716
Toyota Motor Credit
10-26-95 5.75 7,300,000 7,269,948
Transam Financial
10-23-95 5.78 6,500,000 6,474,358
UBS Financial
10-02-95 6.52 10,800,000 10,796,088
US WEST Communications
10-27-95 5.75 3,800,000 3,783,755
Wachovia Bank
10-17-95 5.75 11,000,000 11,000,000
11-01-95 5.75 6,900,000 6,900,000
--------------
Total 299,210,116
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $302,639,507) $ 302,604,204
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $3,182,022,766)(l) $3,492,685,402

____________________________________________________________________________________________________________________________
<PAGE>
PAGE 177
_______________________________________________________________________________________________________________
Notes to investments in securities
________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Security is partially or fully on loan. See Note 5 to the financial statements.
(d) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on
the date of acquisition.
(e) Inverse floaters represent securities which pay interest at a rate that increases (decreases) in the
same magnitude as, or in a multiple of, a decline (increase) in the LIBOR (London InterBank Offering Rate) Index.

Interest rate disclosed is the rate in effect on Sept. 30, 1995.
(f) 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.
(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 Sept. 30, 1995, is as follows:

Acquisition
Security date Cost
__________________________________________________________________________________
Southern Water 06-26-95 $276,655
Thames Water 06-12-95 480,482

(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) Interest rate varies, rate shown is the effective rate on Sept. 30, 1995.
(l) At Sept. 30, 1995, the cost of securities for federal income tax purposes was
$3,176,730,644 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:

Unrealized appreciation $370,228,162
Unrealized depreciation (54,273,404)
__________________________________________________________________________________

Net unrealized appreciation $315,954,758
__________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 178

Independent auditors' report
___________________________________________________________________

The board of directors and shareholders
IDS Investment Series, Inc.:

We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Diversified Equity Income Fund (a series of IDS Investment
Series, Inc.) as of September 30, 1995, 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 ended
September 30, 1995, and the financial highlights for each of the
years in the four-year period ended September 30, 1995, and for the
period from October 15, 1990 (commencement of operations), to
September 30, 1991. 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
Diversified Equity Income Fund at September 30, 1995, and the
results of its operations for the year then ended and the changes
in its net assets for each of the years in the two-year period
ended September 30, 1995, 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
November 3, 1995
<PAGE>
PAGE 179
<TABLE>
<CAPTION>
Financial statements

Statement of assets and liabilities
IDS Diversified Equity Income Fund
Sept. 30, 1995
_____________________________________________________________________________________________________________
Assets
______________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $1,036,962,304) $1,154,288,088
Dividends and accrued interest receivable 4,342,037
Receivable for investment securities sold 32,987,244
U.S. government securities held as collateral (Note 5) 15,395,413
_____________________________________________________________________________________________________________
Total assets 1,207,012,782
_____________________________________________________________________________________________________________

Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 24,640,118
Dividends payable to shareholders 70,930
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 7) 229,729
Payable for investment securities purchased 7,822,089
Payable upon return of securities loaned (Note 5) 24,872,213
Accrued investment management services fee 32,011
Accrued distribution fee 1,268
Accrued service fee 10,661
Accrued transfer agency fee 8,907
Accrued administrative services fee 2,283
Other accrued expenses 122,304
_____________________________________________________________________________________________________________
Total liabilities 57,812,513
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $1,149,200,269
_____________________________________________________________________________________________________________

Represented by
_____________________________________________________________________________________________________________
Capital stock -- $.01 par value; (Note 1) $ 1,456,700
Additional paid-in capital 1,054,606,497
Undistributed net investment income 367,388
Accumulated net realized loss (Notes 1 and 8) (24,327,501)
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies (Note 7) 117,097,185
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $1,149,200,269
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $1,091,430,345
Class B $ 31,612,698
Class Y $ 26,157,226
Net asset value per share of outstanding capital stock: Class A shares 138,347,238 $ 7.89
Class B shares 4,007,132 $ 7.89
Class Y shares 3,315,622 $ 7.89

See accompanying notes to financial statements.
<PAGE>
PAGE 180
Financial statements

Statement of operations
IDS Diversified Equity Income Fund
Year ended Sept. 30, 1995
_____________________________________________________________________________________________________________

Investment income
_____________________________________________________________________________________________________________
Income:
Dividends (net of foreign taxes withheld of $266,469) $ 38,081,058
Dividends earned from affiliate 182,750
Interest 11,107,793
_____________________________________________________________________________________________________________
Total income 49,371,601
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 5,291,578
Distribution fee
Class A 318,377
Class B 60,472
Transfer agency fee 1,753,745
Incremental transfer agency fee - Class B 1,652
Service fee
Class A 958,646
Class B 14,111
Administrative services fee 210,581
Compensation of directors 30,645
Compensation of officers 10,640
Custodian fees 230,867
Postage 142,513
Registration fees 403,195
Reports to shareholders 117,155
Audit fees 22,500
Administrative 9,197
Other 21,689
_____________________________________________________________________________________________________________
Total expenses 9,597,563
Earnings credits on cash balances (Note 2) (20,006)
______________________________________________________________________________________________________________
Total net expenses 9,577,557
______________________________________________________________________________________________________________
Investment income -- net 39,794,044
_____________________________________________________________________________________________________________

Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security and foreign currency transactions
(including gain of $446,076 from foreign currency transactions) (Note 3) (25,934,945)
Net realized loss on sale of affiliated securities (75,149)
Net realized gain on closed or expired option contracts written (Note 6) 1,179,473
_____________________________________________________________________________________________________________
Net realized loss on investments and foreign currency (24,830,621)
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies 106,070,195
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 81,239,574
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $ 121,033,618
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.

</TABLE>
<PAGE>
PAGE 181
<TABLE>
<CAPTION>
Financial statements

Statements of changes in net assets
IDS Diversified Equity Income Fund
Year ended Sept. 30,

_____________________________________________________________________________________________________________

Operations and distributions 1995 1994
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 39,794,044 $ 27,087,887
Net realized gain (loss) on investments and foreign currency (24,830,621) 39,681,404
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies 106,070,195 (26,167,681)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 121,033,618 40,601,610
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (37,225,409) (26,871,792)
Class B (181,960) --
Class Y (434,055) --
Net realized gain
Class A (39,678,584) (20,616,878)
Excess distributions of realized gain
Class A (523,553) --
Class B (9,768) --
Class Y (11,614) --
_____________________________________________________________________________________________________________
Total distributions (78,064,943) (47,488,670)
_____________________________________________________________________________________________________________

Capital share transactions (Note 4)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 242,586,941 502,336,890
Class B shares 30,516,349 --
Class Y shares 29,279,592 --
Reinvestment of distributions at net asset value
Class A shares 76,213,964 44,540,693
Class B shares 187,686 --
Class Y shares 443,647 --
Payments for redemptions
Class A shares (202,458,780) (91,147,458)
Class B shares (Note 2) (716,415) --
Class Y shares (5,962,282) --
_____________________________________________________________________________________________________________

Increase in net assets from capital share transactions 170,090,702 455,730,125
_____________________________________________________________________________________________________________

Total increase in net assets 213,059,377 448,843,065

Net assets at beginning of year 936,140,892 487,297,827
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$367,388 and $378,929) $1,149,200,269 $936,140,892
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.

</TABLE>
<PAGE>
PAGE 182
Notes to financial statements

IDS Diversified Equity Income Fund

___________________________________________________________________
1. Summary of significant accounting policies

The Fund is a series of IDS Investment Series, Inc. and registered
under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. IDS
Investment Series, Inc. has 10 billion authorized shares of capital
stock that can be allocated among the separate series as designated
by the board of directors. 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.

Significant accounting policies followed by the Fund are summarized
below:

Valuation of securities

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
<PAGE>
PAGE 183
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

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

<PAGE>
PAGE 184
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

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.

On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, undistributed net investment
income has been decreased by $1,964,161, and accumulated net
realized loss has been decreased by $993,566 resulting in a net
reclassification adjustment to increase additional paid-in-capital
by $970,595.

Dividends to shareholders

Dividends from net investment income, declared daily 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>
PAGE 185
___________________________________________________________________
2. Expenses and sales charges

Under terms of a prior agreement, which ended March 19, 1995, the
Fund paid AEFC 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 0.14% of
average daily net assets.

Also under the terms of a prior agreement, the Fund paid AEFC a
distribution fee at an annual rate of $6 per shareholder account
and a transfer agency fee at an annual rate of $15 per shareholder
account.

During the year ended Sept. 30, 1995, the Fund's custodian and
transfer agency fees were reduced by $20,006 as a result of
earnings credits from overnight cash balances.

Under an Administrative Services Agreement, the Fund pays AEFC for
administration and accounting services at a percentage of the
Fund's average daily net assets in reducing percentages from 0.04%
to 0.02% annually.

Under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The Fund pays AEFC an annual fee
per shareholder account for this service as follows:

o Class A $15
o Class B $16
o Class Y $15

Also effective March 20, 1995, the Fund entered into agreements
with American Express Financial Advisors Inc. for distribution and
shareholder servicing- related services as follows: Under a Plan
and Agreement of Distribution, the Fund pays a distribution fee at
an annual rate of 0.75% of the Fund's average daily net assets
attributable to Class B shares for distribution-related services.

<PAGE>
PAGE 186
AEFC will assume and pay any expenses (except taxes and brokerage
commissions) that exceed the most restrictive applicable state
expense limitation.

Sales charges received by American Express Financial Advisors Inc.
for distributing fund shares were $5,392,426 for Class A and $3,588
for Class B for the year ended Sept. 30, 1995. The Fund also pays
custodian fees to American Express Trust Company, an affiliate of
AEFC.

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 $1,431 for the year ended Sept. 30, 1995.

___________________________________________________________________
3. Securities transactions

Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $1,070,112,240 and $871,608,878,
respectively, for the year ended Sept. 30, 1995. Realized gains
and losses are determined on an identified cost basis.

Brokerage commissions paid to brokers affiliated with AEFC were
$86,872 for the year ended Sept. 30, 1995.

___________________________________________________________________
4. Capital share transactions

<TABLE>
<CAPTION>
Transactions in shares of capital stock for the periods indicated are as follows:
________________________________________________________________________________________
Year ended Sept. 30, 1995 Year ended
9/30/94
Class A Class B* Class Y* Class A
________________________________________________________________________________________
<S> <C> <C> <C> <C>
Sold 33,110,396 4,077,608 4,061,650 65,143,446
Issued for reinvested 10,713,866 24,242 57,935 5,808,815
distributions
Redeemed (27,645,516) (94,718) (803,963) (11,825,092)
_________________________________________________________________________________________
Net increase 16,178,746 4,007,132 3,315,622 59,127,169
_________________________________________________________________________________________
*Inception date was March 20, 1995.

</TABLE>

___________________________________________________________________
5. Lending of portfolio securities

At Sept. 30, 1995, securities valued at $23,995,400 were on loan to
brokers. For collateral, the Fund received $9,476,800 in cash and
U.S. government securities valued at $15,395,413. Income from
securities lending amounted to $139,729 for the year ended Sept.
30, 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>
PAGE 187
___________________________________________________________________
6. Option contracts written

The number of contracts and premium amounts associated with option
contracts written is as follows:

Year ended Sept. 30, 1995
_________________________________________
Puts Calls
Contracts Premium Contracts Premium
___________________________________________________________________

Balance Sept. 30, 1994 -- $ -- 2,000 $ 219,993
Opened 22,716 1,245,933 5,000 591,479
Closed (8,216) (520,775) (3,000) (464,109)
Exercised (3,850) (257,491) (1,650) (151,482)
Expired (10,650) (467,667) (2,350) (195,881)
___________________________________________________________________
Balance Sept. 30, 1995 -- $ -- -- $ --
___________________________________________________________________

___________________________________________________________________
7. Foreign currency contracts

At Sept. 30, 1995, the Fund had entered into a foreign currency
exchange contract that obligates the Fund to deliver currency at a
specified future date. The gross unrealized depreciation on this
contract is included in the accompanying financial statements. The
terms of the open contract is as follows:

Exchange date Currency to be Currency to be Unrealized
delivered received depreciation
___________________________________________________________________
Dec. 14, 1995 9,450,000 14,680,575 $229,729
British Pound U.S. Dollar
___________________________________________________________________

___________________________________________________________________
8. Capital loss carryover

For federal income tax purposes, the Fund has a capital loss
carryover of $24,304,930 at Sept. 30, 1995, that will expire in
2003 and 2004 if not offset by subsequent capital gains. It is
unlikely the board of directors will authorize a distribution of
any net realized capital gains until the available capital loss
carryover has been offset or expires.

___________________________________________________________________
9. Illiquid securities

As Sept. 30, 1995, investments in securities included issues that
are illiquid. The Fund currently limits investments in illiquid
securitities to 10% of the net assets, at market value, at the time
of purchase. The aggregate value of such securities at Sept. 30,
1995, was $200,904 which represents 0.02% of 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.
<PAGE>
PAGE 188
___________________________________________________________________
10. Financial highlights

"Financial highlights" showing per share data and selected
information is presented on pages 6 and 7 of the prospectus.
<PAGE>
PAGE 189
<TABLE>
<CAPTION>
Investments in securities

IDS Diversified Equity Income Fund (Percentages represent value of
Sept. 30, 1995 investments compared to net assets)

Investments in securities
_____________________________________________________________________________________________________________________________

Common stocks (84.4%)
_____________________________________________________________________________________________________________________________

Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Aerospace & defense (2.0%)
Rockwell Intl 235,000 $ 11,103,750
United Technologies 135,000 11,930,625
______________
Total 23,034,375
_____________________________________________________________________________________________________________________________
Automotive & related (2.1%)
Ford Motor 425,000 (c) 13,228,125
Genuine Parts 260,000 10,432,500
______________
Total 23,660,625
_____________________________________________________________________________________________________________________________
Banks and savings & loans (5.6%)
BankAmerica 275,000 16,465,625
First Chicago 235,000 16,126,875
First Union 300,000 15,300,000
NationsBank 245,000 16,476,250
______________
Total 64,368,750
_____________________________________________________________________________________________________________________________
Beverages & tobacco (4.1%)
Anheuser-Busch 230,000 14,346,250
Philip Morris 190,000 15,865,000
UST 595,000 17,031,875
______________
Total 47,243,125
_____________________________________________________________________________________________________________________________
Building materials (1.2%)
Weyerhaeuser 295,000 13,459,375
_____________________________________________________________________________________________________________________________
Chemicals (3.8%)
Dow Chemical 155,000 11,547,500
Monsanto 105,000 10,578,750
Nalco Chemical 300,000 10,237,500
PPG Inds 250,000 11,625,000
______________
Total 43,988,750
_____________________________________________________________________________________________________________________________
Computers & office equipment (1.2%)
Pitney Bowes 335,000 14,070,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.

Energy (6.0%)
Amoco 240,000 15,390,000
Exxon 180,000 13,005,000
Mobil 140,000 13,947,500
Total 495,000 14,911,875
Ultramar 475,000 11,281,250
______________
Total 68,535,625
_____________________________________________________________________________________________________________________________
Financial services (1.5%)
Federal Natl Mtge 90,000 9,315,000
United Asset Management 200,000 8,025,000
______________
17,340,000
_____________________________________________________________________________________________________________________________
Food (1.0%)
ConAgra 295,000 11,689,375
_____________________________________________________________________________________________________________________________
<PAGE>
PAGE 190
Health care (5.3%)
Amer Home Products 150,000 12,731,250
Bristol-Myers Squibb 160,000 11,660,000
Lilly (Eli) 145,000 13,031,875
Merck 205,000 11,480,000
Warner Lambert 120,000 11,430,000
______________
Total 60,333,125
_____________________________________________________________________________________________________________________________
Health care services (2.0%)
LTC Properties 365,000 5,292,500
Nationwide Health 125,000 5,125,000
Omega Healthcare Investors 210,000 5,617,500
US Healthcare 200,000 7,075,000
______________
Total 23,110,000
_____________________________________________________________________________________________________________________________
Household products (1.3%)
Clorox 210,000 14,988,750
_____________________________________________________________________________________________________________________________
Industrial machines & services (0.9%)
General Signal 370,000 10,822,500
_____________________________________________________________________________________________________________________________
Industrial transportation (1.7%)
Norfolk Southern 130,000 9,717,500
Union Pacific 145,000 9,606,250
______________
Total 19,323,750
_____________________________________________________________________________________________________________________________
Insurance (3.9%)
Amer General 410,000 15,323,750
Lincoln Natl 340,000 16,022,500
Marsh & McLennan 155,000 13,620,625
______________
Total 44,966,875
_____________________________________________________________________________________________________________________________
Media (3.0%)
Gannett 220,000 12,017,500
Knight-Ridder 180,000 10,552,500
McGraw-Hill 140,000 11,445,000
______________
Total 34,015,000
_____________________________________________________________________________________________________________________________
Multi-industry conglomerates (1.7%)
General Electric 300,000 19,125,000
_____________________________________________________________________________________________________________________________
Paper & packaging (1.9%)
Kimberly-Clark 170,000 11,411,250
Union Camp 185,000 10,660,625
______________
Total 22,071,875
_____________________________________________________________________________________________________________________________
Real estate (8.4%)
Bay Apartment 73,000 1,569,500
Beacon Office Property 200,000 4,275,000
Cali Realty 265,000 5,366,250
Equity Residential 190,000 5,723,750
Felcor Hotel 145,000 4,350,000
Gable Residential Trust 180,000 4,050,000
Highwood Property 185,000 4,879,375
Home Properties 160,000 2,720,000
Manufactured Home Communities 280,000 4,830,000
Merry Land & Investment 200,000 4,225,000
Mid-Amer Apart Communities 215,000 5,321,250
Oasis 225,000 5,062,500
RFS Hotel Investors 530,000 8,082,500
ROC Communities 235,000 5,434,375
South West Property Trust 365,000 4,653,750
Storage Trust Realty 220,000 4,482,500
Storage USA 235,000 7,255,625
Summit Properties 200,000 3,775,000
Sun Communities 200,000 5,200,000
Wellsford 250,000 5,343,750
______________
Total 96,600,125
<PAGE>
PAGE 191
_____________________________________________________________________________________________________________________________
Retail (3.4%)
Dayton Hudson 121,600 9,226,400
Melville 300,000 10,350,000
Rite Aid 380,000 10,640,000
Sears Roebuck 230,000 8,481,250
______________
Total 38,697,650
_____________________________________________________________________________________________________________________________
Utilities-electric (4.7%)
Duke Power 241,200 10,462,050
FPL Group 230,000 9,401,250
Northern States Power of Minnesota 260,000 11,797,500
Public Service of Colorado 295,000 10,103,750
Southern Co 530,000 12,521,250
______________
Total 54,285,800
_____________________________________________________________________________________________________________________________
Utilities-gas (3.1%)
Enron 330,000 11,055,000
Enron Global Power 430,000 9,836,250
Tenneco 325,000 15,031,250
______________
Total 35,922,500
_____________________________________________________________________________________________________________________________
Utilities-telephone (4.2%)
BellSouth 215,000 15,721,875
SBC Communications 290,000 15,950,000
U S WEST 345,000 16,258,125
______________
Total 47,930,000
_____________________________________________________________________________________________________________________________
Foreign (10.4%)(d)
Amcor 1,040,000 (c) 7,796,880
Grand Met 2,100,000 14,765,100
Grand Met 28,574 (i) 200,904
Hanson Inds ADR 1,030,000 16,737,500
Repsol (SA) ADR 515,000 16,351,250
Royal Dutch Petroleum 140,000 17,185,000
SmithKline Beecham 270,000 13,668,750
Tele Danmark ADR 660,000 17,077,500
Tomkins 4,025,000 16,023,525
______________
Total 119,806,409
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $855,579,050) $ 969,389,359
_____________________________________________________________________________________________________________________________

Preferred stocks & other (6.0%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
AK Steel Holdings
7% Cv 185,000 5,596,250
Alco Standard
6.50% Cv 125,650 10,586,012
ATL Richfield
$9 Cv 220,000 (f) 5,610,000
Best Buy
6.50% Cv 190,000 (c) 8,288,750
Browning Ferris
7.25% Cv 260,000 8,645,000
COINTEL
7.00% 120,000 (g) 5,790,000
MFS Communication
2.68% Cv 92,000 3,829,500
Service Corp
3.125% Cv 190,000 13,276,250
Sonoco Products
$2.25 Cv 120,000 7,230,000
_____________________________________________________________________________________________________________________________
Total preferred stocks & other
(Cost: $65,077,995) $ 68,851,762
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 192
<TABLE>
<CAPTION>
Bonds (1.3%)
_____________________________________________________________________________________________________________________________
Issuer Coupon Maturity Principal Value(a)
rate year amount
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Mortgage-backed security (--%)
Federal Natl Mtge Assn
Collateralized Mtge Obligation 9.25% 2016 $ 24,320 $ 24,670
_____________________________________________________________________________________________________________________________
Industrial (1.3%)
Chemicals (0.4%)
US Filter
Cv 6.00 2005 4,000,000 (e) 4,425,000
_____________________________________________________________________________________________________________________________
Health care services (0.4%)
Sandoz
Cv 2.00 2002 6,000,000 (e) 5,040,000
_____________________________________________________________________________________________________________________________
Leisure time & entertainment (0.5%)
Sholodge
Cv 7.50 2004 6,000,000 5,580,000
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $14,930,962) $15,069,670
_____________________________________________________________________________________________________________________________

Options purchased (0.3%)
_____________________________________________________________________________________________________________________________
Issuer Number Exercise Expiration Value(a)
of contracts price date
_____________________________________________________________________________________________________________________________
Put
S&P 500 5,500 $575 Dec. 1995 $ 3,712,500
_____________________________________________________________________________________________________________________________
Total options purchased
(Cost: $4,109,500) $ 3,712,500
_____________________________________________________________________________________________________________________________
</TABLE>

<TABLE>
<CAPTION>
Short-term securities (8.4%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable
date of at
purchase maturity
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.5%)
Federal Home Loan Mtge Corp
Disc Note
10-11-95 5.68% $ 6,000,000 $ 5,989,642
_____________________________________________________________________________________________________________________________
Commercial paper (7.9%)
A.I. Credit
10-10-95 5.75 5,000,000 4,992,056
Avco Financial Services
10-04-95 5.76 3,000,000 2,998,090
BellSouth Telecommunications
10-19-95 5.73 7,700,000 7,676,836
Campbell Soup
10-18-95 5.73 4,800,000 4,786,320
10-25-95 5.73 600,000 597,625
Ciesco LP
11-09-95 5.72 1,700,000 1,689,290
Harris Bank
11-03-95 5.75 2,900,000 2,900,000
Household Finance
10-02-95 5.75 10,600,000 10,596,614
Metlife Funding
10-26-95 5.71 7,600,000 7,568,823
Penney (JC) Funding
10-03-95 5.77 900,000 899,570
Reed Elsevier
10-20-95 5.73 5,000,000 (h) 4,984,167
<PAGE>
PAGE 193
Southwestern Bell Capital
10-25-95 5.75 1,200,000 (h) 1,195,250
Southwestern Bell Telephone
10-25-95 5.76 5,500,000 5,478,153
Transamerica Finance
10-27-95 5.73 7,500,000 7,467,937
UBS Finance
10-02-95 6.52 2,800,000 2,798,986
United Parcel Service of America
10-20-95 5.73 7,875,000 7,850,062
USL Capital
10-03-95 5.76 9,700,000 9,695,376
Wachovia Bank
10-26-95 5.73 7,100,000 7,100,000
______________
Total 91,275,155
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $97,264,797) $ 97,264,797
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $1,036,962,304)(j) $1,154,288,088
_____________________________________________________________________________________________________________________________

Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Security is partially or fully on loan. See Note 5 to the financial statements.
(d) Foreign security values are stated in U.S. dollars.
(e) 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.
(f) ACES are automatically convertible equity securities.
(g) PRIDES -- Preferred Redeemed Increased Dividend Equity Securities are structured
as convertible preferred securities issued by a company. Investors receive an enhanced
yield but based upon a specific formula, potential appreciation is limited. PRIDES pay
dividends, have voting rights, are noncallable for three years and upon maturity, convert
into shares of common stock.
(h) 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.
(i) Identifiees issues considered to be illiquid (see Note 9 to the financial statements).
Information concerning such security holdings at Sept. 30, 1995, is as follows:

Acquisition
Security date Cost
__________________________________________________________________________________________
Grand Met 07-17-95 $184,211

(j) At Sept. 30, 1995, the cost of securities for federal income tax purposes was $1,036,007,632
and the aggregate gross unrealized appreciation and depreciation based on that cost was:

Unrealized appreciation $128,690,680
Unrealized depreciation (10,410,224)
___________________________________________________________________________________________
Net unrealized appreciation $118,280,456
___________________________________________________________________________________________

</TABLE>
<PAGE>
PAGE 194
Part C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits:

(a) FINANCIAL STATEMENTS:

Financial statements filed electronically:

- Independent Auditors' Report dated November 3, 1995
- Statement of Assets and Liabilities, Sept. 30, 1995
- Statement of Operations, Year ended Sept. 30, 1995
- Statement of Changes in Net Assets, for the two-year
period ended Sept. 30, 1994 and Sept. 30, 1995
- Notes to Financial Statements
- Investments in Securities, Sept. 30, 1995
- Notes to Investments in Securities

(b) EXHIBITS:

1. Copy of Articles of Incorporation amended November 13, 1991,
filed as Exhibit 1 to Registrant's Post-Effective Amendment
No. 87 to Registration Statement No. 2-11328 is incorporated
herein by reference.

2. Copy of By-laws, as amended January 12, 1989, filed as Exhibit
2 to Registrant's Post-Effective Amendment No. 80 to
Registration Statement No. 2-11328 is incorporated herein by
reference.

3. Not Applicable.

4. Copy of IDS Mutual's stock certificate, filed as Exhibit No. 3
to Registrant's Form N-1Q for the calendar quarter ended
September 30, 1976 is incorporated herein by reference.

5. Form of Investment Management Services Agreement between
Registrant and American Express Financial Corporation, dated
March 20, 1995, filed electronically as Exhibit 5 to
Registrant's Post-Effective Amendment No. 94 to Registration
Statement No. 2-11328 is incorporated by reference.

6. Form of Distribution Agreement between Registrant and American
Express Financial Advisors Inc., dated March 20, 1995, filed
electronically as Exhibit 6 to Registrant's Post-Effective
Amendment No. 94 to Registration Statement No. 2-11328 is
incorporated by reference.
<PAGE>
PAGE 195
7. All employees are eligible to participate in a profit
sharing plan. Entry into the plan is Jan. 1 or July 1.
The Registrant contributes each year an amount up to 15
percent of their annual salaries, the maximum deductible
amount permitted under Section 404(a) of the Internal
Revenue Code.

8(a). Form of Custodian Agreement between Registrant and
American Express Trust Company, dated March 20, 1995,
filed electronically as Exhibit 8 to Registrant's Post-
Effective Amendment No. 94 to Registration Statement No.
2-11328 is incorporated by reference.

8(b). Form of Custody Agreement between Morgan Stanley Trust
Company and IDS Bank & Trust, dated May, 1993, is filed
electronically as Exhibit 8(b) to Registrant's Post-
Effective Amendment No. 95 to Registration Statement No.
2-11328 is herein incorporated by reference.

9(a). Copy of Plan and Agreement of Merger between IDS Mutual
Minnesota, Inc. and IDS Mutual, Inc. dated April 10,
1986, filed as Exhibit 9 to Post-Effective Amendment No.
70 is herein incorporated by reference.

9(b). Form of Transfer Agency Agreement between Registrant and
American Express Financial Corporation, dated March 20,
1995, filed electronically as Exhibit 9(b) to
Registrant's Post-Effective Amendment No. 94 to
Registration Statement No. 2-11328 is incorporated by
reference.

9(c). Copy of License Agreement between Registrant and IDS
Financial Corporation dated January 25, 1988 filed as
Exhibit No. 9(d) to Registrant's Post-Effective Amendment
No. 80 to Registration Statement No. 2-11328 is
incorporated herein by reference.

9(d). Form of Shareholder Service Agreement between Registrant
and American Express Financial Advisors Inc., dated March
20, 1995, filed electronically as Exhibit 9(d) to
Registrant's Post-Effective Amendment No. 94 to
Registration Statement No. 2-11328 is incorporated by
reference.

9(e). Form of Administrative Service Agreement between
Registrant and American Express Financial Corporation,
dated March 20, 1995, filed electronically as Exhibit
9(e) to Registrant's Post-Effective Amendment No. 94 to
Registration Statement No. 2-11328 is incorporated by
reference.

10. Opinion and consent of counsel as to the legality of the
securities being registered is filed with Registrant's
most recent 24f-2 Notice.

11. Independent Auditors' Consent filed electronically.

12. None.

13. Not Applicable.<PAGE>
PAGE 196
14. Forms of Keogh, IRA and other retirement plans, filed as
Exhibits 14(a) through 14(n) to IDS Growth Fund, Inc.,
Post-Effective Amendment No. 34 to Registration Statement
No. 2-38355 are incorporated herein by reference.

15. Form of Plan and Agreement of Distribution between
Registrant and American Express Financial Advisors Inc.,
dated March 20, 1995, filed electronically as Exhibit 15
to Registrant's Post-Effective Amendment No. 94 to
Registration Statement No. 2-11328 is incorporated by
reference.

16(a). Schedule for computation of each performance quotation
for IDS Mutual provided in the Registration Statement in
response to Item 22, is filed as Exhibit 16(a) to Post-
Effective Amendment No. 88 to Registration No. 2-11328 is
incorporated herein by reference.

16(b). Schedule for computation of each performance quotation
for IDS Diversified Equity Income Fund provided in the
Registration Statement in response to Item 22, is filed
as Exhibit 16(b) to Post-Effective Amendment No. 88 to
Registration No. 2-11328 is incorporated herein by
reference.

17. Financial Data Schedule filed electronically herewith.

18. Copy of plan pursuant to Rule 18f-3 under the 1940 Act
filed electronically as Exhibit 18 to Registrant's Post-
Effective Amendment No. 95 to Registration Statement No.
2-11328 is incorporated herein by reference.

19(a). Directors' Power of Attorney dated Nov. 10, 1994, to sign
Amendments to this Registration Statement, filed
electronically as Exhibit 18(a) to Registrant's Post-
Effective Amendment No. 93, is incorporated herein by
reference.

19(b). Officers' Power of Attorney, dated Nov. 1, 1995, to sign
Amendments to this Registration Statement, filed
electronically.

Item 25. Persons Controlled by or Under Common Control with
Registrant:

None.
<PAGE>
PAGE 197
Item 26. Number of Holders of Securities

(1) (2)
Number of Record
Holders as of
Title of Class Nov. 9, 1995

IDS Mutual
Common Stock 170,728

IDS Diversified Equity
Income Common Stock 119,260

Item 27. Indemnification

The Articles of Incorporation of the registrant provide that the
Fund shall indemnify any person who was or is a party or is
threatened to be made a party, by reason of the fact that she or he
is or was a director, officer, employee or agent of the Fund, or is
or was serving at the request of the Fund as a director, officer,
employee or agent of another company, partnership, joint venture,
trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may
purchase liability insurance and advance legal expenses, all to the
fullest extent permitted by the laws of the State of Minnesota, as
now existing or hereafter amended. The By-laws of the registrant
provide that present or former directors or officers of the Fund
made or threatened to be made a party to or involved (including as
a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by
the Minnesota Business Corporation Act, all as more fully set forth
in the By-laws filed as an exhibit to this registration statement.

Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.

Any indemnification hereunder shall not be exclusive of any other
rights of indemnification to which the directors, officers,
employees or agents might otherwise be entitled. No
indemnification shall be made in violation of the Investment
Company Act of 1940.
<PAGE>
PAGE 198

<PAGE>
PAGE 1
<TABLE><CAPTION>
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)

Directors and officers of American Express Financial Corporation who are directors and/or
officers of one or more other companies:
<S> <C> <C>
Ronald G. Abrahamson, Vice President--Service Quality and Reengineering

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
and Reengineering
American Express Service Corporation Vice President

Douglas A. Alger, Vice President--Total Compensation

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Total Compensation

Peter J. Anderson, Director and Senior Vice President--Investments

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Investments
IDS Advisory Group Inc. Director and Chairman
of the Board
IDS Capital Holdings Inc. Director and President
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701

Ward D. Armstrong, Vice President-Sales and Marketing, American Express Institutional Services

American Express Financial Advisors IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, American
Express Institutional
Services

Joseph M. Barsky III, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
IDS Advisory Group Inc. Vice President

Robert C. Basten, Vice President--Tax and Business Services

American Express Financial Advisors IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
American Express Tax & Business Director, President and
Services Inc. Chief Executive Officer
<PAGE>
PAGE 2
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Timothy V. Bechtold, Vice President--Risk Management Products

American Express Financial Advisors IDS Tower 10 Vice President-Risk
Minneapolis, MN 55440 Management Products
IDS Life Insurance Company Vice President-Risk
Management Products

Carl E. Beihl, Vice President--Strategic Technology Planning

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Strategic Technology
Planning
Alan F. Bignall, Vice President--Financial Planning Systems

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Financial Planning
Systems
American Express Service Corporation Vice President

John C. Boeder, Vice President--Mature Market Group

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205

Karl J. Breyer, Director, Senior Vice President--Corporate Affairs and General Counsel

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Affairs and
Special Counsel
American Express Minnesota Foundation Director
IDS Aircraft Services Corporation Director and President

Harold E. Burke, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Express Service Corporation Vice President

Daniel J. Candura, Vice President--Marketing Support

American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support

Cynthia M. Carlson, Vice President--American Express Securities Services

American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Advisors Vice President-American
Express Securities Services
<PAGE>
PAGE 3
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Orison Y. Chaffee III, Vice President--Field Real Estate

American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate

James E. Choat, Director and Senior Vice President--Field Management

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President--North
Central Region
American Express Minnesota Foundation Director
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region
IDS Property Casualty Insurance Co. Director

Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty

AMEX Assurance Co. Director and President
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115
<PAGE>
PAGE 4
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Colleen Curran, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel

Alan R. Dakay, Vice President--Institutional Products Group

American Centurion Life Assurance Co. Director and Vice Chairman
and President, Financial
Institutions Division

American Enterprise Life Insurance Co. IDS Tower 10 Director and President
Minneapolis, MN 55440
American Express Financial Advisors Vice President -
Institutional Products
Group

IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing

Regenia David, Vice President--Systems Services

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services

William H. Dudley, Director and Executive Vice President--Investment Operations

American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-
Investment Operations
IDS Advisory Group Inc. Director
IDS Capital Holdings Inc. Director
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer

Roger S. Edgar, Director, Senior Vice President and Technology Advisor

American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 Technology Advisor
<PAGE>
PAGE 5
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel

American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 General Counsel
American Express Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director

Robert M. Elconin, Vice President--Government Relations

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President

Mark A. Ernst, Vice President--Retail Services

American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Vice President-
Retail Services
American Express Tax & Business Director and Chairman of
Services Inc. the Board

Gordon M. Fines, Vice President--Mutual Fund Equity Investments

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mutual Fund Equity
Investments
IDS Advisory Group Inc. Executive Vice President
IDS International, Inc. Vice President and
Portfolio Manager

Robert G. Gilbert, Vice President--Real Estate

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Real Estate

John J. Golden, Vice President--Field Compensation Development

American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation Development

Harvey Golub, Director

American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer<PAGE>
PAGE 6
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Morris Goodwin Jr., Vice President and Corporate Treasurer

American Centurion Life Assurance Co. Vice President and
Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Vice President and
Company Treasurer
American Express Financial Advisors Vice President and
Corporate Treasurer
American Express Insurance Agency of Nevada Inc. Vice President and
Treasurer
American Express Minnesota Foundation Vice President and
Treasurer
American Express Service Corporation Vice President and
Treasurer
American Express Tax & Business Vice President and
Services Inc. Treasurer
American Partners Life Insurance Co. Vice President and
Treasurer
AMEX Assurance Co. Vice President and
Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Director, Vice President
and Treasurer
IDS Cable II Corporation Director, Vice President
and Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Futures Corp. Director
IDS Futures III Corp. Director
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer <PAGE>
PAGE 7
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

IDS Life Series Fund, Inc. Vice President and
Treasurer
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Corporation Director, Vice President
and Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Director, Vice President
and Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440

NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director

Suzanne Graf, Vice President--Systems Services

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services

David A. Hammer, Vice President and Marketing Controller

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President

Lorraine R. Hart, Vice President--Insurance Investments

American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Express Financial Advisors Vice President-Insurance
Investments
American Partners Life Insurance Co. Director and Vice
President-Investments
AMEX Assurance Co. Vice President-Investments
IDS Certificate Company Vice President-Investments
IDS Life Insurance Company Vice President-Investments
IDS Life Series Fund, Inc. Vice President-Investments
IDS Life Variable Annuity Funds A and B Vice President-Investments
<PAGE>
PAGE 8
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

IDS Property Casualty Insurance Company Vice President-Investment
Officer
Investors Syndicate Development Corp. Director and Vice
President-Investments

Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management

American Express Financial Advisors IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets Product
Development & Management

James G. Hirsh, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel

Darryl G. Horsman, Vice President--Product Development and Technology, American Express
Institutional Retirement Services

American Express Trust Company IDS Tower 10 Director and President
Minneapolis, MN 55440

Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer

American Enterprise Investment IDS Tower 10 Vice President and Chief
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Financial Advisors Vice President-
Government and
Customer Relations
American Express Service Corporation Vice President
IDS Securities Corporation Vice President and Chief
Compliance Officer

David R. Hubers, Director, President and Chief Executive Officer

American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive
Minneapolis, MN 55440 Officer and President
American Express Service Corporation Director and President
AMEX Assurance Co. Director
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director

Marietta L. Johns, Director and Senior Vice President--Field Management

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management

James E. Kaarre, Vice President--Marketing Information

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Marketing Information<PAGE>
PAGE 9
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Linda B. Keene, Vice President--Market Development

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Market Development

G. Michael Kennedy, Vice President--Investment Services and Investment Research

American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research

Susan D. Kinder, Director and Senior Vice President--Human Resources

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Human Resources
American Express Minnesota Foundation Director
American Express Service Corporation Vice President

Richard W. Kling, Director and Senior Vice President--Risk Management Products

American Centurion Life Assurance Co. Director
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Express Financial Advisors Senior Vice President-
Risk Management Products
American Express Insurance Agency of Nevada Inc. Director and President
American Partners Life Insurance Co. Director and Chairman of
the Board
AMEX Assurance Co. Director and Chairman of
the Board
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President
IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A and B Director and Chairman of
the Board and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President

Paul F. Kolkman, Vice President--Actuarial Finance

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
<PAGE>
PAGE 10
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Claire Kolmodin, Vice President--Service Quality

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality

Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems

American Express Financial Advisors IDS Tower 10 Director and Senior Vice
Minneapolis, MN 55440 President-Field
Management and Business
Systems
American Express Service Corporation Vice President

Edward Labenski, Jr.., Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President

Kurt A. Larson, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager

Lori J. Larson, Vice President--Variable Assets Product Development

American Express Financial Advisors IDS Tower 10 Vice President-Variable
Minneapolis, MN 55440 Assets Product
Development
IDS Cable Corporation Director and Vice President
IDS Cable II Corporation Director and Vice President
IDS Futures Brokerage Group Assistant Vice President-
General Manager/Director
IDS Futures Corporation Director and Vice President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and Vice President
IDS Partnership Services Corporation Director and Vice President
IDS Realty Corporation Director and Vice President

Ryan R. Larson, Vice President--IPG Product Development

American Centurion Life Assurance Co. Director and
Vice President-Product
Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development

Daniel E. Laufenberg, Vice President and Chief U.S. Economist

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist
<PAGE>
PAGE 11
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Richard J. Lazarchic, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager

Peter A. Lefferts, Director and Senior Vice President--Corporate Strategy and Development

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Strategy and
Development
American Express Service Corporation Director
American Express Trust Company Director
IDS Plan Services of California, Inc. Director
Investors Syndicate Development Corp. Director

Douglas A. Lennick, Director and Executive Vice President--Private Client Group

American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-Private
Client Group
American Express Service Corporation Vice President

Jonathan S. Linen, Director

Mary J. Malevich, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS International, Inc. Vice President and
Portfolio Manager

Fred A. Mandell, Vice President--Field Marketing Readiness

American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness

William J. McKinney, Vice President--Field Management Support

American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support

Thomas W. Medcalf, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager

William C. Melton, Vice President-International Research and Chief International Economist

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist
<PAGE>
PAGE 12
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Janis E. Miller, Vice President--Variable Assets

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Variable Assets
IDS Cable Corporation Director and President
IDS Cable II Corporation Director and President
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and President
IDS Life Insurance Company Director and Executive
Vice President-Variable
Assets
IDS Life Series Fund, Inc. Director
IDS Life Variable Annuity Funds A&B Director
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
IDS Life Insurance Company of New York Box 5144 Executive Vice President
Albany, NY 12205

James A. Mitchell, Director and Executive Vice President--Marketing and Products

American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President-
Marketing and Products
American Express Tax and Business Director
Services Inc.
AMEX Assurance Co. Director
IDS Certificate Company Director and Chairman of
the Board
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director

Pamela J. Moret, Vice President--Corporate Communications

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Communications
American Express Minnesota Foundation Director and President

Barry J. Murphy, Director and Senior Vice President--Client Service

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service

Mary Owens Neal, Vice President--Mature Market Segment

American Express Financial Advisors Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Segment<PAGE>
PAGE 13
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Robert J. Neis, Vice President--Information Systems Operations

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Information Systems
Operations

James R. Palmer, Vice President--Insurance Operations

American Express Financial Advisors IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corp. Vice President
IDS Life Insurance Company Vice President-Taxes

Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business

American Express Financial Advisors IDS Tower 10 Vice President-Specialty
Minneapolis, MN 55440 Service Teams and
Emerging Business

Susan B. Plimpton, Vice President--Segmentation Development and Support

American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support

Ronald W. Powell, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary
IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary

James M. Punch, Vice President--Geographic Service Teams

American Express Financial Advisors IDS Tower 10 Vice President-Geographic
Minneapolis, MN 55440 Services Teams

Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments

American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Taxable Mutual Fund
Investments
IDS Advisory Group Inc. Vice President
<PAGE>
PAGE 14
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

ReBecca K. Roloff, Vice President--1994 Program Director

American Express Financial Advisors IDS Tower 10 Vice President-1994
Minneapolis, MN 55440 Program Director

Stephen W. Roszell, Vice President--Advisory Institutional Marketing

American Express Financial Advisors IDS Tower 10 Vice President-Advisory
Minneapolis, MN 55440 Institutional Marketing
IDS Advisory Group Inc. President and Chief
Executive Officer
IDS International, Inc. Director

Robert A. Rudell, Vice President--American Express Institutional Retirement Services

American Express Financial Advisors IDS Tower 10 Vice President-American
Minneapolis, MN 55440 Express Institutional
Services
American Express Trust Company Director and Chairman of
the Board
IDS Sales Support Inc. Director and President

John P. Ryan, Vice President and General Auditor

American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor

Erven A. Samsel, Director and Senior Vice President--Field Management

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-
New England Region
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region
<PAGE>
PAGE 15
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Stuart A. Sedlacek, Vice President--Assured Assets

American Centurion Life Assurance Co. Director and Chairman
and President
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
American Express Financial Advisors Vice President-
Assured Assets
American Partners Life Insurance Co. Director and President
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Director and Chairman of
the Board and President

Donald K. Shanks, Vice President--Property Casualty

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President

F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments

American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Express Financial Advisors Vice President-Senior
Portfolio Manager,
Insurance Investments
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
AMEX Assurance Co. Vice President
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer

Judy P. Skoglund, Vice President--Human Resources and Organization Development

American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development

Ben C. Smith, Vice President--Workplace Marketing

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing
<PAGE>
PAGE 16
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

William A. Smith, Vice President and Controller--Private Client Group

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group

Bridget Sperl, Vice President--Human Resources Management Services

American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services

William A. Stoltzmann, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Partners Life Insurance Co. Director, Vice President,
General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary

James J. Strauss, Vice President--Corporate Planning and Analysis

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis

Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD

American Express Financial Advisors IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD

Fenton R. Talbott, Director

PAGE 19
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

John R. Thomas, Director and Senior Vice President--Information and Technology

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information and
Technology
<PAGE>
PAGE 17
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Melinda S. Urion, Director, Senior Vice President and Chief Financial Officer

American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Express Financial Advisors Senior Vice President and
Chief Financial Officer
American Partners Life Insurance Co. Director, Vice President,
and Controller
IDS Life Insurance Company Director, Executive Vice
President and Controller
IDS Life Series Fund, Inc. Vice President and
Controller

Wesley W. Wadman, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Vice Chairman
IDS International, Inc. Senior Vice President

Norman Weaver Jr., Director and Senior Vice President--Field Management

American Express Financial Advisors IDS Tower 10 Senior Vice President--
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-Southeast
Region
American Express Service Corporation Vice President
IDS Insurance Agency of Alabama Inc. Vice President-Pacific
Region
IDS Insurance Agency of Arkansas Inc. Vice President-Pacific
Region
IDS Insurance Agency of Massachusetts Inc. Vice President-Pacific
Region
IDS Insurance Agency of New Mexico Inc. Vice President-Pacific
Region
IDS Insurance Agency of North Carolina Inc. Vice President-Pacific
Region
IDS Insurance Agency of Ohio Inc. Vice President-Pacific
Region
IDS Insurance Agency of Wyoming Inc. Vice President-Pacific
Region

James M. Weiss, Vice President and Senior Portfolio Manager

American Express Financial Advisors Inc. Vice President and Senior
Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
<PAGE>
PAGE 18
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Michael L. Weiner, Vice President--Corporate Tax Operations

American Express Financial Advisors IDS Tower 10 Vice President-Corporate
Minneapolis, MN 55440 Tax Operations
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
IDS Futures III Corporation Vice President, Treasurer
and Secretary

Lawrence J. Welte, Vice President--Investment Administration

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer

Jeffry F. Welter, Vice President--Equity and Fixed Income Trading

American Express Financial Advisors IDS Tower 10 Vice President-Equity
Minneapolis, MN 55440 and Fixed Income Trading

William N. Westhoff, Director, Senior Vice President and Global Chief Investment Officer

American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Global Chief Investment
Officer
IDS Fund Management Limited Director
IDS International, Inc. Director
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director

Edwin M. Wistrand, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel

Michael R. Woodward, Director and Senior Vice President--Field Management

IDS Insurance Agency of Massachusetts Inc. Vice President-
North Region
IDS Insurance Agency of New Mexico Inc. Vice President-
North Region

IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
</TABLE>

Item 29. Principal Underwriters.

(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:

IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra
Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-Exempt
Fund, Inc.; IDS International Fund, Inc.; IDS Investment
Series, Inc.; IDS Managed Retirement Fund, Inc.; IDS Market
Advantage Series, Inc.; IDS Money Market Series, Inc.; IDS New
Dimensions Fund, Inc.; IDS Precious Metals Fund, Inc.; IDS
Progressive Fund, Inc.; IDS Selective Fund, Inc.; IDS Special
Tax-Exempt Series Trust; IDS Stock Fund, Inc.; IDS Strategy
Fund, Inc.; IDS Tax-Exempt Bond Fund, Inc.; IDS Tax-Free Money
Fund, Inc.; IDS Utilities Income Fund, Inc. and IDS
Certificate Company.

(b) As to each director, officer or partner of the principal
underwriter:

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Ronald G. Abrahamson Vice President- None
IDS Tower 10 Service Quality and
Minneapolis, MN 55440 Reengineering

Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440

Peter J. Anderson Senior Vice President- Vice
IDS Tower 10 Investments President--
Minneapolis, MN 55440 Investments
<PAGE>
PAGE 20
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 American Express
Institutional Services

Alvan D. Arthur Group Vice President- None
Suite 105 Central California/
2710 S. Gateway Oaks Dr. Western Nevada
Sacramento, CA 95833

Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440

Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440

Timothy V. Bechtold Vice President-Risk None
IDS Tower 10 Management Products
Minneapolis, MN 55440

John D. Begley Group Vice President- None
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235

Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning

Jack A. Benjamin Group Vice President- None
Suite 200 Greater Pennsylvania
3500 Market Street
Camp Hill, PA 17011

Alan F. Bignall Vice President- None
IDS Tower 10 Financial Planning
Minneapolis, MN 55440 Systems

Brent L. Bisson Group Vice President- None
Ste 900 E. Westside Twr Los Angeles Metro
11835 West Olympic Blvd.
Los Angeles, CA 90064

John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440
<PAGE>
PAGE 21
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Walter K. Booker Group Vice President-
Suite 200 New Jersey
3500 Market Street
Camp Hill, NJ 17011

Bruce J. Bordelon Group Vice President- None
Galleria One Suite 1900 Gulf States
Galleria Blvd.
Metairie, LA 70001

Charles R. Branch Group Vice President- None
Suite 200 Northwest
West 111 North River Dr
Spokane, WA 99201

Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel

Harold E. Burke Vice President None
IDS Tower 10 and Assistant
Minneapolis, MN 55440 General Counsel

Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440

Cynthia M. Carlson Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Securities Services

Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440

James E. Choat Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440

Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304

Roger C. Corea Group Vice President- None
290 Woodcliff Drive Upstate New York
Fairport, NY 14450
<PAGE>
PAGE 22
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Henry J. Cormier Group Vice President- None
Commerce Center One Connecticut
333 East River Drive
East Hartford, CT 06108

John M. Crawford Group Vice President- None
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211

Kevin F. Crowe Group Vice President- None
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226

Colleen Curran Vice President and None
IDS Tower 10 Assistant General Counsel
Minneapolis, MN 55440

Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Products
Minneapolis, MN 55440 Group

Regenia David Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440

Scott M. Digiammarino Group Vice President- None
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182

Bradford L. Drew Group Vice President- None
Two Datran Center Eastern Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156

William H. Dudley Director and Executive Director
IDS Tower 10 Vice President-
Minneapolis MN 55440 Investment Operations

Roger S. Edgar Senior Vice President None
IDS Tower 10 and Technology Advisor
Minneapolis, MN 55440

Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440
<PAGE>
PAGE 23
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440

Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440

Joseph Evanovich Jr. Group Vice President- None
One Old Mill Nebraska/Iowa/Dakotas
101 South 108th Avenue
Omaha, NE 68154

Louise P. Evenson Group Vice President- None
Suite 200 San Francisco Bay Area
1333 N. California Blvd.
Walnut Creek, CA 94596

Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments

Douglas L. Forsberg Group Vice President- None
Suite 100 Portland/Eugene
7931 N. E. Halsey
Portland, OR 97213

William P. Fritz Group Vice President- None
Suite 160 Northern Missouri
12855 Flushing Meadows Dr
St. Louis, MO 63131

Carl W. Gans Group Vice President- None
8500 Tower Suite 1770 Twin City Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437

Robert G. Gilbert Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440

John J. Golden Vice President- None
IDS Tower 10 Field Compensation
Minneapolis, MN 55440 Development

Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440

<PAGE>
PAGE 24
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Suzanne Graf Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440

Bruce M. Guarino Group Vice President- None
Suite 1736 Hawaii
1585 Kapiolani Blvd.
Honolulu, HI 96814

David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller

Teresa A. Hanratty Group Vice President- None
Suites 6&7 Northern New England
169 South River Road
Bedford, NH 03110

John R. Hantz Group Vice President- None
Suite 107 Detroit Metro
17177 N. Laurel Park
Livonia, MI 48154

Robert L. Harden Group Vice President- None
Two Constitution Plaza Boston Metro
Boston, MA 02129

Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440

Scott A. Hawkinson Vice President-Assured None
IDS Tower 10 Assets Product Development
Minneapolis, MN 55440 and Management

Brian M. Heath Group Vice President- None
Suite 150 North Texas
801 E. Campbell Road
Richardson, TX 75081

James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel

David J. Hockenberry Group Vice President- None
30 Burton Hills Blvd. Eastern Tennessee
Suite 175
Nashville, TN 37215
<PAGE>
PAGE 25
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations and
Chief Compliance Officer

David R. Hubers Chairman, Chief Director
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President

Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440

James E. Kaarre Vice President- None
IDS Tower 10 Marketing Information
Minneapolis, MN 55440

Linda B. Keene Vice President- None
IDS Tower 10 Market Development
Minneapolis, MN 55440

G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research

Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440

Richard W. Kling Senior Vice President- None
IDS Tower 10 Risk Management Products
Minneapolis, MN 55440

Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440

Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440

David S. Kreager Group Vice President- None
Ste 108 Trestle Bridge V Greater Michigan
5136 Lovers Lane
Kalamazoo, MI 49002

Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems
<PAGE>
PAGE 26
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Mitre Kutanovski Group Vice President- None
Suite 680 Chicago Metro
8585 Broadway
Merrillville, IN 48410

Edward Labenski Jr. Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager

Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager

Lori J. Larson Vice President- None
IDS Tower 10 Variable Assets Product
Minneapolis, MN 55440 Development

Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440

Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440

Richard J. Lazarchic Vice President- None
IDS Tower 10 Senior Portfolio
MInneapolis, MN 55440 Manager

Peter A. Lefferts Senior Vice President- None
IDS Tower 10 Corporate Strategy and
Minneapolis, MN 55440 Development

Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group

Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager

Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440

Daniel E. Martin Group Vice President- None
Suite 650 Pittsburgh Metro
5700 Corporate Drive
Pittsburgh, PA 15237
<PAGE>
PAGE 27
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support

Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440

William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist

Janis E. Miller Vice President- None
IDS Tower 10 Variable Assets
Minneapolis, MN 55440

James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440

John P. Moraites Group Vice President- None
Union Plaza Suite 900 Kansas/Oklahoma
3030 Northwest Expressway
Oklahoma City, OK 73112

Pamela J. Moret Vice President- None
IDS Tower 10 Corporate Communications
Minneapolis, MN 55440

Alan D. Morgenstern Group Vice President-
Suite 200 At Large
3500 Market Street
Camp Hill, NJ 17011

Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440

Mary Owens Neal Vice President-
IDS Tower 10 Mature Market Segment
Minneapolis, MN 55440

Robert J. Neis Vice President- None
IDS Tower 10 Information Systems
Minneapolis, MN 55440 Operations

Ronald E. Newton Group Vice President- None
319 Southbridge St. Rhode Island/Central
Auburn, MA 01501 Massachusetts
<PAGE>
PAGE 28
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Thomas V. Nicolosi Group Vice President- None
Suite 220 New York Metro Area
500 Mamaroneck Avenue
Harrison, NY 10528

James R. Palmer Vice President- None
IDS Tower 10 Taxes
Minneapolis, MN 55440

Carla P. Pavone Vice President- None
IDS Tower 10 Specialty Service Teams
Minneapolis, MN 55440 and Emerging Business

Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support

Larry M. Post Group Vice President- None
One Tower Bridge Philadelphia Metro
100 Front Street 8th Fl
West Conshohocken, PA 19428

Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel

James M. Punch Vice President- None
IDS Tower 10 Geographical Service
Minneapolis, MN 55440 Teams

Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440

R. Daniel Richardson Group Vice President- None
Suite 800 Southern Texas
Arboretum Plaza One
9442 Capital of Texas Hwy N.
Austin, TX 78759

Roger B. Rogos Group Vice President- None
One Sarasota Tower Western Florida
Suite 700
Two N. Tamiami Trail
Sarasota, FL 34236

ReBecca K. Roloff Vice President-1994 None
IDS Tower 10 Program Director
Minneapolis, MN 55440
<PAGE>
PAGE 29
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing

Max G. Roth Group Vice President- None
Suite 201 S IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304

Robert A. Rudell Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Institutional Retirement
Services

John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440

Erven Samsel Director and Senior
45 Braintree Hill Park Vice President-
Suite 402 Field Management
Braintree, MA 02184

Russell L. Scalfano Group Vice President- None
Suite 201 Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715

William G. Scholz Group Vice President- None
Suite 205 Arizona/Las Vegas
7333 E Doubletree Ranch Rd
Scottsdale, AZ 85258

Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440

Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440

F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments

Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development
<PAGE>
PAGE 30
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Julian W. Sloter Group Vice Presidnet- None
Ste 1700 Orlando FinCtr Orlando/Jacksonville
800 North Magnolia Ave.
Orlando, FL 32803

Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440

William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group

James B. Solberg Group Vice President- None
466 Westdale Mall Eastern Iowa Area
Cedar Rapids, IA 52404

Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services

Paul J. Stanislaw Group Vice President- None
Suite 1100 Southern California
Two Park Plaza
Irvine, CA 92714

Lois A. Stilwell Group Vice President- None
Suite 433 Outstate Minnesota Area/
9900 East Bren Road North Dakota/Western Wisconsin
Minnetonka, MN 55343

William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel

James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis

Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440

Neil G. Taylor Group Vice President- None
Suite 425 Seattle/Tacoma
101 Elliott Avenue West
Seattle, WA 98119
<PAGE>
PAGE 31
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

John R. Thomas Senior Vice President- Director
IDS Tower 10 Information and
Minneapolis, MN 55440 Technology

Melinda S. Urion Senior Vice President Treasurer
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer

Peter S. Velardi Group Vice President- None
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338

Charles F. Wachendorfer Group Vice President- None
Suite 100 Denver/Salt Lake City/
Stanford Plaza II Albuquerque
7979 East Tufts Ave Pkwy
Denver, CO 80237

Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager

Norman Weaver Jr. Senior Vice President- None
1010 Main St Suite 2B Field Management
Huntington Beach, CA 92648

Michael L. Weiner Vice President- None
IDS Tower 10 Corporate Tax
Minneapolis, MN 55440 Operations

James M. Weiss Vice President-Senior
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440

Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
Minneapolis, MN 55440

Jeffry M. Welter Vice President- None
IDS Tower 10 Equity and Fixed Income
Minneapolis, MN 55440 Trading

William N. Westhoff Senior Vice President and None
IDS Tower 10 Global Chief Investment
Minneapolis, MN 55440 Officer

Thomas L. White Group Vice President- None
Suite 200 Cleveland Metro
28601 Chagrin Blvd.
Woodmere, OH 44122<PAGE>
PAGE 32
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Eric S. Williams Group Vice President- None
Suite 250 Virginia
3951 Westerre Parkway
Richmond, VA 23233

Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel

Michael R. Woodward Senior Vice President- None
32 Ellicott St Ste 100 Field Management
Batavia, NY 14020

Item 29(c). Not applicable.

Item 30. Location of Accounts and Records

American Express Financial Corporation
IDS Tower 10
Minneapolis, MN 55440

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

(a) Not Applicable.

(b) Not Applicable.

(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.

<PAGE>
PAGE 199

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, IDS Investment
Series, Inc., certifies that it meets the requirements for the
effectiveness of this Amendment to its Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has
caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Minneapolis and the State of Minnesota on the 27th day of
November, 1995.

IDS INVESTMENT SERIES, INC.

By /s/ Melinda S. Urion
Melinda S. Urion, Treasurer

By /s/ William R. Pearce**
William R. Pearce, President

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the 27th day of
November, 1995.

Signature Capacity

/s/ William R. Pearce** President, Principal
William R. Pearce Executive Officer and
Director

/s/ Lynne V. Cheney* Director
Lynne V. Cheney

/s/ William H. Dudley* Director
William H. Dudley

/s/ Robert F. Froehlke* Director
Robert F. Froehlke

/s/ David R. Hubers* Director
David R. Hubers

/s/ Heinz F. Hutter*
Heinz F. Hutter Director
<PAGE>
PAGE 200
Signature Capacity

/s/ Anne P. Jones* Director
Anne P. Jones

/s/ Donald M. Kendall* Director
Donald M. Kendall

/s/ Melvin R. Laird* Director
Melvin R. Laird

/s/ Lewis W. Lehr* Director
Lewis W. Lehr

/s/ Edson W. Spencer* Director
Edson W. Spencer

/s/ John R. Thomas* Director
John R. Thomas

/s/ Wheelock Whitney* Director
Wheelock Whitney

/s/ C. Angus Wurtele* Director
C. Angus Wurtele

*Signed pursuant to Directors' Power of Attorney, dated November
10, 1994, filed electronically as Exhibit 18(a) to Registrant's
Post-Effective Amendment No. 93 by:

/s/ Leslie L. Ogg
Leslie L. Ogg

**Signed pursuant to Officers' Power of Attorney, dated November 1,
1995 filed electronically:

/s/ Leslie L. Ogg
Leslie L. Ogg

<PAGE>
PAGE 201
CONTENTS OF THIS
POST-EFFECTIVE AMENDMENT NO. 96
TO REGISTRATION STATEMENT NO. 2-11328

This post-effective amendment comprises the following papers and
documents:

The facing sheet.

Cross reference sheet.

Part A:

IDS Mutual's prospectus.

IDS Diversified Equity Income Fund's prospectus.

Part B:

IDS Mutual's SAI.

IDS Diversified Equity Income Fund's SAI.

Financial Statements

Part C:

Other information.

Exhibits.

The signatures.

<PAGE>
PAGE 1

EXHIBIT INDEX

B(11) Independent Auditor's Consent.

B(17) Financial Data Schedule.

B(19)(b) Officer's Power of Attorney, dated November 1, 1995.

<PAGE>
PAGE 1

INDEPENDENT AUDITORS' CONSENT
___________________________________________________________________

The Board of Directors and Shareholders
IDS Investment Series, Inc.:

The audits referred to in our report dated November 3, 1995
included the related supplementary financial statement data in
Schedule III on pages 2 & 3 of Part C of this Registration
Statement. The supplementary financial statement data is the
responsibility of Fund Management. Our responsibility is to
express an opinion on this supplementary financial statement data
based on our audit. In our opinion, such supplementary financial
statement data, when considered with the basic financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.

We consent to the use of our report incorporated herein by
reference and to the references to our Firm under the headings
"Financial Highlights" in Part A and "INDEPENDENT AUDITORS" in Part
B of the Registration Statement.

/s/ KPMG Peat Marwick LLP

KPMG Peat Marwick LLP

Minneapolis, Minnesota
November 29, 1995
<PAGE>
PAGE 2
<TABLE>
<CAPTION>
SCHEDULE III

IDS DIVERSIFIED EQUITY INCOME FUND
INVESTMENTS IN AFFILIATES
(AS DEFINED IN SECTION 2 (a) OF THE INVESTMENT COMPANY ACT OF 1940)
YEAR ENDED SEPTEMBER 30, 1995

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
___________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Amount of equity in
Name of issuer and Number of shares held net profit and loss Amount of Value at
title of issuer at close of year for the year dividend income Sept. 30, 1995

Common stocks:

None

Note:

(a) Non-income producing.

</TABLE>
<PAGE>
PAGE 3
<TABLE>
<CAPTION>
SCHEDULE III (CONT'D)

IDS DIVERSIFIED EQUITY INCOME FUND
CHANGES IN INVESTMENTS IN AFFILIATES
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995

Gross Gross
Shares held purchases sales Shares held Market value Amount of
Name of issuer at beginning and and at close at dividend
and title of issuer of year additions reductions of year Sept. 30, 1995 income
__________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Common stock:

Conso Products 300,000 -- 300,000 -- -- (a)

Malan Realty 225,000 -- 225,000 -- -- 182,750

_______ ________ _______ ________ ________ _______

525,000 -- 525,000 -- -- 182,750
======= ======== ======= ======== ======== =======

Note:

(a) Non-income producing.

</TABLE>

<PAGE>
PAGE 1
[ARTICLE] 6
[SERIES]
[NUMBER] 1
[NAME] IDS DIVERSIFIED EQUITY INCOME FUND CLASS A
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-END] SEP-30-1995
[INVESTMENTS-AT-COST] 1036962304
[INVESTMENTS-AT-VALUE] 1154288088
[RECEIVABLES] 37329281
[ASSETS-OTHER] 15395413
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1207012782
[PAYABLE-FOR-SECURITIES] 7822089
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 49990424
[TOTAL-LIABILITIES] 1149200269
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1056063197
[SHARES-COMMON-STOCK] 138347238
[SHARES-COMMON-PRIOR] 122168492
[ACCUMULATED-NII-CURRENT] 367388
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (24327501)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 117097185
[NET-ASSETS] 1149200269
[DIVIDEND-INCOME] 38263808
[INTEREST-INCOME] 11107793
[OTHER-INCOME] 0
[EXPENSES-NET] (9577557)
[NET-INVESTMENT-INCOME] 39794044
[REALIZED-GAINS-CURRENT] (24830621)
[APPREC-INCREASE-CURRENT] 106070195
[NET-CHANGE-FROM-OPS] 121033618
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (37225409)
[DISTRIBUTIONS-OF-GAINS] (39678584)
[DISTRIBUTIONS-OTHER] (523553)
[NUMBER-OF-SHARES-SOLD] 33110396
[NUMBER-OF-SHARES-REDEEMED] (27645516)
[SHARES-REINVESTED] 10713866
[NET-CHANGE-IN-ASSETS] 213059377
[ACCUMULATED-NII-PRIOR] 27087887
[ACCUMULATED-GAINS-PRIOR] 39681404
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 5291578
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 9577557
[AVERAGE-NET-ASSETS] 992914935
[PER-SHARE-NAV-BEGIN] 7.66
[PER-SHARE-NII] .30
[PER-SHARE-GAIN-APPREC] .53
[PER-SHARE-DIVIDEND] (.29)
[PER-SHARE-DISTRIBUTIONS] (.31)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 7.89
[EXPENSE-RATIO] .94
<PAGE>
PAGE 2
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0

<PAGE>
PAGE 3
[ARTICLE] 6
[SERIES]
[NUMBER] 2
[NAME] IDS DIVERSIFIED EQUITY INCOME FUND CLASS B
[PERIOD-TYPE] OTHER
[FISCAL-YEAR-END] SEP-30-1995
[PERIOD-START] MAR-20-1995
[PERIOD-END] SEP-30-1995
[INVESTMENTS-AT-COST] 1036962304
[INVESTMENTS-AT-VALUE] 1154288088
[RECEIVABLES] 37329281
[ASSETS-OTHER] 15395413
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1207012782
[PAYABLE-FOR-SECURITIES] 7822089
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 49990424
[TOTAL-LIABILITIES] 1149200269
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1056063197
[SHARES-COMMON-STOCK] 4007132
[SHARES-COMMON-PRIOR] 122168492
[ACCUMULATED-NII-CURRENT] 367388
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (24327501)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 117097185
[NET-ASSETS] 1149200269
[DIVIDEND-INCOME] 38263808
[INTEREST-INCOME] 11107793
[OTHER-INCOME] 0
[EXPENSES-NET] (9577557)
[NET-INVESTMENT-INCOME] 39794044
[REALIZED-GAINS-CURRENT] (24830621)
[APPREC-INCREASE-CURRENT] 106070195
[NET-CHANGE-FROM-OPS] 121033618
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (181960)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (9768)
[NUMBER-OF-SHARES-SOLD] 4077608
[NUMBER-OF-SHARES-REDEEMED] (94718)
[SHARES-REINVESTED] 24242
[NET-CHANGE-IN-ASSETS] 213059377
[ACCUMULATED-NII-PRIOR] 27087887
[ACCUMULATED-GAINS-PRIOR] 39681404
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 5291578
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 9577557
[AVERAGE-NET-ASSETS] 15144620
[PER-SHARE-NAV-BEGIN] 7.13
[PER-SHARE-NII] .19
[PER-SHARE-GAIN-APPREC] .74
[PER-SHARE-DIVIDEND] (.17)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 7.89<PAGE>
PAGE 4

[EXPENSE-RATIO] 1.77
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0

<PAGE>
PAGE 1

OFFICERS POWER OF ATTORNEY

City of Minneapolis

State of Minnesota

Each of the undersigned, as officers of the below listed
open-end, diversified investment companies that previously have
filed registration statements and amendments thereto pursuant to
the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 with the Securities and Exchange Commission:

1933 Act 1940 Act
Reg. Number Reg. Number
IDS Bond Fund, Inc. 2-51586 811-2503
IDS California Tax-Exempt Trust 33-5103 811-4646
IDS Discovery Fund, Inc. 2-72174 811-3178
IDS Equity Select Fund, Inc. 2-13188 811-772
IDS Extra Income Fund, Inc. 2-86637 811-3848
IDS Federal Income Fund, Inc. 2-96512 811-4260
IDS Global Series, Inc. 33-25824 811-5696
IDS Growth Fund, Inc. 2-38355 811-2111
IDS High Yield Tax-Exempt Fund, Inc. 2-63552 811-2901
IDS International Fund, Inc. 2-92309 811-4075
IDS Investment Series, Inc. 2-11328 811-54
IDS Life Investment Series, Inc. 2-73115 811-3218
IDS Life Managed Fund, Inc. 2-96367 811-4252
IDS Life Moneyshare Fund, Inc. 2-72584 811-3190
IDS Life Special Income Fund, Inc. 2-73113 811-3219
IDS Managed Retirement Fund, Inc. 2-93801 811-4133
IDS Market Advantage Series, Inc. 33-30770 811-5897
IDS Money Market Series, Inc. 2-54516 811-2591
IDS New Dimensions Fund, Inc. 2-28529 811-1629
IDS Precious Metals Fund, Inc. 2-93745 811-4132
IDS Progressive Fund, Inc. 2-30059 811-1714
IDS Selective Fund, Inc. 2-10700 811-499
IDS Special Tax-Exempt Series Trust 33-5102 811-4647
IDS Stock Fund, Inc. 2-11358 811-498
IDS Strategy Fund, Inc. 2-89288 811-3956
IDS Tax-Exempt Bond Fund, Inc. 2-57328 811-2686
IDS Tax-Free Money Fund, Inc. 2-66868 811-3003
IDS Utilities Income Fund, Inc. 33-20872 811-5522

hereby constitutes and appoints William R. Pearce and Leslie L. Ogg
or either one of them, as her or his attorney-in-fact and agent, to
sign for her or him in her or his name, place and stead, as an
officer, any and all further amendments to said registration
statements filed pursuant to said Acts and any rules and
regulations thereunder, and to file such amendments with all
exhibits thereto and other documents in connection therewith with <PAGE>
PAGE 2
the Securities and Exchange Commission, granting to either of them
the full power and authority to do and perform each and every act
required and necessary to be done in connection therewith.

Dated the 1st day of November, 1995.

/s/ William R. Pearce
William R. Pearce

/s/ Melinda S. Urion
Melinda S. Urion