Independent Auditors' Report on Internal Accounting Control
The Board of Directors and Shareholders
AXP Investment Series, Inc.:
In planning and performing our audits 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, 2000, we considered their
internal control, including control activities for safeguarding securities,
in order to determine our auditing procedures for the purpose of expressing
our opinion on the financial statements and to comply with the requirements
of Form N-SAR, not to provide assurance on the internal control.
The management of AXP 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 misstatements caused by error or
fraud in amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a timely
period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving the internal control and
its operation, including controls for safeguarding securities, that we
consider to be a material weakness as defined above.
This report is intended solely for the information and use of management,
the Board of Directors of AXP 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 3, 2000
