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PAGE 1
1996 Annual Report
IDS Diversified Equity Income Fund
(prospectus enclosed)
(icon of) two puzzle pieces
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.
(This annual report includes a prospectus that describes in detail
the Fund's objective, investment policies, risks, sales charges,
fees and other matters of interest. Please read the prospectus
carefully before you invest or send money.)
AMERICAN
EXPRESS
Financial
Advisors
Distributed by American Express Financial Advisors Inc.
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PAGE 2
(Icon of) two puzzle pieces
Dual-purpose stocks
Some of the most sucessful investments over the years have been
stocks that reward investors in two ways--through growth in the
value of the share price as well as through payment of regular
dividend income. Diversified Equity Income sets its sights on
stocks that can provide this double-barreled benefit. The Fund
takes advantage of opportunities across various industries, among
different types of securities and in markets throughout the world
to find investments that meet its combination growth-and-dividend
requirement.
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Contents
(Icon of) One open book inside of another
1996 annnual report
From the president 4
From the portfolio manager 4
Ten largest holdings 6
Making the most of the Fund 7
Long-term performance 8
Independent auditors' report (Fund) 9
Financial statements (Fund) 10
Notes to financial statements (Fund) 13
Independent auditors' report (Portfolio) 18
Financial statements (Portfolio) 19
Notes to financial statements (Portfolio) 22
Investments in securities 31
IDS mutual funds 35
Federal income tax information 39
The purpose of this annual report is to tell investors how the Fund
performed.
1996 prospectus
The Fund in brief
Goals 3p
Investment policies and risks 3p
Structure of the Fund 4p
Manager and distributor 5p
Portfolio manager 6p
Alternative purchase arrangements 6p
Sales charge and Fund expenses 7p
Performance 9p
Financial highlights 9p
Total returns 11p
Investment policies and risks 14p
Facts about investments and their risks 15p
Valuing Fund shares 22p
How to purchase, exchange or redeem shares 23p
Alternative purchase arrangements 23p
How to purchase shares 26p
How to exchange shares 29p
How to redeem shares 29p
Reductions and waivers of the sales charge 34p
Special shareholder services 39p
Services 39p
Quick telephone reference 39p
Distributions and taxes 40p
Dividend and capital gain distributions 40p
Reinvestments 41p
Taxes 42p
How to determine the correct TIN 44p<PAGE>
PAGE 4
How the Fund and Portfolio are organized 45p
Shares 45p
Voting Rights 45p
Shareholder meetings 45p
Special considerations regarding
master/feeder structure 46p
Board members and officers 48p
Investment manager 50p
Administrator and transfer agent 50p
Distributor 51p
About American Express Financial Corporation 52p
General Information 52p
Appendices 53p
Description of corporate bond ratings 53p
Descriptions of derivative instruments 53p
The prospectus, which is bound into the middle of this annual
report, describes the Fund in detail.
(This annual report is not part of the prospectus.)
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PAGE 5
To our shareholders
From the President
The volatility in the stock market in recent months has put some
investors, even experienced ones, on edge. Although no one can
know exactly what will happen next, history tells us that ups and
downs are intrinsic to stock investing.
But, history also shows that changing strategies with every twist
and turn of the market is an impractical and, worse yet, typically
unproductive way to invest. What matters more, therefore, is how
we react to market volatility. If we take a long-term view and
accept the downs with the ups, we improve our chances of success.
For in the investment world, the race most often goes not to the
swift, but to the persistent.
Along the way, of course, you'll still want to review your
investment program to make sure it's on track to achieving your
financial goals. Your American Express financial advisor will help
you do just that, and I suggest you take advantage of his or her
services on a regular basis.
On May 13, 1996, the Fund began investing its assets in Equity
Income Portfolio instead of directly in securities of individual
companies. Following the portfolio manager's letter are the
financial statements of both the Fund and Portfolio. The notes to
the financials and the prospectus go into more detail of how the
new structure works.
William R. Pearce
President of the Fund
From the portfolio manager
A generally favorable investment environment set the stage for a
productive fiscal year for IDS Diversified Equity Income Fund. For
investors in Class A shares, that meant a total return (net asset
value change plus dividends) of 17% from October 1995 through
September 1996.
The stock market gained most of its ground from October through
February, as a low rate of inflation, relatively low interest rates
and often robust corporate profits provided the foundation for
higher stock prices. The rest of the fiscal year was more of a
struggle, though, as concern arose about the possibility of overly
strong economic growth leading to an upturn in inflation.
Fund fluctuates less than the market
Most of the time, growth stocks (those of rapidly growing
companies) were at the front of the market's advances. Because the
focus of this Fund is on comparatively conservative companies,
particularly the ones that generate substantial dividends, that
trend kept the Fund from keeping up with the more dynamic pace of
the market as a whole. On the other hand when the market dropped <PAGE>
PAGE 6
by more than 4% last July, the Fund was down by only about half
that amount--again, a characteristic of its relatively conservative
investment style.
Its well-diversified portfolio served the Fund well, as a variety
of stock sectors contributed positive results. For example, early
in the fiscal year when concerns rose about the possibility of the
economy falling into recession, our "defensive" holdings among
pharmaceutical companies and banks did well. Later, when it
appeared that the economy might be getting ready to take off, our
stocks of "cyclical" companies, such as oil producers and autos,
provided a boost.
Portfolio changes serve Fund well
Also beneficial were some changes I made to the portfolio. These
included: lowering the exposure to real estate investment trusts
(REITs), whose relatively poor price performance had been a drag on
Fund results; reducing holdings among foreign stocks and moving
that money into the U.S. market, which continued to outperform most
foreign markets; cutting back cash reserves and putting a greater
percentage of assets to work in stocks, which proved to be far more
productive; and adding more bonds, to enhance the Fund's yield.
Although I have no reason to expect a major downturn in stocks,
given the market's lofty level at this point (mid-October), I think
that it could be more vulnerable to negative news than it was
earlier in the year. Therefore, I'm comfortable with a broadly
diversified portfolio with a yield well above that of the market as
a whole. Should the investment environment become more difficult,
I think the Fund will weather it relatively well. If, on the other
hand, stocks sustain their strength, I expect the Fund to
participate in the gains on a moderate scale.
Keith Tufte
Portfolio Manager
Class A
12 month performance
(All figures per share)
Net asset value (NAV)
________________________________
Sept. 30, 1996 $ 8.96
Sept. 30, 1995 $ 7.89
Increase $ 1.07
Distributions
Oct. 1, 1995 - Sept. 30, 1996
________________________________
From income $ 0.26
From capital gains $ --
Total distributions $ 0.26
________________________________
Total Return* +17.0%**
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Class B
12-month performance
(All figures per share)
Net asset value (NAV)
________________________________
Sept. 30, 1996 $ 8.96
Sept. 30, 1995 $ 7.89
Increase $ 1.07
Distributions
Oct. 1, 1995 - Sept. 30, 1996
________________________________
From income $ 0.19
From capital gains $ --
Total distributions $ 0.19
________________________________
Total Return* +16.2%**
Class Y
12-month performance
(All figures per share)
Net asset value (NAV)
_______________________________
Sept. 30, 1996 $ 8.96
Sept. 30, 1995 $ 7.89
Increase $ 1.07
________________________________
Distributions
Oct. 1, 1995 - Sept. 30, 1996
________________________________
From income $ 0.27
From capital gains $ --
Total distributions $ 0.27
________________________________
Total Return* +17.3%**
* The prospectus discusses the effect of sales charges, if any, on
the various classes.
**The total return is a hypothetical investment in the Fund with
all distributions reinvested.
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<TABLE><CAPTION>
The Portfolio's ten largest holdings
Equity Income Portfolio
(pie chart) The ten holdings listed here make up 13.88% of the Portfolio's net assets
Percent Value
(of Portfolio's net assets) (as of Sept. 30, 1996)
_____________________________________________________________________________________________________________
<S> <C> <C>
First Union 1.51% $22,027,500
A bank-holding company based in Charlotte, North Carolina, with a strategic market position in
North Carolina, South Carolina and Florida.
Alco Standard 1.44 20,930,000
6.50% Cv Preferred
The company's operations are divided into two business groups: Alco Office products and Unisource.
Unisource Worldwide, Inc. markets and distributes papers, plastic packaging supply items, and
commercial sanitary and maintenance products. Alco Office Products sells, leases and rents office
equipment and operates specialized overnight copy centers.
Crown Cork & Seal 1.42 20,700,000
4.50% Cv Preferred
One of the largest packaging companies in the world.
NationsBank 1.40 20,415,625
A bank holding company with a strong presence in North Carolina, South Carolina, Texas, Virginia,
Florida and Georgia.
American Home Products 1.40 20,400,000
This company is engaged in the discovery, development, manufacturing, distribution and sales of a
diversified line of products in three business segments: health care products, agricultural products
and food products.
Norwest 1.38 20,028,750
As a diversified financial services organization, this company operates through subsidiaries engaged in
banking and in related businesses.
Kimberly-Clark 1.36 19,828,125
World's largest manufacturer of tissue products and other household, personal care and industrial
paper products.
May Dept Stores 1.34 19,450,000
The country's largest department store chain. The company operates over 300 department stores,
including Lord & Taylor, Foley's, Heck's, and Filene's, and 3,800 Payless Shoe Stores.
Penney (JC) 1.32 19,214,375
One of the largest general merchandise retailers. The company distributes family apparel, home
furnishings and leisure lines through its stores and catalog mail order operations.
Key Corp 1.31 19,140,000
The resulting franchise of the merger between Cleveland's Society Bank and New York's Key Bank.
KeyCorp has four major businesses: community banking, national consumer finance, personal
financial services and corporate banking.
</TABLE>
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Class A
12-month performance
(All figures per share)
Net asset value (NAV)
________________________________
Sept. 30, 1996 $ 8.96
________________________________
Sept. 30, 1995 $ 7.89
________________________________
Increase $ 1.07
________________________________
Distributions
Oct. 1, 1995 - Sept. 30, 1996
________________________________
From income $ 0.26
________________________________
From capital gains $ --
________________________________
Total distributions $ 0.26
________________________________
Total return* + 17.0%**
________________________________
Class B
12-month performance
(All figures per share)
Net asset value (NAV)
________________________________
Sept. 30, 1996 $ 8.96
________________________________
Sept. 30, 1995 $ 7.89
________________________________
Increase $ 1.07
________________________________
Distributions
Oct. 1, 1995 - Sept. 30, 1996
________________________________
From income $ 0.19
________________________________
From capital gains $ --
________________________________
Total distributions $ 0.19
________________________________
Total return* + 16.2%**
________________________________
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Class Y
12-month performance
(All figures per share)
Net asset value (NAV)
________________________________
Sept. 30, 1996 $ 8.96
________________________________
Sept. 30, 1995 $ 7.89
________________________________
Increase $ 1.07
________________________________
Distributions
Oct. 1, 1995 - Sept. 30, 1996
________________________________
From income $ 0.27
________________________________
From capital gains $ --
________________________________
Total distributions $ 0.27
________________________________
Total return* + 17.3%**
________________________________
* The prospectus discusses the effect of sales charges, if any,
on the various classes.
** The total return is a hypothetical investment in the Fund with
all distributions reinvested.
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PAGE 11
Making the most of the Fund
Average annual total return
(as of Sept. 30, 1996)
1 year 5 years Since Inception
_____________________________________________________________
Class A* +11.22% +13.77% +15.71%
_____________________________________________________________
Class B** +11.21% --% +17.11%
_____________________________________________________________
Class Y** +17.27% --% +20.56%
_____________________________________________________________
*Inception date was Oct. 15, 1990.
**Inception date was March 20, 1995.
The performance of Class B and Class Y will vary from the
performance of Class A based on differences in sales charges and
fees.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
Figures for Class A reflect the effect of the maximum 5% sales
charge and figures for Class B reflect the applicable contingent
deferred sales charge. This was a period of widely fluctuating
security prices. Past performance is no guarantee of future
results.
Build your assets systematically
This does not ensure a profit or avoid a loss if the market
declines. But, if you can continue to invest regularly through
changing market conditions, it can be an effective way to
accumulate shares to meet your long-term goals.
How dollar-cost averaging works
______________________________________________________________
Month Amount Per-share Number of shares purchased
invested market price
Jan $100 $20 5.00
______________________________________________________________
Feb 100 18 5.56
______________________________________________________________
March 100 17 5.88
______________________________________________________________
April 100 15 6.67
______________________________________________________________
May 100 16 6.25
______________________________________________________________
June 100 18 5.56
______________________________________________________________
July 100 17 5.88
______________________________________________________________
Aug 100 19 5.26
______________________________________________________________
Sept 100 21 4.76
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PAGE 12
______________________________________________________________
Oct 100 20 5.00
______________________________________________________________
By investing an equal number of dollars each month you
automatically buy more shares when the per share market price is
low and fewer shares when the per share market price is high.
You have paid an average price of only $17.91 per share over the 10
months, while the average market price was actually $18.10.
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PAGE 13
The Fund's long-term performance
Three ways to benefit from a mutual fund:
o your shares increase in value when the Fund's investments do well
o you receive capital gains when the gains on investments sold by
the Fund exceed losses
o you receive invome when the Fund's stock dividends, interest and
short-term gains exceed its expenses.
All three make up your total return. And you potentially can
increase your investment if, like most investors, you reinvest your
dividends and capital gain distributions to buy additional shares
of the Fund or another fund.
How $10,000 has grown is IDS Diversified Equity Income Fund
__________________________________________________________________
S&P 500 Stock
Index
$28,108
Mutual
Class A
$20,000
Lipper Balanced
Fund Index
$9,500
___________________________________________________________________
11/1/90 '91 '92 '93 '94 '95 '96
Assumes:
o Holding period from 11/01/90 to 9/30/96.
o Returns do not reflect taxes payable on distributions.
o Reinvestments of all income and capital gain distributions for
the Fund, with a value of $7,014.
Also see "Performance" in the Fund's current prospectus.
Standard and 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, an unmanaged index published by
Lipper Analytical Services, Inc., includes 30 funds that are
generally similar to the Fund, although some funds in the index may
have somewhat different investment policies or objectives.
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PAGE 14
Average annual total return
(as of Sept. 30, 1996)
1 year 5 years Since Inception
__________________________________________________________
Class A* +11.22% +13.77% +15.71%
Class B** +11.21% --% +17.11%
Class Y** +17.27% --% +20.56%
__________________________________________________________
*Inception date was Oct. 15, 1990
**Inception date was March 20, 1995
On the graph above you can see how the Fund's total return compared
to two widely cited performance measures, the S&P 500 and the
Lipper Equity Income Fund Index. In comparing IDS Diversified
Equity Income Fund to the two indexes, you should take into account
the fact that the Fund's performance reflects the maximum sales
charge of 5%, while such charges are not reflected in the
performance of the indexes. If you were actually to buy either
individual securities or mutual funds, any sales charge that you
pay would reduce your total return as well.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
This was a period of widely fluctuating security prices. Past
performance is no guarantee of future results.
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PAGE 15
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing
primarily in foreign securities. Foreign investments may be
subject to currency fluctuations and political and economic risks
of the countries in which the investments are made. They are high
risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies
in developing countries throughout the world that are believed to
offer growth potential. Seeks to provide long-term growth of
capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of stocks of companies
throughout the world that are positioned to meet market needs in a
changing world economy. These companies offer above-average
potential for long-term growth.
(icon of) world
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The Fund may invest up to 20% of
its assets in the U.S. market.
(icon of) three flags
IDS Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets
throughout the world, including the U.S. Seeks to provide a
balance of growth of capital and current income.
(icon of) scale holding two worlds
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of
U.S. and foreign issuers to seek high total return through income
and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common
stocks. They are high risk mutual funds with a potential for high
reward.
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PAGE 16
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic
companies that explore for, mine and process or distribute gold and
other precious metals. A highly aggressive and speculative fund
that seeks long-term growth of capital.
(icon of) cart of precious gems
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Small Company Index Fund
Invests in all or a representative group of the equity securities
comprising the S&P SmallCap 600 Index, as it strives to provide
long-term capital appreciation.
(icon of) office building
IDS Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of
companies included in the S&P 500 Index that are believed to have
strong growth potential. The Portfolio is managed using a research
methodology by the Research Department of AEFC. Goal is long-term
appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of companies that have
above-average potential for long-term growth as a result of new
management, marketing opportunities or technological superiority.
(icon of) trees
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PAGE 17
IDS New Dimensions Fund
Invests in a Portfolio comprised primarily of companies with
significant growth potential due to superiority in technology,
marketing or management. The Fund frequently changes its industry
mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The Fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
Growth & income funds
These funds focus on securities of medium to large, well-
established companies that offer long-term growth of capital and
reasonable income from dividends and interest.
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of capital and
income.
(icon of) three pine trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Managed Allocation Fund
Invests in a Portfolio comprised primarily of U.S. equity
securities, U.S. and foreign debt securities, foreign equity
securities and money market instruments. The Fund provides
diversification among these major investment categories and has a
target mix that represents the way the Fund's investments will be
allocated over the long term. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of
companies representing many sectors of the economy. Seeks current
income and growth of capital.
(icon of) building with columns
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PAGE 18
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) light bulb
IDS Diversified Equity Income Fund
Invests in a Portfolio comprised primarily of high-yielding common
stocks to seek high current income and, secondarily, to benefit
from the growth potential offered by stock investments.
(icon of) two puzzle pieces
IDS Mutual
Invests in a Portfolio which seeks to balance between common stocks
and senior securities (preferred stocks and bonds). Seeks a
balance of growth of capital and current income.
(icon of) scale of justice
Income funds
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income. Secondary
objective is capital growth. Risk varies by bond quality.
IDS Extra Income Fund
Invests in a Portfolio comprised mainly of long-term, high-yielding
corporate fixed-income securities in the lower rated, higher risk
bond categories to seek high current income. Secondary objective
is capital growth.
(icon of) coins
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher
rated, lower risk bond categories, or the equivalent, and in
government bonds.
(icon of) greek column
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PAGE 19
IDS Selective Fund
Invests in a Portfolio comprised primarily of high-quality
corporate bonds and other highly rated debt instruments including
government securities and short-term investments. Seeks current
income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests in a Portfolio comprised primarily of securities issued or
guaranteed as to the timely payment of principal and interest by
the U.S. government, its agencies and instrumentalities. Seeks a
high level of current income and safety of principal consistent
with its type of investments.
(icon of) shield with eagle head enclosed
Tax-exempt income funds
These funds provide tax-free income by investing in municipal
bonds. The income is generally free from federal income tax, but a
portion of the income may be subject to state and local taxes.
Risk varies by bond quality.
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government
units, with at least 75% in the four highest rated, lowest risk
bond categories.
(icon of) shield with Greek column enclosed
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to
the timely payment of principal and interest. The insurance
feature minimizes credit risk of the Fund but does not guarantee
the market value of the Fund's shares.
(icon of) shield with star enclosed
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to
provide income to residents of each respective state that is exempt
from federal, state and local income taxes. (New York is the only
state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
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PAGE 20
IDS High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of medium- and lower-
quality municipal bonds and notes. Lower-quality securities
generally involve greater risk of principal and income.
(icon of) shield with basket of apples enclosed
IDS Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities
with intermediate-term maturities issued by state and local
government units. Goal is to seek a high level of current income
exempt from federal taxes.
(icon of) shield with a tree enclosed
Money market funds
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. An investment in these funds is
neither insured nor guaranteed by the U.S. government, and there
can be no assurance that these funds will be able to maintain a
stable net asset value of $1.00 per share. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
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PAGE 21
Federal income tax information
IDS Diversified Equity Income Fund
_______________________________________ _______
The Fund is required by the Internal Revenue Code of
1986 to tell its shareholders about the tax treatment
of the dividends it pays during its fiscal year.
Some of the dividends listed below were reported to
you on a Form 1099-DIV, Dividends and Distributions,
last January. Dividends paid to you since the end of
last year will be reported to you on a tax statement
sent next January. Shareholders should consult a tax
advisor on how to report distributions for state and
local purposes.
IDS Diversified Equity Income Fund
Fiscal year ended Sept. 30, 1996
Class A
Income distribution taxable as dividend income, 60.20% qualifying
for deduction by corporations.
Payable date Per share
Dec. 28, 1995 $0.06109
March 28, 1996 0.05745
June 27, 1996 0.06530
Sept. 26, 1996 0.07401
Total distributions $0.25785
Class B
Income distribution taxable as dividend income, 60.20% qualifying
for deduction by corporations.
Payable date Per share
Dec. 28, 1995 $0.04580
March 29, 1996 0.04137
June 28, 1996 0.04893
Sept. 27, 1996 0.05760
Total $0.19370
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PAGE 22
Class Y
Income distribution taxable as dividend income, 60.20% qualifying
for deduction by corporations.
Payable date Per share
Dec. 28, 1995 $0.06459
March 29, 1996 0.06108
June 28, 1996 0.06903
Sept. 27, 1996 0.07775
Total $0.27245
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PAGE 23
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchToneR phones only), including
current fund prices and performance, account values and recent
account transactions
National/Minnesota: 800-272-4445
Mpls./St. Paul area: 671-1630
AMERICAN
EXPRESS
Financial
Advisors
IDS Diversified Equity Income Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 24
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report are
placed in a blue strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
