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SIGNATURE LESLIE L. OGG
TITLE VICE PRESIDENT
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<RECEIVABLES> 0
<ASSETS-OTHER> 2639158772
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2639158772
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 728021
<TOTAL-LIABILITIES> 728021
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2322973199
<SHARES-COMMON-STOCK> 67284516
<SHARES-COMMON-PRIOR> 56327822
<ACCUMULATED-NII-CURRENT> 1924753
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 212521757
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 101011042
<NET-ASSETS> 632588135
<DIVIDEND-INCOME> 57746657
<INTEREST-INCOME> 4650925
<OTHER-INCOME> 0
<EXPENSES-NET> 28821915
<NET-INVESTMENT-INCOME> 33575667
<REALIZED-GAINS-CURRENT> 211284556
<APPREC-INCREASE-CURRENT> 161033636
<NET-CHANGE-FROM-OPS> 405893859
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3285043
<DISTRIBUTIONS-OF-GAINS> 53833250
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16309409
<NUMBER-OF-SHARES-REDEEMED> 11498308
<SHARES-REINVESTED> 6145593
<NET-CHANGE-IN-ASSETS> 229341844
<ACCUMULATED-NII-PRIOR> 616616
<ACCUMULATED-GAINS-PRIOR> 250293495
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3266244
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 28935641
<AVERAGE-NET-ASSETS> 611143693
<PER-SHARE-NAV-BEGIN> 8.96
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 1.38
<PER-SHARE-DIVIDEND> .06
<PER-SHARE-DISTRIBUTIONS> .94
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.40
<EXPENSE-RATIO> 1.66
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> AXP DIVERSIFIED EQUITY INCOME FUND CLASS Y
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 2639158772
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2639158772
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 728021
<TOTAL-LIABILITIES> 728021
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2322973199
<SHARES-COMMON-STOCK> 2260601
<SHARES-COMMON-PRIOR> 8468411
<ACCUMULATED-NII-CURRENT> 1924753
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 212521757
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 101011042
<NET-ASSETS> 21247424
<DIVIDEND-INCOME> 57746657
<INTEREST-INCOME> 4650925
<OTHER-INCOME> 0
<EXPENSES-NET> 28821915
<NET-INVESTMENT-INCOME> 33575667
<REALIZED-GAINS-CURRENT> 211284556
<APPREC-INCREASE-CURRENT> 161033636
<NET-CHANGE-FROM-OPS> 405893859
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 714058
<DISTRIBUTIONS-OF-GAINS> 8013205
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1685598
<NUMBER-OF-SHARES-REDEEMED> 8845686
<SHARES-REINVESTED> 952278
<NET-CHANGE-IN-ASSETS> 229341844
<ACCUMULATED-NII-PRIOR> 616616
<ACCUMULATED-GAINS-PRIOR> 250293495
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 109707
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 28935641
<AVERAGE-NET-ASSETS> 45618589
<PER-SHARE-NAV-BEGIN> 8.96
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> 1.37
<PER-SHARE-DIVIDEND> .14
<PER-SHARE-DISTRIBUTIONS> .94
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.40
<EXPENSE-RATIO> .78
</TABLE>
Independent Auditors' Report
on Internal Accounting Control
The Board of Directors and Shareholders
AXP Investment Series, Inc.:
In planning and performing our audit of the financial statements of AXP
Diversified Equity Income Fund and AXP Mutual (funds within AXP Investment
Series, Inc.) for the year ended September 30, 1999, we considered its internal
control, including control activities for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on the internal control.
The management of AXP Investment Series, Inc. is responsible for establishing
and maintaining internal control. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with generally accepted
accounting principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or irregularities
may occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of the internal control would not necessarily disclose all
matters in the internal control that might be material weaknesses under
standards established by the American Institute of Certified Public Accountants.
A material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that errors or irregularities in amounts that would be material
in relation to the financial statements being audited may occur and not be
detected within a timely period by employees in the normal course of performing
their assigned functions. However, we noted no matters involving the internal
control and its operation, including controls for safeguarding securities, that
we consider to be a material weakness as defined above.
This report is intended solely for the information and use of management, the
Board of Directors of AXP Investment Series, Inc. and the Securities and
Exchange Commission and is not intended to be and should not be used by anyone
other than these specified parties.
KPMG LLP
Minneapolis, Minnesota
November 5, 1999
<TABLE>
<CAPTION>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 1
IDS FUNDS
IDS INVESTMENT SERIES, INC.
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
1. Election of Board members.
H. Brewster Atwater, Jr.
<S> <C> <C> <C>
Affirmative 368,478,574.340 56.039% 98.584%
Withhold 5,292,320.373 .805% 1.416%
TOTAL 373,770,894.713 56.844% 100.000%
Arne H. Carlson
Affirmative 367,929,257.454 55.956% 98.437%
Withhold 5,841,637.259 .888% 1.563%
TOTAL 373,770,894.713 56.844% 100.000%
Lynne V. Cheney
Affirmative 368,275,585.756 56.008% 98.530%
Withhold 5,495,308.957 .836% 1.470%
TOTAL 373,770,894.713 56.844% 100.000%
William H. Dudley
Affirmative 368,507,449.571 56.044% 98.592%
Withhold 5,263,445.142 .800% 1.408%
TOTAL 373,770,894.713 56.844% 100.000%
David R. Hubers
Affirmative 368,564,735.186 56.052% 98.607%
Withhold 5,206,159.527 .792% 1.393%
TOTAL 373,770,894.713 56.844% 100.000%
Heinz F. Hutter
Affirmative 368,433,586.519 56.032% 98.572%
Withhold 5,337,308.194 .812% 1.428%
TOTAL 373,770,894.713 56.844% 100.000%
Anne P. Jones
Affirmative 368,453,329.065 56.035% 98.577%
Withhold 5,317,565.648 .809% 1.423%
TOTAL 373,770,894.713 56.844% 100.000%
SHAREHOLDER RESPONSE SUMMARY REPORT Page 2
IDS FUNDS
IDS INVESTMENT SERIES, INC.
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
William R. Pearce
Affirmative 368,316,410.341 56.015% 98.541%
Withhold 5,454,484.372 .829% 1.459%
TOTAL 373,770,894.713 56.844% 100.000%
Alan K. Simpson
Affirmative 368,172,024.874 55.993% 98.502%
Withhold 5,598,869.839 .851% 1.498%
TOTAL 373,770,894.713 56.844% 100.000%
John R. Thomas
Affirmative 368,518,153.069 56.045% 98.595%
Withhold 5,252,741.644 .799% 1.405%
TOTAL 373,770,894.713 56.844% 100.000%
C. Angus Wurtele
Affirmative 368,476,549.705 56.039% 98.584%
Withhold 5,294,345.008 .805% 1.416%
TOTAL 373,770,894.713 56.844% 100.000%
2. Ratify the selection of independent auditors
Affirmative 363,996,506.311 55.358% 97.385%
Against 3,976,447.800 .604% 1.064%
Abstain 5,797,940.602 .882% 1.551%
TOTAL 373,770,894.713 56.844% 100.000%
3. Change the Fund name from "IDS" to "AXP"
Affirmative 332,311,958.202 50.539% 88.908%
Against 30,856,016.993 4.693% 8.255%
Abstain 10,602,919.518 1.612% 2.837%
TOTAL 373,770,894.713 56.844% 100.000%
SHAREHOLDER RESPONSE SUMMARY REPORT Page 3
IDS FUNDS
IDS INVESTMENT SERIES, INC.
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
** FUND TOTALS: SHARES
RECORD TOTAL 657,537,533.632
VOTED SHARES 373,770,894.713
PERCENT VOTED 56.844%
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 1
IDS FUNDS
IDS DIVERSIFIED EQUITY INCOME FUND
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
1. Election of Board members.
H. Brewster Atwater, Jr.
Affirmative 150,153,733.214 53.855% 98.464%
Withhold 2,342,380.181 .840% 1.536%
TOTAL 152,496,113.395 54.695% 100.000%
Arne H. Carlson
Affirmative 149,889,829.779 53.760% 98.291%
Withhold 2,606,283.616 .935% 1.709%
TOTAL 152,496,113.395 54.695% 100.000%
Lynne V. Cheney
Affirmative 150,103,835.595 53.837% 98.431%
Withhold 2,392,277.800 .858% 1.569%
TOTAL 152,496,113.395 54.695% 100.000%
William H. Dudley
Affirmative 150,169,865.078 53.861% 98.475%
Withhold 2,326,248.317 .834% 1.525%
TOTAL 152,496,113.395 54.695% 100.000%
David R. Hubers
Affirmative 150,238,098.244 53.885% 98.519%
Withhold 2,258,015.151 .810% 1.481%
TOTAL 152,496,113.395 54.695% 100.000%
Heinz F. Hutter
Affirmative 150,135,543.665 53.848% 98.452%
Withhold 2,360,569.730 .847% 1.548%
TOTAL 152,496,113.395 54.695% 100.000%
Anne P. Jones
Affirmative 150,190,884.705 53.868% 98.488%
Withhold 2,305,228.690 .827% 1.512%
TOTAL 152,496,113.395 54.695% 100.000%
SHAREHOLDER RESPONSE SUMMARY REPORT Page 2
IDS FUNDS
IDS DIVERSIFIED EQUITY INCOME FUND
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
William R. Pearce
Affirmative 150,078,145.697 53.828% 98.414%
Withhold 2,417,967.698 .867% 1.586%
TOTAL 152,496,113.395 54.695% 100.000%
Alan K. Simpson
Affirmative 150,037,037.113 53.813% 98.387%
Withhold 2,459,076.282 .882% 1.613%
TOTAL 152,496,113.395 54.695% 100.000%
John R. Thomas
Affirmative 150,222,885.111 53.880% 98.509%
Withhold 2,273,228.284 .815% 1.491%
TOTAL 152,496,113.395 54.695% 100.000%
C. Angus Wurtele
Affirmative 150,166,900.858 53.860% 98.473%
Withhold 2,329,212.537 .835% 1.527%
TOTAL 152,496,113.395 54.695% 100.000%
2. Ratify the selection of independent auditors
Affirmative 148,303,112.619 53.191% 97.250%
Against 1,618,854.755 .581% 1.062%
Abstain 2,574,146.021 .923% 1.688%
TOTAL 152,496,113.395 54.695% 100.000%
3. Change the Fund name from "IDS" to "AXP"
Affirmative 139,414,215.992 50.003% 91.421%
Against 10,097,118.888 3.622% 6.622%
Abstain 2,984,778.515 1.070% 1.957%
TOTAL 152,496,113.395 54.695% 100.000%
SHAREHOLDER RESPONSE SUMMARY REPORT Page 3
IDS FUNDS
IDS DIVERSIFIED EQUITY INCOME FUND
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
5. Approve changes to the Investment Management Services
Agreement
Affirmative 134,755,505.762 48.332% 89.604%
Against 10,333,102.018 3.706% 6.871%
Abstain 5,301,420.615 1.902% 3.525%
TOTAL 150,390,028.395 53.940% 100.000%
Not Voting 2,106,085.000
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 4
IDS FUNDS
IDS DIVERSIFIED EQUITY INCOME FUND
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
** FUND TOTALS: SHARES
RECORD TOTAL 278,811,315.231
VOTED SHARES 152,496,113.395
PERCENT VOTED 54.695%
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 1
IDS FUNDS
IDS DIVERSIFIED EQUITY INCOME FUND CLASS B
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
4. Approve a new shareholder service and distribution plan
Affirmative 29,647,766.056 46.755% 90.324%
Against 2,139,079.842 3.373% 6.517%
Abstain 1,036,965.950 1.636% 3.159%
TOTAL 32,823,811.848 51.764% 100.000%
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 2
IDS FUNDS
IDS DIVERSIFIED EQUITY INCOME FUND CLASS B
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
** FUND TOTALS: SHARES
RECORD TOTAL 63,410,927.440
VOTED SHARES 32,823,811.848
PERCENT VOTED 51.764%
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 1
IDS FUNDS
IDS DIVERSIFIED EQUITY INCOME FUND CLASSES A & B
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
4. Approve a new shareholder service and distribution plan
Affirmative 133,656,299.692 48.321% 89.519%
Against 10,763,627.788 3.891% 7.209%
Abstain 4,884,669.296 1.766% 3.272%
TOTAL 149,304,596.776 53.978% 100.000%
Not Voting 2,106,085.000
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 2
IDS FUNDS
IDS DIVERSIFIED EQUITY INCOME FUND CLASSES A & B
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
** FUND TOTALS: SHARES
RECORD TOTAL 276,603,217.095
VOTED SHARES 151,410,681.776
PERCENT VOTED 54.739%
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 1
IDS FUNDS
IDS MUTUAL
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
1. Election of Board members.
H. Brewster Atwater, Jr.
Affirmative 218,324,841.126 57.647% 98.667%
Withhold 2,949,940.192 .779% 1.333%
TOTAL 221,274,781.318 58.426% 100.000%
Arne H. Carlson
Affirmative 218,039,427.675 57.572% 98.538%
Withhold 3,235,353.643 .854% 1.462%
TOTAL 221,274,781.318 58.426% 100.000%
Lynne V. Cheney
Affirmative 218,171,750.161 57.607% 98.598%
Withhold 3,103,031.157 .819% 1.402%
TOTAL 221,274,781.318 58.426% 100.000%
William H. Dudley
Affirmative 218,337,584.493 57.651% 98.673%
Withhold 2,937,196.825 .775% 1.327%
TOTAL 221,274,781.318 58.426% 100.000%
David R. Hubers
Affirmative 218,326,636.942 57.648% 98.668%
Withhold 2,948,144.376 .778% 1.332%
TOTAL 221,274,781.318 58.426% 100.000%
Heinz F. Hutter
Affirmative 218,298,042.854 57.640% 98.655%
Withhold 2,976,738.464 .786% 1.345%
TOTAL 221,274,781.318 58.426% 100.000%
Anne P. Jones
Affirmative 218,262,444.360 57.631% 98.639%
Withhold 3,012,336.958 .795% 1.361%
TOTAL 221,274,781.318 58.426% 100.000%
SHAREHOLDER RESPONSE SUMMARY REPORT Page 2
IDS FUNDS
IDS MUTUAL
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
William R. Pearce
Affirmative 218,238,264.644 57.624% 98.628%
Withhold 3,036,516.674 .802% 1.372%
TOTAL 221,274,781.318 58.426% 100.000%
Alan K. Simpson
Affirmative 218,134,987.761 57.597% 98.581%
Withhold 3,139,793.557 .829% 1.419%
TOTAL 221,274,781.318 58.426% 100.000%
John R. Thomas
Affirmative 218,295,267.958 57.639% 98.653%
Withhold 2,979,513.360 .787% 1.347%
TOTAL 221,274,781.318 58.426% 100.000%
C. Angus Wurtele
Affirmative 218,309,648.847 57.643% 98.660%
Withhold 2,965,132.471 .783% 1.340%
TOTAL 221,274,781.318 58.426% 100.000%
2. Ratify the selection of independent auditors
Affirmative 215,693,393.692 56.952% 97.478%
Against 2,357,593.045 .623% 1.065%
Abstain 3,223,794.581 .851% 1.457%
TOTAL 221,274,781.318 58.426% 100.000%
3. Change the Fund name from "IDS" to "AXP"
Affirmative 192,897,742.210 50.933% 87.176%
Against 20,758,898.105 5.482% 9.381%
Abstain 7,618,141.003 2.011% 3.443%
TOTAL 221,274,781.318 58.426% 100.000%
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 3
IDS FUNDS
IDS MUTUAL
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
6. Changes to investment policies
6.1 Prohibited conflict of interest
Affirmative 202,149,916.667 53.376% 91.614%
Against 9,681,042.456 2.556% 4.388%
Abstain 8,822,266.195 2.330% 3.998%
TOTAL 220,653,225.318 58.262% 100.000%
Not Voting 621,556.000
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 4
IDS FUNDS
IDS MUTUAL
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
** FUND TOTALS: SHARES
RECORD TOTAL 378,726,218.401
VOTED SHARES 221,274,781.318
PERCENT VOTED 58.426%
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 1
IDS FUNDS
IDS MUTUAL CLASS B
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
4. Approve a new shareholder service and distribution plan
Affirmative 16,025,951.359 48.238% 90.141%
Against 1,175,212.583 3.537% 6.610%
Abstain 577,574.800 1.739% 3.249%
TOTAL 17,778,738.742 53.514% 100.000%
Not Voting 1,037.000
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 2
IDS FUNDS
IDS MUTUAL CLASS B
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
** FUND TOTALS: SHARES
RECORD TOTAL 33,222,689.562
VOTED SHARES 17,779,775.742
PERCENT VOTED 53.517%
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 1
IDS FUNDS
IDS MUTUAL CLASSES A & B
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
4. Approve a new shareholder service and distribution plan
Affirmative 144,185,182.405 51.233% 88.856%
Against 11,961,948.415 4.251% 7.372%
Abstain 6,121,169.418 2.175% 3.772%
TOTAL 162,268,300.238 57.659% 100.000%
Not Voting 613,371.000
<PAGE>
SHAREHOLDER RESPONSE SUMMARY REPORT Page 2
IDS FUNDS
IDS MUTUAL CLASSES A & B
June 30, 1999
% of Outstanding % of Shares
No. of Shares Shares Voted
--------------- ---------------- ----------------
** FUND TOTALS: SHARES
RECORD TOTAL 281,428,684.538
VOTED SHARES 162,881,671.238
PERCENT VOTED 57.877%
</TABLE>
EXHIBIT 77D for AXP Investment Series, Inc.
At the Board of Directors meetings held on September 8-9, 1999, the following
investment policy was eliminated:
Under normal market conditions, the Fund does not intend to commit more than
5% of its total assets to when-issued securities or forward commitments.
