IDS LIFE MANAGED FUND INC, 485APOS, 1994-08-19

IDS LIFE MANAGED FUND INC
485APOS, 1994-08-19

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<PAGE>
PAGE 1
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549-1004

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. (File No. 2-96367)

Post-Effective Amendment No. 14 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940

Amendment No. 16 (File No. 811-4252) X

IDS LIFE MANAGED FUND, INC.
IDS Tower 10, Minneapolis, MN 55440-0010 (612) 330-9283
Leslie L. Ogg - 901 S. Marquette Ave., Suite 2810,
Minneapolis, MN 55402-3268

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)
on (date) pursuant to paragraph (b)
_____60 days after filing pursuant to paragraph (a)
X on October 28, 1994 pursuant to paragraph (a) of rule 485

Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Section
24(f) of the Investment Company Act of 1940. Registrant will file
its 24f-2 Notice for the fiscal year ended Aug. 31, 1994, on or
about Oct. 31, 1994.
<PAGE>
PAGE 2
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Cross reference sheet for the Retirement Annuity Mutual Funds (six funds) and the Retirement Annuity Mutual Funds-Symphony
(Symphony) showing the location in the prospectus and 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.

PART A PART B

Six Funds: Symphony:
Six Funds: Symphony: Page Number in Page Number in
Page Number Page Number Statement of Statement of
Item No. in Prospectus in Prospectus Item No. Additional Information Additional Information
<C> <C> <C> <C> <C> <C>
1 3 23 10 39 94

2 6;6-7 25 11 40-41 95

3(a) 7 26 12 NA NA
(b) NA NA
(c) 7-11 26-29 13(a) 42-47;67-92 96-100;116-139
(d) 7 26 (b) 42-47 96-100
(c) 45-47 98-100
4(a) 6;11-16;17-22 25;29-33;34-38 (d) 51 103
(b) 11-16 29-33
(c) 11-16 29-33 14(a) 20-21* 36-37*
(b) 20-21* 36-37*
5(a) 19;20-21 36;36-37 (c) 21* 37*
(b) 22 38
(b)(i) 22 38 15(a) NA NA
(b)(ii) 21 37-38 (b) NA NA
(b)(iii) 21 37-38 (c) 21* 37*
(c) 18-19 35-36
(d) 6 25 16(a)(i) 22 38
(e) 21 37-38 (a)(ii) 60-61;NA 109-111;NA
(f) NA NA (a)(iii) 60-61 110-111
(g) 21 37-38 (b) 60-61;NA 109-111;NA
(c) NA NA
5A(a) * * (d) None None
(b) * * (e) NA NA
(f) NA NA
6(a) 18 35 (g) NA NA
(b) NA NA (h) 65;66 114;114
(c) NA NA (i) NA;65 NA;114
(d) NA NA
(e) 3 23 17(a) 48-51 100-103
(f) 17 34 (b) 51-53 103-104
(g) 17 34 (c) 48-51 100-103
(d) NA 102
7(a) NA NA (e) 50 103
(b) 10-11 28-29
(c) NA NA 18(a) 18* 35*
(d) NA NA (b) NA NA
(e) NA NA
(f) NA NA 19(a) 59 108
(b) 56-58;59 106-108;108
8(a) NA NA (c) NA NA
(b) NA NA
(c) NA NA 20 60 NA
(d) NA NA
21(a) NA NA
9 None None (b) NA NA
(c) NA NA

22(a) NA NA
(b) 53-55 105-106

23 66 115

*Designates information is located in annual report.
**Designates page number in the prospectus, which is hereby incorporated by reference in the Statement of Additional
Information.
</TABLE>
<PAGE>
PAGE 3

Retirement Annuity Mutual Funds
Prospectus/Oct. 28, 1994

This prospectus describes six funds that receive payments from the
variable accounts of your variable annuity contract. Each of these
funds has different investment objectives and policies.

IDS Life Aggressive Growth Fund is a stock fund investing primarily
in common stocks of small and medium-size companies.

IDS Life International Equity Fund is an international stock fund.

IDS Life Capital Resource Fund is a stock fund.

IDS Life Managed Fund is a managed fund.

IDS Life Special Income Fund is a bond fund.

IDS Life Moneyshare Fund is a money market fund. An investment in
Moneyshare Fund is neither insured nor guaranteed by the U.S.
government and there can be no assurance that the fund will be able
to maintain a stable net asset value of $1 per share.

This prospectus contains facts that can help you decide if the
funds are the right investment for you. Read this along with your
variable annuity prospectus before you invest and keep both
prospectuses for future reference.

Additional facts about the funds are in a Statement of Additional
Information (SAI), filed with the Securities and Exchange
Commission. The SAI, dated Oct. 28, 1994, is incorporated here by
reference. For a free copy, contact IDS Life Insurance Company.

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.

IDS LIFE IS NOT A BANK AND THE SECURITIES IT OFFERS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK,
NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.

IDS Life Capital Resource Fund, Inc.
IDS Life Aggressive Growth Fund
IDS Life International Equity Fund
IDS Life Capital Resource Fund
IDS Life Managed Fund, Inc.
IDS Life Special Income Fund, Inc.
IDS Life Moneyshare Fund, Inc.

<PAGE>
PAGE 4
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
612-671-3733
TTY: 800-285-8846
<PAGE>
PAGE 5
Table of contents

The funds in brief
Goals and types of fund investments
Manager and distributor
Variable accounts

Sales charge and fund expenses
Sales charge
Expenses

Performance
Financial highlights
Total returns
Yield calculation
Key terms

Investment policies and risk
Facts about investments and their risks
Valuing assets

How to invest, transfer or redeem shares
How to invest
How to transfer among variable accounts
Redeeming shares

Distributions and taxes
Dividend and capital gain distributions
Taxes

How the funds are organized
Shares
Voting rights
Shareholder meetings
Portfolio managers
Directors and officers
Investment manager
Investment advisory agreements

About IDS
General information
<PAGE>
PAGE 6
The funds in brief

Goals and types of fund investments

Aggressive Growth Fund's goal is capital appreciation and it
invests primarily in common stocks of small and medium-size
companies.

International Equity Fund's goal is capital appreciation and it
invests primarily in common stocks of foreign issuers.

Capital Resource Fund's goal is capital appreciation and it invests
primarily in U.S. common stocks.

Managed Fund's goal is maximum total investment return through a
combination of capital growth and current income. It invests in
stocks, convertible securities, bonds, and money market
instruments.

Special Income Fund's goal is to provide a high level of current
income while conserving the value of the investment for the longest
period of time. It invests primarily in investment-grade bonds.

Moneyshare Fund's goal is to provide maximum current income
consistent with liquidity and conservation of capital. It invests
in money market securities.

Because any investment involves risk, achieving these goals cannot
be guaranteed. Only the contract owners can change the goals. See
Voting rights.

Manager and distributor

The funds are managed by IDS Life, a subsidiary of IDS Financial
Corporation (IDS). IDS has an agreement with IDS Life to furnish
investment advice for the funds managed by IDS Life.

Variable accounts

You may not buy (nor will you own) shares of the fund directly.
You invest by buying a variable annuity and allocating your
purchase payments among the variable accounts that invest in the
funds.

Sales charge

There is no sales charge for the sale or redemption of fund shares,
but there may be charges associated with your redemption
(surrender) or withdrawal of your annuity contract. Any charges
that apply to the variable accounts and your annuity contract are
described in the variable annuity prospectus.

<PAGE>
PAGE 7
Expenses

The funds pay IDS Life a fee for managing their investment
portfolios and for certain administrative services. The funds also
pay certain nonadvisory expense. See "Investment manager" under
"How the funds are organized".

Performance

Financial highlights

[to be inserted here]

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

Total returns

Average annual total returns as of Aug. 31, 1994

Since
Purchase 1 year inception
made ago Jan. 13, 1992

Aggressive Growth % %
Fund

S&P 500 % %

Cumulative total returns as of Aug. 31, 1994

Since
Purchase 1 year inception
made ago Jan. 13, 1992

Aggressive Growth % %
Fund

S&P 500 % %

Average annual total returns as of Aug. 31, 1994

Since
Purchase 1 year inception
made ago Jan. 13, 1992

International % %
Equity Fund

Morgan Stanley % %
Capital International
World Index

<PAGE>
PAGE 8
Cumulative total returns as of Aug. 31, 1994

Since
Purchase 1 year inception
made ago Jan. 13, 1992

International % %
Equity Fund

Morgan Stanley % %
Capital International
World Index

Average annual total returns as of Aug. 31, 1994

Purchase 1 year 5 years 10 years
made ago ago ago

Capital Resource % % %
Fund

S&P 500 % % %

Cumulative total returns as of Aug. 31, 1994

Purchase 1 year 5 years 10 years
made ago ago ago

Capital Resource % % %
Fund

S&P 500 % % %

Average annual total returns as of Aug. 31, 1994

Since
Purchase 1 year 5 Years inception
made ago ago April 30, 1986

Managed Fund % % %

S&P 500 % % %

Cumulative total returns as of Aug. 31, 1994

Since
Purchase 1 year 5 Years inception
made ago ago April 30, 1986

Managed Fund % % %

S&P 500 % % %

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PAGE 9
Average annual total returns as of Aug. 31, 1994

Purchase 1 year 5 years 10 years
made ago ago ago

Special Income Fund % % %

Lehman Aggregate % % %
Bond Index

Cumulative total returns as of Aug. 31, 1994

Purchase 1 year 5 years 10 years
made ago ago ago

Special Income Fund % % %

Lehman Aggregate % % %
Bond Index

These examples show total returns from hypothetical investments in
each fund. These returns are compared to those of popular indexes
for the same periods. The results do not reflect the expenses that
apply to the variable accounts or the annuity contract. Inclusion
of these charges would reduce total return for all periods shown.

For purposes of calculation, information about each fund assumes
the deduction of applicable fund expenses, makes no adjustments for
taxes that may have been paid on the reinvested income and capital
gains, and covers a period of widely fluctuating securities prices.
Returns shown should not be considered a representation of the
fund's future performance.

The fund's investments 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.

The Morgan Stanley Capital International World Index, compiled from
a composite of securities listed on the markets of North America,
Europe, Australasia and the Far East is widely recognized by
investors as the measurement index for portfolios which invest in
the major markets of the world.

Lehman Aggregate Bond Index is made up of a representative list of
government and corporate bonds as well as asset-backed securities
and mortgage-backed securities. The index is frequently used as a
general measure of bond market performance. However, the
securities used to create the index may not be representative of
the bonds held in Special Income Fund.

<PAGE>
PAGE 10
Yield calculation

Special Income Fund may calculate a 30-day annualized yield by
dividing:

o net investment income per share deemed earned during a 30-day
period by

o the net asset value per share on the last day of the period,
and

o converting the result to a yearly equivalent figure.

This yield calculation does not include any annuity charges or
contingent deferred sales charges, which would reduce the yield
quoted.

A fund's yield varies from day to day, mainly because share values
and net asset values (which are calculated daily) vary in response
to changes in interest rates. Net investment income normally
changes much less in the short run. Thus, when interest rates rise
and share values fall, yield tends to rise. When interest rates
fall, yield tends to follow.

Moneyshare Fund calculates annualized simple and compound yields
based on a seven-day period.

Past yields should not be considered an indicator of future yields.

Key terms

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

Capital gains or losses - Increase or decrease in value of the
securities the funds hold. Gains are realized when securities that
have increased in value are sold. A fund also may have unrealized
gains or losses when securities increase or decrease in value but
are not sold.

Close of business - Normally 3 p.m. Central time each business day
(any day the New York Stock Exchange is open).

Distributions - Payments to the variable accounts of two types:
investment income (dividends) and realized net long-term capital
gains (capital gains distributions).

Investment income - Dividends and interest earned on securities
held by the funds.

Net asset value (NAV) - Value of a single fund share. It is the
total market value of all of a fund's investments and other assets,
less any liabilities, divided by the number of shares outstanding.

<PAGE>
PAGE 11
The NAV is the price the variable account receives when it sells
shares. It usually changes from day to day, and is calculated at
the close of business. For Special Income Fund, NAV generally
declines as interest rates increase and rises as interest rates
decline.

Total return - Sum of all returns for a given period, assuming
reinvestment of all distributions. Calculated by taking the total
value of shares at the end of the period (including shares acquired
by reinvestment), less the price of shares purchased at the
beginning of the period.

Variable Accounts - The separate accounts or subaccounts, each of
which invests in shares of one of the funds.

Yield - Net investment income earned per share for a specified time
period, divided by the net asset value at the end of the period.

Investment policies and risk

Aggressive Growth Fund - Under normal market conditions, Aggressive
Growth Fund invests primarily in common stocks of U.S. and foreign
companies that are small and medium size growth companies. Many of
these companies emphasize technological innovation or productivity
improvements.

The fund invests in warrants to purchase common stock, debt
securities or in securities of large, well-established companies
when the portfolio manager believes those investments offer the
best opportunity for capital growth. The fund also may invest in
foreign securities, derivative instruments and money market
instruments.

International Equity Fund - Under normal market conditions,
International Equity Fund invests at least 80% of its total assets
in foreign equity securities having a potential for superior
growth. Superior means fund performance better than the Morgan
Stanley Capital International World Index.

The fund's investments will be primarily in common stocks and
securities convertible into common stocks of foreign issuers.
However, if the investment manager believes they have more
potential for capital growth, the fund may invest in bonds issued
or guaranteed either by countries that are members of the
Organization for Economic Cooperation and Development (OECD) or by
international agencies such as the World Bank or the European
Investment Bank. These bonds will not be purchased unless, in the
judgment of the investment manager, they are comparable in quality
to bonds rated AA by Standard & Poor's Corporation (S&P).

The percentage of fund assets invested in particular countries or
regions of the world will change according to their political
stability and economic condition. Ordinarily, the fund will invest
in companies domiciled in at least three foreign countries.

<PAGE>
PAGE 12
Normally, investments in U.S. issuers will constitute less than 20%
of the fund's portfolio. However, as a temporary measure, the fund
may invest any portion of its assets in securities of U.S. issuers
that appear to have greater potential for superior growth than
foreign securities. U.S. investments would include common stocks,
convertible securities and corporate and government bonds. The
bonds must bear one of the four highest ratings given by Moody's or
S&P or must be of comparable quality. The fund also may invest in
money market instruments and derivative instruments. No more than
5% of the fund's total assets may be invested in options on
individual securities.

Capital Resource Fund - Under normal market conditions, Capital
Resource Fund invests in U.S. common stocks listed on national
securities exchanges and other securities convertible into common
stock. The portfolio manager selects investments believed to have
potential for capital growth.

The fund also may invest in preferred stocks, bonds, debt
securities, foreign securities, money market instruments and
derivative instruments. The fund does not have a minimum rating
requirement for corporate bonds.

Managed Fund - Under normal market conditions, Managed Fund invests
at least 50% of its total assets in common stocks. The fund also
invests in preferred stocks, convertible securities, warrants,
bonds and money market instruments. Ordinarily, investments other
than common stock would constitute 50% or less of the fund's
portfolio. However, the fund may invest any portion of its assets
in securities other than common stocks. This allows the investment
manager flexibility to best achieve the fund's goal.

The fund does not have a minimum rating requirement for corporate
bonds. The fund also may invest in derivative instruments and
foreign securities.

Special Income Fund - Under normal market conditions, Special
Income Fund primarily invests in debt securities. At least 50% of
its net assets are invested in corporate bonds of the four highest
ratings, in other corporate bonds the investment manager believes
have the same investment qualities, and in government bonds.

The fund also may invest in corporate bonds with lower ratings,
convertible securities, preferred stocks, derivative instruments,
money market instruments and foreign bonds. The fund does not have
a minimum rating requirement for corporate bonds.

Moneyshare Fund - Under normal market conditions, Moneyshare Fund
invests primarily in high-quality, short-term, debt securities and
other money market instruments denominated in U.S. dollars. The
fund intends to maintain a constant net asset value of $1 per share
although there is no assurance it will be able to do so. The fund
will not purchase any security with a remaining maturity of more
than 13 months and will maintain a dollar-weighted average
portfolio maturity of 90 days or less. The fund also may invest in
foreign securities. For a description of money market securities,
see Appendix C in the SAI.<PAGE>
PAGE 13
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: Stock prices are subject to market fluctuations.
Stocks of smaller or foreign companies may be subject to abrupt or
erratic price movements. Also, small companies often have limited
product lines, smaller markets or fewer financial resources.
Therefore, some of the securities in which a fund invests involve
substantial risk and may be considered speculative.

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.

Investment grade bonds: The price of an investment grade bond
fluctuates as interest rates change or if its credit rating is
upgraded or downgraded.

Debt securities below investment grade: The price of these bonds
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, a 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 and will be sold only when the fund's
investment manager believes it is advantageous to do so.

Bond ratings and holdings for fiscal year ended Aug. 31, 1994
For Special Income Fund
<TABLE>
<CAPTION>
IDS
S&P Rating Protection of Assessment
Percent of (or Moody's principal and of unrated
net assets equivalent) interest securities
<S> <C> <C> <C>
% AAA Highest quality %
AA High quality
A Upper medium grade
BBB Medium grade
BB Moderately speculative
B Speculative
CCC Highly speculative
CC Poor quality
C Lowest quality
D In default

Unrated Unrated securities
</TABLE>
(See Appendix to the SAI for further information regarding
ratings.)<PAGE>
PAGE 14
[For the fiscal year ended Aug. 31, 1994, ________ Fund(s) held
less than 5% of its (their) 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, a 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, a fund may have to sell
securities to have sufficient cash to pay the dividends.

Mortgage-backed securities: All funds except Moneyshare may invest
in U.S. government securities representing part ownership of pools
of mortgage loans. A pool, or group, of mortgage loans issued by
such lenders as mortgage bankers, commercial banks and savings and
loan associations, is assembled and mortgage pass-through
certificates are offered to investors through securities dealers.
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 the
certificates.

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 must be purchased. This is done
by 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.

Derivative instruments: The portfolio managers 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
<PAGE>
PAGE 15
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 a 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. A 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's custodian will maintain, in a segregated
account, cash or liquid high-grade debt securities that are marked
to market daily and are at least equal in value to the fund's
obligations. No more than 5% of each 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. For further information, see the options and futures
appendixes in the SAI.

Securities and derivative instruments that are illiquid: Illiquid
means the security or derivative instrument 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. Each
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 each fund's
net assets (15% for Capital Resource) will be held in securities
and derivative instruments that are illiquid.

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

Securities of other investment companies: International Equity
Fund may invest in securities of investment companies by purchase
in the open market where the dealer's or sponsor's profit is the
regular commission. If any such investment is made, not more than
10% of the fund's net assets will be so invested. To the extent
the fund were to make such investments, you may be subject to
duplicate advisory, administrative and distribution fees.

The investment policies described above may be changed by the board
of directors.
<PAGE>
PAGE 16
Lending portfolio securities: Each 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
a fund's net assets.

Valuing assets

Moneyshare Fund's securities are valued at amortized cost. In
valuing assets of Capital Resource, International Equity,
Aggressive Growth, Special Income and Managed Funds:

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

o Assets and liabilities denominated in foreign currencies are
translated daily into U.S. dollars at a rate of exchange set
as near to the close of the day as practicable.

How to invest, transfer or redeem shares

How to invest

You may invest in the funds only by buying a variable annuity
contract. For further information concerning maximum and minimum
payments and submitting and acceptance of your application, see
your annuity prospectus.

How to transfer among variable accounts

You can transfer all or part of your value in a variable account to
one or more of the other variable accounts with different
investment objectives. Please refer to your variable annuity
prospectus for more information about transfers.

Redeeming shares

The funds will buy (redeem) any shares presented by the variable
accounts. Surrender or withdrawal details are described in your
variable annuity prospectus.

Payment generally will be mailed within seven days of the
redemption request. The amount may be more or less than the amount
invested. Shares will be redeemed at net asset value at the close
of business on the day the request is accepted at the Minneapolis
office. If the request arrives after the close of business, the
price per share will be the net asset value at the close of
business on the next business day.
<PAGE>
PAGE 17
Distributions and taxes

The funds distribute to shareholders (the variable accounts) net
investment income and net capital gains. They do so to qualify as
regulated investment companies and to avoid paying corporate income
and excise taxes.

Dividend and capital gain distributions

Capital Resource, International Equity, Aggressive Growth and
Managed Funds distribute their net investment income (dividends and
interest earned on securities held by the fund, less operating
expenses) to shareholders (the variable accounts) at the end of
each calendar quarter. For Special Income and Moneyshare Funds,
net investment income is distributed monthly. Short-term capital
gains distributed are included in net investment income. Net
realized capital gains, if any, from selling securities are
distributed at the end of the calendar year. Before they are
distributed, both net investment income and net capital gains are
included in the value of each share. After they are distributed,
the value of each share drops by the per-share amount of the
distribution. (Since the distributions are reinvested, the total
value of the holdings will not change.) The reinvestment price is
the net asset value at close of business on the day the
distribution is paid.

Taxes

The Internal Revenue Service has issued final regulations relating
to the diversification requirements under section 817(h) of the
Internal Revenue Code. Each fund intends to comply with these
requirements.

Federal income taxation of variable accounts, life insurance
companies and annuities is discussed in your annuity prospectus.

Income received by International Equity Fund may be subject to
foreign tax and withholding. Tax conventions between certain
countries and the United States may reduce or eliminate those
taxes.

How the funds are organized

IDS Life Capital Resource Fund, Inc. is a series mutual fund. It
has three series of stock representing three separate, diversified
funds - Capital Resource, International Equity and Aggressive
Growth. It was incorporated in Nevada on April 27, 1981, but
changed its state of incorporation to Minnesota on June 13, 1986.
International Equity and Aggressive Growth Fund began operations on
Jan. 13, 1992. IDS Life Special Income Fund, Inc. and IDS Life
Moneyshare Fund, Inc. were originally incorporated in Nevada on
April 27, 1981, but changed their state of incorporation to
Minnesota on June 13, 1986. IDS Life Managed Fund, Inc. was
incorporated in Minnesota on March 5, 1985.

<PAGE>
PAGE 18
All funds are open-end management investment companies as defined
in the Investment Company Act of 1940. The headquarters of the
Funds is IDS Tower 10, Minneapolis, MN 55440-0010. The funds are
part of the IDS MUTUAL FUND GROUP, a family of funds that began in
1940.

A fund is owned by the variable accounts, its shareholders. All
shares issued by each fund are of the same class -- capital stock.
Par value is 1 cent per share ($.001 for Managed Fund). Both full
and fractional shares can be issued.

Voting rights

For a discussion of the rights of annuity contract owners
concerning the voting of shares held by the variable accounts,
please see your annuity prospectus. All shares have equal voting
rights. In any matter requiring the vote of shareholders (the
fund's management and fundamental policies), IDS Life and its
affiliates will ask for instructions from the person with voting
rights. The number of votes you have is in proportion to the
amount you have allocated to each variable account. Your
instructions will be weighted in the same proportion and IDS Life
and its affiliates will vote them that way. If you do not give us
instructions, and for the shares for which we have voting rights,
we will vote your shares in the same proportion as those for which
we have received instructions.

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. Meetings of the shareholders also may be called
on demand by the holders of 3% or more of the outstanding shares of
each fund if no meeting has been held during the preceding 15
months.

Portfolio managers

Aggressive Growth

Ray Hirsch joined IDS in 1986 and serves as senior portfolio
manager. He has managed this fund since it's inception in 1992.
He also serves as portfolio manager for IDS Strategy - Aggressive
Equity Fund and IDS Discovery Fund. He also manages investments
for IDS Growth Spectrum Advisors, a division of IDS Advisory Group,
Inc.

International Equity

Peter Lamaison joined IDS in 1981 and serves as president and chief
executive officer of IDS International Inc. and senior portfolio
manager. He has managed this fund since 1992. He also serves as
portfolio manager of IDS International Fund and Strategy -
Worldwide Growth Fund.
<PAGE>
PAGE 19
Wes Wadman joined IDS in 1964 and serves as executive vice
president of IDS International Inc. and as executive vice president
of IDS Advisory Group Inc. He has served as portfolio manager of
this fund since its inception.

Paul Hopkins joined IDS in 1992 and serves as chief investment
officer and executive vice president of IDS International Inc. He
was appointed to the portfolio management team of this fund in
January 1994. He also serves as portfolio manager of IDS
International Fund and IDS Strategy-Worldwide Growth Fund. Prior
to joining IDS, he was a European fund manager for Bankers Trust.

Capital Resource

Curt Weaver joined IDS in 1979 and serves as senior portfolio
manager. He has managed this fund since 1987. He also serves IDS
Stock Fund as a member of the Growth Income team.

Managed

Mike Ducar joined IDS in 1974 and serves as senior portfolio
manager. He has managed the equity portfolio of this fund since
1991. He had served as director-investment research and vice
president of investment services. He also is a member of IDS
Growth Income team.

Deb Pederson joined IDS in 1986 and serves as portfolio manager.
She has managed the fixed income portfolio of this fund since
January 1994. She also manages the fixed-income portfolio of IDS
Life Series Fund, Inc. - Managed Portfolio and the low grade
invested assets of IDS Life, IDS Life Insurance Company of New York
and American Enterprise Life Insurance Company.

Special Income

William Westhoff joined IDS in 1971 and serves as senior vice
president - fixed income management and senior portfolio manager.
He managed this fund from 1986 to 1989 and resumed management in
1993.

Moneyshare

Terry Fettig joined IDS in 1986. He serves as portfolio manager
for this fund, IDS Cash Management Fund, IDS Planned Investment
Account and IDS Tax-Free Money Fund. From 1986 to 1992 he was a
fixed income securities analyst. From 1992 to 1993 he was an
associate portfolio manager.

Directors and officers

Shareholders elect a board of directors who oversee the operations
of the fund and choose 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. On Aug. 31, 1994, the fund's directors and
officers did not own any shares of the funds.<PAGE>
PAGE 20
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
President and chief operating officer, Cargill, Incorporated.

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 director who is a partner in a law firm that has
represented an IDS subsidiary

Anne P. Jones
Partner, law firm of Sutherland, Asbill & Brennan.

Interested directors who are officers and/or employees of IDS

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

James A. Mitchell
Executive Vice President, IDS. Director, Chairman of the Board and
Chief Executive Officer, IDS Life.

John R. Thomas
Senior vice president, IDS.
<PAGE>
PAGE 21
Other officer

Leslie L. Ogg
Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.

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

Investment manager

Each fund pays IDS Life for managing its portfolio, providing
administrative services and serving as transfer agent.

Under its Investment Management and Services Agreement, IDS Life
determines which securities will be purchased, held or sold
(subject to the direction and control of the fund's board of
directors). For these services, Aggressive Growth, International
Equity, Capital Resource, Managed and Special Income pay IDS Life a
two-part fee.

The first part is based on the combined average daily net assets of
all funds in the IDS MUTUAL FUND GROUP, as follows:

Net assets of IDS MUTUAL FUND GROUP* Annual fee

First $5 billion 0.46%

Each additional $5 billion Decreasing percentages

More than $50 billion 0.32%

*Includes all funds, except the money market funds.

The second part is equal to 0.25% of each fund's average daily net
assets during the fiscal year except for International Equity Fund
whose individual asset charge is equal to .50% of its average daily
net assets.

For the fiscal year ended Aug. 31, 1994, Aggressive Growth paid IDS
Life a total investment management fee of ____% of its average
daily net assets. International Equity paid ____%, Capital
Resource paid ____%, Managed paid ____%, and Special Income paid
____%. Under the Agreement, each fund also pays taxes, brokerage
commissions and nonadvisory expenses. Total fees and expenses for
fiscal year 1994 were ____% for Aggressive Growth, ____% for
International Equity, ____% for Capital Resource, ____% for Managed
and ____% for Special Income.

For its services, Moneyshare Fund pays IDS Life a fee based on an
annual rate of 0.54% on the first $1 billion of daily net assets,
decreasing thereafter in reduced percentages of each succeeding
$500 million to 0.46% on all net assets of more than $2.5 billion.
Under the agreement with IDS Life, Moneyshare Fund reimburses IDS
Life for nonadvisory expenses incurred by IDS Life in connection
with the fund's operations in an amount not to exceed 0.25% of the
fund's average daily net assets. For fiscal year 1994, Moneyshare
Fund's fees and expenses were ____% of its average daily net
assets.<PAGE>
PAGE 22
Investment advisory agreements

IDS Life and IDS have an Investment Advisory Agreement under which
IDS executes purchases and sales and negotiates brokerage as
directed by IDS Life. For its services, IDS Life pays IDS a fee
based on a percentage of each fund's average daily net assets for
the year. This fee is equal to 0.50% for International Equity Fund
and 0.25% for each remaining fund.

IDS has a Sub-investment Advisory Agreement with IDS International,
Inc. (International), a wholly owned subsidiary of IDS.

International's principal place of business is located at IDS Tower
10, Minneapolis, MN 55440-0010 while it also conducts
investmentadvisory business in London, England. International has
had assets under management since 1981. International determines
the securities which will be purchased, held or sold and executes
purchases and sales for International Equity Fund as directed by
IDS. For its services, IDS pays International a fee equal on an
annual basis to 0.50% of International Equity Fund's net assets.

General information

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

IDS has been providing financial services since 1894. Besides
managing investments for all publicly offered funds in the IDS
MUTUAL FUND GROUP, IDS also manages investments for itself and its
subsidiaries, IDS Certificate Company and IDS Life Insurance
Company. Total assets under management on August 31, 1994 were
more than $______________ billion.

IDS Life is a stock life insurance company organized in 1957 under
the laws of the State of Minnesota and located at IDS Tower 10,
Minneapolis, MN 55440-0010. IDS Life conducts a conventional life
insurance business in the District of Columbia and all states
except New York.

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

IDS 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
IDS.

Retirement Annuity Mutual Funds
IDS Tower 10
Minneapolis, MN
55440-0010

Managed by IDS Life Insurance Company

<PAGE>
PAGE 23

Retirement Annuity Mutual Funds - Symphony
Prospectus/Oct. 28, 1994

This prospectus describes three funds that receive payments from
the variable accounts of your variable annuity contract. Each of
these funds has different investment objectives and policies.

IDS Life Capital Resource Fund is a stock fund.

IDS Life Managed Fund is a managed fund.

IDS Life Special Income Fund is a bond fund.

IDS Life Capital Resource Fund, Inc.
IDS Life Managed Fund, Inc.
IDS Life Special Income Fund, Inc.

IDS Life Insurance Company
P.O. Box 458
Minneapolis, MN 55440
800-422-3542
<PAGE>
PAGE 24
Table of contents

The funds in brief
Goals and types of fund investments
Manager and distributor
Variable accounts

Sales charge and fund expenses
Sales charge
Expenses

Performance
Financial highlights
Total returns
Yield calculation
Key terms

Investment policies and risk
Facts about investments and their risks
Valuing assets

How to invest, transfer or redeem shares
How to invest
How to transfer among variable accounts
Redeeming shares

Distributions and taxes
Dividend and capital gain distributions
Taxes

How the funds are organized
Shares
Voting rights
Shareholder meetings
Portfolio managers
Directors and officers
Investment manager
Investment advisory agreements

About IDS
General information
<PAGE>
PAGE 25
The funds in brief

Goals and types of fund investments

Capital Resource Fund's goal is capital appreciation and it invests
primarily in U.S. common stocks.

Managed Fund's goal is maximum total investment return through a
combination of capital growth and current income. It invests in
stocks, convertible securities, bonds, and money market
instruments.

Special Income Fund's goal is to provide a high level of current
income while conserving the value of the investment for the longest
period of time. It invests primarily in investment-grade bonds.

Because any investment involves risk, achieving these goals cannot
be guaranteed. Only the contract owners can change the goals. See
Voting rights.

Manager and distributor

The funds are managed by IDS Life, a subsidiary of IDS Financial
Corporation (IDS). IDS has an agreement with IDS Life to furnish
investment advice for the funds managed by IDS Life.

Variable accounts

You may not buy (nor will you own) shares of the fund directly.
You invest by buying a variable annuity and allocating your
purchase payments among the variable accounts that invest in the
funds.

Sales charge

Expenses

<PAGE>
PAGE 26
Performance

Financial highlights

[to be inserted here]

Total returns

Average annual total returns as of Aug. 31, 1994

Purchase 1 year 5 years 10 years
made ago ago ago

Capital Resource % % %
Fund

S&P 500 % % %

Cumulative total returns as of Aug. 31, 1994

Purchase 1 year 5 years 10 years
made ago ago ago

Capital Resource % % %
Fund

S&P 500 % % %

Average annual total returns as of Aug. 31, 1994

Since
Purchase 1 year 5 Years inception
made ago ago April 30, 1986

Managed Fund % % %

S&P 500 % % %

Cumulative total returns as of Aug. 31, 1994

Since
Purchase 1 year 5 Years inception
made ago ago April 30, 1986

Managed Fund % % %

S&P 500 % % %

<PAGE>
PAGE 27
Average annual total returns as of Aug. 31, 1994

Purchase 1 year 5 years 10 years
made ago ago ago

Special Income Fund % % %

Lehman Aggregate % % %
Bond Index

Cumulative total returns as of Aug. 31, 1994

Purchase 1 year 5 years 10 years
made ago ago ago

Special Income Fund % % %

Lehman Aggregate % % %
Bond Index

These examples show total returns from hypothetical investments in
each fund. These returns are compared to those of popular indexes
for the same periods. The results do not reflect the expenses that
apply to the variable accounts or the annuity contracts. Inclusion
of these charges would reduce total return for all periods shown.

The fund's investments 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.

Yield calculation

Special Income Fund may calculate a 30-day annualized yield by
dividing:

o net investment income per share deemed earned during a 30-day
period by
<PAGE>
PAGE 28
o the net asset value per share on the last day of the period,
and

o converting the result to a yearly equivalent figure.

This yield calculation does not include any annuity charges or
contingent deferred sales charges, which would reduce the yield
quoted.

Past yields should not be considered an indicator of future yields.

Key terms

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

Close of business - Normally 3 p.m. Central time each business day
(any day the New York Stock Exchange is open).

Distributions - Payments to the variable accounts of two types:
investment income (dividends) and realized net long-term capital
gains (capital gains distributions).

Investment income - Dividends and interest earned on securities
held by the funds.

Net asset value (NAV) - Value of a single fund share. It is the
total market value of all of a fund's investments and other assets,
less any liabilities, divided by the number of shares outstanding.

The NAV is the price the variable account receives when it sells
shares. It usually changes from day to day, and is calculated at
the close of business. For Special Income Fund, NAV generally
declines as interest rates increase and rises as interest rates
decline.

<PAGE>
PAGE 29
Total return - Sum of all returns for a given period, assuming
reinvestment of all distributions. Calculated by taking the total
value of shares at the end of the period (including shares acquired
by reinvestment), less the price of shares purchased at the
beginning of the period.

Variable Accounts - The separate accounts or subaccounts, each of
which invests in shares of one of the funds.

Yield - Net investment income earned per share for a specified time
period, divided by the net asset value at the end of the period.

Investment policies and risk

The fund does not have a minimum rating requirement for corporate
bonds. The fund also may invest in derivative instruments and
foreign securities.

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.
<PAGE>
PAGE 30
Facts about investments and their risks

Preferred stocks: If a company earns a profit, it generally must
pay its preferred stockholders a dividend at a pre-established
rate.

Investment grade bonds: The price of an investment grade bond
fluctuates as interest rates change or if its credit rating is
upgraded or downgraded.

Unrated Unrated securities
</TABLE>

(See Appendix to the SAI for further information regarding
ratings.)
<PAGE>
PAGE 31
[For the fiscal year ended Aug. 31, 1994, ________ Fund(s) held
less than 5% of its (their) average daily net assets in bonds rated
below investment grade.]

Mortgage-backed securities: All funds may invest in U.S.
government securities representing part ownership of pools of
mortgage loans. A pool, or group, of mortgage loans issued by
such lenders as mortgage bankers, commercial banks and savings and
loan associations, is assembled and mortgage pass-through
certificates are offered to investors through securities dealers.
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 the
certificates.

Derivative instruments: The portfolio managers 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
<PAGE>
PAGE 32
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 a 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. A 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's custodian will maintain, in a segregated
account, cash or liquid high-grade debt securities that are marked
to market daily and are at least equal in value to the fund's
obligations. No more than 5% of each 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. For further information, see the options and futures
appendixes in the SAI.

Money market instruments: Short-term debt securities rated in the
top two grades are used to meet daily cash needs and at various
times to hold assets until better investment opportunities arise.
Generally less than 25% of each of the funds' 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: Each 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
<PAGE>
PAGE 33
provide collateral when required or return securities when due.
Unless shareholders approve otherwise, loans may not exceed 30% of
a fund's net assets.

Valuing assets

In valuing assets of each fund:

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

o Assets and liabilities denominated in foreign currencies are
translated daily into U.S. dollars at a rate of exchange set
as near to the close of the day as practicable.

How to invest, transfer or redeem shares

How to invest

How to transfer among variable accounts

Redeeming shares

The funds will buy (redeem) any shares presented by the variable
accounts. Surrender or withdrawal details are described in your
variable annuity prospectus.

<PAGE>
PAGE 34
Distributions and taxes

Dividend and capital gain distributions

Capital Resource and Managed Funds distribute their net investment
income (dividends and interest earned on securities held by the
fund, less operating expenses) to shareholders (the variable
accounts) at the end of each calendar quarter. For Special Income,
net investment income is distributed monthly. Short-term capital
gains distributed are included in net investment income. Net
realized capital gains, if any, from selling securities are
distributed at the end of the calendar year. Before they are
distributed, both net investment income and net capital gains are
included in the value of each share. After they are distributed,
the value of each share drops by the per-share amount of the
distribution. (Since the distributions are reinvested, the total
value of the holdings will not change.) The reinvestment price is
the net asset value at close of business on the day the
distribution is paid.

Taxes

Federal income taxation of variable accounts, life insurance
companies and annuities is discussed in your annuity prospectus.

How the funds are organized

Capital Resource Fund is a portfolio of IDS Life Capital Resource
Fund, Inc., a series mutual fund which was incorporated in Nevada
on April 27, 1981, but changed its state of incorporation to
Minnesota on June 13, 1986. IDS Life Special Income Fund, Inc. was
originally incorporated in Nevada on April 27, 1981, but changed
its state of incorporation to Minnesota on June 13, 1986. IDS Life
Managed Fund, Inc. was incorporated in Minnesota on March 5, 1985.

All funds are open-end management investment companies as defined
in the Investment Company Act of 1940. The headquarters of the
Funds is IDS Tower 10, Minneapolis, MN 55440-0010. The funds are
part of the IDS MUTUAL FUND GROUP, a family of funds that began in
1940.

<PAGE>
PAGE 35
Shares

Voting rights

Shareholder meetings

Portfolio managers

Capital Resource

Curt Weaver joined IDS in 1979 and serves as senior portfolio
manager. He has managed this fund since 1987. He also serves IDS
Stock Fund as a member of the Growth Income team.

Managed

William Westhoff joined IDS in 1971 and serves as senior vice
president - fixed income management and senior portfolio manager.
He managed this fund from 1986 to 1989 and resumed management in
1993.

Directors and officers

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
President and chief operating officer, Cargill, Incorporated.

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.

<PAGE>
PAGE 37
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar
Corporation.

Interested director who is a partner in a law firm that has
represented an IDS subsidiary

Anne P. Jones
Partner, law firm of Sutherland, Asbill & Brennan.

Interested directors who are officers and/or employees of IDS

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

James A. Mitchell
Executive Vice President, IDS. Director, Chairman of the Board and
Chief Executive Officer, IDS Life.

John R. Thomas
Senior vice president, IDS.

Other officer

Leslie L. Ogg
Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.

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

Investment manager

Each fund pays IDS Life for managing its portfolio, providing
administrative services and serving as transfer agent.

The first part is based on the combined average daily net assets of
all funds in the IDS MUTUAL FUND GROUP, as follows:

Net assets of IDS MUTUAL FUND GROUP* Annual fee

First $5 billion 0.46%

Each additional $5 billion Decreasing percentages

More than $50 billion 0.32%

*Includes all funds, except the money market funds.

<PAGE>
PAGE 38
The second part is equal to 0.25% of each fund's average daily net
assets during the fiscal year.

For the fiscal year ended Aug. 31, 1994, Capital Resource paid IDS
Life a total investment management fee of ____% of its average
daily net assets. Managed paid ____%, and Special Income paid
____%. Under the Agreement, each fund also pays taxes, brokerage
commissions and nonadvisory expenses. Total fees and expenses for
fiscal year 1994 were ____% for Capital Resource, ____% for Managed
and ____% for Special Income.

Investment advisory agreements

General information

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

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

Retirement Annuity Mutual Funds - Symphony
IDS Tower 10
Minneapolis, MN
55440-0010

Managed by IDS Life Insurance Company

<PAGE>
PAGE 39

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS Life Capital Resource Fund, Inc.
IDS Life Capital Resource Fund
IDS Life International Equity Fund
IDS Life Aggressive Growth Fund
IDS Life Special Income Fund, Inc.
IDS Life Moneyshare Fund, Inc.
IDS Life Managed Fund, Inc.

Oct. 28, 1994

This Statement of Additional Information (SAI), is not a
prospectus. It should be read together with the funds' prospectus
and the financial statements contained in the funds' Annual Report
which, if not included with your prospectus, may be obtained
without charge.

This SAI is dated Oct. 28, 1994, and it is to be used with the
funds' prospectus dated Oct. 28, 1994. It is also to be used with
the funds' Annual Report for the fiscal year ended Aug. 31, 1994.

IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
(612) 671-3733

<PAGE>
PAGE 40
TABLE OF CONTENTS

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

Additional Investment Policies................................p. 4

Portfolio Transactions........................................p. 9

Brokerage Commissions Paid to Brokers
Affiliated with IDS Life......................................p. 13

Performance Information.......................................p. 15

Valuing Each Fund's Shares....................................p. 17

Investing in the Funds........................................p. 20

Redeeming Shares..............................................p. 21

Capital Loss Carryover........................................p. 21

Taxes.........................................................p. 21

Agreements with IDS Life and IDS..............................p. 22

Directors and Officers........................................p. 24

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

Independent Auditors..........................................p. 27

Financial Statements....................See Annual Report and p. 27

Prospectus....................................................p. 27

Appendix A: Description of Corporate Bond Ratings and
Additional Information on Investment Policies
for Investments of Capital Resource and Special
Income Funds.....................................p. 28

Appendix B: Foreign Currency Transactions for Investments
of Capital Resource, International Equity,
Aggressive Growth, Special Income and Managed
Funds............................................p. 30

Appendix C: Description of Money Market Securities...........p. 35

Appendix D: Options and Stock Index Futures Contracts for
Investments of Capital Resource, International
Equity, Aggressive Growth and Managed Funds......p. 37

Appendix E: Options and Interest Rate Futures Contracts
for Investments of Special Income and Managed
Funds............................................p. 45

<PAGE>
PAGE 41

Appendix F: Mortgage-backed securities and Additional
Information on Investment Policies for all
funds except Moneyshare..........................p. 51

Appendix G: Dollar-Cost Averaging............................p. 54

<PAGE>
PAGE 42
ADDITIONAL INVESTMENT POLICIES

In addition to the investment goals and policies presented in the
prospectus, each fund has the investment policies stated below that
will not be changed unless holders of a majority of the outstanding
shares of the fund to which the policy applies agree to make the
change.

These policies state each fund will not:

'Invest more than 5 percent of its total assets, at market value,
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. Except for Moneyshare Fund, up to
25 percent of each fund's total assets may be invested without
regard to this 5 percent limitation.

'Buy on margin or sell short, but Capital Resource, International
Equity, Aggressive Growth and Managed Funds may make margin
payments in connection with transactions in stock index futures
contracts and Special Income Fund may make margin payments in
connection with transactions in financial futures contracts.

'Invest in a company to control or manage it.

'Purchase securities of an issuer if the directors and officers of
the fund, IDS Financial Corporation (IDS) and IDS Life Insurance
Company (IDS Life) hold more than a certain percentage of the
issuer's outstanding securities. The holdings of all officers and
directors of the fund, IDS and IDS Life who own more than 0.5
percent of an issuer's securities are added together, and if in
total they own more than 5 percent, the fund will not purchase
securities of that issuer.

'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 the fund's total assets (including
borrowings) less liabilities (other than borrowings) immediately
after the borrowing. The funds will not purchase additional
portfolio securities at any time borrowing for temporary purposes
exceeds 5 percent. The funds have not borrowed in the past and
have no present intention to borrow.

'Lend portfolio securities in excess of 30 percent of each fund's
net assets, at market value. The current policy of each fund's
Board of Directors 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 of Directors. 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
<PAGE>
PAGE 43
due. A loan will not be made unless the opportunity for additional
income outweighs the risks. During the existence of the loan, the
fund receives cash payments equivalent to all interest or other
distributions paid on the loaned securities.

'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. It may be considered an underwriter under
securities laws when it sells restricted securities.

Capital Resource, International Equity, Aggressive Growth, Special
Income and Moneyshare Funds will not:

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

Capital Resource, International Equity, Aggressive Growth, Special
Income and Managed Funds will not:

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

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

Capital Resource, Aggressive Growth, Special Income and Managed
Funds will not:

'Invest in securities of investment companies except by purchase in
the open market where the dealer's or sponsor's profit is the
regular commission. The funds do not intend to invest in such
securities but may do so to the extent of not more than 5 percent
of Capital Resource and Special Income Funds' net assets and not
more than 10 percent of Aggressive Growth Fund's net assets taken
at market or other current value. The funds may acquire limited
amounts of securities of one or more investment companies as
permitted by the Investment Company Act of 1940, in connection with
the acquisition of or merger with such companies. Except for
these, the funds will not purchase securities of investment
companies.

'Engage in the purchase and sale of commodities or commodity
contracts, except to the extent that stock index futures contracts
may be considered such for Capital Resource, Aggressive Growth and
Managed Funds or financial futures contracts may be considered such
for Special Income Fund.
<PAGE>
PAGE 44
Capital Resource and Special Income Funds will not:

'Invest in securities that are not readily marketable (including
restricted securities and repurchase agreements with maturities
greater than seven days) whether or not registration or the filing
of a notification under the Securities Act of 1933, or the taking
of similar action under other securities laws relating to the sale
of securities is required, if immediately after the making of any
such investment more than 15 percent of the net assets of Capital
Resource Fund or more than 10 percent of the net assets of Special
Income Fund (taken at market or other current value) would be
invested in such securities. The current policy of the Board of
Directors is to not invest more than 10 percent of Capital Resource
Fund's assets in such securities.

'Invest more than 10 percent of the fund's assets, taken at cost,
in real properties, or do so as a principal activity.

'Make loans, except that (a) assets may be invested in debt
securities, whether or not publicly distributed, of a type
customarily purchased by institutional investors; and (b) to the
extent that loans are fully collateralized, and subject to the
applicable New York Stock Exchange rules, the funds may engage in
lending portfolio securities to qualified banks or broker-dealers.
The funds will try to vote loaned securities by asking for their
return if some major event affecting the investment is going to be
considered.

Moneyshare Fund will not:

'Purchase common stocks, preferred stocks, warrants, other equity
securities, corporate bonds or debentures, state bonds, municipal
bonds, or industrial revenue bonds.

'Make cash loans. However, the fund does make short-term
investments which it may have an agreement with the seller to
reacquire (See Appendix C).

'Invest in an investment company beyond 5 percent of its total
assets taken at market and then only on the open market where the
dealer's or sponsor's profit is limited to the regular commission.
However, the fund will not purchase or retain the securities of
other open-end investment companies.

'Buy or sell real estate, commodities or commodity contracts.

'Intentionally invest more than 25 percent of the fund's assets
taken at market value in any particular industry, except with
respect to investing in U.S. government or agency securities and
bank obligations. Investments are varied according to what is
judged advantageous under different economic conditions.
<PAGE>
PAGE 45
International Equity, Aggressive Growth and Managed Funds will not:

'Invest more than 5 percent of its total assets, at cost, in
securities of domestic or foreign companies, including any
predecessors, that have a record of less than three years
continuous operations.

'Buy or sell real estate, real estate mortgage loans, commodities,
or commodity contracts. However, the fund may enter into futures
contracts.

'Pledge or mortgage its assets beyond 15 percent of the cost of its
total assets. If the fund were ever to do so, valuation of its
assets would be based on market value. For the purpose of this
restriction, collateral arrangements with respect to margin for
futures contracts are not deemed to be a pledge of assets.

'Make cash loans. However, the fund does make investments in debt
securities whereby the sellers agree to repurchase the securities
at cost plus an agreed-upon interest rate within a specified period
of time.

'Make a loan of any part of its assets to IDS, to its directors and
officers or to its own directors and officers.

International Equity and Managed Funds will not:

'Issue senior securities, except to the extent that borrowing from
banks, lending its securities, or entering into repurchase
agreements or options or futures contracts may be deemed to
constitute issuing a senior security.

Unless these policies are changed by the Board of Directors,

'Each Fund may maintain a portion of its assets in cash and
cash-equivalent investments. Each Fund may purchase short-term
U.S. and Canadian government securities. International Equity Fund
may invest in short-term obligations or currencies of the U.S.
government (and its agencies and instrumentalities) and of the
Canadian and United Kingdom governments.

Each Fund may purchase short-term corporate notes and obligations
rated in the top two classifications by Moody's and S&P or the
equivalent. International Equity Fund also may purchase high grade
notes and obligations of U.S. banks (including their branches
located outside of the United States and U.S. branches of foreign
banks). On a day-to-day basis, International Equity Fund also may
maintain a portion of its assets in currencies of countries other
than the United States, Canada and the United Kingdom. As a
temporary investment, during periods of weak or declining market
values for the securities the Fund invests in, any portion of its
assets may be converted to cash (in foreign currencies or U.S.
dollars) or to short-term debt securities.

<PAGE>
PAGE 46

Each Fund may invest in bank obligations including negotiable
certificates of deposit (CDs), 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 that Fund's limitations on foreign investments.

Each Fund may use repurchase agreements with broker-dealers
registered under the Securities Exchange Act of 1934 and with
commercial U.S. 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. The
security acquired by Moneyshare Fund in a repurchase agreement can
be any security the Fund can purchase directly and it may have a
maturity of more than 13 months.

'All funds except Moneyshare (separately, 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). A fund does not pay for the securities or receive
dividends or interest on them until the contractual settlement
date. The fund's custodian will maintain, in a segregated account,
cash or liquid high-grade debt securities that are marked to market
daily and are at least equal in value to the fund's 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.

Capital Resource, International Equity, Aggressive Growth, Special
Income and Managed Funds will not:

'Invest more than 5 percent of its net assets in warrants. Under
one state's law, no more than 2 percent of each Fund's net assets
may be invested in warrants not listed on an exchange.

International Equity, Aggressive Growth, Managed and Moneyshare
Funds will not:

'Invest in securities that are not readily marketable (whether or
not registration or the filing of a notification under the
Securities Act of 1933, or the taking of similar action under other
securities laws relating to the sale of securities is required), if
immediately after the making of any such investment more than 10
percent of International Equity Fund's or Aggressive Growth Fund's
or 5 percent of Managed Fund's net assets (taken at market) would
be invested in such securities.

'Capital Resource, International Equity, Aggressive Growth, Special
Income and Managed Funds will not invest more than 10% of the
Fund's 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
<PAGE>
PAGE 47
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.

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 of directors, 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 of directors, 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.

International Equity Fund will not:

'Invest in securities of investment companies except by purchase in
the open market where the dealer's or sponsor's profit is the
regular commission. If any such investment is ever made, not more
than 10 percent of the fund's net assets, at market, will be so
invested. To the extent the fund were to make such investments,
the shareholders may be subject to duplicate advisory,
administrative and distribution fees.

Managed Fund will not:

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

'Invest in a company if its investments would result in the total
holdings of all the funds in the IDS MUTUAL FUND GROUP being in
excess of 15 percent of that company's issued shares.

For a discussion on corporate bond ratings and additional
information on investment policies, see Appendix A. For a
discussion on foreign currency transactions, see Appendix B. For a
discussion on money market securities, see Appendix C. For a
discussion on options and stock index futures contracts, see
Appendix D. For a discussion on options and interest rate futures
contracts, see Appendix E. For a discussion on dollar-cost
averaging, see Appendix F.
<PAGE>
PAGE 48
PORTFOLIO TRANSACTIONS

Subject to policies set by the Board of Directors, IDS, IDS
International, Inc. (International) and IDS Life are authorized to
determine, consistent with the funds' investment goals and
policies, which securities will be purchased, held or sold. In
determining where buy and sell orders are to be placed,
IDS, International and IDS Life have been directed to use their
best efforts to obtain the best available price and the most
favorable execution except where otherwise authorized by the Board
of Directors. IDS Life intends to direct IDS and International to
execute trades and negotiate commissions on its behalf. These
services are covered by the Investment Advisory Agreement between
IDS and IDS Life and the Sub-Investment Advisory Agreement between
IDS and International. When IDS and International act on IDS
Life's behalf for the funds, they follow the rules described here
for IDS Life.

On occasion, it may be desirable for Capital Resource,
International Equity, Aggressive Growth, Special Income or Managed
Funds 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 Boards of Directors have adopted a policy authorizing
IDS Life to do so to the extent authorized by law, if IDS Life
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 IDS Life's, IDS' or International's overall
responsibilities to the funds in the IDS MUTUAL FUND GROUP.

Research provided by brokers supplements IDS' and International's
own research activities. Research services include economic data
on, and analysis of: the U.S. economy and specific industries
within the economy; information about specific companies, including
earning 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. IDS 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 includes
the research, portfolio management and trading functions and such
other services to the extent permitted under an interpretation by
the Securities and Exchange Commission.

When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge, IDS
Life must follow procedures authorized by the Board of Directors.
To date, three procedures have been authorized. One procedure
permits IDS Life to direct an order to buy or sell a security
<PAGE>
PAGE 49
traded on a national securities exchange to a specific broker for
research services it has provided. The second procedure permits
IDS Life, 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 the
security. The commission paid generally includes compensation for
research services. The third procedure permits IDS Life, in order
to obtain research and brokerage services, to cause each fund to
pay a commission in excess of the amount another broker might have
charged.

IDS Life has advised the funds that it is necessary to do business
with a number of brokerage firms on a continuing basis to obtain
such services as: handling of large orders; willingness of a
broker to risk its own money by taking a position in a security;
and 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 IDS Life believes it may obtain better
overall execution. IDS Life has assured the funds 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 IDS Life, IDS and International in providing advice
to all the funds in the IDS MUTUAL FUND GROUP and other accounts
advised by IDS Life, IDS and International, even though it is not
possible to relate the benefits to any particular fund or account.

Normally, the securities of Special Income and Moneyshare Funds are
traded on a principal rather than an agency basis. In other words,
IDS will trade directly with the issuer or with a dealer who buys
or sells for its own account, rather than acting on behalf of
another client. IDS does not pay the dealer commissions. Instead,
the dealer's profit, if any, is the difference, or spread, between
the dealer's purchase and sale price for the security.

Each investment decision made for each fund is made independently
from any decision made for another fund in the IDS MUTUAL FUND
GROUP or other account advised by IDS or any IDS subsidiary. When
a fund buys or sells the same security as another fund or account,
IDS or International 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 a fund, the fund hopes to gain an overall advantage in
execution. IDS and International have assured the funds they will
continue to seek ways to reduce brokerage costs.

<PAGE>
PAGE 50
On a periodic basis, IDS and International make a comprehensive
review of the broker-dealers and the overall reasonableness of
their commissions. The review evaluates execution, operational
efficiency and research services.

The funds have paid the following brokerage commissions:

<TABLE>
<CAPTION>
Fiscal year ended Capital International Aggressive Special
Aug. 31, Resource Equity Growth Income Managed
<S> <C> <C> <C> <C> <C>
1992 1,869,988 99,498 49,168 49,465 776,462

1993 2,957,827 820,299 225,254 14,954 1,487,314

1994 _________ _________ ________ _______ _________
</TABLE>

Transactions amounting to $____________, $__________ and $_________
with related commissions of $__________, $_________ and $__________
were directed to brokers by Capital Resource, Aggressive Growth and
Managed Funds, respectively, because of research services received
for the fiscal year ended Aug. 31, 1994.

No transactions were directed to brokers because of research
services they provided to International Equity for the fiscal year
ended Aug. 31, 1994.

Special Income Fund's acquisition during the fiscal year ended
Aug. 31, 1994, of securities of its regular brokers or dealers or
of the parents of those brokers or dealers that derived more than
15 percent of gross revenue from securities-related activities is
presented below:

Value of Securities
Owned at End of
Name of Issuer Fiscal Year
Goldman Sachs $

Managed Fund's acquisition during the fiscal year ended Aug. 31,
1994, of securities of its regular brokers or dealers or of the
parents of those brokers or dealers that derived more than 15
percent of gross revenue from securities-related activities is
presented below:

Value of Securities
Owned at End of
Name of Issuer Fiscal Year
Primerica $
Salomon Brothers
Norwest

Capital Resource Fund, International Equity Fund, Aggressive Growth
Fund and Moneyshare Fund did not acquire securities of their
regular brokers or dealers or of the parents of those brokers or
dealers that derived more than 15 percent of gross revenue from
securities-related activities during the fiscal year ended Aug. 31,
1994.
<PAGE>
PAGE 51
Because certain groups of bonds have different yields, Special
Income Fund may do some short-term trading. As a result, the
portfolio turnover rate may be greater than 100 percent annually
which may be higher than the rate of other funds with similar
goals. A turnover rate of 100 percent would occur, for example, if
all the securities in the fund's portfolio were replaced in the
period of one year. The fund's turnover rate was 77% in fiscal
year ended Aug. 31, 1993 and ____% in fiscal year ended Aug. 31,
1994.

The portfolio turnover rate for Capital Resource Fund was 65% in
fiscal year ended Aug. 31, 1993 and ____% in fiscal year ended Aug.
31, 1994. The portfolio turnover rate for Managed Fund was 58% in
fiscal year ended Aug. 31, 1993 and ____% in fiscal year ended Aug.
31, 1994.

The portfolio turnover rate for International Equity Fund was 62%
in fiscal year ended Aug. 31, 1993 and ____% in fiscal year ended
Aug. 31, 1994. The portfolio turnover rate for Aggressive Growth
Fund was 55% in fiscal year ended Aug. 31, 1993 and ____% in fiscal
year ended Aug. 31, 1994.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH IDS LIFE

Affiliates of American Express Company (American Express) (of which
IDS Life is a wholly owned indirect subsidiary) may engage in
brokerage and other securities transactions on behalf of Capital
Resource, International Equity, Aggressive Growth, Special Income
and Managed Funds in accordance with procedures adopted by the
funds' Boards of Directors and to the extent consistent with
applicable provisions of the federal securities laws. IDS Life
will use an American Express affiliate only if (i) IDS Life
determines that a 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 and Services Agreement.

No brokerage commissions were paid by International Equity, Special
Income or Moneyshare Fund to brokers affiliated with IDS Life for
the fiscal year ended Aug. 31, 1994.

Information about brokerage commissions paid by Capital Resource
Fund for the last three fiscal years to brokers affiliated with IDS
Life is contained in the following table:

<PAGE>
PAGE 52
<TABLE>
<CAPTION>
For the Fiscal Year Ended Aug. 31,

1994 1993 1992
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 (1) $ % % $ 79,780 $205,105
Brothers,
Inc.

American (2) 245,330 173,665
Enterprise
Investment
Services, Inc.
</TABLE>

Information about brokerage commissions paid by Aggressive Growth
Fund for the last fiscal period to brokers affiliated with IDS Life
is contained in the following table:
<TABLE>
<CAPTION>
For the Fiscal Year Ended Aug. 31,

American (2) 30,150 2,292
Enterprise
Investment
Services, Inc.
</TABLE>

Information about brokerage commissions paid by Managed Fund during
the last three fiscal years to brokers affiliated with IDS Life is
contained in the following table:

<PAGE>
PAGE 53
<TABLE>
<CAPTION>
For the Fiscal Period Ended Aug. 31,

The Robinson (2) None 6,510
Humphrey
Company, Inc.

American (3) 177,107 110,913
Enterprise
Investment
Services, Inc.
</TABLE>

(1) Under common control with IDS as a subsidiary of American
Express Company (American Express). Lehman Brothers, Inc. is no
longer a subsidiary of American Express as of May 31, 1994.
(2) Under common control with IDS as an indirect subsidiary of
American Express until July 30, 1993.
(3) Wholly owned subsidiary of IDS.

PERFORMANCE INFORMATION

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

Average annual total return

Each fund may calculate average annual total return 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

Each fund may calculate aggregate total return for certain periods
representing the cumulative change in the value of an investment in
a fund over a specified period of time according to the following
formula:
<PAGE>
PAGE 54
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)

Annualized yield and Distribution yield

Special Income Fund may calculate an annualized yield by dividing
the net investment income per share deemed earned during a 31-day
period by the public offering price per share (including the
maximum sales charge) on the last day of the period and annualizing
the results.

Yield is calculated according to the following formula:

Yield = 2[(a-b + 1)6 - 1]
cd

where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

The fund's annualized yield was ____% for the 31-day period ended
Aug. 31, 1994.

The fund's yield, calculated as described above according to the
formula prescribed by the SEC, is a hypothetical return based on
market value yield to maturity for the fund's securities. It is
not necessarily indicative of the amount which was or may be paid
to the contract owners. Actual amounts paid to contract owners are
reflected in the distribution yield.

Distribution yield is calculated according to the following
formula:

D x F = DY
NAV 31

where: D = sum of dividends for 31 day period
NAV = beginning of period net asset value
F = annualizing factor
DY = distribution yield

The fund's distribution yield was ____% for the 31-day period ended
Aug. 31, 1994.

<PAGE>
PAGE 55
Moneyshare Fund calculates annualized simple and compound yields
based on a seven-day period.

The simple yield is calculated by determining the net change in the
value of a hypothetical account having a balance of one share at
the beginning of the seven-day period, dividing the net change in
account value by the value of the account at the beginning of the
period to obtain the return for the period, and multiplying that
return by 365/7 to obtain an annualized figure. The value of the
hypothetical account includes the amount of any declared dividends,
the value of any shares purchased with any dividend paid during the
period and any dividends declared for such shares. The fund's
yield does not include any realized or unrealized gains or losses.

Moneyshare Fund calculates its compound yield according to the
following formula:

Compound Yield = (return for seven day period + 1) 365/7 - 1

Moneyshare Fund's simple annualized yield was ____% and its
compound yield was ____% for the seven days ended Aug. 31, 1994,
the last business day of the fund's fiscal year. The fund's simple
yield was ____% and the compound yield was ____% for the seven days
ended Sept. 30, 1994.

Yield, or rate of return, on Moneyshare Fund shares may fluctuate
daily and does not provide a basis for determining future yields.
However, it may be used as one element in assessing how the fund is
meeting its goal. When comparing an investment in the fund with
savings accounts and similar investment alternatives, you must
consider that such alternatives often provide an agreed to or
guaranteed fixed yield for a stated period of time, whereas the
fund's yield fluctuates. In comparing the yield of one money
market fund to another, you should consider each fund's investment
policies, including the types of investments permitted.

REMEMBER THAT THESE YIELDS ARE THE RETURN TO THE SHAREHOLDER (THE
VARIABLE ACCOUNTS), NOT TO THE VARIABLE ANNUITY CONTRACT OWNER.
SEE YOUR ANNUITY PROSPECTUS FOR A DISCUSSION OF THE DIFFERENCES.

In sales material and other communications, the funds 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 56
VALUING EACH FUND'S SHARES

On Aug. 31, 1994, the computation of the value of an individual
share looked like this:

Capital Resource Fund
Net asset value
Net assets Shares outstanding of one share
$ divided by = $

International Equity Fund
Net asset value
Net assets Shares outstanding of one share
$ divided by = $

Aggressive Growth Fund

Net assets Shares outstanding of one share
$ divided by = $

Special Income Fund
Net asset value
Net assets Shares outstanding of one share
$ divided by = $

Managed Fund
Net asset value
Net assets Shares outstanding of one share
$ divided by = $

Capital Resource, International Equity, Aggressive Growth, Special
Income and Managed Funds' portfolio 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 exists, 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.

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PAGE 57
'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.

'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 Boards of Directors. The Boards of
Directors are responsible for selecting methods they believe
provide fair value. When possible, bonds are valued by a pricing
service independent from a 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.

Moneyshare Fund intends to use its best efforts to maintain a
constant net asset value of $1 per share although there is no
assurance it will be able to do so. Accordingly, the fund uses the
amortized cost method in valuing its portfolio.

Short-term securities maturing in 60 days or less 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
<PAGE>
PAGE 58
maturity value on the maturity date. It does not take into
consideration unrealized capital gains or losses. All of the
securities in the fund's portfolio will be valued at their
amortized cost.

In addition, Moneyshare Fund must abide by certain conditions. It
must only invest in securities of high quality which present
minimal credit risks as determined by the Board of Directors. This
means that the rated commercial paper in the fund's portfolio will
be issues that have been rated in the highest rating category by at
least two nationally recognized statistical rating organizations
(or by one if only one rating is assigned) and in unrated paper
determined by the fund's Board of Directors to be comparable. The
fund must also purchase securities with original or remaining
maturities of 13 months or less, and maintain a dollar-weighted
average portfolio maturity of 90 days or less. In addition, the
Board of Directors must establish procedures designed to stabilize
the fund's price per share for purposes of sales and redemptions at
$1 to the extent that it is reasonably possible to do so. These
procedures include review of the fund's portfolio securities by the
Board, at intervals deemed appropriate by it, to determine whether
the fund's net asset value per share computed by using the
available market quotations deviates from a share value of $1 as
computed using the amortized cost method. The Board must consider
any deviation that appears, and if it exceeds 0.5 percent, it must
determine what action, if any, needs to be taken. If the Board
determines that a deviation exists that may result in a material
dilution of the holdings of the Separate Accounts or investors, or
in other unfair consequences for such people, it must undertake
remedial action that it deems necessary and appropriate. Such
action may include withholding dividends, calculating net asset
value per share for purposes of sales and redemptions in kind, and
selling portfolio securities before maturity in order to realize
capital gain or loss or to shorten average portfolio maturity.

In other words, while the amortized cost method provides certainty
and consistency in portfolio valuation, it may, from time to time,
result in valuations of portfolio securities that are either
somewhat higher or lower than the prices at which the securities
could be sold. This means that during times of declining interest
rates, the yield on Moneyshare Fund's shares may be higher than if
valuations of portfolio securities were made based on actual market
prices and estimates of market prices. Accordingly, if use of the
amortized cost method were to result in a lower portfolio value at
a given time, a prospective investor in the fund would be able to
obtain a somewhat higher yield than if portfolio valuation were
based on actual market values. The Variable Accounts, on the other
hand, would receive a somewhat lower yield than they would
otherwise receive. The opposite would happen during a period of
rising interest rates.

The New York Stock Exchange, IDS, IDS Life and the funds 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.
<PAGE>
PAGE 59
INVESTING IN THE FUNDS

You cannot buy shares of the funds directly. The only way you can
invest in the funds at the current time is by buying an annuity
contract and directing the allocation of part or all of your net
purchase payment to the variable accounts, which will invest in
shares of Capital Resource, International Equity, Aggressive
Growth, Special Income, Moneyshare or Managed Funds. Please read
the funds' prospectus along with your annuity prospectus for
further information.

Sales Charges and Surrender or Withdrawal Charges

The funds do not assess sales charges, either when they sell or
when they redeem securities. The surrender or withdrawal charges
that may be assessed under your annuity contract are described in
your annuity prospectus, as are the other charges that apply to
your annuity contract and to the variable accounts.

REDEEMING SHARES

The funds will redeem any shares presented by a shareholder
(Variable Account) for redemption. The Variable Accounts' policies
on when or whether to buy or redeem fund shares are described in
your annuity prospectus.

During an emergency, the Boards of Directors can suspend the
computation of net asset value, stop accepting payments for
purchase of shares or suspend the duty of the funds to redeem
shares for more than 7 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,

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

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

Should a fund stop selling shares, the directors 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 contract owners.

CAPITAL LOSS CARRYOVER

For federal income tax purposes, Aggressive Growth Fund and Special
Income Fund had capital loss carryovers of $____________ and
$_____________, respectively, at Aug. 31, 1994, which, if not
offset by subsequent capital gains, will expire in 1996 through
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PAGE 60
2001. It is unlikely the Board of Directors will authorize a
distribution of any net realized capital gain for these funds until
the capital loss carryover has been offset or expires except as
required by IRS rules.

TAXES

International Equity 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 percent or more of its gross
income for the taxable year is passive income or if 50 percent or
more of the average value of its assets consists of assets that
produce or could produce passive income.

AGREEMENTS WITH IDS LIFE AND IDS

Investment Management and Services Agreement

Each fund has an Investment Management and Services Agreement with
IDS Life. For its services, IDS Life is paid a fee composed of an
asset charge. Except for Moneyshare Fund, the asset charge is in
two parts. The first part, the group asset charge, is based on the
combined daily net assets of all funds in the IDS MUTUAL FUND
GROUP, except the money market funds, including any new fund that
may be organized in the future. The daily rate of the group asset
charge is based upon the following schedule:

Group Asset Charge

Group assets Annual rate at Effective
(billions) each asset level annual rate

First $5 0.460% 0.460%
Next $5 0.440 0.450
Next $5 0.420 0.440
Next $5 0.400 0.430
Next $5 0.390 0.422
Next $5 0.380 0.415
Next $5 0.360 0.407
Next $5 0.350 0.400
Next $5 0.340 0.393
Next $5 0.330 0.387
Over $50 0.320

The aggregate net assets of all non-money market funds in the IDS
MUTUAL FUND GROUP were $_______________ on Aug. 31, 1994, and the
daily rate applied to each fund's assets was equal to approximately
0.__% on an annual basis.

The second part of the asset charge is based on the daily net
assets of each fund alone, and is equal to 0.25 percent per year of
Capital Resource, Aggressive Growth, Special Income and Managed
Funds' assets and 0.50 percent per year of International Equity
Fund's assets. The total fee is calculated for each calendar day
<PAGE>
PAGE 61
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. The
management fee is payable monthly.

Moneyshare Fund's fee is based on the following schedule:

On the first $1 billion of net assets
of the fund................................ 0.540%
On the next $500 million of net assets
of the fund................................ 0.520%
On the next $500 million of net assets
of the fund................................ 0.500%
On the next $500 million of net assets
of the fund................................ 0.480%
and all net assets of the fund in
excess thereof............................. 0.460%

The funds have retained IDS Life to, among other things, counsel
and advise the funds and their directors in connection with the
formulation of investment programs designed to accomplish the
funds' investment objectives, and to determine, consistent with the
funds' investment objectives and policies, which securities in IDS
Life's discretion shall be purchased, held or sold, subject always
to the direction and control of the Boards of Directors. The funds
do not maintain their own research departments or record-keeping
services. These services are provided by IDS Life under the
Investment Management and Services Agreement.

The Agreement provides that, in addition to paying its own
management fee, brokerage costs and certain taxes, each fund pays
IDS Life an amount equal to the cost of certain expenses incurred
and paid by IDS Life in connection with the fund's operations. In
no event will such payments by Moneyshare Fund exceed 0.25 percent
of the fund's average daily net assets.

The expenses of IDS Life that each fund has agreed to reimburse
are: taxes, brokerage commissions, custodian fees and expenses,
audit expenses, cost of items sent to contract owners, postage,
fees and expenses paid to directors who are not officers or
employees of IDS Life or IDS, fees and expenses of attorneys, costs
of fidelity and surety bonds, SEC registration fees, expenses of
preparing prospectuses and of printing and distributing
prospectuses to existing contract owners, losses due to theft or
other wrong doing or due to liabilities not covered by bond or
agreement, expenses incurred in connection with lending portfolio
securities of the funds and expenses properly payable by the funds,
approved by the Boards of Directors. All other expenses are borne
by IDS Life.

Investment Advisory Agreements

IDS Life and IDS have an Investment Advisory Agreement under which
IDS executes purchases and sales and negotiates brokerage as
directed by IDS Life. For its services, IDS Life pays IDS a fee
<PAGE>
PAGE 62
based on a percentage of each fund's average daily net assets for
the year. This fee is equal to 0.50 percent for International
Equity Fund and 0.25 percent for each remaining fund.

IDS has a Sub-Investment Advisory Agreement with IDS International,
Inc. under which IDS pays IDS International, Inc. a fee equal on an
annual basis to 0.50 percent of International Equity Fund's daily
net assets for providing investment advice for the fund.

For the fiscal year ended Aug. 31, 1992, Capital Resource Fund paid
IDS Life $9,797,391 and IDS Life paid IDS $3,658,890 for its
services. For fiscal year 1993, the amounts were $13,224,140 and
$5,025,362 and for fiscal year 1994, they were $____________ and
$______________.

For the fiscal year ended Aug. 31, 1992, International Equity Fund
paid IDS Life $96,332 and IDS Life paid IDS $52,557 for its
services. For fiscal year 1993, the amounts were $1,032,426 and
$569,659 and for fiscal year 1994, they were $____________ and
$___________.

For the fiscal year ended Aug. 31, 1992, Aggressive Growth Fund
paid IDS Life $114,660 and IDS Life paid IDS $42,965 for its
services. For fiscal year 1993, the amounts were $1,091,156 and
$415,541 and for fiscal year 1994, they were $____________ and
$___________.

For the fiscal year ended Aug. 31, 1992, Special Income Fund paid
IDS Life $6,350,961 and IDS Life paid IDS $2,370,981 for its
services. For fiscal year 1993, the amounts were $8,479,379 and
$3,222,653 and for fiscal year 1994, they were $____________ and
$______________.

For the fiscal year ended Aug. 31, 1992, Moneyshare Fund paid IDS
Life $1,451,910 and IDS Life paid IDS $672,234 for its services.
For fiscal year 1993, the amounts were $1,141,272 and $879,494 and
for fiscal year 1994, they were $____________ and $______________.

For the fiscal year end Aug. 31, 1992, Managed Fund paid IDS Life
$6,587,986 and IDS Life paid IDS $2,459,603 for its services. For
fiscal year 1993, the amounts were $9,652,553 and $3,669,394 and
for fiscal year 1994, they were $___________ and $____________.

Information concerning other funds advised by IDS Life or IDS is
contained in the prospectus.

DIRECTORS AND OFFICERS

The following is a list of the fund's directors who also are
directors of all other funds in the IDS MUTUAL FUND GROUP. All
shares have cumulative voting rights when voting on the election of
directors.

<PAGE>
PAGE 63
Lynne V. Cheney'
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.,
Lockhead Corporation, and the Interpublic Group of Companies, Inc.
(advertising).

Robert F. Froehlke+
901 S. Marquette Ave.
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. (architectual
engineering) and Public Oversight Board of the American Institute
of Certified Public Accountants.

David R. Hubers**
2900 IDS Tower
Minneapolis, MN

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

Heinz F. Hutter
P.O. Box 5724
Minneapolis, MN

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

Anne P. Jones***
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., N.W.
Washington, D.C.

Partner, law firm of Sutherland, Asbill & Brennan. Director,
Motorola, Inc. and C-Cor Electronics, Inc.

Donald M. Kendall'
PepsiCo, Inc.
Purchase, NY

Former chairman and chief executive officer, PepsiCo, Inc.

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PAGE 64
Melvin R. Laird
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'
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).

James A. Mitchell**
2900 IDS Tower
Minneapolis, MN

Executive Vice President, IDS. Director, Chairman of the Board and
Chief Executive Officer, IDS Life.

William R. Pearce+*
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+'
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).

John R. Thomas**
2900 IDS Tower
Minneapolis, MN

Senior vice president and director of IDS.
<PAGE>
PAGE 65
Wheelock Whitney+
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN

Chairman, Whitney Management Company (manages family assets).

C. Angus Wurtele
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).

+ 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 IDS or American Express.
***Interested person by reason of being a partner in a law firm
that has represented IDS or its subsidiaries.

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

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

Leslie L. Ogg
901 S. Marquette Ave.
Minneapolis, MN

Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.

On ___________, 199_, the fund's directors and officers as a group
owned less than 1% of the outstanding shares. During the fiscal
year ended _______________, 199_, no director or officer earned
more than $60,000 from this fund. All directors and officers as a
group earned $_______, including $______ of retirement plan
expense, from this fund.

CUSTODIAN

The funds' securities and cash are held by IDS Trust Company, 2800
Multifoods Tower, Minneapolis, MN, 55402, through a custodian
agreement. The custodian is permitted to deposit some or all of
its securities with sub-custodians or in central depository systems
as allowed by federal law.

<PAGE>
PAGE 66
INDEPENDENT AUDITORS

The funds' financial statements contained in their Annual Report,
as of and for, the year ended Aug. 31, 1994, are audited by
independent auditors, KPMG Peat Marwick, 4200 Norwest Center,
90 S. Seventh St., Minneapolis, MN 55402-3900. IDS Life has
agreed that it will send a copy of this report and the Semiannual
Report to every annuity contract owner having an interest in the
funds. The independent auditors also provide other accounting and
tax-related services as requested by the funds.

FINANCIAL STATEMENTS

The Independent Auditors' Report and Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1994 Annual Report to
the shareholders of Capital Resource, International Equity,
Aggressive Growth, Special Income, Moneyshare and Managed Funds,
pursuant to Section 30(d) of the Investment Company Act of 1940, as
amended, are hereby incorporated in this Statement of Additional
Information by reference. No other portion of the Annual Report,
however, is incorporated by reference.

PROSPECTUS

The prospectus dated Oct. 28, 1994, is hereby incorporated in this
Statement of Additional Information by reference.
<PAGE>
PAGE 67
APPENDIX A

DESCRIPTION OF CORPORATE BOND RATINGS AND ADDITIONAL INFORMATION ON
INVESTMENT POLICIES FOR INVESTMENTS OF CAPITAL RESOURCE AND SPECIAL
INCOME FUNDS

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, C and D. 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 the 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.

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.
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PAGE 68
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.

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 69
APPENDIX B

FOREIGN CURRENCY TRANSACTIONS FOR INVESTMENTS OF CAPITAL RESOURCE,
INTERNATIONAL EQUITY, AGGRESSIVE GROWTH, SPECIAL INCOME AND MANAGED
FUNDS

Since investments in foreign companies 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 portfolio 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
<PAGE>
PAGE 70
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 portfolio 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.

At maturity of a forward contract, the fund may either sell the
portfolio 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 portfolio 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 portfolio
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 portfolio 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
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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 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 portfolio 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 portfolio 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, when 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 portfolio
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.
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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.

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 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.
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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 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 not use leverage in its 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.
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APPENDIX C

DESCRIPTION OF MONEY MARKET SECURITIES

Certificates of Deposit -- A certificate of deposit is a negotiable
receipt issued by a bank or savings and loan association in
exchange for the deposit of funds. The issuer agrees to pay the
amount deposited, plus interest, on the date specified on the
certificate.

Time Deposit -- A time deposit is a non-negotiable deposit in a
bank for a fixed period of time.

Bankers' Acceptances -- A bankers' acceptance arises from a short-
term credit arrangement designed to enable businesses to obtain
funds to finance commercial transactions. It is a time draft drawn
on a bank by an exporter or an importer to obtain a stated amount
of funds to pay for specific merchandise. The draft is then
"accepted" by a bank that, in effect, unconditionally guarantees to
pay the face value of the instrument on its maturity date.

Commercial Paper -- Commercial paper is generally defined as
unsecured short-term notes issued in bearer form by large well-
known corporations and finance companies. Maturities on commercial
paper range from one day to nine months.

Commercial paper rated A by Standard & Poor's Corporation has the
following characteristics: Liquidity ratios are better than the
industry average. Long-term senior debt rating is "A" or better.
The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend with
allowances made for unusual circumstances. Typically, the issuer's
industry is well established, the issuer has a strong position
within its industry and the reliability and quality of management
is unquestioned. Issuers rated A are further rated by use of
numbers 1, 2 and 3 to denote relative strength within this highest
classification.

A Prime rating is the highest commercial paper rating assigned by
Moody's Investors Services Inc. Issuers rated Prime are further
rated by use of numbers 1, 2 and 3 to denote relative strength
within this highest classification. Among the factors considered
by Moody's in assigning ratings for an issuer are the following:
(1) management; (2) economic evaluation of the industry and an
appraisal of speculative type risks which may be inherent in
certain areas; (3) competition and customer acceptance of products;
(4) liquidity; (5) amount and quality of long-term debt; (6) ten
year earnings trends; (7) financial strength of a parent company
and the relationships which exist with the issuer; and (8)
recognition by management of obligations which may be present or
may arise as a result of public interest questions and preparations
to meet such obligations.
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Letters of Credit -- A letter of credit is a short-term note issued
in bearer form with a bank letter of credit which provides that the
bank pay to the bearer the amount of the note upon presentation.

U.S. Treasury Bills -- Treasury bills are issued with maturities of
any period up to one year. Three-month and six-month bills are
currently offered by the Treasury on 13-week and 26-week cycles
respectively and are auctioned each week by the Treasury. Treasury
bills are issued in book entry form and are sold only on a discount
basis, i.e. the difference between the purchase price and the
maturity value constitutes interest income for the investor. If
they are sold before maturity, a portion of the income received may
be a short-term capital gain.

U.S. Government Agency Securities -- Federal agency securities are
debt obligations which principally result from lending programs of
the U.S. government. Housing and agriculture have traditionally
been the principal beneficiaries of Federal credit programs, and
agencies involved in providing credit to agriculture and housing
account for the bulk of the outstanding agency securities.

Repurchase Agreements -- A repurchase agreement involves the
acquisition of securities by the Portfolio, with the concurrent
agreement by a bank (or securities dealer if permitted by law or
regulation), to reacquire the securities at the portfolio's cost,
plus interest, within a specified time. The Portfolio thereby
receives a fixed rate of return on this investment, one that is
insulated from market and rate fluctuations during the holding
period. In these transactions, the securities acquired by the
Portfolio have a total value equal to or in excess of the value of
the repurchase agreement and are held by the Portfolio's custodian
until required. Pursuant to guidelines established by the Fund's
Board of Directors, the creditworthiness of the other party to the
transaction is considered and the value of those securities held as
collateral is monitored to ensure that such value is maintained at
the required level.

If IDS becomes aware that a security owned by a Fund is downgraded
below the second highest rating, IDS will either sell the security
or recommend to the Fund's Board of Directors why it should not be
sold.

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APPENDIX D

OPTIONS AND STOCK INDEX FUTURES CONTRACTS FOR INVESTMENTS OF
CAPITAL RESOURCE, INTERNATIONAL EQUITY, AGGRESSIVE GROWTH AND
MANAGED FUNDS

Capital Resource, International Equity, Aggressive Growth and
Managed Funds 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 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. Managed Fund also may enter into interest rate futures
contracts - see Appendix E.

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 a
fund and its shareholders by improving the fund's liquidity and by
helping to stabilize the value of its net assets.

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Buying options. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. They also may be used for investment. Options
are used as a trading technique to take advantage of any disparity
between the price of the underlying 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, a 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 a fund for investment
purposes. Options permit a fund to experience the change in the
value of a security with a relatively small initial cash
investment. The risk a fund assumes when it buys an option is the
loss of the premium. To be beneficial to a 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 subsequent 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. Each 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 each fund's
goal.

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

'Each fund will deal only in standard option contracts traded on
national securities exchanges or those that may be quoted on NASDAQ
(a system of price quotations developed by the National Association
of Securities Dealers, Inc.)

'Each 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 funds, each will conform to the requirements of those
states. For example, California limits the writing of options to
50 percent of the assets of a fund. Some regulations also affect
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the Custodian. When a covered option is written, the Custodian
segregates the underlying securities, and issues a receipt. There
are certain rules regarding banks issuing such receipts that may
restrict the amount of covered call options written. Furthermore,
each fund is limited to pledging not more than 15 percent of the
cost of its total assets.

Net premiums on call options closed or premiums on expired call
options are treated as short-term capital gains. Since each 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 percent 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 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 a
fund writes listed options, it will follow the rules of the options
exchange. The Custodian will segregate the underlying securities
and issue a receipt. There are certain rules regarding issuing
such receipts that may restrict the amount of covered call options
written. Further the funds are limited to pledging not more than
15 percent of the cost of their total assets. Options are valued
at the close of the New York Stock Exchange. An option listed on a
national exchange 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 asked prices.

STOCK INDEX FUTURES CONTRACTS. Stock index futures contracts are
commodity contracts listed on commodity exchanges. They currently
include contracts on the Standard & Poor's 500 Stock Index (S&P 500
Index) and other broad stock market indexes such as the New York
Stock Exchange Composite Stock Index and the Value Line Composite
Stock Index, as well as narrower sub-indexes such as the S&P 100
Energy Stock Index and the New York Stock Exchange Utilities Stock
Index. A stock index assigns relative values to common stocks
included in the index and the index fluctuates with the value of
the common stocks so included.

A futures contract is a legal agreement between a buyer or seller
and the clearinghouse of a futures exchange in which the parties
agree to make a cash settlement on a specified future date in an
amount determined by the stock index on the last trading day of the
contract. The amount is a specified dollar amount (usually $100 or
$500) multiplied by the difference between the index value on the
last trading day and the value on the day the contract was struck.

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For example, the S&P 500 Index consists of 500 selected common
stocks, most of which are listed on the New York Stock Exchange.
The S&P 500 Index assigns relative weightings to the common stocks
included in the Index, and the Index fluctuates with changes in the
market values of those stocks. 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 a 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.

Unlike the purchase or sale of an equity security, no price would
be paid or received by the fund upon entering into stock index
futures contracts. However, the fund would be required to deposit
with its custodian, in a segregated account in the name of the
futures broker, an amount of cash or U.S. Treasury bills equal to
approximately 5 percent of the contract value. This amount is
known as initial margin. The nature of initial margin in futures
transactions is different from that of margin in security
transactions in that futures contract margin does not involve
borrowing funds by the fund to finance the transactions. Rather,
the initial margin is in the nature of a performance bond or good-
faith deposit on the contract that is returned to the fund upon
termination of the contract, assuming all contractual obligations
have been satisfied.

Subsequent payments, called variation margin, to and from the
broker would be made on a daily basis as the price of the
underlying stock index fluctuates, making the long and short
positions in the contract more or less valuable, a process known as
marking to market. For example, when a fund enters into a contract
in which it benefits from a rise in the value of an index and the
price of the underlying stock index has risen, the fund will
receive from the broker a variation margin payment equal to that
increase in value. Conversely, if the price of the underlying
stock index declines, the fund would be required to make a
variation margin payment to the broker equal to the decline in
value.

How These Funds Would Use Stock Index Futures Contracts. The funds
intend to use stock index futures contracts and related options for
hedging and not for speculation. Hedging permits a fund to gain
rapid exposure to or protect itself from changes in the market.
For example, a fund may find itself with a high cash position at
the beginning of a market rally. Conventional procedures of
purchasing a number of individual issues entail the lapse of time
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and the possibility of missing a significant market movement. By
using futures contracts, the fund can obtain immediate exposure to
the market and benefit from the beginning stages of a rally. The
buying program can then proceed and once it is completed (or as it
proceeds), the contracts can be closed. Conversely, in the early
stages of a market decline, market exposure can be promptly offset
by entering into stock index futures contracts to sell units of an
index and individual stocks can be sold over a longer period under
cover of the resulting short contract position.

A fund may enter into contracts with respect to any stock index or
sub-index. To hedge the fund's portfolio successfully, however,
the fund must enter into contracts with respect to indexes or sub-
indexes whose movements will have a significant correlation with
movements in the prices of the fund's individual portfolio
securities.

Special Risks of Transactions in Stock Index Futures Contracts.

1. Liquidity. Each fund may elect to close some or all of its
contracts prior to expiration. The purpose of making such a move
would be to reduce or eliminate the hedge position held by the
fund. The fund may close its positions by taking opposite
positions. Final determinations of variation margin are then made,
additional cash as required is paid by or to the fund, and the fund
realizes a gain or a loss.

Positions in stock index futures contracts may be closed only on an
exchange or board of trade providing a secondary market for such
futures contracts. For example, futures contracts transactions can
currently be entered into with respect to the S&P 500 Stock Index
on the Chicago Mercantile Exchange, the New York Stock Exchange
Composite Stock Index on the New York Futures Exchange and the
Value Line Composite Stock Index on the Kansas City Board of Trade.

Although the funds intend 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 subject to the hedge. 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.

2. Hedging Risks. There are several risks in using stock index
futures contracts as a hedging device. One risk arises because the
prices of futures contracts may not correlate perfectly with
movements in the underlying stock index due to certain market
distortions. First, all participants in the futures market are
subject to initial margin and variation margin requirements.
Rather than making additional variation margin payments, investors
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may close the contracts through offsetting transactions which could
distort the normal relationship between the index and futures
markets. Second, the margin requirements in the futures market are
lower than margin requirements in the securities market, and as a
result the futures market may attract more speculators than does
the securities market. Increased participation by speculators in
the futures market also may cause temporary price distortions.
Because of price distortion in the futures market and because of
imperfect correlation between movements in stock indexes and
movements in prices of futures contracts, even a correct forecast
of general market trends may not result in a successful hedging
transaction over a short period.

Another risk arises because of imperfect correlation between
movements in the value of the stock index futures contracts and
movements in the value of securities subject to the hedge. If this
occurred, a fund could lose money on the contracts and also
experience a decline in the value of its portfolio securities.
While this could occur, IDS believes that over time the value of
the fund's portfolio will tend to move in the same direction as the
market indexes and will attempt to reduce this risk, to the extent
possible, by entering into futures contracts on indexes whose
movements it believes will have a significant correlation with
movements in the value of the fund's portfolio securities sought to
be hedged. It is also possible that if the fund has hedged against
a decline in the value of the stocks held in its portfolio and
stock prices increase instead, the fund will lose part or all of
the benefit of the increased value of its stock which it has hedged
because it will have offsetting losses in its futures positions.
In addition, in such situations, if the fund has insufficient cash,
it may have to sell securities to meet daily variation margin
requirements. Such sales of securities may be, but will not
necessarily be, at increased prices which reflect the rising
market. The fund may have to sell securities at a time when it may
be disadvantageous to do so.

OPTIONS ON STOCK INDEX FUTURES CONTRACTS. Options on stock index
futures contracts are similar to options on stock except that
options on futures contracts give the purchaser the right, in
return for the premium paid, to assume a position in a stock index
futures contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise
price at any time during the period of the option. If the option
is closed instead of exercised, the holder of the option receives
an amount that represents the amount by which the market price of
the contract exceeds (in the case of a call) or is less than (in
the case of a put) the exercise price of the option on the futures
contract. If the option does not appreciate in value prior to the
exercise date, the fund will suffer a loss of the premium paid.

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,
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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.

SPECIAL RISKS OF TRANSACTIONS IN OPTIONS ON STOCK INDEX FUTURES
CONTRACTS AND OPTIONS ON STOCK INDEXES. As with options on stocks,
the holder of an option on a stock index futures contract or on a
stock index may terminate a position by selling an option covering
the same contract or index and having the same exercise price and
expiration date. The ability to establish and close out positions
on such options will be subject to the development and maintenance
of a liquid secondary market. The funds will not purchase options
unless the market for such options has developed sufficiently, so
that the risks in connection with options are not greater than the
risks in connection with stock index futures contracts transactions
themselves. Compared to using futures contracts, purchasing
options involves less risk to the funds because the maximum amount
at risk is the premium paid for the options (plus transaction
costs). There may be circumstances, however, when using an option
would result in a greater loss to a fund than using a futures
contract, such as when there is no movement in the level of the
stock index.

TAX TREATMENT. As permitted under federal income tax laws, each
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 stock indexes is currently
unclear, although the funds' tax advisers currently believe marking
to market is not required. Depending on developments, a fund may
seek Internal Revenue Service (IRS) rulings clarifying questions
concerning such treatment. Certain provisions of the Internal
Revenue Code may also limit a 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
percent of the value of its assets must consist of cash, government
securities and other securities, subject to certain diversification
requirements. Less than 30 percent 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-percent-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, a
fund may be required to defer closing out a contract beyond the
time when it might otherwise be advantageous to do so. The fund
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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
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.
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APPENDIX E

OPTIONS AND INTEREST RATE FUTURES CONTRACTS FOR INVESTMENTS OF
SPECIAL INCOME AND MANAGED FUNDS

The funds 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 traded on any U.S. or foreign
exchange. The fund also may buy or write put and call options on
these futures. 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. Managed Fund also may enter into
stock index futures contracts - see Appendix D.

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 stock
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
value 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 (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.

Buying options. Put and call options may be used as a trading
technique to facilitate buying and selling securities for
investment reasons. They also may be used for investment. Options
are used as a trading technique to take advantage of any disparity
between the price of the underlying security in the securities
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PAGE 85
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 a 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. A 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, 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 percent
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 a 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 percent of its annual
gross income.

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PAGE 86
If a covered call option is exercised, the security is sold by the
fund. The fund will recognize a capital gain or loss based upon
the difference between the proceeds and the security's basis.

Options on many securities are listed on options exchanges. If a
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 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 asked prices.

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. They have been established by boards of trade which have
been designated contract markets by the Commodity Futures Trading
Commission (CFTC). Futures contracts trade on these markets in a
manner similar to the way a stock trades on a stock exchange, and
the boards of trade, through their clearing corporations, guarantee
performance of the contracts. Currently, there are futures
contracts based on such debt securities as long-term U.S. Treasury
bonds, Treasury notes, GNMA modified pass-through mortgage-backed
securities, three-month U.S. Treasury bills and bank certificates
of deposit. While futures contracts based on debt securities do
provide for the delivery and acceptance of securities, such
deliveries and acceptances are very seldom made. Generally, the
futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale
is effected by the fund entering into a futures contract purchase
for the same aggregate amount of the specific type of financial
instrument and same delivery date. If the price in the sale
exceeds the price in the offsetting purchase, the fund immediately
is paid the difference and realizes a gain. If the offsetting
purchase price exceeds the sale price, the fund pays the difference
and realizes a loss. Similarly, closing out a futures contract
purchase is effected by the fund entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the
fund realizes a gain, and if the offsetting sale price is less than
the purchase price, the fund realizes a loss. 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. The initial margin deposit is approximately 1.5
percent of a contract's face value. 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, in the case of a portfolio
holding long-term debt securities, is to gain the benefit of
changes in interest rates without actually buying or selling long-
term debt securities. For example, if a fund owned long-term bonds
and interest rates were expected to increase, it might enter into
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PAGE 87
futures contracts to sell securities which would have much the same
effect as selling some of the long-term bonds it owned. Futures
contracts are based on types of debt securities referred to above,
which have historically reacted to an increase or decline in
interest rates in a fashion similar to the debt securities the fund
owns. 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.
Successful use of futures contracts depends on the investment
manager's ability to predict the future direction of interest
rates. If the investment manager's prediction is incorrect, the
fund would have been better off had it not entered into futures
contracts.

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.

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PAGE 88
Risks. There are risks in engaging in each of the management tools
described above. The risk a fund assumes when it buys an option is
the loss of the premium paid for the option. Purchasing options
also limits the use of monies that might otherwise be available for
long-term investments.

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 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.

A risk in employing futures contracts to protect against the price
volatility of portfolio 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 portfolio 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.

Another risk is that the fund's investment manager could be
incorrect in anticipating as to the direction or extent of various
interest rate 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.

Federal income tax treatment of gains or losses from transactions
in options on futures contracts and indexes is currently unclear,
although the funds' tax advisers currently believe marking to
market is not required. Depending on developments, a fund may seek
Internal Revenue Service (IRS) rulings clarifying questions
concerning such treatment. Certain provisions of the Internal
Revenue Code may also limit a fund's ability to engage in futures
contracts and related options transactions. For example, at the
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PAGE 89
close of each quarter of the fund's taxable year, at least 50
percent of the value of its assets must consist of cash, government
securities and other securities, subject to certain diversification
requirements. Less than 30 percent 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-percent-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, a
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.

MORTGAGE-BACKED SECURITIES AND ADDITIONAL INFORMATION ON INVESTMENT
POLICIES FOR ALL FUNDS EXCEPT MONEYSHARE

GNMA Certificates

The Government National Mortgage Association (GNMA) is a wholly
owned corporate instrumentality of the United States within the
Department of Housing and Urban Development. GNMA certificates are
mortgage-backed securities of the modified pass-through type, which
means that both interest and principal payments (including
prepayments) are passed through monthly to the holder of the
certificate. Each certificate evidences an interest in a specific
pool of mortgage loans insured by the Federal Housing
Administration or the Farmers Home Administration or guaranteed by
the Veterans Administration. The National Housing Act provides
that the full faith and credit of the United States is pledged to
the timely payment of principal and interest by GNMA of amounts due
on these certificates. GNMA is empowered to borrow without
limitation from the U.S. Treasury, if necessary, to make such
payments.

Underlying Mortgages of the Pool. Pools consist of whole mortgage
loans or participations in loans. The majority of these loans are
made to purchasers of 1-4 member family homes. The terms and
characteristics of the mortgage instruments generally are uniform
within a pool but may vary among pools. For example, in addition
to fixed-rate fixed-term mortgages, the fund may purchase pools of
variable rate mortgages, growing equity mortgages, graduated
payment mortgages and other types.

All servicers apply standards for qualification to local lending
institutions which originate mortgages for the pools. Servicers
also establish credit standards and underwriting criteria for
individual mortgages included in the pools. In addition, many
mortgages included in pools are insured through private mortgage
insurance companies.

Average Life of GNMA Certificates. The average life of GNMA
certificates varies with the maturities of the underlying mortgage
instruments which have maximum maturities of 30 years. The average
life is likely to be substantially less than the original maturity
of the mortgage pools underlying the securities as the result of
prepayments or refinancing of such mortgages. Such prepayments are
passed through to the registered holder with the regular monthly
payments of principal and interest.

As prepayment rates vary widely, it is not possible to accurately
predict the average life of a particular pool. It is customary in
the mortgage industry in quoting yields on a pool of 30-year
mortgages to compute the yield as if the pool were a single loan
that is amortized according to a 30-year schedule and that is
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prepaid in full at the end of the 12th year. For this reason, it
is standard practice to treat GNMA certificates as 30-year
mortgage-backed securities which prepay fully in the 12th year.

Calculation of Yields. Yields on pass-through securities are
typically quoted based on the maturity of the underlying
instruments and the associated average life assumption.

Actual pre-payment experience may cause the yield to differ from
the assumed average life yield. When mortgage rates drop, pre-
payments will increase, thus reducing the yield. Reinvestment of
pre-payments may occur at higher or lower interest rates than the
original investment, thus affecting the yield of a fund. The
compounding effect from reinvestments of monthly payments received
by the fund will increase the yield to shareholders compared to
bonds that pay interest semi-annually. The yield also may be
affected if the certificate was issued at a premium or discount,
rather than at par. This also applies after issuance to
certificates trading in the secondary market at a premium or
discount.

"When-Issued" GNMA 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. Payment and interest terms, however,
are fixed at the time the purchaser enters into the commitment.
However, the yield on a comparable GNMA certificate when the
transaction is consummated may vary from the yield on the GNMA
certificate at the time that the when-issued transaction was made.
A fund does not pay for the securities or start earning interest on
them until the contractual settlement date. When-issued securities
are subject to market fluctuations and they may affect the fund's
gross assets the same as owned securities.

Market for GNMA Certificates. Since the inception of the GNMA
mortgage-backed securities program in 1970, the amount of GNMA
certificates outstanding has grown rapidly. The size of the market
and the active participation in the secondary market by securities
dealers and many types of investors make the GNMA certificates a
highly liquid instrument. Prices of GNMA certificates are readily
available from securities dealers and depend on, among other
things, the level of market interest rates, the certificate's
coupon rate and the prepayment experience of the pool of mortgages
underlying each certificate.

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
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PAGE 92
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.

Managed and Special Income Funds may invest in securities called
"inverse floaters". Inverse floaters are created by underwriters
using the interest payments on securities. A portion of the
interest received is paid to holders of instruments based on
current interest rates for short-term securities. What is left
over, less a servicing fee, is paid to holders of the 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.

Managed and Special Income Funds may purchase some securities in
advance of when they are issued. Price and rate of interest are
set on the date the commitments are given but no payment is made or
interest earned until the date the securities are issued, usually
within two months, but other terms may be negotiated. The
commitment requires the portfolio to buy the security when it is
issued so the commitment is valued daily the same way as owning a
security would be valued. The Portfolio's custodian will maintain,
in a segregated account, cash or liquid high-grade debt securities
that are marked to market daily and are at least equal in value to
the Portfolio's commitments to purchase the securities. The
portfolio may sell the commitment just like it can sell a security.
Frequently, the portfolio has the opportunity to sell the
commitment back to the institution that plans to issue the security
and at the same time enter into a new commitment to purchase a
when-issued security in the future. For rolling its commitment
forward, the portfolio realizes a gain or loss on the sale of the
current commitment or receives a fee for entering into the new
commitment.

Managed and Special Income Funds 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 portfolio would buy or sell covered MBS call spread
options in situations where mortgage-backed securities are expected
to under perform like-duration Treasury securities.

<PAGE>
PAGE 93

APPENDIX G

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 unit value 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
units 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 units lower
than the average price of units 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
contract owners who can continue investing through changing market
conditions to acquire units to meet long term goals.

Dollar-cost averaging

Regular Market Value of an Accumulation
Investment Accumulation Unit Units Acquired

$100 $ 6 16.7
100 4 25.0
100 4 25.0
100 6 16.7
100 5 20.0
$500 $25 103.4

Average market price of an accumulation unit over 5 periods: $5
($25 divided by 5).
The average price you paid for each accumulation unit: $4.84
($500 divided by 103.4).
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PAGE 94

RETIREMENT ANNUITY MUTUAL FUNDS - SYMPHONY

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS Life Capital Resource Fund, Inc.
IDS Life Special Income Fund, Inc.
IDS Life Managed Fund, Inc.

Oct. 28, 1994

This SAI is dated Oct. 28, 1994, and it is to be used with the
funds' prospectus dated Oct. 28, 1994. It is also to be used with
the funds' Annual Report for the fiscal year ended Aug. 31, 1994.

IDS Life Insurance Company
P.O. Box 458
Minneapolis, MN 55440
800-422-3542
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PAGE 95
TABLE OF CONTENTS

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

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

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

Brokerage Commissions Paid to Brokers
Affiliated with IDS Life......................................p.

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

Valuing Each Fund's Shares....................................p.

Investing in the Funds........................................p.

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

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

Agreements with IDS Life and IDS..............................p.

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

Custodian.....................................................p.

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

Financial Statements....................See Annual Report and p.

Prospectus....................................................p.

Appendix A: Description of Corporate Bond Ratings and
Additional Information on Investment Policies
for Investments of all funds.....................p.

Appendix B: Foreign Currency Transactions for Investments
of Capital Resource, Special Income and Managed
Funds............................................p.

Appendix C: Options and Stock Index Futures Contracts for
Investments of Capital Resource and Managed
Funds............................................p.

Appendix D: Options and Interest Rate Futures Contracts
for Investments of Special Income and Managed
Funds............................................p.

Appendix E: Mortgage-backed securities and Additional
Information on Investment Policies for all
funds............................................p.

Appendix F: Dollar-Cost Averaging............................p.
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PAGE 96
ADDITIONAL INVESTMENT POLICIES

These policies state each fund will not:

'Invest more than 5 percent of its total assets, at market value,
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. Up to 25 percent of each fund's
total assets may be invested without regard to this 5 percent
limitation.

'Buy on margin or sell short, but Capital Resource and Managed
Funds may make margin payments in connection with transactions in
stock index futures contracts and Special Income Fund may make
margin payments in connection with transactions in financial
futures contracts.

'Invest in a company to control or manage it.

'Lend portfolio securities in excess of 30 percent of each fund's
net assets, at market value. The current policy of each fund's
Board of Directors 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 of Directors. 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
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PAGE 97
due. A loan will not be made unless the opportunity for additional
income outweighs the risks. During the existence of the loan, the
fund receives cash payments equivalent to all interest or other
distributions paid on the loaned securities.

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

'Invest in securities of investment companies except by purchase in
the open market where the dealer's or sponsor's profit is the
regular commission. The funds do not intend to invest in such
securities but may do so to the extent of not more than 5 percent
of Capital Resource and Special Income Funds' net assets taken at
market or other current value. The funds may acquire limited
amounts of securities of one or more investment companies as
permitted by the Investment Company Act of 1940, in connection with
the acquisition of or merger with such companies. Except for
these, the funds will not purchase securities of investment
companies.

'Engage in the purchase and sale of commodities or commodity
contracts, except to the extent that stock index futures contracts
may be considered such for Capital Resource and Managed Funds or
financial futures contracts may be considered such for Special
Income Fund.

Capital Resource and Special Income Funds will not:

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

Managed Fund will not:

'Buy or sell real estate, real estate mortgage loans, commodities,
or commodity contracts. However, the fund may enter into futures
contracts.

'Make a loan of any part of its assets to IDS, to its directors and
officers or to its own directors and officers.

Unless these policies are changed by the Board of Directors,

'Each Fund may maintain a portion of its assets in cash and
cash-equivalent investments. Each Fund may purchase short-term
U.S. and Canadian government securities.

Each Fund may purchase short-term corporate notes and obligations
rated in the top two classifications by Moody's and S&P or the
equivalent.
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PAGE 99
Each Fund may invest in bank obligations including negotiable
certificates of deposit (CDs), 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 that Fund's limitations on foreign investments.

'All funds (separately, 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). A
fund does not pay for the securities or receive dividends or
interest on them until the contractual settlement date. The fund's
custodian will maintain, in a segregated account, cash or liquid
high-grade debt securities that are marked to market daily and are
at least equal in value to the fund's 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.

Each fund will not invest more than 5 percent of its net assets in
warrants. Under one state's law, no more than 2 percent of each
Fund's net assets may be invested in warrants not listed on an
exchange.

Each fund will not 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.

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
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PAGE 100
guidelines established by the board of directors, 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.

Managed Fund will not:

'Invest in securities that are not readily marketable (whether or
not registration or the filing of a notification under the
Securities Act of 1933, or the taking of similar action under other
securities laws relating to the sale of securities is required), if
immediately after the making of any such investment more than 5
percent of Managed Fund's net assets (taken at market) would be
invested in such securities.

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

'Invest in a company if its investments would result in the total
holdings of all the funds in the IDS MUTUAL FUND GROUP being in
excess of 15 percent of that company's issued shares.

For a discussion on corporate bond ratings and additional
information on investment policies, see Appendix A. For a
discussion on foreign currency transactions, see Appendix B. For a
discussion on options and stock index futures contracts, see
Appendix C. For a discussion on options and interest rate futures
contracts, see Appendix D. For a discussion on dollar-cost
averaging, see Appendix E.

PORTFOLIO TRANSACTIONS

Subject to policies set by the Board of Directors, IDS and IDS Life
are authorized to determine, consistent with the funds' investment
goals and policies, which securities will be purchased, held or
sold. In determining where buy and sell orders are to be placed,
IDS and IDS Life have been directed to use their best efforts to
obtain the best available price and the most favorable execution
except where otherwise authorized by the Board of Directors. IDS
Life intends to direct IDS to execute trades and negotiate
commissions on its behalf. These services are covered by the
Investment Advisory Agreement between IDS and IDS Life. When IDS
acts on IDS Life's behalf for the funds, they follow the rules
described here for IDS Life.

On occasion, it may be desirable for the funds 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 Boards of
Directors have adopted a policy authorizing IDS Life to do so to
the extent authorized by law, if IDS Life 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
<PAGE>
PAGE 101
dealer, viewed either in the light of that transaction or IDS
Life's or IDS' overall responsibilities to the funds in the IDS
MUTUAL FUND GROUP.

Research provided by brokers supplements IDS' own research
activities. Research services include economic data on, and
analysis of: the U.S. economy and specific industries within the
economy; information about specific companies, including earning
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. IDS 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 includes the research,
portfolio management and trading functions and such other services
to the extent permitted under an interpretation by the Securities
and Exchange Commission.

When paying a commission that might not otherwise be charged or a
commission in excess of the amount another broker might charge, IDS
Life must follow procedures authorized by the Board of Directors.
To date, three procedures have been authorized. One procedure
permits IDS Life 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
IDS Life, 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 the
security. The commission paid generally includes compensation for
research services. The third procedure permits IDS Life, in order
to obtain research and brokerage services, to cause each fund to
pay a commission in excess of the amount another broker might have
charged.

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
<PAGE>
PAGE 102
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 IDS Life and IDS in providing advice to all the
funds in the IDS MUTUAL FUND GROUP and other accounts advised by
IDS Life and IDS even though it is not possible to relate the
benefits to any particular fund or account.

Normally, the securities of Special Income Fund are traded on a
principal rather than an agency basis. In other words, IDS will
trade directly with the issuer or with a dealer who buys or sells
for its own account, rather than acting on behalf of another
client. IDS does not pay the dealer commissions. Instead, the
dealer's profit, if any, is the difference, or spread, between the
dealer's purchase and sale price for the security.

Each investment decision made for each fund is made independently
from any decision made for another fund in the IDS MUTUAL FUND
GROUP or other account advised by IDS or any IDS subsidiary. When
a fund buys or sells the same security as another fund or account,
IDS 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 a fund,
the fund hopes to gain an overall advantage in execution. IDS has
assured the funds they will continue to seek ways to reduce
brokerage costs.

On a periodic basis, IDS 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 funds have paid the following brokerage commissions:

Fiscal year ended Capital Special
Aug. 31, Resource Income Managed
1992 1,869,988 49,465 776,462

1993 2,957,827 14,954 1,487,314

1994 _________ _______ _________

Transactions amounting to $____________ and $_________ with related
commissions of $__________ and $__________ were directed to brokers
by Capital Resource, and Managed Funds, respectively, because of
research services received for the fiscal year ended Aug. 31, 1994.

<PAGE>
PAGE 103
Value of Securities
Owned at End of
Name of Issuer Fiscal Year
Goldman Sachs $

Value of Securities
Owned at End of
Name of Issuer Fiscal Year
Primerica $
Salomon Brothers
Norwest

Capital Resource Fund did not acquire securities of its regular
brokers or dealers or of the parents of those brokers or dealers
that derived more than 15 percent of gross revenue from securities-
related activities during the fiscal year ended Aug. 31, 1994.

Because certain groups of bonds have different yields, Special
Income Fund may do some short-term trading. As a result, the
portfolio turnover rate may be greater than 100 percent annually
which may be higher than the rate of other funds with similar
goals. A turnover rate of 100 percent would occur, for example, if
all the securities in the fund's portfolio were replaced in the
period of one year. The fund's turnover rate was 77% in fiscal
year ended Aug. 31, 1993 and ____% in fiscal year ended Aug. 31,
1994.

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH IDS LIFE

Affiliates of American Express Company (American Express) (of which
IDS Life is a wholly owned indirect subsidiary) may engage in
brokerage and other securities transactions on behalf of the funds
in accordance with procedures adopted by the funds' Boards of
Directors and to the extent consistent with applicable provisions
of the federal securities laws. IDS Life will use an American
Express affiliate only if (i) IDS Life determines that a 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 and Services Agreement.
<PAGE>
PAGE 104
No brokerage commissions were paid by Special Income Fund to
brokers affiliated with IDS Life for the fiscal year ended Aug. 31,
1994.

Information about brokerage commissions paid by Capital Resource
Fund for the last three fiscal years to brokers affiliated with IDS
Life is contained in the following table:
<TABLE>
<CAPTION>
For the Fiscal Year Ended Aug. 31,

American (2) 245,330 173,665
Enterprise
Investment
Services, Inc.
</TABLE>

Information about brokerage commissions paid by Managed Fund during
the last three fiscal years to brokers affiliated with IDS Life is
contained in the following table:
<TABLE>
<CAPTION>
For the Fiscal Period Ended Aug. 31,

The Robinson (2) None 6,510
Humphrey
Company, Inc.

American (3) 177,107 110,913
Enterprise
Investment
Services, Inc.
</TABLE>

Average annual total return

P(1+T)n = ERV

Aggregate total return

ERV - P
P

Annualized yield and Distribution yield

Yield is calculated according to the following formula:

Yield = 2[(a-b + 1)6 - 1]
cd
<PAGE>
PAGE 106
where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period

The fund's annualized yield was ____% for the 31-day period ended
Aug. 31, 1994.

Distribution yield is calculated according to the following
formula:

D x F = DY
NAV 31

where: D = sum of dividends for 31 day period
NAV = beginning of period net asset value
F = annualizing factor
DY = distribution yield

The fund's distribution yield was ____% for the 31-day period ended
Aug. 31, 1994.

REMEMBER THAT THESE YIELDS ARE THE RETURN TO THE SHAREHOLDER (THE
VARIABLE ACCOUNT), NOT TO A VARIABLE ANNUITY CONTRACT OWNER. SEE
YOUR ANNUITY PROSPECTUS FOR A DISCUSSION OF THE DIFFERENCES.

VALUING EACH FUND'S SHARES

On Aug. 31, 1994, the computation of the value of an individual
share looked like this:

<PAGE>
PAGE 107
Capital Resource Fund
Net asset value
Net assets Shares outstanding of one share
$ divided by = $

Special Income Fund
Net asset value
Net assets Shares outstanding of one share
$ divided by = $

Managed Fund
Net asset value
Net assets Shares outstanding of one share
$ divided by = $

Capital Resource, Special Income and Managed Funds' portfolio
securities are valued as follows as of the close of business of the
New York Stock Exchange:

'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. 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 New York Stock Exchange that will not be
reflected in the computation of a 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
funds' Boards of Directors.
<PAGE>
PAGE 108
'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.

INVESTING IN THE FUNDS

You cannot buy shares of the funds directly. The only way you can
invest in the funds at the current time is by buying an annuity
contract from IDS Life or its affiliates and directing the
allocation of part or all of your net purchase payment to the
Separate Accounts which will invest in shares of Capital Resource,
Special Income or Managed Funds. Please read the funds' prospectus
along with your annuity prospectus for further information.

Sales Charges and Surrender or Withdrawal Charges

REDEEMING SHARES

The funds will redeem any shares presented by a shareholder
(variable account) for redemption. The Variable Accounts' policies
on when or whether to buy or redeem fund shares are described in
your annuity prospectus.
<PAGE>
PAGE 109
During an emergency, the Boards of Directors can suspend the
computation of net asset value, stop accepting payments for
purchase of shares or suspend the duty of the funds to redeem
shares for more than 7 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,

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

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

CAPITAL LOSS CARRYOVER

For federal income tax purposes, Special Income Fund had a capital
loss carryover of $____________ at Aug. 31, 1994, which, if not
offset by subsequent capital gains, will expire in 1996 through
2001. It is unlikely the Board of Directors will authorize a
distribution of any net realized capital gain for this fund until
the capital loss carryover has been offset or expires except as
required by IRS rules.

AGREEMENTS WITH IDS LIFE AND IDS

Investment Management and Services Agreement

Each fund has an Investment Management and Services Agreement with
IDS Life. For its services, IDS Life is paid a fee composed of an
asset charge. The asset charge is in two parts. The first part,
the group asset charge, is based on the combined daily net assets
of all funds in the IDS MUTUAL FUND GROUP, except the money market
funds, including any new fund that may be organized in the future.
The daily rate of the group asset charge is based upon the
following schedule:
<PAGE>
PAGE 110
Group Asset Charge

Group assets Annual rate at Effective
(billions) each asset level annual rate

The second part of the asset charge is based on the daily net
assets of each fund alone, and is equal to 0.25 percent per year.
The total 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. The management fee is
payable monthly.

The expenses of IDS Life that each fund has agreed to reimburse
are: taxes, brokerage commissions, custodian fees and expenses,
audit expenses, cost of items sent to contract owners, postage,
fees and expenses paid to directors who are not officers or
employees of IDS Life or IDS, fees and expenses of attorneys, costs
of fidelity and surety bonds, SEC registration fees, expenses of
preparing prospectuses and of printing and distributing
prospectuses to existing contract owners, losses due to theft or
other wrong doing or due to liabilities not covered by bond or
agreement, expenses incurred in connection with lending portfolio
<PAGE>
PAGE 111
securities of the funds and expenses properly payable by the funds,
approved by the Boards of Directors. All other expenses are borne
by IDS Life.

Investment Advisory Agreements

Information concerning other funds advised by IDS Life or IDS is
contained in the prospectus.

DIRECTORS AND OFFICERS

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

David R. Hubers**
2900 IDS Tower
Minneapolis, MN

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

Heinz F. Hutter
P.O. Box 5724
Minneapolis, MN

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

Anne P. Jones***
Sutherland, Asbill & Brennan
1275 Pennsylvania Ave., N.W.
Washington, D.C.

Partner, law firm of Sutherland, Asbill & Brennan. Director,
Motorola, Inc. and C-Cor Electronics, Inc.

Donald M. Kendall'
PepsiCo, Inc.
Purchase, NY

Former chairman and chief executive officer, PepsiCo, Inc.

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

James A. Mitchell**
2900 IDS Tower
Minneapolis, MN

Executive Vice President, IDS. Director, Chairman of the Board and
Chief Executive Officer, IDS Life.

William R. Pearce+*
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+'
4900 IDS Center
80 S. 8th St.
Minneapolis, MN

John R. Thomas**
2900 IDS Tower
Minneapolis, MN

Senior vice president and director of IDS.

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

Chairman, Whitney Management Company (manages family assets).
<PAGE>
PAGE 114
C. Angus Wurtele
1101 S. 3rd St.
Minneapolis, MN

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

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

Leslie L. Ogg
901 S. Marquette Ave.
Minneapolis, MN

Vice president of all funds in the IDS MUTUAL FUND GROUP and
general counsel and treasurer of the publicly offered funds.

CUSTODIAN

INDEPENDENT AUDITORS

The Independent Auditors' Report and Financial Statements,
including Notes to the Financial Statements and the Schedule of
Investments in Securities, contained in the 1994 Annual Report to
the shareholders of Capital Resource, Special Income and Managed
Funds, pursuant to Section 30(d) of the Investment Company Act of
1940, as amended, are hereby incorporated in this Statement of
Additional Information by reference. No other portion of the
Annual Report, however, is incorporated by reference.

PROSPECTUS

The prospectus dated Oct. 28, 1994, is hereby incorporated in this
Statement of Additional Information by reference.
<PAGE>
PAGE 116
APPENDIX A