IDS MARKET ADVANTAGE SERIES INC, 485APOS, 1996-05-03

IDS MARKET ADVANTAGE SERIES INC
485APOS, 1996-05-03

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<PAGE>
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No. ____

Post-Effective Amendment No. 16 (File No. 33-30770) _X_

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY (ACT OF 1940)

Amendment No. 20 (File No. 811-5897) _X_

Copies to:

IDS MARKET ADVANTAGE SERIES, INC.
IDS Tower 10, Minneapolis, Minnesota 55440
Leslie L. Ogg - 901 Marquette Avenue South, Suite 2810,
Minneapolis, MN 55402-3268 (612) 330-9283

Stephanie A. Djinis, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800 (202) 778-9000

It is proposed that this filing will become effective on August 1, 1996
pursuant to paragraph (a)(ii) of Rule 485.

The 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's Rule 24f-2 Notice for the
fiscal year ended January 31, 1996 was filed on March 29, 1996.
<PAGE>

CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 16
TO REGISTRATION STATEMENT NO. 33-30770

This post-effective amendment comprises the following papers and
documents:

The facing sheet.

Cross reference sheet.

Part A.

Prospectus for the IDS Small Company Index Fund.

Part B.

Statement of Additional Information for the IDS Small Company
Index Fund.

Part C.

Other information.

The signatures.
<PAGE>

Cross reference sheet showing the location in its prospectus and the
Statement of Additional Information of the information called for by the
items enumerated in Parts A and B of Form N-1A.

Negative answers omitted from prospectus are so indicated.
<TABLE>
<CAPTION>
PART A
------
<S> <C>

Item No. Section in Prospectus
-------- ---------------------

1 Cover page of prospectus

2 (a) Sales charge and Fund expenses
(b) The Fund in brief

(b) NA

4 (a) The Fund in brief; Investment policies and risks; How the Fund is organized
(b) Investment policies and risks

5 (a) Board members and officers
(b)(i) Investment manager and transfer agent; About American Express Financial Corporation
-- General Information

(b)(ii) Investment manager and transfer agent
(b)(iii) Investment manager and transfer agent

(d) Investment manager and transfer agent
(e) Investment manager and transfer agent

(f) Distributor
(g) Investment manager and transfer agent; About American Express Financial Corporation
-- General Information

5A (a) NA

(b) NA
6 (a) Shares; Voting rights

(b) NA
<PAGE>

<S> <C>

(e) Cover page; Special shareholder services

(f) Dividends and capital gains distributions; Reinvestments
(g) Taxes

(h) Alternative sales arrangements
7 (a) Distributor

(b) Valuing Fund shares

(e) NA
(f) Distributor

8 (a) How to redeem shares

(b) NA
(c) How to purchase shares: Three ways to invest

(d) How to purchase, exchange or redeem shares: Redemption policies
9 None
PART B

Item No. Section in Statement of Additional Information
-------- ----------------------------------------------
10 Cover page of SAI

11 Table of Contents
12 NA

13 (a) Additional Investment Policies; all appendices except Dollar-Cost Averaging

(b) Additional Investment Policies
(c) Additional Investment Policies

(d) Portfolio Transactions
14 (a) Board members and officers of the Fund;* Board members and officers

(b) Board members and officers

(b) NA
(c) Board Members and Officers
<PAGE>

16 (a)(i) How the Fund is organized; About American Express Financial Corporation*
(a)(ii) Agreements: Investment Management Services Agreement, Plan and Agreement of
Distribution

(a)(iii) Agreements: Investment Management Services Agreement

(b) Agreements: Investment Management Services Agreement
(c) NA

(d) Agreements: Administrative Services Agreement, Shareholder Service Agreement
(e) NA

(f) Agreements: Distribution Agreement

(g) NA
(h) Custodian; Independent Auditors

(i) Agreements: Transfer Agency Agreement; Custodian
17 (a) Portfolio Transactions

(b) Brokerage Commissions Paid to Brokers Affiliated with American Express Financial
Corporation

(e) Portfolio Transactions
18 (a) Shares; Voting rights*

(b) NA

19 (a) Investing in the Fund
(b) Valuing Fund Shares; Investing in the Fund

21 (a) Agreements: Distribution Agreement

(b) Agreements: Distribution Agreement
(c) NA

22 (a) NA
(b) Performance Information

23 NA
</TABLE>

* Designates location in prospectus.
<PAGE>

IDS SMALL COMPANY INDEX FUND

Prospectus
August __, 1996

The goal of IDS Small Company Index Fund, a part of IDS Market
Advantage Series, Inc., is to achieve long-term capital appreciation. The
Fund attempts to mirror the performance of the Standard & Poor's Small
Capitalization Stock Index[REGISTERED] (S&P SmallCap 600
Index[REGISTERED]) by investing in all or a representative group of the
equity securities comprising that Index.

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

Additional facts about the Fund are in a Statement of Additional
Information (SAI), filed with the Securities and Exchange Commission. The
SAI, dated August ___, 1996, is incorporated here by reference. For a
free copy, contact American Express Shareholder Service.

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

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

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

Table of contents

Page
----
The Fund in brief . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Types of Fund investments and their risks . . . . . . . . . . . . . . 3
Manager and distributor . . . . . . . . . . . . . . . . . . . . . . . 3
Portfolio manager . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Alternative purchase arrangements . . . . . . . . . . . . . . . . . . 3

Sales charge and Fund expenses . . . . . . . . . . . . . . . . . . . . 4

Performance
Total Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Investment policies and risks . . . . . . . . . . . . . . . . . . . . . 7
Facts about investments and their risks . . . . . . . . . . . . . . . 8
Alternative Investment Option . . . . . . . . . . . . . . . . . . . . . 10
Valuing Fund shares . . . . . . . . . . . . . . . . . . . . . . . . . 10

How to purchase, exchange or redeem shares
Alternative purchase arrangements . . . . . . . . . . . . . . . . . . 11
How to purchase shares . . . . . . . . . . . . . . . . . . . . . . . 14
How to exchange shares . . . . . . . . . . . . . . . . . . . . . . . 16
How to redeem shares . . . . . . . . . . . . . . . . . . . . . . . . 17
Reductions and waivers of the sales charge . . . . . . . . . . . . . 23

Special shareholder services
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Quick telephone reference . . . . . . . . . . . . . . . . . . . . . . 27

Distributions and taxes
Dividend and capital gain distributions . . . . . . . . . . . . . . . 28
Reinvestments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
How to determine the correct TIN . . . . . . . . . . . . . . . . . . . 30

How the Fund is organized
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Voting rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Shareholder meetings . . . . . . . . . . . . . . . . . . . . . . . . 31
Board members and officers . . . . . . . . . . . . . . . . . . . . . 32
Investment manager and transfer agent . . . . . . . . . . . . . . . . 33
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

About American Express Financial Corporation
General information . . . . . . . . . . . . . . . . . . . . . . . . . 36
<PAGE>

The Fund in Brief
-----------------

Goal

IDS Small Company Index Fund (the Fund), a part of IDS Market Advantage
Series, Inc., seeks to provide shareholders with long-term capital
appreciation. Because any investment involves risk, achieving this goal
cannot be guaranteed. Only shareholders can change this goal. To achieve
its goal, the Fund attempts to mirror the performance of the S&P SmallCap
600 Index by investing in all or a representative group of the equity
securities comprising that Index.

Types of Fund investments and their risks

The Fund is a diversified mutual fund that invests primarily in common
stocks of small-capitalization companies that are expected to provide
investment results that correspond to the performance of the S&P SmallCap
600 Index1/, an index composed of approximately 600 small-capitalization
common stocks in the United States chosen based upon their market size,
liquidity and industry group representation. As of November 30, 1995,
stocks in the S&P SmallCap 600 Index had market capitalization of between
$25 million and $3 billion. To be included in the Index, stock selections
are also screened by Standard & Poor's Corporation for trading volume,
share turnover, ownership concentration, share price and bid/ask spreads.

Because the Fund invests in many of the stocks included in the S&P
SmallCap 600 Index, your investment will be subject to the risks of
investments in such companies. Some of the companies included in the
Index do not have the financial strength needed to do well in difficult
times. The S&P SmallCap 600 Index has above-average risk and may
fluctuate more than the Standard & Poor's 500 Stock Price Index, which
invests in stocks of larger, more established firms. Small-capitalization
companies also often sell limited numbers of products, which can make it
harder for them to compete with medium and large companies. An index fund
holding all or a representative group of the 600 stocks in the S&P
SmallCap 600 Index, like the Fund, reduces certain risks of a more
actively managed fund, such as the risk of individual stock selection and
seeks to provide investors with returns corresponding to the performance
of the smaller-sized company sector of the market. Additional information
about the investment policies of the Fund appear in "Investment policies
and risks."

Manager and distributor

The Fund is managed by American Express Financial Corporation (AEFC), a
provider of financial services since 1894. AEFC currently manages more
than $__ billion in assets for the IDS MUTUAL FUND GROUP. Shares of the
Fund are sold through American Express Financial Advisors Inc., a wholly
owned subsidiary of AEFC.

1/ "Standard & Poor's," "Standard & Poor's Small Capitalization
Stock Index" and "S&P SmallCap 600" are trademarks of McGraw-Hill, Inc.
<PAGE>

Portfolio manager

Guru Baliga joined AEFC in 1991 as a research analyst. He became
portfolio manager of this Fund and IDS Research Opportunities Fund in
August 1996. He has been portfolio manager of IDS Blue Chip Fund since
1994. He was appointed to the portfolio management team for IDS Managed
Retirement in December 1995 and is also a portfolio manager of certain IDS
advisory accounts.

Alternative purchase arrangements

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

Sales charge and Fund expenses
------------------------------

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

Shareholder transaction expenses
--------------------------------

Class A Class B Class Y

Maximum sales charge on
purchases* (as a percentage of
offering price) . . . . . . . . . 5% 0% 0%

Maximum deferred sales charge
imposed on redemptions (as a
percentage of original purchase
price) . . . . . . . . . . . . . 0% 5% 0%

Annaul Fund operation expenses**
--------------------------------
(as a % of average daily net assets):
Class A Class B Class Y

Management fee . . . . . . . . 0.35% 0.35% 0.35%

12b-1 fee . . . . . . . . . . . 0.00% 0.75% 0.00%

Other expenses*** . . . . . . . _.__% _.__% _.__%

Total . . . . . . . . . . . . . _.__% _.__% _._%

- 2 -
<PAGE>

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

** Expenses are those expected to be incurred by each class during
the Fund's initial fiscal period.

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

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

1 year 3 years
------ -------

Class A $__ $__

Class B $__ $__

Class B* $__ $__

Class Y $__ $__

* Assuming Class B shares are not redeemed at the end of the period.

THIS EXAMPLE DOES NOT REPRESENT ACTUAL EXPENSES, PAST OR FUTURE. ACTUAL
EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN. Because Class B pays
annual distribution (12b-1) fees, long term shareholders of Class B may
indirectly pay an equivalent of more than a 6.25% sales charge, the
maximum permitted by the National Association of Securities Dealers.

Performance
-----------

Total Return

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

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

The Fund may at times advertise its average annual total return and
cumulative total return and compare its performance to that of other
mutual funds with similar investment objectives and to the performance of

- 3 -
<PAGE>

the S&P SmallCap 600 Index, as well as other indices, and may also
disclose its performance as ranked by certain ranking entities. Each
class of the Fund has different expenses that will impact its performance.
Performance will vary from time to time and past results are not
necessarily representative of future results. See the SAI for more
information about the calculation of total returns.

The S&P SmallCap 600 Index is a market-weighted index, with each stock
affecting the index in proportion to its market value. Standard & Poor's
Corporation is responsible for selecting and maintaining the list of
stocks to be included in the Index. Inclusion in the Index in no way
implies an opinion by Standard & Poor's Corporation as to attractiveness
as an investment. This unmanaged Index tracks the common stock
performance of 600 small-capitalized U.S. companies in various industries.
The Fund may invest in common stocks that may not be listed in the S&P
SmallCap 600 Index. The Index reflects reinvestment of all distributions
and changes in market prices, but excludes brokerage commissions or other
fees. The Fund is not promoted, sponsored or endorsed by, nor in any way
affiliated with Standard & Poor's.

The following table shows the performance of the S&P SmallCap 600 Index
for the ten years ending in 1995. Although the Index was first published
in 1994, Standard & Poor's reconstructed its performance for earlier
years. The past performance of the S&P SmallCap 600 Index should not be
viewed as representative of the Index's or the Fund's future performance.
The fees and costs involved in the operation of the Fund mean that the
performance of a share of stock in the Fund may not equal the performance
of the S&P SmallCap 600 Index even if the performance of the assets held
by the Fund do equal that performance.

S&P SMALLCAP 600 INDEX WITH DIVIDENDS REINVESTED
ANNUAL PERCENTAGE CHANGE

1986 +3.23
1987 -13.50
1988 +19.49
1989 +13.89
1990 -9.90
1991 +48.49
1992 +21.04
1993 +18.79
1994 -4.77
1995 +29.96

Source: Standard & Poor's Corporation.

- 4 -
<PAGE>

Investment policies and risks
-----------------------------

The Fund will primarily invest in a representative group of the stocks
comprising the S&P SmallCap 600 Index. The Fund will not be managed
according to traditional methods of "active" investment management,
instead it will follow a passive or indexing investment approach under
which stocks are generally purchased or sold in order to match the
performance of the S&P SmallCap 600 Index. Accordingly, the portfolio
manager will not select securities for the Fund's investment portfolio
based upon traditional economic, financial and market analyses or
forecasting.

The Fund seeks to mirror the performance of the S&P SmallCap 600 Index by
replicating the S&P SmallCap 600 Index or by investing in a statistically
selected sample of the approximately 600 stocks included in the S&P
SmallCap 600 Index. The Fund will invest in as many stocks as necessary
to closely track the performance of the S&P SmallCap 600 Index. Under
normal market conditions, the Fund will invest at least 80% of its net
assets in stocks of issuers that comprise the S&P SmallCap 600 Index. As
part of its investment strategy, the Fund also may hold cash or its
equivalent or invest in short-term fixed income securities, which may
cause its performance to differ from that of the S&P SmallCap 600 Index.
The Fund will attempt to minimize any such differences through
transactions involving stock index futures contracts, options on stock
indices, and/or options on stock index futures contracts. During its
initial fiscal period, the Fund's investments in cash or its equivalent
and in stock index futures contracts may be weighted more heavily. These
investment instruments are described under "Facts about investments and
their risks - Derivative instruments" below.

In addition, the Fund may purchase and sell options on equity securities,
lend its portfolio securities and purchase securities on a when-issued or
delayed delivery basis. These techniques are described under "Facts about
investments and their risks" below and further information about some of
them is included in the SAI.

The stocks of the S&P SmallCap 600 Index to be included in the Fund's
investment portfolio may be selected by utilizing a statistical sampling.
The Fund generally will select stocks by closely approximating the risks,
fundamentals, industry weightings and other characteristics of the stocks
listed on the S&P SmallCap 600 Index.

While the Fund will not precisely match the S&P SmallCap 600 Index's
performance, the Fund will attempt to minimize the variation between its
performance and that of the Index. The Fund's ability to mirror
performance of the S&P SmallCap 600 Index may be affected by factors such
as the size of the Fund's portfolio, transaction costs, management fees
and expenses, brokerage commissions and fees, the extent and timing of
cash flows into and out of the Fund, the Fund's policy of minimizing
transaction costs and tax liability from capital gain distributions, and
changes in the securities markets and the Index itself.

- 5 -
<PAGE>

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

Facts about investments and their risks

Because of the risks associated with investing in the small companies that
comprise the S&P Small Cap 600 Index, the Fund is intended to be a long-
term investment vehicle and is not designed to provide you with a means of
speculating on short-term market movements.

Small-capitalization common stocks: Stocks of smaller companies may be
subject to more abrupt or erratic price movements than stocks of larger,
established companies or the stock market as a whole. Among the reasons
for greater price volatility of stocks of smaller companies are the less
than certain growth prospects of smaller firms, the lower degree of
liquidity in the markets for such stocks, and the greater exposure of
small-size companies to changing economic conditions. Also, small
companies often have limited product lines, smaller markets or fewer
financial resources. Therefore, some of the securities in which the Fund
invests involve substantial risk and may be considered speculative.

Market risk: The Fund is subject to market risk because it invests
primarily in common stocks. Market risk is the possibility that common
stock prices will decline over short or even extended periods. The U.S.
stock market tends to be cyclical, with periods when stock prices
generally rise and periods when stock prices generally decline.

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

- 6 -
<PAGE>

The Fund is not limited as to the percentage of its assets that may be
invested in permissible investments, including derivatives, except as
otherwise explicitly provided in this prospectus or the SAI.

The Fund may use any of the above instruments, and there can be no
assurance that any strategy that is used will succeed. The Fund's
ability to use these instruments may be limited by market conditions,
regulatory limits and tax considerations. Risks include loss of premiums
for purchased options, defaults by other parties with respect to over-the-
counter instruments, and inability to close-out positions in such
instruments due, for example, to lack of a liquid secondary market. For
further information regarding derivative instruments, see the SAI.

Stock Index Futures Contracts: Stock index futures contracts are
commodity contracts listed on commodity exchanges. 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. Unlike the
purchase or sale of an equity security, no price would be paid or received
by the Fund upon entering into 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% of the contract value. The Fund intends to use stock
index futures contracts for hedging and not for speculation. Hedging
permits the Fund to gain rapid exposure to or protect itself from changes
in the market. There are several risks in using stock index futures
contracts as a hedging device, however, because the prices of futures
contracts may not correlate perfectly with movements in the underlying
stock index due to certain market distortions. See Appendix A to the SAI
for a complete description of the risks involved.

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

The investment policies described above, including the Fund's investment
in stocks listed on the S&P SmallCap 600 Index, may be changed by the
board.

- 7 -
<PAGE>

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

The investment policies described above may not be changed by the board
without the vote of a majority of the Fund's outstanding voting
securities.

Portfolio turnover: The Fund does not expect its portfolio turnover rate
to exceed 250% during its initial fiscal period. High portfolio turnover
can lead to increased brokerage commissions and taxes.

Alternative investment option

In the future, the board of the Fund may determine for operating
efficiencies to use a master/feeder structure. Under that structure, the
Fund's assets would be invested in an investment company with the same
goal as the Fund, rather than invested directly in a portfolio of
securities.

Valuing Fund shares

The public offering price is the net asset value (NAV) plus the sales
charge for Class A. It is the NAV for Class B and Class Y. The NAV is
the value of a single Fund share. The NAV usually changes daily, and is
calculated at the close of business, normally 3 p.m. Central time, each
business day (any day the New York Stock Exchange is open).

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

. Securities (except bonds) and assets with available market values
are valued on that basis.
. Securities maturing in 60 days or less are valued at amortized
cost.
. Bonds and assets without readily available market values are
valued according to methods selected in good faith by the board.

- 8 -
<PAGE>

How to purchase, exchange or redeem shares
------------------------------------------

Alternative purchase arrangements

The Fund offers three different classes of shares -- Class A, Class B and
Class Y. The primary differences among the classes are in the sales charge
structures and in their ongoing expenses. These differences are
summarized in the table below. Qualifying institutional investors should
purchase Class Y shares. Other investors may choose Class A or Class B
shares, as best suits their circumstances and objectives.
<TABLE>
<CAPTION>
Sales charge and
distribution (12b-1) fee Service fee Other information

Class A Maximum initial sales 0.175% of average Initial sales charge waived or
charge of 5%; no 12b-1 daily net assets reduced for certain purchases
fee

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

Class Y None None Available only to certain
qualifying institutional
investors
</TABLE>

Conversion of Class B shares to Class A shares -- Eight calendar years
after Class B shares were originally purchased, Class B shares will
convert to Class A shares and will no longer be subject to a distribution
fee. The conversion will be on the basis of relative net asset values of
the two classes, without the imposition of any sales charge. Class B
shares purchased through reinvested dividends and other distributions will
convert to Class A shares on a pro rata basis with Class B shares not
purchased through reinvestment.

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

- 9 -
<PAGE>

Sales charges on purchase or redemption
---------------------------------------

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

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

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

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

Ongoing expenses
----------------

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

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

- 10 -
<PAGE>

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

. Qualified employee benefit plans* if the plan:

-- uses a daily transfer recordkeeping service offering participants
daily access to IDS funds and has:

-- at least $10 million in plan assets or

-- 500 or more participants; or

-- does not use daily transfer recordkeeping and has:

-- at least $3 million invested in funds of the IDS
MUTUAL FUND GROUP or

-- 500 or more participants.

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

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

_______________

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

- 11 -
<PAGE>

How to purchase shares

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

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

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

Purchase policies:

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

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

. The maximum purchase allowed is $1 million. Any order for $1 million
or more must be pre-approved by AEFC prior to placing the order or it
will be rejected. This maximum amount allowed for investment may
change from time to time.

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

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

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

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

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

. If your application does not specify which class of shares you are
purchasing, it will be assumed that you are investing in Class A
shares.

- 12 -
<PAGE>

Three ways to invest
----------------------------------------------------------------------------------------
<S> <C> <C>

1. Send your check and application (or Minimum amounts
your name and account number if you
have an established account) to: Initial Investment: $2,000
By regular
account American Express Additional Investment: $100
Financial Advisors Inc.
P.O. Box 74 Account Balances: $300*
Minneapolis, MN 55440-0074
Qualified retirement
Your financial advisor will help accounts: none
you with this process.

----------------------------------------------------------------------------------------
2 Contact your financial advisor to Minimum amounts
set up one of the following
By scheduled scheduled plans: Initial investment $100
investment
plan . automatic payroll deduction Additional investments: $100/mo.

. bank authorization Account balances: none
(on active plans of monthly
. direct deposit of Social payments)
Security check

. other plan approved by the Fund

----------------------------------------------------------------------------------------
3 If you have an established account, If this information is not
you may wire money to: included, the order may be
By wire rejected and all money received by
Norwest Bank Minneapolis the Fund less any costs the Fund
Routing No. 091000019 or AEFC incurs, will be returned
Minneapolis, MN promptly.
Attn: Domestic Wire Dept.
Minimum amounts
Give these instructions:
Credit IDS Account Each wire investment: $1,000
#00-30-015 for personal account #
(your account number) or (your
name).

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

- 13 -
<PAGE>

How to exchange shares

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

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

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

- 14 -
<PAGE>

How to redeem shares

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

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

A redemption is a taxable transaction. If your proceeds from your
redemption are more or less than the cost of your shares, you will have a
gain or loss, which can affect your tax liability. Redeeming shares held
in an IRA or qualified retirement account may subject you to certain
federal taxes, penalties and reporting requirements. Consult your tax
advisor.

- 15 -
<PAGE>

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

<S> <C> <C>
1 Include in your letter: Regular mail:

By letter . the name of the fund(s) American Express
Shareholder Service
. the class of shares to be exchanged Attn: Redemptions
or redeemed P.O. Box 534
Minneapolis, MN
. your account number(s) (for 55440-0534
exchanges, both funds must be
registered in the same ownership) Express mail:

. your Taxpayer Identification Number American Express
(TIN) Shareholder Service
Attn: Redemptions
. the dollar amount or number of 733 Marquette Ave.
shares you want to exchange or Minneapolis, MN 55402
redeem
. signature of all registered account
owners

. for redemptions, indicate how you
want your money delivered to you
. any paper certificates of shares
you hold

__________________________________________________________________________________

2 . The Fund and AEFC will honor any . AEFC answers phone
telephone exchange or redemption requests promptly,
By phone request believed to be authentic but you may
and will use reasonable procedures experience delays
American Express to confirm that they are. This when call volume is
Telephone includes asking identifying high. If you are
Transaction questions and tape recording calls. unable to get
Service: If reasonable procedures are not through, use mail
800-437-3133 followed, the Fund or AEFC will be procedure as an
or liable for any loss resulting from alternative.
612-671-3800 fraudulent requests.

- 16 -
<PAGE>

. Phone exchange and redemption . Acting on your
privileges automatically apply to instructions, your
all accounts except custodial, financial advisor may
corporate or qualified retirement conduct telephone
accounts unless you request these transactions on your
privileges NOT apply by writing behalf.
American Express Shareholder
Service. Each registered owner . Phone privileges may
must sign the request. be modified or
discontinued at any
time.

Minimum amount

Redemption: $100

Maximum amount

Redemption: $50,000

</TABLE>

- 17 -
<PAGE>

Exchange policies:

. YOU MAY MAKE UP TO THREE EXCHANGES WITHIN ANY 30-DAY PERIOD, WITH EACH
LIMITED TO $300,000. These limits do not apply to scheduled exchange
programs and certain employee benefit plans or other arrangements
through which one shareholder represents the interests of several.
Exceptions may be allowed with pre-approval of the Fund.

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

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

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

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

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

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

- 18 -
<PAGE>

Redemption policies:

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

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

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

- 19 -
<PAGE>

Three ways to receive payment when you redeem shares

_______________________________________________________________________

1 . Mailed to the address on record

By regular or . Payable to names listed on the account.
express mail
NOTE: The express mail delivery charges you
pay will vary depending on the courier you
select.

_______________________________________________________________________

2 . Minimum wire redemption: $1,000.

By wire . Request that money be wired to your bank.

. Bank account must be in the same ownership
as the IDS Fund account.

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

_______________________________________________________________________

3 . Minimum payment: $50.

By scheduled . Contact your financial advisor or American
payout plan Express Shareholder Service to set up
regular payments to you on a monthly,
bimonthly, quarterly, semiannual or annual
basis.

. Purchasing new shares while under a payout
plan may be disadvantageous because of the
sales charges.

- 20 -
<PAGE>

Reductions and waivers of the sales charge

Class A -- initial sales charge alternative

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

Public offering Net invested
price amount

Up to $50,000 5.0% 5.26%

Next $50,000 4.5 4.71

Next $400,000 3.8 3.95

Next $500,000 2.0 2.04

$1,000,000 or more 0.0 0.00

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

Reductions of the sales charge on Class A Shares

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

. the amount you are investing in this Fund now,

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

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

Other policies that affect your sales charge:

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

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

- 21 -
<PAGE>

purchased through that plan. Plans eligible to purchase Class Y shares
should purchase shares of that class.

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

For more details, see the SAI.

Waivers of the sales charge for Class A shares

Sales charges do not apply to:

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

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

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

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

. Shareholders who have at least $1 million invested in funds of the IDS
MUTUAL FUND GROUP. If the investment is redeemed in the first year
after purchase, a CDSC of 1% will be charged on the redemption. The
CDSC will be waived only in the circumstances described for waivers for
Class B.

. Purchases made within 30 days after a redemption of shares (up to the
amount redeemed):

-- of a product distributed by American Express Financial Advisors in a
qualified plan subject to a deferred sales charge or

-- in a qualified plan where American Express Trust Company has a
recordkeeping, trustee, investment management or investment servicing
relationship.

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

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

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

- 22 -
<PAGE>

. Purchases made under the University of Texas System ORP.

_________________________

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

Class B--contingent deferred sales charge alternative

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

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

First year 5%

Second year 4%

Third year 4%

Fourth year 3%

Fifth year 2%

Sixth year 1%

Seventh year 0%

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

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

- 23 -
<PAGE>

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

Waivers of the sales charge for Class B shares

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

. In the event of the shareholder's death,

. Purchased by any trustee, board member, officer or employee of a Fund
or AEFC or its subsidiaries,

. Held in a trusteed employee benefit plan,

. Held in IRAs or certain qualified plans for which American Express
Trust Company acts as trustee or custodian, such as Keogh plans,
tax-sheltered custodial accounts or corporate pension plans, provided
that the shareholder is:

-- at least 59-1/2 years old, and

-- taking a retirement distribution (if the redemption is part of a
transfer to an IRA or qualified plan in a product distributed by
American Express Financial Advisors, or a custodian-to-custodian
transfer to a product not distributed by American Express
Financial Advisors, the CDSC will not be waived), or

-- redeeming under an approved substantially equal periodic payment
arrangement.

- 24 -
<PAGE>

Special shareholder services
----------------------------

Services

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

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

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

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

Quick telephone reference
-------------------------

American Express Redemptions and National/Minnesota:
Telephone Transaction exchanges, dividend 800-437-3133
Service payments or
reinvestments and Mpls./St. Paul area:
automatic payment 671-3800
arrangements
_______________________________________________________________________

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

_______________________________________________________________________

TTY Service For the hearing 800-846-4852
impaired

_______________________________________________________________________
American Express Automated account National/Minnesota:
Infoline information 800-272-4445
(TouchTone[REGISTERED]
phones only), including Mpls./St. Paul area:
current Fund prices and 671-1630
performance, account
values and recent
account transactions

- 25 -
<PAGE>

Distributions and taxes
-----------------------

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

Dividend and capital gain distributions

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

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

Reinvestments

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

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

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

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

- 26 -
<PAGE>

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

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

Taxes

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

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

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

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

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

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

. a $50 penalty for each failure to supply your correct TIN

. a civil penalty of $500 if you make a false statement that results in
no backup withholding

. criminal penalties for falsifying information

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

- 27 -
<PAGE>

How to determine the correct TIN
--------------------------------
For this type of account: Use the Social Security or Employer
Identification number of:
______________________________________________________________________
Individual or joint account The individual or individuals
listed on the account

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

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

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

______________________________________________________________________
Sole proprietorship The owner

______________________________________________________________________
Partnership The partnership

______________________________________________________________________
Corporate The corporation

______________________________________________________________________
Association, club or tax-exempt The organization
organization

For details on TIN requirements, ask your financial advisor or local
American Express Financial Advisors office for federal Form W-9, "Request
for Taxpayer Identification Number and Certification."

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

- 28 -
<PAGE>

How the Fund is organized
-------------------------

IDS Market Advantage Series, Inc., of which IDS Small Company Index Fund
is a part, is a diversified, open-end management investment company, as
defined in the Investment Company Act of 1940. IDS Market Advantage
Series, Inc. is a Minnesota corporation incorporated on August 25, 1989.
The Fund's headquarters are at 901 S. Marquette Ave., Suite 2810,
Minneapolis, MN 55402-3268.

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

The shares of each fund making up IDS Market Advantage Series, Inc.
represent an interest in that fund's assets only (and profits or losses),
and, in the event of liquidation, each share of a fund would have the same
rights to dividends and assets as every other share of that fund (except
expenses attributable solely to a class of shares will be borne by that
class).

Voting rights

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

Shareholder meetings

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

- 29 -
<PAGE>

Board members and officers

Shareholders elect a board that oversees the operations of the Fund and
chooses its officers. Its officers are responsible for day-to-day
business decisions based on policies set by the board. The board has
named an executive committee that has authority to act on its behalf
between meetings. The board members also serve on the boards of the 46
other funds in the IDS MUTUAL FUND GROUP, except for Mr. Dudley, who is a
board member of all 34 publicly offered funds.

Board members and officers of the Fund

President and interested William R. Pearce
board member President of all funds in the IDS
MUTUAL FUND GROUP.

Independent board Lynne V. Cheney
members Distinguished fellow, American
Enterprise Institute for Public Policy
Research.

Robert F. Froehlke
Former president of all funds in the
IDS MUTUAL FUND GROUP.

Heinz F. Hutter
Former president and chief operating
officer, Cargill, Inc.

Anne P. Jones
Attorney and telecommunications
consultant.

Melvin R. Laird
Senior counsellor for national and
international affairs, The Reader's
Digest Association, Inc.

Edson W. Spencer
Former chairman and chief executive
officer,
Honeywell, Inc.

Wheelock Whitney
Chairman, Whitney Management Company.

- 30 -
<PAGE>

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

Interested board members William H. Dudley
who are officers and/or Executive vice president, AEFC.
employees of AEFC

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

John R. Thomas
Senior vice president, AEFC.

Officers who also are Peter J. Anderson
officers and/or Vice president of all funds in the IDS
employees of AEFC MUTUAL FUND GROUP.

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

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

Refer to the SAI for the board members' and officers' biographies.

Investment manager and transfer agent

The Fund pays AEFC for managing its portfolio, providing administrative
services and serving as transfer agent (handling shareholder accounts).
The Fund also pays taxes, brokerage commissions and other non-advisory
expenses.

Under its Investment Management Services Agreement, AEFC determines which
securities will be purchased, held or sold (subject to the direction and
control of the board). Under the current agreement, effective August ___,
1996, the Fund pays AEFC a fee for these services based on the average
daily net assets of the Fund, as follows:

- 31 -
<PAGE>

Assets Annual rate
(billions) at each asset level
---------- -------------------

First $0.25 0.350%

Next 0.25 0.335%

Next 0.25 0.320%

Next 0.25 0.305%

Over 1.0 0.290%

Under the Agreement, the Fund also pays taxes, brokerage commissions and
nonadvisory expenses.

Under an Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at an annual rate of 0.13%
decreasing in gradual percentages to 0.07% as assets increase.

In addition, under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The Fund pays AEFC an annual fee per
shareholder account for this service as follows:

. Class A $15
. Class B $16
. Class Y $15

Distributor

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

Persons who buy Class A shares pay a sales charge at the time of purchase.
Persons who buy Class B shares are subject to a contingent deferred sales
charge on a redemption in the first six years and pay an asset-based sales
charge (also known as a 12b-1 fee) of up to 0.75% of the Fund's average
daily net assets. Class Y shares are sold without a sales charge and
without an asset-based sales charge.

Portions of the sales charge also may be paid to securities dealers who
sell the Fund's shares or to banks and other financial institutions. The
amounts of those payments range from 0.8% to 4% of the Fund's offering
price depending on the monthly sales volume.

- 32 -
<PAGE>

Under a Shareholder Service Agreement, the Fund also pays a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.175% of the Fund's average
daily net assets attributable to Class A and Class B shares.

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

- 33 -
<PAGE>

About American Express Financial Corporation
--------------------------------------------

General information

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

Besides managing investments for all publicly-offered funds in the IDS
MUTUAL FUND GROUP, AEFC also manages investments for itself and its
subsidiaries, IDS Certificate Company and IDS Life Insurance Company.
Total assets under management on June 30, 1996 were more than $___
billion.

American Express Financial Advisors serves individuals and businesses
through its nationwide network of more than _____ offices and more than
______ advisors.

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

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

- 34 -
<PAGE>

IDS Small Company Index Fund
IDS Tower 10
Minneapolis, MN 55440-0010

Distributed by
American Express
Financial Advisors Inc.
<PAGE>

IDS MARKET ADVANTAGE SERIES, INC.

STATEMENT OF ADDITIONAL INFORMATION

FOR

IDS SMALL COMPANY INDEX FUND

August __, 1996

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

This SAI is dated August __, 1996, and it is to be used with the
prospectus dated August __, 1996.
<PAGE>

IDS Small Company Index Fund

TABLE OF CONTENTS

Page

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

Additional Investment Policies . . . . . . . . . . . . . . . . . . . 1

Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . 4

Brokerage Commissions Paid to Brokers Affiliated with
American Express Financial Corporation . . . . . . . . . . . . . . 6

Performance Information . . . . . . . . . . . . . . . . . . . . . . . 7

Valuing Fund Shares . . . . . . . . . . . . . . . . . . . . . . . . . 8

Investing in the Fund . . . . . . . . . . . . . . . . . . . . . . . . 10

Redeeming Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Pay-Out Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Board Members and Officers . . . . . . . . . . . . . . . . . . . . . 20

Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . 25

Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

APPENDIX A: Options and Stock Index Futures Contracts . . . . . . . . A-1

APPENDIX B: Dollar-Cost Averaging . . . . . . . . . . . . . . . . . . B-1
<PAGE>

IDS Small Company Index Fund

ADDITIONAL INVESTMENT POLICIES

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

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

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

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

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

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

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

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

. Buy or sell physical commodities unless acquired as a result of
ownership of securities or other instruments, except this shall
not prevent the Fund from buying or selling financial instruments
<PAGE>

IDS Small Company Index Fund

(such as options and futures contracts) or from investing in
securities or other instruments backed by, or whose value is
derived from, physical commodities.

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

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

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

Unless changed by the board, the Fund will not:

. Buy on margin or sell short, but it may make margin payments in
connection with transactions in options, futures contracts and
other financial instruments.

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

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

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

. Invest in a company to control or manage it.

- 2 -
<PAGE>

IDS Small Company Index Fund

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

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

. Invest more than 10% of its net assets in securities and other
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, nonnegotiable
fixed-time deposits, over-the-counter options.

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

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

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

The Fund may maintain a portion of its assets in cash and cash-equivalent
investments. The cash-equivalent investments the Fund may use are short-
term U.S. and Canadian government securities and negotiable certificates
of deposit, non-negotiable fixed-time deposits, bankers' acceptances and
letters of credit of basis or savings and loan associations having

- 3 -
<PAGE>

IDS Small Company Index Fund

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 investment in foreign
securities will be subject to the limitations on foreign investments
described in the prospectus. The Fund also may purchase short-term
corporate notes and obligations rated in the top two classifications by
Moody's Investors Service, Inc. (Moody's) or Standard & Poor's Corporation
(S&P) or the equivalent and may use repurchase agreements with broker-
dealers registered under the Securities Exchange Act of 1934 and with
commercial banks. A risk of a repurchase agreement is that if the seller
seeks the protection of the bankruptcy laws, the Fund's ability to
liquidate the security involved could be impaired.

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

For a discussion of options and stock index futures contracts, see
Appendix A.

PORTFOLIO TRANSACTIONS

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

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

On occasion, it may be desirable to compensate a broker for research
services or for brokerage services by paying a commission that might not
otherwise be charged or a commission in excess of the amount another
broker might charge. The board has adopted a policy authorizing AEFC to
do so to the extent authorized by law, if AEFC determines, in good faith,
that such commission is reasonable in relation to the value of the

- 4 -
<PAGE>

IDS Small Company Index Fund

brokerage or research services provided by a broker or dealer, viewed
either in the light of that transaction or AEFC's overall responsibilities
to the Funds in the IDS MUTUAL FUND GROUP and other accounts for which it
acts as investment advisor.

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

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

All transactions, including the foregoing, 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

- 5 -
<PAGE>

IDS Small Company Index Fund

selecting the broker or dealer, several firms can execute the transaction
on the same basis, consideration will be given by such person to those
firms offering research services. Such services may be used by AEFC in
providing advice to all the Funds in the IDS MUTUAL FUND GROUP even though
it is not possible to relate the benefits to any particular Fund or
account.

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

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

BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH
AMERICAN EXPRESS FINANCIAL CORPORATION

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

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

PERFORMANCE INFORMATION

- 6 -
<PAGE>

IDS Small Company Index Fund

The Fund may quote various performance figures to illustrate past
performance. Average annual total return to be used by the Fund will be
based on standardized methods of computing performance as required by the
SEC. An explanation of these methods used by the Fund to compute
performance follows below.

Average annual total return

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

Standard & Poor's Small Capitalization Stock(Registered Trademark)
Index total return

The Standard & Poor's Small Capitalization Stock Index ("S&P SmallCap
600(Registered Trademark) Index") consists of 600 domestic stocks chosen
for market size, liquidity (bid/asked spread, ownership, share turnover
and number of no trade days) and industry group representation. It is a
market value weighted index. The weighted average market capitalization
as of November 30, 1995 is $684 million.

The index is valued at the end of every day using composite prices and
available shares. Standard & Poor's ("S&P") does not use an index divisor
method for calculating the index. A geometric rate of return is
calculated from the daily valuations.

To calculate the total return for the S&P SmallCap 600 Index for a given
time period, add the indexed dividend to the closing Index value. Then,
divide this number by the closing S&P SmallCap 600 Index value at the
beginning of the time period. The indexed dividend is an index number
that represents the dividend distribution of the companies in the Index.
It is calculated by adding the total daily dividends (based on the ex-
dividend date) for all of the stocks in the Index for a given time period,
and then converting that sum to an indexed number by dividing it by the
same Index Divisor that is used to calculate the actual S&P SmallCap 600
Index.

- 7 -
<PAGE>

IDS Small Company Index Fund

The general formula to calculate the indexed dividend is:

Total Daily Dividends
----------------------- = Indexed Dividend
Latest Index Divisor

The Daily Indexed Dividend for the S&P SmallCap 600 Index on December 5,
1994, can be calculated using the above formula and the appropriate index
divisor -- 1990.5639.

7.9928
------------------ = Indexed Dividend
1900.5639

Indexed Dividend = 0.00421

S&P's uses the ex-dividend date rather than the payment date to determine
the total daily dividends for each day because the marketplace price
adjustment for the dividend occurs on the ex-date. Treatment of special
dividends, such as stock dividends and extraordinary dividends, paid by
companies in the S&P SmallCap 600 Index is decided upon on a case-by-case
basis.

The S&P SmallCap 600 Index total-return calculation assumes the
reinvestment of dividends on a daily basis. Monthly, quarterly, and
annual total-return numbers for the S&P SmallCap 600 Index are calculated
by daily compounding of the reinvested dividends. The table below
calculates the 1994 annual total return for the S&P SmallCap 600 Index by
compounding the monthly total returns, which are based on compounded daily
total returns. The year-to-date total-return index is also calculated
assuming daily reinvestment of dividends; however, the base period is the
last day of the prior year.

The total return calculations for the S&P SmallCap 600 Index industry
groups are calculated with dividends reinvested on a MONTHLY, not a daily
basis. The quarterly and annual industry total return numbers are
calculated by compounding the monthly total returns.

The Fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes
no representation or warranty, express or implied, to any member of the
public regarding the advisability of investing in securities generally or
in the Fund particularly or the ability of the S&P SmallCap 600 Index to
track general stock market performance. The S&P SmallCap 600 Index is
determined, composed and calculated by S&P without regard to the Fund.
S&P has no obligation to take the needs of the Fund into consideration in
determining, composing or calculating the S&P SmallCap 600 Index. S&P is
not responsible for and has not participated in the determination of the

- 8 -
<PAGE>

IDS Small Company Index Fund

prices and amount of the Fund shares or the timing of the issuance or sale
of those shares or in the determination or calculation of the equation by
which the shares are to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of
the Fund's shares.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
SMALLCAP 600 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO
LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES
NO WARRANTY, EXPRESS OR IMPLIED AS TO RESULTS TO BE OBTAINED BY THE FUND,
OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P SMALLCAP 600 INDEX
OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES,
AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P SMALLCAP 600 INDEX OR
ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO
EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.

Aggregate total return

The Fund may calculate aggregate total return for a class for certain
periods representing the cumulative change in the value of an investment

- 9 -
<PAGE>

IDS Small Company Index Fund

in the Fund over a specified period of time according to the following
formula:

ERV - P
--------
P

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

In its sales material and other communications, the Fund may quote,
compare or refer to rankings, yields or returns as published by
independent statistical services or publishers and publications such as
The Bank Rate Monitor National Index, Barron's, BusinessWeek, 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.

VALUING FUND SHARES

The value of an individual share for each class is determined by using the
net asset value before shareholder transactions for the day.

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

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

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

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

- 10 -
<PAGE>

IDS Small Company Index Fund

. Securities included in NASDAQ for which a last-quoted sales price
is not readily available, and other securities traded over-the-
counter but not included in the NASDAQ 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 Exchange. Foreign securities
quoted in foreign currencies are translated into U.S. dollars at
the current rate of exchange. Occasionally, events affecting the
value of such securities may occur between such times and the
close of the Exchange that will not be reflected in the
computation of the Fund's net asset value. If events materially
affecting the value of such securities occur during such period,
these securities will be valued at their fair value according to
procedures decided upon in good faith by the Fund's board.

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

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

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

- 11 -
<PAGE>

IDS Small Company Index Fund

INVESTING IN THE FUND

Sales Charge

Shares of the Fund are sold at the public offering price determined at the
close of business on the day an application is accepted. The public
offering price is the net asset value of one share plus a sales charge, if
applicable. For Class B and Class Y, there is no initial sales charge so
the public offering price is the same as the net asset value. For Class
A, the public offering price for an investment of less than $50,000 made
on August ___, 1996, was determined by dividing the net asset value of one
share, $______, by 0.95 (1.00-0.05 for a maximum 5% sales charge) for a
public offering price of $______. The sales charge is paid to American
Express Financial Advisors by the person buying the shares.

Class A - Calculation of the Sales Charge

Sales charges are determined as follows:

Within each increment,
sales charge as a
percentage of:
---------------------------

Public Net
Amount of Investment Offering Price Amount Invested
-------------------- -------------- ---------------

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

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

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

In the case of the $85,000 investment, the first $50,000 also incurs a
sales charge of $2,500 (5.0% x $50,000) and $35,000 incurs a sales charge

- 12 -
<PAGE>

IDS Small Company Index Fund

of $1,575 (4.5% x $35,000). The total sales charge of $4,075 is 4.79% of
the public offering price and 5.04% of the net amount invested.

The following table shows the range of sales charges as a percentage of
the public offering price and of the net amount invested on total
investments at each applicable level.

<TABLE>
<CAPTION>
On total investment,
sales charge as a
percentage of:
--------------------
Public Net
Amount of Investment Offering Price Amount Invested
-------------------- -------------- ---------------
ranges from:
---------------------------------
<S> <C> <C> <C> <C>
First $ 50,000 5.00% 5.26%
More than 50,000 to 100,000 5.00-4.50 5.26-4.71
More than 100,000 to 500,000 4.50-3.80 4.71-3.95
More than 500,000 to 999,999 3.80-2.00 3.95-2.04
$1,000,000 or more 0.0 0.00

</TABLE>

The initial sales charge is waived for certain qualified plans that meet
the requirements described in the prospectus. Participants in these
qualified plans may be subject to a deferred sales charge on certain
redemptions. The deferred sales charge on certain redemptions will be
waived if the redemption is a result of a participant's death, disability,
retirement, attaining age 59 1/2, loans or hardship withdrawals. The
deferred sales charge only applies to plans with less than $1 million in
assets and fewer than 100 participants.

Class A - Reducing the Sales Charge

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

- 13 -
<PAGE>

IDS Small Company Index Fund

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

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

The total amount invested also includes any investment you or your
immediate family already have in the other publicly offered funds in the
IDS MUTUAL FUND GROUP where the investment is subject to a sales charge.
For example, suppose you already have an investment of $30,000 in another
IDS Fund. If you invest $40,000 more in this Fund, your total amount
invested in the Funds will be $70,000 and therefore $20,000 of your
$40,000 investment will incur a 4.5% sales charge.

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

Class A - Letter of Intent (LOI)

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

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

- 14 -
<PAGE>

IDS Small Company Index Fund

Systematic Investment Programs

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

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

The systematic investment program itself cannot ensure a profit, nor can
it protect against a loss in a declining market. If you decide to
discontinue the program and redeem your shares when their net asset value
is less than what you paid for them, you will incur a loss.

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

Automatic Directed Dividends

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

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

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

- 15 -
<PAGE>

IDS Small Company Index Fund

. Between different kinds of custodial accounts with the same
ownership (for example, you may not exchange distributions from
your IRA to your 401(k) plan account, although you may exchange
distributions from one IRA to another IRA).

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

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

REDEEMING SHARES

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

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

. The Exchange closes for reasons other than the usual weekend and
holiday closings or trading on the Exchange is restricted, or

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

. The SEC, under the provisions of the Investment Company Act of
1940 (the 1940 Act) declares a period of emergency to exist.

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

The Fund has elected to be governed by Rule 18f-1 under the 1940 Act,
which obligates the Fund to redeem shares in cash, with respect to any one
shareholder during any 90-day period, up to lesser of $250,000 or 1% of
the net assets of the Fund at the beginning of the period. Although
redemptions in excess of this limitation would normally be paid in cash,
the Fund reserves the right to make these payments in whole or in part in
securities or other assets in case of an emergency, or if the payment of a
redemption in cash would be detrimental to the existing shareholders of

- 16 -
<PAGE>

IDS Small Company Index Fund

the Fund as determined by the board. In these circumstances, the
securities distributed would be valued as set forth in the prospectus.
Should the Fund distribute securities, a shareholder may incur brokerage
fees or other transaction costs in converting the securities to cash.

PAY-OUT PLANS

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

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

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

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

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

- 17 -
<PAGE>

IDS Small Company Index Fund

-------

If you choose this plan, a varying number of shares will be redeemed at
regular intervals during the time period you choose. This plan is designed
to end in complete redemption of all shares in your account by the end of
the fixed period.

Plan #2: Redemption of a fixed number of shares
-------

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

Plan #3: Redemption of a fixed dollar amount
-------

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

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

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

TAXES

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

Retirement Accounts

If you have a nonqualified investment in the Fund and you wish to move
part or all of those shares to an IRA or qualified retirement account in
the Fund, you can do so without paying a sales charge. However, this type
of exchange is considered a sale of shares and may result in a gain or
loss for tax purposes. In addition, this type of exchange may result in
an excess contribution under IRA or qualified plan regulations if the

- 18 -
<PAGE>

IDS Small Company Index Fund

amount exchanged plus the amount of the initial sales charge applied to
the amount exchanged exceeds annual contribution limitations. For
example: If you were to exchange $2,000 in Class A shares from a non-
qualified account to an IRA without considering the 5% ($100) initial
sales charge applicable to that $2,000, you may be deemed to have exceeded
current IRA annual contribution limitations. You should consult your tax
advisor for further details about this complex subject.

Net investment income dividends received should be treated as dividend
income for federal income tax purposes. Corporate shareholders are
generally entitled to a deduction equal to 70% of that portion of the
Fund's dividend that is attributable to dividends the Fund received from
domestic (U.S.) securities.

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

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

The Fund may be subject to U.S. taxes resulting from holdings in a passive
foreign investment company (PFIC). A foreign corporation is a PFIC when

- 19 -
<PAGE>

IDS Small Company Index Fund

75% or more of its gross income for the taxable year is passive income or
if 50% or more of the average value of its assets consists of assets that
produce or could produce passive income.

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

AGREEMENTS

Investment Management Services Agreement

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

Assets Annual rate at
(billions) each asset level
---------- ----------------

First $0.25 0.350%
Next 0.25 0.335

Next 0.25 0.320
Next 0.25 0.305

Over 1.0 0.290

The fee is calculated for each calendar day on the basis of net assets as
of the close of business two business days prior to the day for which the
calculation is made. The management fee is paid monthly.

Under the current Agreement, the Fund also pays taxes, brokerage
commissions and nonadvisory expenses, which include custodian fees; audit
and certain legal fees; fidelity bond premiums; registration fees for
shares; Fund office expenses; consultants' fees; compensation of board
members, officers and employees; corporate filing fees; organizational
expenses; expenses incurred in connection with lending securities to the
Fund; and expenses properly payable by the Fund, approved by the board.

- 20 -
<PAGE>

IDS Small Company Index Fund

Administrative Services Agreement

The Fund has an Administrative Services Agreement with AEFC. Under this
agreement, the Fund pays AEFC for providing administration and accounting
services. The fee is calculated as follows:
Assets Annual rate at
(billions) each asset level
---------- ----------------

First $0.25 0.130%
Next 0.25 0.115

Next 0.25 0.100
Next 0.25 0.085

Over $1 0.070

The fee is calculated for each calendar day on the basis of net assets as
of the close of business two business days prior to the day for which the
calculation is made.

Transfer Agency Agreement

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

Distribution Agreement

Under a Distribution Agreement, sales charges deducted for distributing
fund shares are paid to American Express Financial Advisors daily.

Shareholder Service Agreement

The Fund pays a fee for service provided to shareholders by financial
advisors and other servicing agents. The fee is calculated at a rate of
0.175% of the Fund's average daily net assets attributable to Class A and
Class B shares.

- 21 -
<PAGE>

IDS Small Company Index Fund

Plan and Agreement of Distribution

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

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

Total Fees and Expenses

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

- 22 -
<PAGE>

IDS Small Company Index Fund

BOARD MEMBERS AND OFFICERS

The following is a list of the Fund's board members who, except for Mr.
Dudley, also are board members of the other funds in the IDS MUTUAL FUND
GROUP. As of June 30, 1996, there were 46 registered investment companies
in the IDS MUTUAL FUND GROUP. Mr. Dudley is a board member of 34 publicly
offered funds. All shares have cumulative voting rights with respect to
the election of board members. At all elections of board members, each
shareholder shall be entitled to as many votes as shall equal the number
of shares owned multiplied by the number of board members to be elected
and may cast all of such votes for a single board member or may distribute
them among the number to be voted for, or any two or more of them.

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

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

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

Executive vice president and director of AEFC.

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

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

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

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

- 23 -
<PAGE>

IDS Small Company Index Fund

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

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

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

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

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

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

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

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

- 24 -
<PAGE>

IDS Small Company Index Fund

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

President, Spencer Associates Inc. (consulting). Chairman of the board,
Mayo Foundation (health care). 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**
Born in 1937.
2900 IDS Tower
Minneapolis, MN

Senior vice president and director of AEFC.

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

Chairman, Whitney Management Company (manages family assets).

C. Angus Wurtele
Born in 1934.
Valspar Corporation
Suite 1700
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, board member,
employee and/or shareholder of AEFC or American Express.

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

- 25 -
<PAGE>

IDS Small Company Index Fund

In addition to Mr. Pearce, who is president, the Fund's other officers
are:

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

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

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

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

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

Treasurer of all funds in the IDS MUTUAL FUND GROUP. Director and senior
vice president and chief financial officer of AEFC. Director and
executive vice president and controller of IDS Life Insurance Company.

Members of the board who are not officers of the Fund or of AEFC receive
an annual fee of $800. They also receive attendance and other fees, the
cost of which the Fund shares with the other funds in the IDS MUTUAL FUND
GROUP. These fees include attendance of meetings of the board, $1,000;
meetings of the Contracts Committee, $750; meetings of the Audit,
Executive or Investment Review Committees, $500; meetings of the Personnel
Committee, $300; out-of-state, $500; and Chair of the Contracts Committee,
$5,000. Expenses for attending those meetings are also reimbursed. Upon
retirement, or earlier if for approved reasons, the independent board
members receive monthly payments equal to 1/2 of the annual fee divided by
12 for as many months as the board member served on the board up to 120
months or until the date of death. There are no death benefits and the
plan is not funded.

The Fund did not commence operations until August __, 1996 and, as a
result, did not pay any board members' fees for the previous fiscal year.
During the fiscal year ended _______________________, 199__, the members
of the board, for attending up to ____ meetings, received the following
compensation, in total, from all funds in the IDS MUTUAL FUND GROUP.

- 26 -
<PAGE>

IDS Small Company Index Fund

<TABLE>
<CAPTION>
Compensation Table
------------------

Board Member Aggregate Pension or Estimated Total cash
Compensation Retirement annual benefit compensation from
from the Fund benefits accrued upon the IDS MUTUAL FUND
as Fund expenses retirement GROUP
<S> <C> <C> <C> <C>

Lynne V. Cheney $0 $0
Robert F. Froehlke 0 0
Heinz F. Hutter 0 0
Anne P. Jones 0 0
Melvin R. Laird 0 0
Edson W. Spencer 0 0
Wheelock Whitney 0 0
C. Angus Wurtele 0 0

</TABLE>

CUSTODIAN

The Fund's securities and cash are held by American Express Trust Company,
1200 Northstar Center West, 625 Marquette Ave., Minneapolis, MN
55402-2307, through a custodian agreement. The custodian is permitted to
deposit some or all of its securities in central depository systems as
allowed by federal law. The Fund pays the Custodian a fee at the rate of
___% for serving as custodian of its assets.

INDEPENDENT AUDITORS

The Fund's independent auditors are KPMG Peat Marwick LLP, 4200 Norwest
Center, 90 S. Seventh St., Minneapolis, MN 55402-3900. The independent
auditors also provide other accounting and tax-related services as
requested by the Fund.

PROSPECTUS

The prospectus for IDS Small Company Index Fund, dated August __, 1996, is
hereby incorporated in this SAI by reference.

- 27 -
<PAGE>

IDS Small Company Index Fund

APPENDIX A: Options and Stock Index Futures Contracts

The Fund may buy or write options traded on any U.S. or foreign exchange
or in the over-the-counter market. The Fund may enter into 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. In that case, or if a liquid
secondary market does not exist, the Fund could be required to buy or sell
securities at disadvantageous prices, thereby incurring losses.

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

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

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

Buying Options. Put and call options may be used as a trading technique
to facilitate buying and selling securities for investment reasons. 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

A-1
<PAGE>

IDS Small Company Index Fund

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 recordkeeping
and tax purposes, the price obtained on the purchase of the underlying
security will be the combination of the exercise price, the premium and
both commissions. When using options as a trading technique, commissions
on the option will be set as if only the underlying securities were
traded.

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

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

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

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 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.).

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

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

A-2
<PAGE>

IDS Small Company Index Fund

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

Options are valued at the close of the New York Stock Exchange. An option
listed on a national exchange, CBOE or NASDAQ will be valued at the last-
quoted sales price or, if such a price is not readily available, at the
mean of the last bid and 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.

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 the Fund enters into one
futures contract to buy the S&P 500 Index at a specified future date at a
contract value of 150 and the S&P 500 Index is at 154 on that future date,
the Fund will gain $500 x (154-150) or $2,000. If the Fund enters into
one futures contract to sell the S&P 500 Index at a specified future date
at a contract value of 150 and the S&P 500 Index is at 152 on that future
date, the Fund will lose ($500 x (152-150) or $1,000.

A-3
<PAGE>

IDS Small Company Index Fund

Unlike the purchase or sale of an equity security, no price would be paid
or received by the Fund upon entering into 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% 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 position in the contract more or
less valuable, a process known as marking to market. For example, when
the 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 the Fund would use stock index futures contracts. The Fund intends to
use stock index futures contracts and related options for hedging and not
for speculation. Hedging permits the Fund to gain rapid exposure to or
protect itself from changes in the market. For example, the 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 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.

The 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 portfolio securities.

A-4
<PAGE>

IDS Small Company Index Fund

Special risks of transactions in stock index futures contracts.
--------------------------------------------------------------

1. Liquidity. The 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 opposition 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 Fund intends to enter into
futures contracts only on exchanges or boards of trade where there appears
to be an active secondary market, there is no assurance that a liquid
secondary market will exist for any particular contract at any particular
time. In such event, it may not be possible to close a futures contract
position, and in the event of adverse price movements, the Fund would have
to make daily cash payments of variation margin. Such price movements,
however, will be offset all or in part by the price movements of the
securities 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 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 futures contracts and movements in the value of

A-5
<PAGE>

IDS Small Company Index Fund

securities subject to the hedge. If this occurred, the Fund could lose
money on the contracts and also experience a decline in the value of its
portfolio securities. While this could occur, the investment manager
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 also is 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 given 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, 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 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 Fund 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.

A-6
<PAGE>

IDS Small Company Index Fund

Compared to using futures contracts, purchasing options involves less risk
to the Fund 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 the 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, the Fund
intends to identify futures contracts as mixed straddles and not mark them
to market, that is, not treat them as having been sold at the end of the
year at market value. Such an election may result in the Fund being
required to defer recognizing losses incurred by entering into futures
contracts and losses on underlying securities identified as being hedged
against.

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

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

Accounting for futures contracts will be according to generally accepted
accounting principles. Initial margin deposits will be recognized as
assets due from a broker (the Fund's agent in acquiring the futures
position). During the period the futures contract is open, changes in
value of the contract will be 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.

A-7
<PAGE>

IDS Small Company Index Fund

All contracts and options will be valued at the last-quoted sales price on
their primary exchange.

A-8
<PAGE>

IDS Small Company Index Fund

APPENDIX B: Dollar-Cost Averaging

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

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

Dollar-cost averaging

Regular Market Price Shares
Investment of a Share Acquired

$100 $ 6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
--- ------ -----
$500 $25.00 103.4

Average market price of a share over 5 periods: $5.00 ($25.00 divided by
5).

Average price you paid for each share: $4.84 ($500 divided by 103.4).

B-1
<PAGE>

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits
------- ---------------------------------
(a) FINANCIAL STATEMENTS:

Financial statements filed as part of this post-effective amendment:
None

(b) EXHIBITS

1. Articles of Incorporation as amended on Jan. 16, 1990, filed as
exhibit 1 to Registration Statement No. 33-30770 are incorporated
herein by reference.

2. By-laws, filed as Exhibit 2 to Pre-Effective Amendment No. 3 to
Registration Statement No. 33-30770 are incorporated herein by
reference.

3. Not Applicable.

4. Not Applicable.

5. Form of Investment Management Services Agreement between Registrant,
on behalf of the IDS Small Company Index Fund ("Fund") and American
Express Financial Corporation, dated August ___ 1996, is filed
electronically herewith.

6. Form of Distribution Agreement between Registrant, on behalf of the
Fund, and American Express Financial Advisors Inc., dated August ___,
1996, is filed electronically herewith.

7. All employees are eligible to participate in a profit sharing plan.
Entry into the plan is Jan. 1 or July 1. The Registrant contributes
each year an amount up to 15 percent of their annual salaries, the
maximum deductible amount permitted under Section 404(a) of the
Internal Revenue Code.

8(a). Form of Custodian Agreement between Registrant, on behalf of the
Fund, and American Express Trust Company, dated August ___, 1996,
is filed electronically herewith.

9(a). Form of Transfer Agency Agreement between Registrant, on behalf
of the Fund, and American Express Financial Corporation, dated
August ___, 1996, is filed electronically herewith.

9(b). Form of Shareholder Service Agreement between Registrant, on
behalf of the Fund, and American Express Financial Advisors Inc.,
dated August ___, 1996, is filed electronically herewith.

C-1
<PAGE>

9(c). Copy of License Agreement between Registrant, on behalf of the
Fund, and American Express Financial Corporation, dated August
___, 1996, is filed electronically herewith.

9(d). Form of Administrative Services Agreement between Registrant, on
behalf of the Fund, and American Express Financial Corporation,
dated August ___, 1996, is filed electronically herewith.

10. Opinion and consent of counsel as to the legality of the
securities being registered -- (To be filed by amendment.)

11. Independent Auditor's Consent -- (To be filed by amendment.)

12. None.

13. Agreement made in consideration for providing initial capital
between Registrant and IDS Financial Corporation filed as Exhibit
No. 13 on March 1, 1990 to Pre-Effective Amendment No. 4 to
Registration Statement No. 33-03770 is incorporated herein by
reference.

14. Forms of Keogh, IRA and other retirement plans, filed as Exhibits
14(a) through 14(n) to IDS Growth Fund, Inc., Post-Effective
Amendment No. 34 to Registration Statement No. 2-383 on Sept. 8,
1986, are incorporated herein by reference.

15. Form of Plan and Agreement of Distribution between Registrant, on
behalf of the Fund, and American Express Financial Advisors Inc.,
dated August ___, 1996, is filed electronically herewith.

16. Copy of Schedule for computation of each performance quotation
provided in the Registration Statement in response to Item 22,
filed as Exhibit 16 on August 29, 1990 to Post-Effective
Amendment No. 1 to Registration Statement No. 33-30770 is
incorporated herein by reference.

17. Financial Data Schedule -- (To be filed by amendment.)

18. Copy of plan pursuant to Rule 18f-3 under the 1940 Act is filed
electronically herewith.

19(a). Directors' Power of Attorney to sign amendments to this
Registration Statement, dated Nov. 10, 1994, filed electronically
as Exhibit 18(a) to Registrant's Post-Effective Amendment No. 13
to Registration Statement No. 33-30770 is incorporated herein by
reference.

19(b). Officers' Power of Attorney to sign amendments to this
Registration Statement, dated November 1, 1995, filed as Exhibit
19(b) with Registrant's Post-Effective Amendment No. 15 to
Registration Statement No. 33-30770 is incorporated herein by
reference.

C-2
<PAGE>

Item 25. Persons Controlled by or Under Common Control
with Registrant

None.

Item 26. Number of Holders of Securities

(2)
Number of Record
(1) Holders as of
Title of Class March 31, 1996
-------------- --------------

IDS Blue Chip Advantage Fund
Common Stock 42,709
IDS Small Company Index Fund
Common Stock 0

Item 27. Indemnification
-------
The Articles of Incorporation of the registrant provide that the Fund
shall indemnify any person who was or is a party or is threatened to be
made a party, by reason of the fact that she or he is or was a director,
officer, employee or agent of the Fund, or is or was serving at the
request of the Fund as a director, officer, employee or agent of another
company, partnership, joint venture, trust or other enterprise, to any
threatened, pending or completed action, suit or proceeding, wherever
brought, and the Fund may purchase liability insurance and advance legal
expenses, all to the fullest extent permitted by the laws of the State of
Minnesota, as now existing or hereafter amended. The By-laws of the
registrant provide that present or former directors or officers of the
Fund made or threatened to be made a party to or involved (including as a
witness) in an actual or threatened action, suit or proceeding shall be
indemnified by the Fund to the full extent authorized by the Minnesota
Business Corporation Act, all as more fully set forth in the By-laws filed
as an exhibit to this registration statement.

Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate

C-3
<PAGE>

jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

Any indemnification hereunder shall not be exclusive of any other rights
of indemnification to which the directors, officers, employees or agents
might otherwise be entitled. No indemnification shall be made in
violation of the Investment Company Act of 1940.

C-4
<PAGE>

<PAGE>
PAGE 1
<TABLE><CAPTION>
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)

Directors and officers of American Express Financial Corporation who are directors and/or
officers of one or more other companies:

Ronald G. Abrahamson, Vice President--Service Quality and Reengineering
<S> <C> <C>
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality
and Reengineering

Douglas A. Alger, Vice President--Total Compensation

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Total Compensation

Peter J. Anderson, Director and Senior Vice President--Investments

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Investments
IDS Advisory Group Inc. Director and Chairman
of the Board
IDS Capital Holdings Inc. Director and President
IDS International, Inc. Director, Chairman of the
Board and Executive Vice
President
IDS Securities Corporation Executive Vice President-
Investments
NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701

Ward D. Armstrong, Vice President-Sales and Marketing, American Express Institutional Services

American Express Financial Advisors IDS Tower 10 Vice President-Sales and
Minneapolis, MN 55440 Marketing, American
Express Institutional
Services

Joseph M. Barsky III, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager
IDS Advisory Group Inc. Vice President

Robert C. Basten, Vice President--Tax and Business Services

American Express Financial Advisors IDS Tower 10 Vice President-Tax
Minneapolis, MN 55440 and Business Services
American Express Tax & Business Director, President and
Services Inc. Chief Executive Officer
<PAGE>
PAGE 2
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Timothy V. Bechtold, Vice President--Risk Management Products

American Express Financial Advisors IDS Tower 10 Vice President-Risk
Minneapolis, MN 55440 Management Products
IDS Life Insurance Company Vice President-Risk
Management Products

Carl E. Beihl, Vice President--Strategic Technology Planning

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Strategic Technology
Planning
Alan F. Bignall, Vice President--Technology and Development

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Technology and
Development

John C. Boeder, Vice President--Mature Market Group

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Group
IDS Life Insurance Company of New York Box 5144 Director
Albany, NY 12205

Karl J. Breyer, Director, Senior Vice President--Corporate Affairs and General Counsel

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Affairs and
Special Counsel
American Express Minnesota Foundation Director
IDS Aircraft Services Corporation Director and President

Daniel J. Candura, Vice President--Marketing Support

American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Support

Cynthia M. Carlson, Vice President--American Express Securities Services

American Enterprise Investment IDS Tower 10 Director, President and
Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Advisors Vice President-American
Express Securities Services
Orison Y. Chaffee III, Vice President--Field Real Estate

American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Real Estate

<PAGE>
PAGE 3
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

James E. Choat, Director and Senior Vice President--Field Management

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President--North
Central Region
American Express Minnesota Foundation Director
IDS Insurance Agency of Alabama Inc. Vice President--North
Central Region
IDS Insurance Agency of Arkansas Inc. Vice President--North
Central Region
IDS Insurance Agency of Massachusetts Inc. Vice President--North
Central Region
IDS Insurance Agency of New Mexico Inc. Vice President--North
Central Region
IDS Insurance Agency of North Carolina Inc. Vice President--North
Central Region
IDS Insurance Agency of Ohio Inc. Vice President--North
Central Region
IDS Insurance Agency of Wyoming Inc. Vice President-- North
Central Region

Kenneth J. Ciak, Vice President and General Manager--IDS Property Casualty

AMEX Assurance Co. Director and President
American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Manager-IDS Property
Casualty
IDS Property Casualty Insurance Co. I WEG Blvd. Director and President
DePere, Wisconsin 54115

Colleen Curran, Vice President and Assistant General Counsel
American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Express Service Corporation Vice President and Chief
Legal Counsel

Alan R. Dakay, Vice President--Institutional Products Group

American Centurion Life Assurance Co. IDS Tower 10 Director and Vice Chairman
Minneapolis, MN 55440 and President, Financial
Institutions Division
American Enterprise Life Insurance Co. Director and President
IDS Life Insurance Company Vice President -
Institutional Insurance
Marketing
American Express Financial Advisors Vice President -
Institutional Products
Group

Regenia David, Vice President--Systems Services

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services
<PAGE>
PAGE 4
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

William H. Dudley, Director and Executive Vice President--Investment Operations

American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-
Investment Operations
IDS Advisory Group Inc. Director
IDS Capital Holdings Inc. Director
IDS Futures Corporation Director
IDS Futures III Corporation Director
IDS International, Inc. Director
IDS Securities Corporation Director, Chairman of the
Board, President and
Chief Executive Officer

Gordon L. Eid, Director, Senior Vice President and Deputy General Counsel

American Express Financial Advisors IDS Tower 10 Senior Vice President and
Minneapolis, MN 55440 General Counsel
American Express Insurance Agency of Nevada Inc. Director and Vice President
IDS Insurance Agency of Alabama Inc. Director and Vice President
IDS Insurance Agency of Arkansas Inc. Director and Vice President
IDS Insurance Agency of Massachusetts Inc. Director and Vice President
IDS Insurance Agency of New Mexico Inc. Director and Vice President
IDS Insurance Agency of North Carolina Inc. Director and Vice President
IDS Insurance Agency of Ohio Inc. Director and Vice President
IDS Insurance Agency of Wyoming Inc. Director and Vice President
IDS Real Estate Services, Inc. Vice President
Investors Syndicate Development Corp. Director

Robert M. Elconin, Vice President--Government Relations

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Government Relations
IDS Life Insurance Company Vice President

Mark A. Ernst, Vice President--Retail Services

American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Vice President-
Retail Services
American Express Tax & Business Director and Chairman of
Services Inc. the Board

Gordon M. Fines, Vice President--Mutual Fund Equity Investments

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mutual Fund Equity
Investments
IDS Advisory Group Inc. Executive Vice President

Robert G. Gilbert, Vice President--Real Estate

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Real Estate
<PAGE>
PAGE 5
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

John J. Golden, Vice President--Field Compensation Development

American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Compensation Development

Harvey Golub, Director

American Express Company American Express Tower Chairman and Chief
World Financial Center Executive Officer
New York, New York 10285
American Express Travel Chairman and Chief
Related Services Company, Inc. Executive Officer

Morris Goodwin Jr., Vice President and Corporate Treasurer

American Centurion Life Assurance Co. Vice President and
Treasurer
American Enterprise Investment IDS Tower 10 Vice President and
Services Inc. Minneapolis, MN 55440 Treasurer
American Enterprise Life Insurance Vice President and
Company Treasurer
American Express Financial Advisors Vice President and
Corporate Treasurer
American Express Insurance Agency of Nevada Inc. Vice President and
Treasurer
American Express Minnesota Foundation Vice President and
Treasurer
American Express Tax & Business Vice President and
Services Inc. Treasurer
American Partners Life Insurance Co. Vice President and
Treasurer
AMEX Assurance Co. Vice President and
Treasurer
IDS Advisory Group Inc. Vice President and
Treasurer
IDS Aircraft Services Corporation Vice President and
Treasurer
IDS Cable Corporation Director, Vice President
and Treasurer
IDS Cable II Corporation Director, Vice President
and Treasurer
IDS Capital Holdings Inc. Vice President and
Treasurer
IDS Certificate Company Vice President and
Treasurer
IDS Deposit Corp. Director, President
and Treasurer
IDS Futures Corp. Director
IDS Futures III Corp. Director
IDS Insurance Agency of Alabama Inc. Vice President and
Treasurer
IDS Insurance Agency of Arkansas Inc. Vice President and
Treasurer
IDS Insurance Agency of Massachusetts Inc. Vice President and
Treasurer
<PAGE>
PAGE 6
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

IDS Insurance Agency of New Mexico Inc. Vice President and
Treasurer
IDS Insurance Agency of North Carolina Inc. Vice President and
Treasurer
IDS Insurance Agency of Ohio Inc. Vice President and
Treasurer
IDS Insurance Agency of Wyoming Inc. Vice President and
Treasurer
IDS International, Inc. Vice President and
Treasurer
IDS Life Insurance Company Vice President and
Treasurer
IDS Life Series Fund, Inc. Vice President and
Treasurer
IDS Life Variable Annuity Funds A&B Vice President and
Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Corporation Director, Vice President
and Treasurer
IDS Plan Services of California, Inc. Vice President and
Treasurer
IDS Property Casualty Insurance Co. Vice President and
Treasurer
IDS Real Estate Services, Inc Vice President and
Treasurer
IDS Realty Corporation Director, Vice President
and Treasurer
IDS Sales Support Inc. Director, Vice President
and Treasurer
IDS Securities Corporation Vice President and
Treasurer
Investors Syndicate Development Corp. Vice President and
Treasurer
National Computer Systems, Inc. 11000 Prairie Lakes Drive Director
Minneapolis, MN 55440

NCM Capital Management Group, Inc. 2 Mutual Plaza Director
501 Willard Street
Durham, NC 27701
Sloan Financial Group, Inc. Director

Suzanne Graf, Vice President--Systems Services

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Systems Services

David A. Hammer, Vice President and Marketing Controller

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Marketing Controller
IDS Plan Services of California, Inc. Director and Vice President
<PAGE>
PAGE 7
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Lorraine R. Hart, Vice President--Insurance Investments

American Enterprise Life IDS Tower 10 Vice President-Investments
Insurance Company Minneapolis, MN 55440
American Express Financial Advisors Vice President-Insurance
Investments
American Partners Life Insurance Co. Director and Vice
President-Investments
AMEX Assurance Co. Vice President-Investments
IDS Certificate Company Vice President-Investments
IDS Life Insurance Company Vice President-Investments
IDS Life Series Fund, Inc. Vice President-Investments
IDS Life Variable Annuity Funds A and B Vice President-Investments
IDS Property Casualty Insurance Company Vice President-Investment
Officer
Investors Syndicate Development Corp. Director and Vice
President-Investments

Scott A. Hawkinson, Vice President--Assured Assets Product Development and Management

American Express Financial Advisors IDS Tower 10 Vice President-Assured
Minneapolis, MN 55440 Assets Product
Development & Management

James G. Hirsh, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Securities Corporation Director, Vice President
and General Counsel

Darryl G. Horsman, Vice President--Product Development and Technology, American Express
Institutional Retirement Services

American Express Trust Company IDS Tower 10 Director and President
Minneapolis, MN 55440

Kevin P. Howe, Vice President--Government and Customer Relations and Chief Compliance Officer

American Enterprise Investment IDS Tower 10 Vice President and Chief
Services Inc. Minneapolis, MN 55440 Compliance Officer
American Express Financial Advisors Vice President-
Government and
Customer Relations
American Express Service Corporation Vice President and Chief
Compliance Officer
IDS Securities Corporation Vice President and Chief
Compliance Officer

David R. Hubers, Director, President and Chief Executive Officer

American Express Financial Advisors IDS Tower 10 Chairman, Chief Executive
Minneapolis, MN 55440 Officer and President
American Express Service Corporation Director and Executive Vice
President
<PAGE>
PAGE 8
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

AMEX Assurance Co. Director
IDS Aircraft Services Corporation Director
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of California, Inc. Director and President
IDS Property Casualty Insurance Co. Director

Marietta L. Johns, Director and Senior Vice President--Field Management

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management

James E. Kaare, Vice President--Marketing Promotions

American Express Financial Advisors IDS Tower 10 Vice President-Marketing
Minneapolis, MN 55440 Promotions

Linda B. Keene, Vice President--Market Development

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Market Development

G. Michael Kennedy, Vice President--Investment Services and Investment Research

American Express Financial Advisors IDS Tower 10 Vice President-Investment
Minneapolis, MN 55440 Services and Investment
Research

Susan D. Kinder, Director and Senior Vice President--Human Resources

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Human Resources
American Express Minnesota Foundation Director

Richard W. Kling, Director and Senior Vice President--Risk Management Products

American Centurion Life Assurance Co. Director
American Enterprise Life Insurance Co. IDS Tower 10 Director and Chairman of
Minneapolis, MN 55440 the Board
American Express Financial Advisors Senior Vice President-
Risk Management Products
American Express Insurance Agency of Nevada Inc. Director and President
American Express Service Corporation Vice President
American Partners Life Insurance Co. Director and Chairman of
the Board
AMEX Assurance Co. Director and Chairman of
the Board
IDS Certificate Company Director and Chairman of
the Board
IDS Insurance Agency of Alabama Inc. Director and President
IDS Insurance Agency of Arkansas Inc. Director and President
IDS Insurance Agency of Massachusetts Inc. Director and President
IDS Insurance Agency of New Mexico Inc. Director and President
IDS Insurance Agency of North Carolina Inc. Director and President
IDS Insurance Agency of Ohio Inc. Director and President<PAGE>
PAGE 9
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

IDS Insurance Agency of Wyoming Inc. Director and President
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Funds A and B Director and Chairman of
the Board and President
IDS Property Casualty Insurance Co. Director and Chairman of
the Board
IDS Life Insurance Company P.O. Box 5144 Director, Chairman of the
of New York Albany, NY 12205 Board and President

Paul F. Kolkman, Vice President--Actuarial Finance

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Actuarial Finance
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
IDS Property Casualty Insurance Company Director

Claire Kolmodin, Vice President--Service Quality

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Service Quality

Steven C. Kumagai, Director and Senior Vice President--Field Management and Business Systems

American Express Financial Advisors IDS Tower 10 Director and Senior Vice
Minneapolis, MN 55440 President-Field
Management and Business
Systems

Edward Labenski, Jr., Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager
IDS Advisory Group Inc. Senior Vice President

Kurt A. Larson, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager

Lori J. Larson, Vice President--Variable Assets Product Development

American Express Financial Advisors IDS Tower 10 Vice President-Variable
Minneapolis, MN 55440 Assets Product
Development
IDS Cable Corporation Director and Vice President
IDS Cable II Corporation Director and Vice President
IDS Futures Brokerage Group Assistant Vice President-
General Manager/Director
IDS Futures Corporation Director and Vice President
IDS Futures III Corporation Director and Vice President
IDS Management Corporation Director and Vice President<PAGE>
PAGE 10
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

IDS Partnership Services Corporation Director and Vice President
IDS Realty Corporation Director and Vice President

Ryan R. Larson, Vice President--IPG Product Development

American Centurion Life Assurance Co. Director and
Vice President-Product
Development
American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 IPG Product Development
IDS Life Insurance Company Vice President-
Annuity Product
Development

Daniel E. Laufenberg, Vice President and Chief U.S. Economist

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Chief U.S. Economist

Richard J. Lazarchic, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager

Peter A. Lefferts, Director and Senior Vice President--Corporate Strategy and Development

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Corporate Strategy and
Development
American Express Trust Company Director
IDS Plan Services of California, Inc. Director
Investors Syndicate Development Corp. Director

Douglas A. Lennick, Director and Executive Vice President--Private Client Group

American Express Financial Advisors IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President-Private
Client Group

Jonathan S. Linen, Director

Mary J. Malevich, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio
Manager

Fred A. Mandell, Vice President--Field Marketing Readiness

American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Marketing Readiness
<PAGE>
PAGE 11
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

William J. McKinney, Vice President--Field Management Support

American Express Financial Advisors IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management Support

Thomas W. Medcalf, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-Senior
Minneapolis, MN 55440 Portfolio Manager

William C. Melton, Vice President-International Research and Chief International Economist

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 International Research
and Chief International
Economist

Janis E. Miller, Vice President--Variable Assets

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Variable Assets
IDS Cable Corporation Director and President
IDS Cable II Corporation Director and President
IDS Futures Corporation Director and President
IDS Futures III Corporation Director and President
IDS Life Insurance Company Director and Executive
Vice President-Variable
Assets
IDS Life Series Fund, Inc. Director
IDS Life Variable Annuity Funds A&B Director
IDS Management Corporation Director and President
IDS Partnership Services Corporation Director and President
IDS Realty Corporation Director and President
IDS Life Insurance Company of New York Box 5144 Executive Vice President
Albany, NY 12205

James A. Mitchell, Director and Executive Vice President--Marketing and Products

American Enterprise Investment IDS Tower 10 Director
Services Inc. Minneapolis, MN 55440
American Express Financial Advisors Executive Vice President-
Marketing and Products
American Express Service Corporation Senior Vice President
American Express Tax and Business Director
Services Inc.
AMEX Assurance Co. Director
IDS Certificate Company Director
IDS Life Insurance Company Director, Chairman of
the Board and Chief
Executive Officer
IDS Plan Services of California, Inc. Director
IDS Property Casualty Insurance Co. Director
<PAGE>
PAGE 12
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Pamela J. Moret, Vice President--Services

American Express Financial Advisors IDS Tower 10 Vice President-Services
Minneapolis, MN 55440
American Express Minnesota Foundation Director and President

Barry J. Murphy, Director and Senior Vice President--Client Service

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Client Service
IDS Life Insurance Company Director and Executive
Vice President-Client
Service

Mary Owens Neal, Vice President--Mature Market Segment

American Express Financial Advisors Inc. IDS Tower 10 Vice President-
Minneapolis, MN 55440 Mature Market Segment

Robert J. Neis, Vice President--Technology Services

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Technology Services

James R. Palmer, Vice President--Taxes

American Express Financial Advisors IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
IDS Aircraft Services Corp. Vice President
IDS Life Insurance Company Vice President-Taxes

Carla P. Pavone, Vice President--Specialty Service Teams and Emerging Business

American Express Financial Advisors IDS Tower 10 Vice President-Specialty
Minneapolis, MN 55440 Service Teams and
Emerging Business

Susan B. Plimpton, Vice President--Segmentation Development and Support

American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Segmentation Development
and Support

Ronald W. Powell, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Corporation Vice President and
Assistant Secretary<PAGE>
PAGE 13
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

IDS Plan Services of California, Inc. Vice President and
Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary

James M. Punch, Vice President--Geographic Service Teams

American Express Financial Advisors IDS Tower 10 Vice President-Geographic
Minneapolis, MN 55440 Services Teams

Frederick C. Quirsfeld, Vice President--Taxable Mutual Fund Investments

American Express Financial Advisors IDS Tower 10 Vice President--
Minneapolis, MN 55440 Taxable Mutual Fund
Investments
IDS Advisory Group Inc. Vice President

ReBecca K. Roloff, Vice President--Private Client Group

American Express Financial Advisors IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group

Stephen W. Roszell, Vice President--Advisory Institutional Marketing

American Express Financial Advisors IDS Tower 10 Vice President-Advisory
Minneapolis, MN 55440 Institutional Marketing
IDS Advisory Group Inc. President and Chief
Executive Officer
IDS International, Inc. Director
IDS Fund Management Limited Director

Robert A. Rudell, Vice President--American Express Institutional Retirement Services

American Express Financial Advisors IDS Tower 10 Vice President-American
Minneapolis, MN 55440 Express Institutional
Services
American Express Trust Company Director and Chairman of
the Board
IDS Sales Support Inc. Director and President

John P. Ryan, Vice President and General Auditor

American Express Financial Advisors IDS Tower 10 Vice President and General
Minneapolis, MN 55440 Auditor

Erven A. Samsel, Director and Senior Vice President--Field Management

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-
New England Region
IDS Insurance Agency of Alabama Inc. Vice President-
New England Region
IDS Insurance Agency of Arkansas Inc. Vice President-
New England Region
<PAGE>
PAGE 14
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

IDS Insurance Agency of Massachusetts Inc. Vice President-
New England Region
IDS Insurance Agency of New Mexico Inc. Vice President-
New England Region
IDS Insurance Agency of North Carolina Inc. Vice President-
New England Region
IDS Insurance Agency of Ohio Inc. Vice President-
New England Region
IDS Insurance Agency of Wyoming Inc. Vice President-
New England Region

Stuart A. Sedlacek, Vice President--Assured Assets

American Centurion Life Assurance Co. Director and Chairman
and President
American Enterprise Life Insurance Co. IDS Tower 10 Director and Executive
Minneapolis, MN 55440 Vice President, Assured
Assets
American Express Financial Advisors Vice President-
Assured Assets
American Partners Life Insurance Co. Director and President
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President, Assured
Assets
Investors Syndicate Development Corp. Director and Chairman of
the Board and President

Donald K. Shanks, Vice President--Property Casualty

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Property Casualty
IDS Property Casualty Insurance Co. Senior Vice President

F. Dale Simmons, Vice President--Senior Portfolio Manager, Insurance Investments

American Enterprise Life Insurance Co. IDS Tower 10 Vice President-Real
Minneapolis, MN 55440 Estate Loan Management
American Express Financial Advisors Vice President-Senior
Portfolio Manager,
Insurance Investments
American Partners Life Insurance Co. Vice President-Real
Estate Loan Management
AMEX Assurance Co. Vice President
IDS Certificate Company Vice President-Real
Estate Loan Management
IDS Life Insurance Company Vice President-Real
Estate Loan Management
IDS Partnership Services Corporation Vice President
IDS Real Estate Services Inc. Director and Vice President
IDS Realty Corporation Vice President
IDS Life Insurance Company of New York Box 5144 Vice President and
Albany, NY 12205 Assistant Treasurer
<PAGE>
PAGE 15
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Judy P. Skoglund, Vice President--Human Resources and Organization Development

American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources and
Organization Development

Ben C. Smith, Vice President--Workplace Marketing

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Workplace Marketing

William A. Smith, Vice President and Controller--Private Client Group

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Controller-Private
Client Group

Bridget Sperl, Vice President--Human Resources Management Services

American Express Financial Advisors IDS Tower 10 Vice President-Human
Minneapolis, MN 55440 Resources Management
Services

William A. Stoltzmann, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel
American Partners Life Insurance Co. Director, Vice President,
General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
American Enterprise Life Insurance P.O. Box 534 Director, Vice President,
Company Minneapolis, MN 55440 General Counsel
and Secretary

James J. Strauss, Vice President--Corporate Planning and Analysis

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Corporate Planning and
Analysis

Jeffrey J. Stremcha, Vice President--Information Resource Management/ISD

American Express Financial Advisors IDS Tower 10 Vice President-Information
Minneapolis, MN 55440 Resource Management/ISD

John R. Thomas, Director and Senior Vice President--Information and Technology

American Express Financial Advisors IDS Tower 10 Senior Vice President-
Minneapolis, MN 55440 Information and
Technology
<PAGE>
PAGE 16
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)

Melinda S. Urion, Director, Senior Vice President and Chief Financial Officer

American Enterprise Life IDS Tower 10 Vice President and
Insurance Company Minneapolis, MN 55440 Controller
American Express Financial Advisors Senior Vice President and
Chief Financial Officer
American Express Trust Company Director
American Partners Life Insurance Co. Director and Vice President
IDS Life Insurance Company Director, Executive Vice
President and Controller
IDS Life Series Fund, Inc. Vice President and
Controller

Wesley W. Wadman, Vice President--Senior Portfolio Manager

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Senior Portfolio Manager
IDS Advisory Group Inc. Executive Vice President
IDS Fund Management Limited Director and Vice Chairman
IDS International, Inc. Senior Vice President

Norman Weaver Jr., Director and Senior Vice President--Field Management

American Express Financial Advisors IDS Tower 10 Senior Vice President--
Minneapolis, MN 55440 Field Management
American Express Insurance Agency of Nevada Inc. Vice President-Southeast
Region
IDS Insurance Agency of Alabama Inc. Vice President-Pacific
Region
IDS Insurance Agency of Arkansas Inc. Vice President-Pacific
Region
IDS Insurance Agency of Massachusetts Inc. Vice President-Pacific
Region
IDS Insurance Agency of New Mexico Inc. Vice President-Pacific
Region
IDS Insurance Agency of North Carolina Inc. Vice President-Pacific
Region
IDS Insurance Agency of Ohio Inc. Vice President-Pacific
Region
IDS Insurance Agency of Wyoming Inc. Vice President-Pacific
Region

Michael L. Weiner, Vice President--Tax Research and Audit

American Express Financial Advisors IDS Tower 10 Vice President-Tax Research
Minneapolis, MN 55440 and Audit
American Express Service Corporation Assistant Treasurer
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
IDS Futures III Corporation Vice President, Treasurer
and Secretary
<PAGE>
PAGE 17
Item 28. Business and Other Connections of Investment Adviser (American Express Financial
Corporation)(cont'd)
Lawrence J. Welte, Vice President--Investment Administration

American Express Financial Advisors IDS Tower 10 Vice President-
Minneapolis, MN 55440 Investment Administration
IDS Securities Corporation Director, Executive Vice
President and Chief
Operating Officer

Jeffry F. Welter, Vice President--Equity and Fixed Income Trading

American Express Financial Advisors IDS Tower 10 Vice President-Equity
Minneapolis, MN 55440 and Fixed Income Trading

William N. Westhoff, Director, Senior Vice President and Global Chief Investment Officer

American Enterprise Life Insurance IDS Tower 10 Director
Company Minneapolis, MN 55440
American Express Financial Advisors Senior Vice President and
Global Chief Investment
Officer
IDS Fund Management Limited Director
IDS International, Inc. Director
IDS Partnership Services Corporation Director and Vice President
IDS Real Estate Services Inc. Director, Chairman of the
Board and President
IDS Realty Corporation Director and Vice President
Investors Syndicate Development Corp. Director

Edwin M. Wistrand, Vice President and Assistant General Counsel

American Express Financial Advisors IDS Tower 10 Vice President and
Minneapolis, MN 55440 Assistant General Counsel

Michael R. Woodward, Director and Senior Vice President--Field Management

IDS Insurance Agency of North Carolina Inc. Vice President-
North Region
IDS Insurance Agency of Ohio Inc. Vice President-
North Region
IDS Insurance Agency of Wyoming Inc. Vice President-
North Region
IDS Life Insurance Company Box 5144 Director
of New York Albany, NY 12205
/TABLE
<PAGE>
PAGE 18
Item 29. Principal Underwriters.

(a) American Express Financial Advisors acts as principal
underwriter for the following investment companies:

IDS Bond Fund, Inc.; IDS California Tax-Exempt Trust; IDS
Discovery Fund, Inc.; IDS Equity Select Fund, Inc.; IDS Extra
Income Fund, Inc.; IDS Federal Income Fund, Inc.; IDS Global
Series, Inc.; IDS Growth Fund, Inc.; IDS High Yield Tax-
Exempt Fund, Inc.; IDS International Fund, Inc.; IDS
Investment Series, Inc.; IDS Managed Retirement Fund, Inc.;
IDS Market Advantage Series, Inc.; IDS Money Market Series,
Inc.; IDS New Dimensions Fund, Inc.; IDS Precious Metals
Fund, Inc.; IDS Progressive Fund, Inc.; IDS Selective Fund,
Inc.; IDS Special Tax-Exempt Series Trust; IDS Stock Fund,
Inc.; IDS Strategy Fund, Inc.; IDS Tax-Exempt Bond Fund,
Inc.; IDS Tax-Free Money Fund, Inc.; IDS Utilities Income
Fund, Inc. and IDS Certificate Company.

(b) As to each director, officer or partner of the principal
underwriter:

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Ronald G. Abrahamson Vice President- None
IDS Tower 10 Service Quality and
Minneapolis, MN 55440 Reengineering

Douglas A. Alger Vice President-Total None
IDS Tower 10 Compensation
Minneapolis, MN 55440

Peter J. Anderson Senior Vice President- Vice
IDS Tower 10 Investments President--
Minneapolis, MN 55440 Investments

Ward D. Armstrong Vice President- None
IDS Tower 10 Sales and Marketing,
Minneapolis, MN 55440 IDS Institutional
Retirement Services

Joseph M. Barsky III Vice President-Senior None
IDS Tower 10 Portfolio Manager
Minneapolis, MN 55440

Robert C. Basten Vice President-Tax None
IDS Tower 10 and Business Services
Minneapolis, MN 55440

Timothy V. Bechtold Vice President-Risk None
IDS Tower 10 Management Products
Minneapolis, MN 55440

John D. Begley Group Vice President- None
Suite 100 Ohio/Indiana
7760 Olentangy River Rd.
Columbus, OH 43235<PAGE>
PAGE 19
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Carl E. Beihl Vice President- None
IDS Tower 10 Strategic Technology
Minneapolis, MN 55440 Planning

Jack A. Benjamin Group Vice President- None
Suite 200 Greater Pennsylvania
3500 Market Street
Camp Hill, PA 17011

Alan F. Bignall Vice President- None
IDS Tower 10 Technology and
Minneapolis, MN 55440 Development

Brent L. Bisson Group Vice President- None
Ste 900 E. Westside Twr Los Angeles Metro
11835 West Olympic Blvd.
Los Angeles, CA 90064

John C. Boeder Vice President- None
IDS Tower 10 Mature Market Group
Minneapolis, MN 55440

Walter K. Booker Group Vice President- None
Suite 200 New Jersey
3500 Market Street
Camp Hill, NJ 17011

Bruce J. Bordelon Group Vice President- None
Galleria One Suite 1900 Gulf States
Galleria Blvd.
Metairie, LA 70001

Charles R. Branch Group Vice President- None
Suite 200 Northwest
West 111 North River Dr
Spokane, WA 99201

Karl J. Breyer Senior Vice President- None
IDS Tower 10 Corporate Affairs and
Minneapolis, MN 55440 Special Counsel

Daniel J. Candura Vice President- None
IDS Tower 10 Marketing Support
Minneapolis, MN 55440

Cynthia M. Carlson Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Securities Services<PAGE>
PAGE 20
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Orison Y. Chaffee III Vice President-Field None
IDS Tower 10 Real Estate
Minneapolis, MN 55440

James E. Choat Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440

Kenneth J. Ciak Vice President and None
IDS Property Casualty General Manager-
1400 Lombardi Avenue IDS Property Casualty
Green Bay, WI 54304

Roger C. Corea Group Vice President- None
290 Woodcliff Drive Upstate New York
Fairport, NY 14450

Henry J. Cormier Group Vice President- None
Commerce Center One Connecticut
333 East River Drive
East Hartford, CT 06108

John M. Crawford Group Vice President- None
Suite 200 Arkansas/Springfield/Memphis
10800 Financial Ctr Pkwy
Little Rock, AR 72211

Kevin F. Crowe Group Vice President- None
Suite 312 Carolinas/Eastern Georgia
7300 Carmel Executive Pk
Charlotte, NC 28226

Colleen Curran Vice President and None
IDS Tower 10 Assistant General Counsel
Minneapolis, MN 55440

Alan R. Dakay Vice President- None
IDS Tower 10 Institutional Products
Minneapolis, MN 55440 Group

Regenia David Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440

Scott M. DiGiammarino Group Vice President- None
Suite 500 Washington/Baltimore
8045 Leesburg Pike
Vienna, VA 22182
<PAGE>
PAGE 21
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Bradford L. Drew Group Vice President- None
Two Datran Center Eastern Florida
Penthouse One B
9130 S. Dadeland Blvd.
Miami, FL 33156

William H. Dudley Director and Executive Board member
IDS Tower 10 Vice President-
Minneapolis MN 55440 Investment Operations

Gordon L. Eid Senior Vice President None
IDS Tower 10 and General Counsel
Minneapolis, MN 55440

Robert M. Elconin Vice President- None
IDS Tower 10 Government Relations
Minneapolis, MN 55440

Mark A. Ernst Vice President- None
IDS Tower 10 Retail Services
Minneapolis, MN 55440

Joseph Evanovich Jr. Group Vice President- None
One Old Mill Nebraska/Iowa/Dakotas
101 South 108th Avenue
Omaha, NE 68154

Louise P. Evenson Group Vice President- None
Suite 200 San Francisco Bay Area
1333 N. California Blvd.
Walnut Creek, CA 94596

Gordon M. Fines Vice President- None
IDS Tower 10 Mutual Fund Equity
Minneapolis MN 55440 Investments

Douglas L. Forsberg Group Vice President- None
Suite 100 Portland/Eugene
7931 N. E. Halsey
Portland, OR 97213

William P. Fritz Group Vice President- None
Suite 160 Northern Missouri
12855 Flushing Meadows Dr
St. Louis, MO 63131

Carl W. Gans Group Vice President- None
8500 Tower Suite 1770 Twin City Metro
8500 Normandale Lake Blvd.
Bloomington, MN 55437
<PAGE>
PAGE 22
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)

Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Robert G. Gilbert Vice President- None
IDS Tower 10 Real Estate
Minneapolis, MN 55440

John J. Golden Vice President- None
IDS Tower 10 Field Compensation
Minneapolis, MN 55440 Development

Morris Goodwin Jr. Vice President and None
IDS Tower 10 Corporate Treasurer
Minneapolis, MN 55440

Suzanne Graf Vice President- None
IDS Tower 10 Systems Services
Minneapolis, MN 55440

Bruce M. Guarino Group Vice President- None
Suite 1736 Hawaii
1585 Kapiolani Blvd.
Honolulu, HI 96814

David A. Hammer Vice President None
IDS Tower 10 and Marketing
Minneapolis, MN 55440 Controller

Teresa A. Hanratty Group Vice President- None
Suites 6&7 Northern New England
169 South River Road
Bedford, NH 03110

John R. Hantz Group Vice President- None
Suite 107 Detroit Metro
17177 N. Laurel Park
Livonia, MI 48154

Robert L. Harden Group Vice President- None
Two Constitution Plaza Boston Metro
Boston, MA 02129

Lorraine R. Hart Vice President- None
IDS Tower 10 Insurance Investments
Minneapolis, MN 55440

Scott A. Hawkinson Vice President-Assured None
IDS Tower 10 Assets Product Development
Minneapolis, MN 55440 and Management

Brian M. Heath Group Vice President- None
Suite 150 North Texas
801 E. Campbell Road
Richardson, TX 75081<PAGE>
PAGE 23
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

James G. Hirsh Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel

David J. Hockenberry Group Vice President- None
30 Burton Hills Blvd. Eastern Tennessee
Suite 175
Nashville, TN 37215

Kevin P. Howe Vice President- None
IDS Tower 10 Government and
Minneapolis, MN 55440 Customer Relations and
Chief Compliance Officer

David R. Hubers Chairman, Chief Board member
IDS Tower 10 Executive Officer and
Minneapolis, MN 55440 President

Marietta L. Johns Senior Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440

James E. Kaarre Vice President- None
IDS Tower 10 Marketing Promotions
Minneapolis, MN 55440

Linda B. Keene Vice President- None
IDS Tower 10 Market Development
Minneapolis, MN 55440

G. Michael Kennedy Vice President-Investment None
IDS Tower 10 Services and Investment
Minneapolis, MN 55440 Research

Susan D. Kinder Senior Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440

Richard W. Kling Senior Vice President- None
IDS Tower 10 Risk Management Products
Minneapolis, MN 55440

Paul F. Kolkman Vice President- None
IDS Tower 10 Actuarial Finance
Minneapolis, MN 55440

Claire Kolmodin Vice President- None
IDS Tower 10 Service Quality
Minneapolis, MN 55440
<PAGE>
PAGE 24
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

David S. Kreager Group Vice President- None
Ste 108 Trestle Bridge V Greater Michigan
5136 Lovers Lane
Kalamazoo, MI 49002

Steven C. Kumagai Director and Senior None
IDS Tower 10 Vice President-Field
Minneapolis, MN 55440 Management and Business
Systems

Mitre Kutanovski Group Vice President- None
Suite 680 Chicago Metro
8585 Broadway
Merrillville, IN 48410

Edward Labenski Jr. Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager

Kurt A. Larson Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager

Lori J. Larson Vice President- None
IDS Tower 10 Variable Assets Product
Minneapolis, MN 55440 Development

Ryan R. Larson Vice President- None
IDS Tower 10 IPG Product Development
Minneapolis, MN 55440

Daniel E. Laufenberg Vice President and None
IDS Tower 10 Chief U.S. Economist
Minneapolis, MN 55440

Richard J. Lazarchic Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager

Peter A. Lefferts Senior Vice President- None
IDS Tower 10 Corporate Strategy and
Minneapolis, MN 55440 Development

Douglas A. Lennick Director and Executive None
IDS Tower 10 Vice President-Private
Minneapolis, MN 55440 Client Group

Mary J. Malevich Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager
<PAGE>
PAGE 25
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Fred A. Mandell Vice President- None
IDS Tower 10 Field Marketing Readiness
Minneapolis, MN 55440

Daniel E. Martin Group Vice President- None
Suite 650 Pittsburgh Metro
5700 Corporate Drive
Pittsburgh, PA 15237

William J. McKinney Vice President- None
IDS Tower 10 Field Management
Minneapolis, MN 55440 Support

Thomas W. Medcalf Vice President- None
IDS Tower 10 Senior Portfolio Manager
Minneapolis, MN 55440

William C. Melton Vice President- None
IDS Tower 10 International Research
Minneapolis, MN 55440 and Chief International
Economist

Janis E. Miller Vice President- None
IDS Tower 10 Variable Assets
Minneapolis, MN 55440

James A. Mitchell Executive Vice President- None
IDS Tower 10 Marketing and Products
Minneapolis, MN 55440

John P. Moraites Group Vice President- None
Union Plaza Suite 900 Kansas/Oklahoma
3030 Northwest Expressway
Oklahoma City, OK 73112

Pamela J. Moret Vice President-Services None
IDS Tower 10
Minneapolis, MN 55440

Alan D. Morgenstern Group Vice President- None
Suite 200 Central California/
3500 Market Street Western Nevada
Camp Hill, NJ 17011

Barry J. Murphy Senior Vice President- None
IDS Tower 10 Client Service
Minneapolis, MN 55440

Mary Owens Neal Vice President- None
IDS Tower 10 Mature Market Segment
Minneapolis, MN 55440
<PAGE>
PAGE 26
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Robert J. Neis Vice President- None
IDS Tower 10 Technology Services
Minneapolis, MN 55440 Operations

Ronald E. Newton Group Vice President- None
319 Southbridge St. Rhode Island/Central
Auburn, MA 01501 Massachusetts

Thomas V. Nicolosi Group Vice President- None
Suite 220 New York Metro Area
500 Mamaroneck Avenue
Harrison, NY 10528

James R. Palmer Vice President- None
IDS Tower 10 Taxes
Minneapolis, MN 55440

Carla P. Pavone Vice President- None
IDS Tower 10 Specialty Service Teams
Minneapolis, MN 55440 and Emerging Business

Susan B. Plimpton Vice President- None
IDS Tower 10 Segmentation Development
Minneapolis, MN 55440 and Support

Larry M. Post Group Vice President- None
One Tower Bridge Philadelphia Metro
100 Front Street 8th Fl
West Conshohocken, PA 19428

Ronald W. Powell Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel

James M. Punch Vice President- None
IDS Tower 10 Geographical Service
Minneapolis, MN 55440 Teams

Frederick C. Quirsfeld Vice President-Taxable None
IDS Tower 10 Mutual Fund Investments
Minneapolis, MN 55440

R. Daniel Richardson Group Vice President- None
Suite 800 Southern Texas
Arboretum Plaza One
9442 Capital of Texas Hwy N.
Austin, TX 78759
<PAGE>
PAGE 27
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Roger B. Rogos Group Vice President- None
One Sarasota Tower Western Florida
Suite 700
Two N. Tamiami Trail
Sarasota, FL 34236

ReBecca K. Roloff Vice President-Private None
IDS Tower 10 Client Group
Minneapolis, MN 55440

Stephen W. Roszell Vice President- None
IDS Tower 10 Advisory Institutional
Minneapolis, MN 55440 Marketing

Max G. Roth Group Vice President- None
Suite 201 S IDS Ctr Wisconsin/Upper Michigan
1400 Lombardi Avenue
Green Bay, WI 54304

Robert A. Rudell Vice President- None
IDS Tower 10 American Express
Minneapolis, MN 55440 Institutional Retirement
Services

John P. Ryan Vice President and None
IDS Tower 10 General Auditor
Minneapolis, MN 55440

Erven Samsel Senior Vice President- None
45 Braintree Hill Park Field Management
Suite 402
Braintree, MA 02184

Russell L. Scalfano Group Vice President- None
Suite 201 Illinois/Indiana/Kentucky
101 Plaza East Blvd.
Evansville, IN 47715

William G. Scholz Group Vice President- None
Suite 205 Arizona/Las Vegas
7333 E Doubletree Ranch Rd
Scottsdale, AZ 85258

Stuart A. Sedlacek Vice President- None
IDS Tower 10 Assured Assets
Minneapolis, MN 55440

Donald K. Shanks Vice President- None
IDS Tower 10 Property Casualty
Minneapolis, MN 55440
<PAGE>
PAGE 28
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

F. Dale Simmons Vice President-Senior None
IDS Tower 10 Portfolio Manager,
Minneapolis, MN 55440 Insurance Investments

Judy P. Skoglund Vice President- None
IDS Tower 10 Human Resources and
Minneapolis, MN 55440 Organization Development

Julian W. Sloter Group Vice President- None
Ste 1700 Orlando FinCtr Orlando/Jacksonville
800 North Magnolia Ave.
Orlando, FL 32803

Ben C. Smith Vice President- None
IDS Tower 10 Workplace Marketing
Minneapolis, MN 55440

William A. Smith Vice President and None
IDS Tower 10 Controller-Private
Minneapolis, MN 55440 Client Group

James B. Solberg Group Vice President- None
466 Westdale Mall Eastern Iowa Area
Cedar Rapids, IA 52404

Bridget Sperl Vice President- None
IDS Tower 10 Human Resources
Minneapolis, MN 55440 Management Services

Paul J. Stanislaw Group Vice President- None
Suite 1100 Southern California
Two Park Plaza
Irvine, CA 92714

Lois A. Stilwell Group Vice President- None
Suite 433 Outstate Minnesota Area/
9900 East Bren Road North Dakota/Western Wisconsin
Minnetonka, MN 55343

William A. Stoltzmann Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel

James J. Strauss Vice President- None
IDS Tower 10 Corporate Planning
Minneapolis, MN 55440 and Analysis

Jeffrey J. Stremcha Vice President-Information None
IDS Tower 10 Resource Management/ISD
Minneapolis, MN 55440
<PAGE>
PAGE 29
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Neil G. Taylor Group Vice President- None
Suite 425 Seattle/Tacoma
101 Elliott Avenue West
Seattle, WA 98119

John R. Thomas Senior Vice President- Board member
IDS Tower 10 Information and
Minneapolis, MN 55440 Technology

Melinda S. Urion Senior Vice President Treasurer
IDS Tower 10 and Chief Financial
Minneapolis, MN 55440 Officer

Peter S. Velardi Group Vice President- None
Suite 180 Atlanta/Birmingham
1200 Ashwood Parkway
Atlanta, GA 30338

Charles F. Wachendorfer Group Vice President- None
Suite 100 Denver/Salt Lake City/
Stanford Plaza II Albuquerque
7979 East Tufts Ave Pkwy
Denver, CO 80237

Wesley W. Wadman Vice President- None
IDS Tower 10 Senior Portfolio
Minneapolis, MN 55440 Manager

Norman Weaver Jr. Senior Vice President- None
1010 Main St Suite 2B Field Management
Huntington Beach, CA 92648

Michael L. Weiner Vice President- None
IDS Tower 10 Tax Research and Audit
Minneapolis, MN 55440

Lawrence J. Welte Vice President- None
IDS Tower 10 Investment Administration
Minneapolis, MN 55440

Jeffry M. Welter Vice President- None
IDS Tower 10 Equity and Fixed Income
Minneapolis, MN 55440 Trading

William N. Westhoff Senior Vice President and None
IDS Tower 10 Global Chief Investment
Minneapolis, MN 55440 Officer

<PAGE>
PAGE 30
Item 29(b). As to each director, officer or partner of the
principal underwriter (American Express Financial Advisors):
(cont'd)
Positions and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Registrant

Thomas L. White Group Vice President- None
Suite 200 Cleveland Metro
28601 Chagrin Blvd.
Woodmere, OH 44122

Eric S. Williams Group Vice President- None
Suite 250 Virginia
3951 Westerre Parkway
Richmond, VA 23233

Edwin M. Wistrand Vice President and None
IDS Tower 10 Assistant General
Minneapolis, MN 55440 Counsel

Michael R. Woodward Senior Vice President- None
32 Ellicott St Ste 100 Field Management
Batavia, NY 14020

Item 29(c). Not applicable.

Item 30. Location of Accounts and Records

American Express Financial Corporation
IDS Tower 10
Minneapolis, MN 55440

Item 31. Management Services

Not Applicable.

C-5
<PAGE>

Item 32.

Registrant, on behalf of the IDS Small Company Index Fund (the "Fund")
hereby undertakes to file a Post-Effective Amendment, using financial
statements which need not be certified, within four to six months from the
effective date of Registrant's 1933 Act Registration Statement or
commencement of operations by the Fund, whichever is later.
<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, IDS Market Advantage
Series, Inc. has duly caused this Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Minneapolis and State of Minnesota on the 3rd day of May,
1996.

IDS MARKET ADVANTAGE SERIES, INC.

By /s/ Melinda S. Urion
---------------------------------
Melinda S. Urion, Treasurer

By /s/ William R. Pearce**
---------------------------------
William R. Pearce, President

Pursuant to the requirements of the Securities Act of 1933, this
Registration statement has been signed below by the following persons in
the capacities indicated on the 3rd day of May, 1996.
<TABLE>
<CAPTION>
Signatures Capacity
---------- --------

<S> <C>
/s/ William R. Pearce** President, Principal Executive Officer and Director
--------------------------------------------------
William R. Pearce

/s/ Leslie L. Ogg** Vice President, General Counsel and Secretary
---------------------------------------------------
Leslie L. Ogg

/s/ Lynne V. Cheney* Director
---------------------------------------------------
Lynne V. Cheney
/s/ William H. Dudley* Director
---------------------------------------------------
William H. Dudley

/s/ Robert F. Froehlke* Director
---------------------------------------------------
Robert F. Froehlke
/s/ David R. Hubers* Director
--------------------------------------------------
David R. Hubers
<PAGE>

Signatures Capacity
---------- --------

/s/ Heinz F. Hutter* Director
---------------------------------------------------
Heinz F. Hutter
/s/ Anne P. Jones* Director
---------------------------------------------------
Anne P. Jones

/s/ Melvin R. Laird* Director
---------------------------------------------------
Melvin R. Laird

/s/ Edson W. Spencer* Director
---------------------------------------------------
Edson W. Spencer
/s/ John R. Thomas* Director
---------------------------------------------------
John R. Thomas

/s/ Wheelock Whitney* Director
---------------------------------------------------
Wheelock Whitney
/s/ C. Angus Wurtele* Director
---------------------------------------------------
C. Angus Wurtele
</TABLE>

* Signed pursuant to Directors' Power of Attorney dated Nov. 10, 1994,
filed electronically as Exhibit 18(a) to Registrant's Post-Effective
Amendment No. 13, by:

/s/ William R. Pearce
---------------------------------
William R. Pearce

** Signed pursuant to Officers' Power of Attorney dated November 1, 1995,
filed as Exhibit 19(b), to Registrant's Post-Effective Amendment No. 15 to
Registration Statement No. 33-30770, by:

/s/ William R. Pearce
----------------------------------
William R. Pierce
<PAGE>

<PAGE>

EXHIBIT 5

INVESTMENT MANAGEMENT SERVICES AGREEMENT

AGREEMENT made the ______ day of August, 1996, by and between IDS
Market Advantage Series, Inc., a Minnesota corporation (the
"Corporation"), on behalf of its underlying series fund IDS Small Company
Index Fund (the "Fund"), and American Express Financial Corporation, a
Delaware corporation (the "Adviser").

Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES

1. The Fund hereby retains the Adviser, and the Adviser hereby
agrees, for the period of this Agreement and under the terms and
conditions hereinafter set forth, to furnish the Fund continuously with
suggested investment planning; to determine, consistent with the Fund's
investment objectives and policies, which securities in the Adviser's
discretion shall be purchased, held or sold and to execute or cause the
execution of purchase or sell orders; to prepare and make available to the
Fund all necessary research and statistical data in connection therewith;
to furnish all services of whatever nature required in connection with the
management of the Fund as provided under this Agreement; and to pay such
expenses as may be provided for in Part Three; subject always to the
direction and control of the Board of Directors (the "Board"), the
Executive Committee of the Board and the authorized officers of the Fund.
The Adviser agrees to maintain an adequate organization of competent
persons to provide the services and to perform the functions herein
mentioned. The Adviser agrees to meet with any persons at such times as
the Board deems appropriate for the purpose of reviewing the Adviser's
performance under this Agreement.

2. The Adviser agrees that the investment planning and
investment decisions will be in accordance with general investment
policies of the Fund as disclosed to the Adviser from time to time by the
Fund and as set forth in its prospectuses and registration statements
filed with the Securities and Exchange Commission (the "SEC").

3. The Adviser agrees that it will maintain all required
records, memoranda, instructions or authorizations relating to the
acquisition or disposition of securities for the Fund.

4. The Fund agrees that it will furnish to the Adviser any
information that the latter may reasonably request with respect to the
services performed or to be performed by the Adviser under this Agreement.

5. The Adviser is authorized to select the brokers or dealers
that will execute the purchases and sales of portfolio securities for the
Fund and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Subject
to prior authorization by the Fund's Board of appropriate policies and
<PAGE>

procedures, and subject to termination at any time by the Board, the
Adviser may also be authorized to effect individual securities
transactions at commission rates in excess of the minimum commission rates
available, to the extent authorized by law, if the Adviser determines in
good faith that such amount of commission was reasonable in relation to
the value of the brokerage and research services provided by such broker
or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund and other
funds for which it acts as investment adviser.

6. It is understood and agreed that in furnishing the Fund with
the services as herein provided, neither the Adviser, nor any officer,
director or agent thereof shall be held liable to the Fund or its
creditors or shareholders for errors of judgment or for anything except
willful misfeasance, bad faith, or gross negligence in the performance of
its duties, or reckless disregard of its obligations and duties under the
terms of this Agreement. It is further understood and agreed that the
Adviser may rely upon information furnished to it reasonably believed to
be accurate and reliable.

Part Two: COMPENSATION TO INVESTMENT MANAGER

1. The Fund agrees to pay to the Adviser, and the Adviser
covenants and agrees to accept from the Fund in full payment for the
services furnished, a fee composed of an asset charge equal to the total
of 1/365th (1/366th in each leap year) of the amount computed as described
below. The computation shall be made for each day on the basis of net
assets as of the close of business of the full business day two (2)
business days prior to the day for which the computation is being made.
In the case of the suspension of the computation of net asset value, the
asset charge for each day during such suspension shall be computed as of
the close of business on the last full business day on which the net
assets were computed. Net assets as of the close of a full business day
shall include all transactions in shares of the Fund recorded on the books
of the Fund for that day.

The asset charge shall be based on the net assets of the Fund as
set forth in the following table.

Asset Charge
------------

- 2 -
<PAGE>

Assets Annual Rate at
(Billions) Each Asset Level
---------- ----------------

First $0.25 0.350%
Next $0.25 0.335
Next $0.25 0.320
Next $0.25 0.305
Over $1 0.290

2. The fee shall be paid on a monthly basis and, in the
event of the termination of this Agreement, the fee accrued shall be pro-
rated on the basis of the number of days that this Agreement is in effect
during the month with respect to which such payment is made.

3. The fee provided for hereunder shall be paid in cash by
the Fund to the Adviser within five business days after the last day of
each month.

Part Three: ALLOCATION OF EXPENSES

1. The Fund agrees to pay:

(a) Fees payable to the Adviser for its services
under the terms of this Agreement.

(b) Taxes.

(d) Custodian fees and charges.

(e) Fees and charges of its independent certified
public accountants for services the Fund
requests.

(f) Premium on the bond required by Rule 17g-1 under
the 1940 Act.

(g) Fees and expenses of attorneys (i) it employs in
matters not involving the assertion of a claim by
a third party against the Fund, its directors and
officers, (ii) it employs in conjunction with a
claim asserted by the Board against the Adviser,
except that the Adviser shall reimburse the Fund
for such fees and expenses if it is ultimately
determined by a court of competent jurisdiction,

- 3 -
<PAGE>

or the Adviser agrees, that it is liable in whole
or in part to the Fund, and (iii) it employs to
assert a claim against a third party.

(h) Fees paid for the qualification and registration
for public sale of the securities of the Fund
under the laws of the United States and of the
several states in which such securities shall be
offered for sale.

(i) Fees of consultants employed by the Fund.

(j) Directors', officers' and employees' expenses
which shall include fees, salaries, memberships,
dues, travel, seminars, pension, profit sharing,
and all other benefits paid to or provided for
directors, officers and employees, directors and
officers liability insurance, errors and
omissions liability insurance, worker's
compensation insurance and other expenses
applicable to the directors, officers and
employees, except the Fund will not pay any fees
or expenses of any person who is an officer or
employee of the Adviser or its affiliates.

(k) Filing fees and charges incurred by the
Corporation in connection with filing any
amendment to its articles of incorporation, or
incurred in filing any other document with the
State of Minnesota or its political subdivisions
on behalf of the Fund.

(l) Organizational expenses of the Fund.

(m) Expenses incurred in connection with lending
portfolio securities of the Fund.

(n) Expenses properly payable by the Fund approved by
the Board.

2. The Adviser agrees to pay all expenses associated with
the services it provides under the terms of this Agreement. Further, the
Adviser agrees that if, at the end of any month, the expenses of the Fund
under this Agreement and any other agreement between the Fund and the
Adviser, but excluding those expenses set forth in 1(b) and 1(c) of this
Part Three, exceed the most restrictive applicable state expenses
limitation, the Fund shall not pay those expenses set forth in 1(a) and
(d) through (n) of this Part Three to the extent necessary to keep the
Fund's expenses from exceeding the limitation, it being understood that
the Adviser will assume all unpaid expenses and bill the Fund for them in
subsequent months but in no event can the accumulation of unpaid expenses
or billing be carried past the end of the Fund's fiscal year.

- 4 -
<PAGE>

Part Four: MISCELLANEOUS

1. The Adviser shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent the Fund.

2. A "full business day" shall be as defined in the By-laws.

3. The Fund recognizes that the Adviser now renders and may
continue to render investment advice and other services to other
investment companies and persons which may or may not have investment
policies and investments similar to those of the Fund and that the Adviser
manages its own investments and/or those of its subsidiaries. The Adviser
shall be free to render such investment advice and other services and the
Fund hereby consents thereto.

4. Neither this Agreement nor any transaction had pursuant
hereto shall be invalidated or in any way affected by the fact that
directors, officers, agents and/or shareholders of the Fund are or may be
interested in the Adviser or any successor or assignee thereof, as
directors, officers, stockholders or otherwise; that directors, officers,
stockholders or agents of the Adviser are or may be interested in the Fund
as directors, officers, shareholders, or otherwise; or that the Adviser or
any successor or assignee, is or may be interested in the Fund as
shareholder or otherwise, provided, however, that neither the Adviser,
nor any officer, director or employee thereof or of the Fund, shall sell
to or buy from the Fund any property or security other than shares issued
by the Fund, except in accordance with applicable regulations or orders of
the SEC.

5. Any notice under this Agreement shall be given in
writing, addressed, and delivered, or mailed postpaid, to the party to
this Agreement entitled to receive such, at such party's principal place
of business in Minneapolis, Minnesota, or to such other address as either
party may designate in writing mailed to the other.

6. The Adviser agrees that no officer, director or employee
of the Adviser will deal for or on behalf of the Fund with himself as
principal or agent, or with any corporation or partnership in which he may
have a financial interest, except that this shall not prohibit:

(a) Officers, directors or employees of the Adviser
from having a financial interest in the Fund or in the Adviser.

(b) The purchase of securities for the Fund, or the
sale of securities owned by the Fund, through a security broker
or dealer, one or more of whose partners, officers, directors or
employees is an officer, director or employee of the Adviser,
provided such transactions are handled in the capacity of broker
only and provided commissions charged do not exceed customary
brokerage charges for such services.

- 5 -
<PAGE>

(c) Transactions with the Fund by a broker-dealer
affiliate of the Adviser as may be allowed by rule or order of
the SEC, and if made pursuant to procedures adopted by the Board.

7. The Adviser agrees that, except as herein otherwise
expressly provided or as may be permitted consistent with the use of a
broker-dealer affiliate of the Adviser under applicable provisions of the
federal securities laws, neither it nor any of its officers, directors or
employees shall at any time during the period of this Agreement, make,
accept or receive, directly or indirectly, any fees, profits or emoluments
of any character in connection with the purchase or sale of securities
(except shares issued by the Fund) or other assets by or for the Fund.

Part Five: RENEWAL AND TERMINATION

1. This Agreement shall continue in effect until August ___,
1998, or until a new agreement is approved by a vote of the majority of
the outstanding shares of the Fund and by vote of the Board, including the
vote required by (b) of this paragraph, and if no new agreement is so
approved, this Agreement shall continue from year to year thereafter
unless and until terminated by either party as hereinafter provided,
except that such continuance shall be specifically approved at least
annually (a) by the Board of the Fund or by a vote of the majority of the
outstanding shares of the Fund and (b) by the vote of a majority of the
directors who are not parties to this Agreement or "interested persons" of
any such party, cast in person at a meeting called for the purpose of
voting on such approval. As used in this paragraph, the term "interested
person" shall have the same meaning as set forth in the Investment Company
Act of 1940, as amended (the "1940 Act").

2. This Agreement may be terminated by either the Fund or
the Adviser at any time by giving the other party 60 days' written notice
of such intention to terminate, provided that any termination shall be
made without the payment of any penalty, and provided further that
termination may be effected either by the Board of the Fund or by a vote
of the majority of the outstanding voting shares of the Fund. The vote of
the majority of the outstanding voting shares of the Fund for the purpose
of this Part Five shall be the vote at a shareholders' regular meeting, or
a special meeting duly called for the purpose, of 67% or more of the
Fund's shares present at such meeting if the holders of more than 50% of
the outstanding voting shares are present or represented by proxy, or more
than 50% of the outstanding voting shares of the Fund, whichever is less.

3. This Agreement shall terminate in the event of its
assignment, the term "assignment" for this purpose having the same meaning
as set forth in the 1940 Act.

IN WITNESS THEREOF, the parties hereto have executed the
foregoing Agreement as of the day and year first above written.

- 6 -
<PAGE>

IDS Market Advantage Series, Inc., on behalf of
IDS SMALL COMPANY INDEX FUND

By: _____________________
Name:
Title:

AMERICAN EXPRESS FINANCIAL CORPORATION

By: _______________________
Name:
Title:

- 7 -
<PAGE>

<PAGE>
EXHIBIT 6

DISTRIBUTION AGREEMENT

THIS AGREEMENT dated August _____, 1996, is between IDS Market Advantage
Series, Inc., a Minnesota corporation (the "Corporation"), for and on
behalf of each class of IDS Small Company Index Fund (the "Fund") and
American Express Financial Advisors Inc. (the "Distributor"), a Delaware
corporation.

Part One: DISTRIBUTION OF SECURITIES

(1) The Fund covenants and agrees that, during the term of
this agreement and any renewal or extension, the Distributor shall have
the exclusive right to act as principal underwriter for the Fund and to
offer for sale and to distribute either directly or through any affiliate
any and all shares of each class of capital stock issued or to be issued
by the Fund.

(2) The Distributor hereby covenants and agrees to act as the
principal underwriter of each class of capital shares issued and to be
issued by the Fund during the period of this agreement and agrees during
such period to offer for sale such shares as long as such shares remain
available for sale, unless the Distributor is unable or unwilling to make
such offer for sale or sales or solicitations therefor legally because of
any federal, state, provincial or governmental law, rule or agency or for
any financial reason.

(3) With respect to the offering for sale and sale of shares
of each class to be issued by the Fund, it is mutually understood and
agreed that such shares are to be sold on the following terms:

(a) All sales shall be made by means of an
application, and every application shall be subject to acceptance
or rejection by the Fund at its principal place of business.
Shares are to be sold for cash, payable at the time the
application and payment for such shares are received at the
principal place of business of the Fund.

(b) No shares shall be sold at less than the net
asset value (computed in the manner provided by the Fund's
currently effective prospectus or Statement of Additional
Information ("SAI") and the Investment Company Act of 1940 ("1940
Act") and rules thereunder). The number of shares or fractional
shares to be acquired by each applicant shall be determined by
dividing the amount of each accepted application by the public
offering price of one share of the capital stock of the
appropriate class as of the close of business on the day when the
application, together with payment, is received by the Fund at
its principal place of business. The computation as to the
number of shares and fractional shares shall be carried to three
<PAGE>

decimal points of one share with the computation being carried to
the nearest 1/1000th of a share. If the day of receipt of the
application and payment is not a full business day, then the net
asset value of the share for use in such computation shall be
determined as of the close of business on the next succeeding
full business day. In the event of a period of emergency, the
computation of the net asset value for the purpose of determining
the number of shares or fractional shares to be acquired by the
applicant may be deferred until the close of business on the
first full business day following the termination of the period
of emergency. A period of emergency shall have the definition
given thereto in the 1940 Act and rules thereunder.

(4) The Fund agrees to make prompt and reasonable effort to
do any and all things necessary, in the opinion of the Distributor, to
have and to keep the Fund and the shares properly registered or qualified
in all appropriate jurisdictions and, as to shares, in such amounts as the
Distributor may from time to time designate in order that the Fund's
shares may be offered or sold in such jurisdictions.

(5) The Fund agrees that it will furnish the Distributor with
information with respect to the affairs and accounts of the Fund, and in
such form, as the Distributor may from time to time reasonably require and
further agrees that the Distributor, at all reasonable times, shall be
permitted to inspect the books and records of the Fund.

(6) The Distributor or its agents may prepare or cause to be
prepared from time to time circulars, sales literature, broadcast
material, publicity data and other advertising material to be used in the
sales of shares issued by the Fund, including material which may be deemed
to be a prospectus under rules promulgated by the Securities and Exchange
Commission (each separate promotional piece is referred to as an "Item of
Soliciting Material"). At its option, the Distributor may submit any Item
of Soliciting Material to the Fund for its prior approval. Unless a
particular Item of Soliciting Material is approved in writing by the Fund
prior to its use, the Distributor agrees to indemnify the Fund and its
directors and officers against any and all claims, demands, liabilities
and expenses which the Fund or such persons may incur arising out of or
based upon the use of any Item of Soliciting Material. The term
"expenses" includes amounts paid in satisfaction of judgments or in
settlements. The foregoing right of indemnification shall be in addition
to any other rights to which the Fund or any director or officer may be
entitled as a matter of law. Notwithstanding the foregoing, such
indemnification shall not be deemed to abrogate or diminish in any way any
right or claim the Distributor may have against the Fund or its officers
or directors in connection with the Fund's registration statement or other
information furnished by or caused to be furnished by the Fund.

(7) The Distributor agrees to submit to the Fund each
application for shares immediately after the receipt of such application
and payment therefor by the Distributor at its principal place of
business.

- 2 -
<PAGE>

(8) The Distributor agrees to cause to be delivered to each
person submitting an application a prospectus or circular to be furnished
by the Fund in the form required by the applicable federal laws or by the
acts or statutes of any applicable state, province or country.

(9) The Fund shall have the right to extend to shareholders
of each class the right to use the proceeds of any cash dividend paid by
the Fund to that shareholder to purchase shares of the same class at the
net asset value at the close of business upon the day of purchase, to the
extent set forth in the currently effective prospectus or SAI.

(10) Shares of each class issued by the Fund may be offered
and sold at their net asset value to the shareholders of the same class of
other funds in the IDS MUTUAL FUND GROUP who wish to exchange their
investments in shares of the other funds in the IDS MUTUAL FUND GROUP to
investments in shares of the Fund, to the extent set forth in the
currently effective prospectus or SAI, such net asset value to be computed
as of the close of business on the day of sale of such shares of the Fund.

(11) The Distributor and the Fund agree to use their best
efforts to conform with all applicable state and federal laws and
regulations relating to any rights or obligations under the term of this
agreement.

Part Two: ALLOCATION OF EXPENSES

Except as provided by any other agreements between the parties,
the Distributor covenants and agrees that during the period of this
agreement it will pay or cause or be paid all expenses incurred by the
Distributor, or any of its affiliates, in the offering for sale or sale of
each class of the Fund's shares.

Part Three: COMPENSATION

(1) It is covenanted and agreed that the Distributor shall be
paid:

(a) for a class of shares imposing a front-end sales
charge, by the purchasers of Fund shares in an amount equal to
the difference between the total amount received upon each sale
of shares issued by the Fund and the net asset value of such
shares at the time of such sale; and

(b) for a class of shares imposing a deferred sales
charge, by owners of Fund shares at the time the sales charge is
imposed in an amount equal to any deferred sales charge, as
described in the Fund's prospectus.

- 3 -
<PAGE>

Such sums as are received by the Fund shall be received as Agent
for the Distributor and shall be remitted to the Distributor
daily as soon as practicable after receipt.

(2) The net asset value of any share of each class of the
Fund shall be determined in the manner provided by the Fund's currently
effective prospectus and SAI and the 1940 Act and rules thereunder.

Part Four: MISCELLANEOUS

(1) The Distributor shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this
agreement, shall have no authority to act for or represent the Fund.

(2) The Distributor shall be free to render to others
services similar to those rendered under this agreement.

(3) Neither this agreement nor any transaction pursuant hereto
shall be invalidated or in any way affected by the fact that directors,
officers, agents and/or shareholders of the Fund are or may be interested
in the Distributor as directors, officers, shareholders or otherwise; that
directors, officers, shareholders or agents of the Distributor are or may
be interested in the Fund as directors, officers, shareholders or
otherwise; or that the Distributor is or may be interested in the Fund as
a shareholder or otherwise, provided, however, that neither the
Distributor nor any officer or director of the Distributor or any officers
or directors of the Fund shall sell to or buy from the Fund any property
or security other than a security issued by the Fund, except in accordance
with a rule, regulation or order of the Securities and Exchange
Commission.

(4) For the purposes of this agreement, a "business day"
shall have the same meaning as is given to the term in the By-laws of the
Fund.

(5) Any notice under this agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the parties to
this agreement at each company's principal place of business in
Minneapolis, Minnesota, or to such other address as either party may
designate in writing mailed to the other.

(6) The Distributor agrees that no officer, director or
employee of the Distributor will deal for or on behalf of the Fund with
himself as principal or agent, or with any corporation or partnership in
which he may have a financial interest, except that this shall not
prohibit:

(a) Officers, directors and employees of the
Distributor from having a financial interest in the Fund or in
the Distributor.

- 4 -
<PAGE>

(b) The purchase of securities for the Fund, or the
sale of securities owned by the Fund, through a security broker
or dealer, one or more of whose partners, officers, directors or
employees is an officer, director or employee of the Distributor,
provided such transactions are handled in the capacity of broker
only and provided commissions charged do not exceed customary
brokerage charges for such services.

(c) Transactions with the Fund by a broker-dealer
affiliate of the Distributor if allowed by rule or order of the
Securities and Exchange Commission and if made pursuant to
procedures adopted by the Corporation's board of directors
("Board").

(7) The Distributor agrees that, except as otherwise provided
in this agreement, or as may be permitted consistent with the use of a
broker-dealer affiliate of the Distributor under applicable provisions of
the federal securities laws, neither it nor any of its officers, directors
or employees shall at any time during the period of this agreement make,
accept or receive, directly or indirectly, any fees, profits, or
emoluments of any character in connection with the purchase or sale of
securities (except securities issued by the Fund) or other assets by or
for the Fund.

(8) No provision of this Agreement may by changed, waived,
discharged or terminated orally, but only by a written amendment signed by
the party against which enforcement of the amendment is sought.

(9) This Agreement shall be construed in accordance with the
laws of the State of Minnesota, without giving effect to the conflicts of
laws principles thereunder.

Part Five: TERMINATION

(1) This agreement shall continue from year to year unless
and until terminated by Distributor or the Fund, except that such
continuance shall be specifically approved at least annually by a vote of
a majority of the Board members who are not parties to this agreement or
interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such approval, and by a majority of the Board
or by vote of a majority of the outstanding voting securities of the Fund.
As used in this paragraph, the term "interested person" shall have the
meaning as set forth in the 1940 Act.

(2) This agreement may be terminated by the Distributor or
the Fund at any time by giving the other party sixty (60) days written
notice of such intention to terminate.

(3) This agreement shall terminate in the event of its
assignment, the term "assignment" for this purpose having the same meaning
as set forth in the 1940 Act.

- 5 -
<PAGE>

IN WITNESS WHEREOF, The parties hereto have executed the foregoing
agreement on the date and year first above written.

IDS Market Advantage Series, Inc., on behalf of
IDS SMALL COMPANY INDEX FUND

By ____________________________________
Name:
Title:

AMERICAN EXPRESS FINANCIAL ADVISORS, INC.

By ____________________________________
Name:
Title:

- 6 -
<PAGE>

<PAGE>
EXHIBIT 8(a)

CUSTODIAN AGREEMENT

THIS CUSTODIAN AGREEMENT dated August ______, 1996, is between IDS Market
Advantage Series, Inc., a Minnesota corporation (the "Corporation"), on
behalf of its underlying series fund, IDS Small Company Index Fund (the
"Fund") and American Express Trust Company, a corporation organized under
the laws of the State of Minnesota with its principal place of business at
Minneapolis, Minnesota (the "Custodian").

WHEREAS, the Fund desires that its securities and cash be hereafter held
and administered by Custodian pursuant to the terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and the Custodian agree as follows:

Section 1. Definitions
-----------------------

The word "securities" as used herein shall be construed to include,
without being limited to, shares, stocks, treasury stocks, including any
stocks of this Fund, notes, bonds, debentures, evidences of indebtedness,
options to buy or sell stocks or stock indexes, certificates of interest
or participation in any profit-sharing agreements, collateral trust
certificates, preorganization certificates or subscriptions, transferable
shares, investment contracts, voting trust certificates, certificates of
deposit for a security, fractional or undivided interests in oil, gas or
other mineral rights, or any certificates of interest or participation in,
temporary or interim certificates for, receipts for, guarantees of, or
warrants or rights to subscribe to or purchase any of the foregoing,
acceptances and other obligations and any evidence of any right or
interest in or to any cash, property or assets and any interest or
instrument commonly known as a security. In addition, for the purpose of
this Custodian Agreement, the word "securities" also shall include other
instruments in which the Fund may invest including currency forward
contracts and commodities such as interest rate or index futures
contracts, margin deposits on such contracts or options on such contracts.

The words "custodian order" shall mean a request for direction, including
a computer printout, directed to the Custodian and signed in the name of
the Fund by any two individuals designated in the current certified list
referred to in Section 2.

The word "facsimile" shall mean an exact copy or likeness which is
electronically transmitted for instant reproduction.
<PAGE>

Section 2. Names, Titles and Signatures of Authorized Persons
--------------------------------------------------------------

The Fund will certify to the Custodian the names and signatures of its
present officers and other designated persons authorized on behalf of the
Fund to direct the Custodian by custodian order as herein before defined.
The Fund agrees that whenever any change occurs in this list it will file
with the Custodian a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Fund as having been duly adopted by the
Corporation's Board of Directors (the "Board") or the Executive Committee
of the Board designating those persons currently authorized on behalf of
the Fund to direct the Custodian by custodian order, as herein before
defined, and upon such filing (to be accompanied by the filing of specimen
signatures of the designated persons) the persons so designated in said
resolution shall constitute the current certified list. The Custodian is
authorized to rely and act upon the names and signatures of the
individuals as they appear in the most recent certified list from the Fund
which has been delivered to the Custodian as herein above provided.

Section 3. Use of Subcustodians
--------------------------------

The Custodian may make arrangements, where appropriate, with banks having
not less than two million dollars aggregate capital, surplus and undivided
profits for the custody of securities. Any such bank selected by the
Custodian to act as subcustodian shall be deemed to be the agent of the
Custodian.

The Custodian also may enter into arrangements for the custody of
securities entrusted to its care through foreign branches of U.S. banks;
through foreign banks, banking institutions or trust companies; through
foreign subsidiaries of U.S. banks or bank holding companies, or through
foreign securities depositories or clearing agencies (hereinafter also
called, collectively, the "Foreign Subcustodian") or indirectly through an
agent, established under the first paragraph of this section, if and to
the extent permitted by Section 17(f) of the Investment Company Act of
1940 (the "1940 Act") and the rules promulgated by the Securities and
Exchange Commission ("SEC") thereunder, or any "no-action" letter received
from the staff of the SEC. To the extent the existing provisions of the
Custodian Agreement are consistent with the requirements of such Section,
rules, order or no-action letter, they shall apply to all such foreign
custodianships. To the extent such provisions are inconsistent with or
additional requirements are established by such Section, rules, order or
no-action letter, the requirements of such Section, rules, order or no-
action letter will prevail and the parties will adhere to such
requirements; provided, however, in the absence of notification from the
Fund of any changes or additions to such requirements, the Custodian shall
have no duty or responsibility to inquire as to any such changes or
additions.

- 2 -
<PAGE>

Section 4. Receipt and Disbursement of Money
---------------------------------------------

(1) The Custodian shall open and maintain a separate account or accounts
in the name of the Fund or cause its agent to open and maintain such
account or accounts subject only to checks, drafts or directives by the
Custodian pursuant to the terms of this Agreement. The Custodian or its
agent shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Fund. The
Custodian or its agent shall make payments of cash to or for the account
of the Fund from such cash only:

(a) for the purchase of securities for the portfolio of the
Fund upon the receipt of such securities by the Custodian
or its agent unless otherwise instructed on behalf of the
Fund;

(b) for the purchase or redemption of shares of capital stock
of the Fund;

(c) for the payment of interest, dividends, taxes, management
fees, or operating expenses (including, without
limitation thereto, fees for legal, accounting and
auditing services);

(d) for payment of distribution fees, commissions, or
redemption fees, if any;

(e) for payments in connection with the conversion, exchange
or surrender of securities owned or subscribed to by the
Fund held by or to be delivered to the Custodian;

(f) for payments in connection with the return of securities
loaned by the Fund upon receipt of such securities or the
reduction of collateral upon receipt of proper notice;

(g) for payments for other proper corporate purposes;

(h) or upon the termination of this Agreement.

Before making any such payment for the purposes permitted under these
items (a), (b), (c), (d), (e), (f) or (g) of paragraph (1) of this
section, the Custodian shall receive and may rely upon a custodian order
directing such payment and stating that the payment is for such a purpose
permitted under these items (a), (b), (c) (d), (e), (f) or (g) and that in
respect to item (g), a copy of a resolution of the Board or of the
Executive Committee of the Board of directors signed by an officer of the
Fund and certified by its Secretary or an Assistant Secretary, specifying
the amount of such payment, setting forth the purpose to be a proper
corporate purpose, and naming the person or persons to whom such payment
is made. Notwithstanding the above, for the purposes permitted under

- 3 -
<PAGE>

items (a) or (f) of paragraph (1) of this section, the Custodian may rely
upon a facsimile order.

(2) The Custodian is hereby appointed the attorney-in-fact of the
Fund to endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of the Fund and
drawn on or to the order of the Fund and to deposit same to the account of
the Fund pursuant to this Agreement.

Section 5. Receipt of securities
---------------------------------

Except as permitted by the second paragraph of this section, the Custodian
or its agent shall hold in a separate account or accounts, and physically
segregated at all times from those of any other persons, firms or
corporations, pursuant to the provisions hereof, all securities received
by it for the account of the Fund. The Custodian shall record and
maintain a record of all certificate numbers. Securities so received
shall be held in the name of the Fund, in the name of an exclusive nominee
duly appointed by the Custodian or in bearer form, as appropriate.

Subject to such rules, regulations or guidelines as the SEC may adopt, the
Custodian may deposit all or any part of the securities owned by the Fund
in a "securities depository" which includes any system for the central
handling of securities established by a national securities exchange or a
national securities association registered with the SEC under the
securities Exchange Act of 1934, or such other person as may be permitted
by the Commission, pursuant to which system all securities of any
particular class or series of any issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of such securities.

All securities are to be held or disposed of by the Custodian for, and
subject at all times to the instructions of, the Fund pursuant to the
terms of this Agreement. The Custodian shall have no power or authority
to assign, hypothecate, pledge or otherwise dispose of any such
securities, except pursuant to the directive of the Fund and only for the
account of the Fund as set forth in Section 6 of this Agreement.

Section 6. Transfer, Exchange, Delivery, etc. of securities
------------------------------------------------------------

The Custodian shall have sole power to release or deliver any securities
of the Fund held by it pursuant to this Agreement. The Custodian agrees
to transfer, exchange or deliver securities held by it or its agent
hereunder only:

(a) for sales of such securities for the account of the Fund, upon
receipt of payment therefor;

- 4 -
<PAGE>

(b) when such securities are called, redeemed, retired or otherwise
become payable;

(c) for examination upon the sale of any such securities in
accordance with "street delivery" custom which would include
delivery against interim receipts or other proper delivery
receipts;

(d) in exchange for or upon conversion into other securities alone or
other securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment,
or otherwise;

(e) for the purpose of exchanging interim receipts or temporary
certificates for permanent certificates;

(f) upon conversion of such securities pursuant to their terms into
other securities;

(g) upon exercise of subscription, purchase or other similar rights
represented by such securities; for loans of such securities by
the Fund upon receipt of collateral; or

(h) for other proper corporate purposes.

As to any deliveries made by the Custodian pursuant to items (a), (b),
(c), (d), (e), (f) and (g), securities or cash received in exchange
therefore shall be delivered to the Custodian, its agent, or to a
securities depository. Before making any such transfer, exchange or
delivery, the Custodian shall receive a custodian order or a facsimile
from the Fund requesting such transfer, exchange or delivery and stating
that it is for a purpose permitted under Section 6 (whenever a facsimile
is utilized, the Fund will also deliver an original signed custodian
order) and, in respect to item (h), a copy of a resolution of the Board or
of the Executive Committee of the Board of directors signed by an officer
of the Fund and certified by its Secretary or an Assistant Secretary,
specifying the securities, setting forth the purpose for which such
payment, transfer, exchange or delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons
to whom such transfer, exchange or delivery of such securities shall be
made.

Section 7. Custodian's Acts Without Instructions
-------------------------------------------------

Unless and until the Custodian receives a contrary custodian order from
the Fund, the Custodian shall or shall cause its agent to:

(a) present for payment all coupons and other income items held by
the Custodian or its agent for the account of the Fund which call
for payment upon presentation and hold all cash received by it
upon such payment for the account of the Fund;

- 5 -
<PAGE>

(b) present for payment all securities held by it or its agent which
mature or when called, redeemed, retired or otherwise become
payable;

(c) ascertain all stock dividends, rights and similar securities to
be issued with respect to any securities held by the Custodian or
its agent hereunder, and to collect and hold for the account of
the Fund all such securities; and

(d) ascertain all interest and cash dividends to be paid to security
holders with respect to any securities held by the Custodian or
its agent, and to collect and hold such interest and cash
dividends for the account of the Fund.

Section 8. Voting and Other Action
-----------------------------------

Neither the Custodian nor any nominee of the Custodian shall vote any of
the securities held hereunder by or for the account of the Fund. The
Custodian shall promptly deliver to the Fund all notices, proxies and
proxy soliciting materials with relation to such securities, such proxies
to be executed by the registered holder of such securities (if registered
otherwise than in the name of the Corporation) but without indicating the
manner in which such proxies are to be voted.

Custodian shall transmit promptly to the Fund all written information
(including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith) received by
the Custodian from issuers of the securities being held for the Fund.
With respect to tender or exchange offers, the Custodian shall transmit
promptly to the Fund all written information received by the Custodian
from issuers of the securities whose tender or exchange is sought and from
the party (or his agents) making the tender or exchange offer.

Section 9. Transfer Taxes
--------------------------

The Fund shall pay or reimburse the Custodian for any transfer taxes
payable upon transfers of securities made hereunder, including transfers
resulting from the termination of this Agreement. The Custodian shall
execute such certificates in connection with securities delivered to it
under this Agreement as may be required, under any applicable law or
regulation, to exempt from taxation any transfers and/or deliveries of any
such securities which may be entitled to such exemption.

Section 10. Custodian's Reports
--------------------------------

The Custodian shall furnish the Fund as of the close of business each day
a statement showing all transactions and entries for the account of the

- 6 -
<PAGE>

Fund. The books and records of the Custodian pertaining to its actions as
Custodian under this Agreement and securities held hereunder by the
Custodian shall be open to inspection and audit by officers of the Fund,
internal auditors employed by the Fund's investment adviser, and
independent auditors employed by the Fund. The Custodian shall furnish
the Fund in such form as may reasonably be requested by the Fund a report,
including a list of the securities held by it in custody for the account
of the Fund, identification of any subcustodian, and identification of
such securities held by such subcustodian, as of the close of business of
the last business day of each month, which shall be certified by a duly
authorized officer of the Custodian. It is further understood that
additional reports may from time to time be requested by the Fund. Should
any report ever be filed with any governmental authority pertaining to
lost or stolen securities, the Custodian will concurrently provide the
Fund with a copy of that report.

The Custodian also shall furnish such reports on its systems of internal
accounting control as the Fund may reasonably request from time to time.

Section 11. Concerning Custodian
---------------------------------

For its services hereunder the Custodian shall be paid such compensation
at such times as may from time to time be agreed on in writing by the
parties hereto in a Custodian Fee Agreement.

The Custodian shall not be liable for any action taken in good faith upon
any custodian order or facsimile herein described or certified copy of any
resolution of the Board or of the Executive Committee of the Board, and
may rely on the genuineness of any such document which it may in good
faith believe to have been validly executed.

The Fund agrees to indemnify and hold harmless Custodian and its nominee
from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or its nominee in
connection with the performance of this Agreement, except such as may
arise from the Custodian's or its nominee's own negligent action,
negligent failure to act or willful misconduct. Custodian is authorized
to charge any account of the Fund for such items. In the event of any
advance of cash for any purpose made by Custodian resulting from orders or
instructions of the Fund, or in the event that Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall be security
therefor.

The Custodian shall maintain a standard of care equivalent to that which
would be required of a bailee for hire and shall not be liable for any
loss or damage to the Fund resulting from participation in a securities
depository unless such loss or damage arises by reason of any negligence,

- 7 -
<PAGE>

misfeasance, or willful misconduct of officers or employees of the
Custodian, or from its failure to enforce effectively such rights as it
may have against any securities depository or from use of an agent, unless
such loss or damage arises by reason of any negligence, misfeasance, or
willful misconduct of officers or employees of the Custodian, or from its
failure to enforce effectively such rights as it may have against any
agent.

Section 12. Termination and Amendment of Agreement
---------------------------------------------------

The Fund and the Custodian mutually may agree from time to time in writing
to amend, to add to, or to delete from, any provision of this Agreement.

The Custodian may terminate this Agreement by giving the Fund ninety days'
written notice of such termination by registered mail addressed to the
Fund at its principal place of business.

The Fund may terminate this Agreement at any time by written notice
thereof delivered, together with a copy of the resolution of the Board
authorizing such termination and certified by the Secretary of the Fund,
by registered mail to the Custodian.

Upon such termination of this Agreement, assets of the Fund held by the
Custodian shall be delivered by the Custodian to a successor custodian, if
one has been appointed by the Fund, upon receipt by the Custodian of a
copy of the resolution of the Board certified by the Secretary, showing
appointment of the successor custodian, and provided that such successor
custodian is a bank or trust company, organized under the laws of the
United States or of any State of the United States, having not less than
two million dollars aggregate capital, surplus and undivided profits.
Upon the termination of this Agreement as a part of the transfer of
assets, either to a successor custodian or otherwise, the Custodian will
deliver securities held by it hereunder, when so authorized and directed
by resolution of the Board, to a duly appointed agent of the successor
custodian or to the appropriate transfer agents for transfer of
registration and delivery as directed. Delivery of assets on termination
of this Agreement shall be effected in a reasonable, expeditious and
orderly manner; and in order to accomplish an orderly transition from the
Custodian to the successor custodian, the Custodian shall continue to act
as such under this Agreement as to assets in its possession or control.
Termination as to each security shall become effective upon delivery to
the successor custodian, its agent, or to a transfer agent for a specific
security for the account of the successor custodian, and such delivery
shall constitute effective delivery by the Custodian to the successor
under this Agreement.

In addition to the means of termination herein before authorized, this
Agreement may be terminated at any time by the vote of a majority of the
outstanding shares of the Fund and after written notice of such action to
the Custodian.

- 8 -
<PAGE>

Section 13. General
--------------------

Nothing expressed or mentioned in or to be implied from any provision of
this Agreement is intended to, or shall be construed to give any person or
corporation other than the parties hereto, any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any covenant,
condition or provision herein contained, this Agreement and all of the
covenants, conditions and provisions hereof being intended to be and being
for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns.

This Agreement shall be governed by the laws of the State of Minnesota.

This Agreement supersedes all prior agreements between the parties.

IDS Market Advantage Series, Inc., on
behalf of
IDS SMALL COMPANY INDEX FUND

By: ________________________________
Name:
Title:

Attest:

_________________________
[Seal]

AMERICAN EXPRESS TRUST COMPANY

By: ________________________________
Name:
Title:

Attest:

________________________
[Seal]

- 9 -
<PAGE>
<PAGE>
EXHIBIT 9(a)

TRANSFER AGENCY AGREEMENT

THIS AGREEMENT dated August ____, 1996, is between IDS Market Advantage
Series, Inc., a Minnesota corporation (the "Corporation") on behalf of its
underlying series fund, IDS Small Company Index Fund (the "Fund"), and
American Express Financial Corporation (the "Transfer Agent"), a Delaware
corporation.

In consideration of the mutual promises set forth below, the Fund
and the Transfer Agent agree as follows:

1. APPOINTMENT OF THE TRANSFER AGENT. The Fund hereby
appoints the Transfer Agent, as transfer agent for its shares and as
shareholder servicing agent for the Fund, and the Transfer Agent accepts
such appointment and agrees to perform the duties set forth below.

2. COMPENSATION. The Fund will compensate the Transfer
Agent for the performance of its obligations as set forth in Schedule A.
Schedule A does not include out-of-pocket disbursements of the Transfer
Agent for which the Transfer Agent shall be entitled to bill the Fund
separately.

The Transfer Agent will bill the Fund monthly. The fee provided
for hereunder shall be paid in cash by the Fund to the Transfer Agent
within five (5) business days after the last day of each month.

Out-of-pocket disbursements shall include, but shall not be
limited to, the items specified in Schedule B. Reimbursement by the Fund
for expenses incurred by the Transfer Agent in any month shall be made as
soon as practicable after the receipt of an itemized bill from the
Transfer Agent.

Any compensation jointly agreed to hereunder may be adjusted from
time to time by attaching to this Agreement a revised Schedule A, dated
and signed by an officer of each party.

3. DOCUMENTS. The Fund will furnish from time to time such
certificates, documents or opinions as the Transfer Agent deems to be
appropriate or necessary for the proper performance of its duties.

4. REPRESENTATIONS OF THE FUND AND THE TRANSFER AGENT.

(a) The Fund represents to the Transfer Agent that
any outstanding shares of each class of shares are validly
issued, fully paid and non-assessable by the Fund. When shares
are hereafter issued in accordance with the terms of the
Corporation's Articles of Incorporation and the Fund's
prospectus, such shares shall be validly issued, fully paid and
non-assessable by the Fund.
<PAGE>

(b) The Transfer Agent represents that it is
registered under Section 17A(c) of the Securities Exchange Act of
1934 (the "Exchange Act"). The Transfer Agent agrees to maintain
the necessary facilities, equipment and personnel to perform its
duties and obligations under this agreement and to comply with
all applicable laws.

5. DUTIES OF THE TRANSFER AGENT. The Transfer Agent shall
be responsible, separately and through its subsidiaries or affiliates, for
the following functions:

(a) SALE OF FUND SHARES.

(1) On receipt of an application and
payment, wired instructions and payment, or payment
identified as being for the account of a shareholder, the
Transfer Agent will deposit the payment, prepare and
present the necessary report to the Custodian and record
the purchase of shares in a timely fashion in accordance
with the terms of the prospectus. All shares shall be
held in book entry form and no certificate shall be
issued unless the Fund is permitted to do so by the
prospectus and the purchaser so requests.

(2) On receipt of notice that payment was
dishonored, the Transfer Agent shall stop redemptions of
all shares owned by the purchaser related to that
payment, place a stop payment on any checks that have
been issued to redeem shares of the purchaser and take
such other action as it deems appropriate.

(b) REDEMPTION OF FUND SHARES. On receipt of
instructions to redeem shares in accordance with the terms of the
Fund's prospectus, the Transfer Agent will record the redemption
of shares of the Fund, prepare and present the necessary report
to the Custodian and pay the proceeds of the redemption to the
shareholder, an authorized agent or legal representative upon the
receipt of the monies from the Custodian.

(c) TRANSFER OR OTHER CHANGE PERTAINING TO FUND
SHARES. On receipt of instructions or forms acceptable to the
Transfer Agent to transfer the shares to the name of a new owner,
change the name or address of the present owner or take other
legal action, the Transfer Agent will take such action as is
requested.

(d) EXCHANGE OF FUND SHARES. On receipt of
instructions to exchange the shares of the Fund for the shares of
another fund in the IDS MUTUAL FUND GROUP or other American
Express Financial Corporation product in accordance with the
terms of the prospectus, the Transfer Agent will process the
exchange in the same manner as a redemption and sale of shares.

- 2 -
<PAGE>

(e) RIGHT TO SEEK ASSURANCE. The Transfer Agent may
refuse to transfer, exchange or redeem shares of the Fund or take
any action requested by a shareholder until it is satisfied that
the requested transaction or action is legally authorized or
until it is satisfied there is no basis for any claims adverse to
the transaction or action. It may rely on the provisions of the
Uniform Act for the Simplification of Fiduciary Security
Transfers or the Uniform Commercial Code. The Fund shall
indemnify the Transfer Agent for any act done or omitted to be
done in reliance on such laws or for refusing to transfer,
exchange or redeem shares or taking any requested action if it
acts on a good faith belief that the transaction or action is
illegal or unauthorized.

(f) SHAREHOLDER RECORDS, REPORTS AND SERVICES.

(1) The Transfer Agent shall maintain all
shareholder accounts, which shall contain all required
tax, legal and regulatory information; shall provide
shareholders, and file with federal and state agencies,
all required tax and other reports pertaining to
shareholder accounts; shall prepare shareholder mailing
lists; shall cause to be printed and mailed all required
prospectuses, annual reports, semi-annual reports,
statements of additional information (upon request),
proxies and other mailings to shareholders; and shall
cause proxies to be tabulated.

(2) The Transfer Agent shall respond to all
valid inquiries related to its duties under this
Agreement.

(3) The Transfer Agent shall create and
maintain all records in accordance with all applicable
laws, rules and regulations, including, but not limited
to, the records required by Section 31(a) of the
Investment Company Act of 1940.

(g) DIVIDENDS AND DISTRIBUTIONS. The Transfer Agent
shall prepare and present the necessary report to the Custodian
and shall cause to be prepared and transmitted the payment of
income dividends and capital gains distributions or cause to be
recorded the investment of such dividends and distributions in
additional shares of the Fund or as directed by instructions or
forms acceptable to the Transfer Agent.

(h) CONFIRMATIONS AND STATEMENTS. The Transfer Agent
shall confirm each transaction either at the time of the
transaction or through periodic reports as may be legally
permitted.

- 3 -
<PAGE>

(i) LOST OR STOLEN CHECKS. The Transfer Agent will
replace lost or stolen checks issued to shareholders upon receipt
of proper notification and will maintain any stop payment orders
against the lost or stolen checks as it is economically desirable
to do.

(j) REPORTS TO FUND. The Transfer Agent will provide
reports pertaining to the services provided under this Agreement
as the Fund may request to ascertain the quality and level of
service being provided or as required by law.

(k) OTHER DUTIES. The Transfer Agent may perform
other duties for additional compensation if agreed to in writing
by the parties to this agreement.

6. OWNERSHIP AND CONFIDENTIALITY OF RECORDS. The Transfer
Agent agrees that all records prepared or maintained by it relating to the
services to be performed by it under the terms of this Agreement are the
property of the Fund and may be inspected by the Fund or any person
retained by the Fund of reasonable times. The Fund and Transfer Agent
agree to protect the confidentiality of those records.

7. ACTION BY BOARD AND OPINION OF FUND'S COUNSEL. The
Transfer Agent may rely on resolutions of the Board or the Executive
Committee of the Board and on opinion of counsel for the Fund.

8. DUTY OF CARE. It is understood and agreed that, in
furnishing the Fund with the services as herein provided, neither the
Transfer Agent, nor any officer, director or agent thereof shall be held
liable for any loss arising out of or in connection with their actions
under this Agreement so long as they act in good faith and with due
diligence, and are not negligent or guilty of any willful misconduct. It
is further understood and agreed that the Transfer Agent may rely upon
information furnished to it reasonably believed to be accurate and
reliable. In the event the Transfer Agent is unable to perform its
obligations under the terms of this Agreement because of an act of God,
strike or equipment or transmission failure reasonably beyond its control,
the Transfer Agent shall not be liable for any damages resulting from such
failure.

9. TERM AND TERMINATION. This Agreement shall become
effective on the date first set forth above (the "Effective Date") and
shall continue in effect from year to year thereafter as the parties may
mutually agree; provided that either party may terminate this Agreement by
giving the other party notice in writing specifying the date of such
termination, which shall not be less than 60 days after the date of
receipt of such notice. In the event such notice is given by the Fund, it
shall be accompanied by a vote of the Board, certified by the Secretary,
electing to terminate this Agreement and designating a successor transfer
agent or transfer agents. Upon such termination and at the expense of the
Fund, the Transfer Agent will deliver to such successor a certified list
of shareholders of the Fund (with name, address and taxpayer

- 4 -
<PAGE>

identification or Social Security number), a historical record of the
account of each shareholder and the status thereof, and all other relevant
books, records, correspondence, and other data established or maintained
by the Transfer Agent under this Agreement in the form reasonably
acceptable to the Fund, and will cooperate in the transfer of such duties
and responsibilities, including provisions for assistance from the
Transfer Agent's personnel in the establishment of books, records and
other data by such successor or successors.

10. AMENDMENT. This Agreement may not be amended or modified
in any manner except by a written agreement executed by both parties.

11. SUBCONTRACTING. The Fund agrees that the Transfer Agent
may subcontract for certain of the services described under this Agreement
with the understanding that there shall be no diminution in the quality or
level of the services and that the Transfer Agent remains fully
responsible for the services. Except for out-of-pocket expenses
identified in Schedule B, the Transfer Agent shall bear the cost of
subcontracting such services, unless otherwise agreed by the parties.

12. MISCELLANEOUS.

(a) This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors
and assigns; provided, however, that this Agreement shall not be
assignable without the written consent of the other party.

(b) This Agreement shall be governed by the laws of
the State of Minnesota.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers as of the day and year written
above.

IDS Market Advantage Series, Inc.,
on behalf of
IDS SMALL COMPANY INDEX FUND

_____________________ By: _________________________
Attest Name:
Title:

AMERICAN EXPRESS FINANCIAL CORPORATION

_____________________ By: _________________________
Attest Name:
Title:

- 5 -
<PAGE>

Schedule A

IDS SMALL COMPANY INDEX FUND

TRANSFER AGENT FEE

Effective the _______ day of August, 1996, the Annual Per Account
Fee accrued daily and payable monthly is as follows:

CLASS FEE
----- ---

A $ 15

B 16

Y 15

- 6 -
<PAGE>

Schedule B

OUT-OF-POCKET EXPENSES

The Fund shall reimburse the Transfer Agent monthly for the following out-
of-pocket expenses:

o typesetting, printing, paper, envelopes, postage and return
postage for proxy soliciting material, and proxy tabulation costs

o printing, paper, envelopes and postage for dividend notices,
dividend checks, records of account, purchase confirmations, exchange
confirmations and exchange prospectuses, redemption confirmations,
redemption checks, confirmations on changes of address and any other
communication required to be sent to shareholders

o typesetting, printing, paper, envelopes, postage for
prospectuses, annual and semi-annual reports, statements of additional
information, supplements for prospectuses and statements of additional and
other required mailings to shareholders.

o stop orders

o outgoing wire charge

o other expenses incurred at the request or with the consent of the
Fund

- 7 -
<PAGE>

<PAGE>
EXHIBIT 9(b)

SHAREHOLDER SERVICE AGREEMENT

THIS AGREEMENT dated August ____, 1996, is between IDS Market
Advantage Series, Inc., a Minnesota corporation (the "Corporation"), on
behalf of its underlying series fund, IDS Small Company Index Fund (the
"Fund"), and American Express Financial Advisors Inc. (the "Distributor"),
the principal underwriter of the Fund, for services to be provided to
shareholders by personal financial advisors and other servicing agents.

The Distributor represents that shareholders consider their
financial advisor or servicing agent a significant factor in their
satisfaction with their investment and, to help retain financial advisors
or servicing agents, it is necessary for the Fund to pay annual servicing
fees to financial advisors and other servicing agents.

The Distributor represents that fees paid to financial advisors
will be used by financial advisors to help shareholders thoughtfully
consider their investment goals and objectively monitor how well the goals
are being achieved. As principal underwriter, the Distributor will use
its best efforts to assure that other distributors provide comparable
services to shareholders for the servicing fees received.

The Distributor agrees to monitor the services provided by
financial advisors and servicing agents, to measure the level and quality
of services provided, to provide training and support to financial
advisors and servicing agents and to devise methods for rewarding
financial advisors and servicing agents who achieve an exemplary level and
quality of services.

The Fund agrees to pay American Express financial advisors and
other servicing agents, 0.15 percent of the net asset value for each
shareholder account assigned to a financial advisor or servicing agent
that holds either Class A or Class B shares. In addition, the Fund agrees
to pay the Distributor's costs to monitor, measure, train and support
services provided by financial advisors or servicing agents up to 0.025
percent of the net asset value for each shareholder account assigned to a
financial advisor or servicing agent that holds either Class A or Class B
shares. The Fund agrees to pay the Distributor in cash within five (5)
business days after the last day of each month.

The Distributor agrees to provide the Fund, prior to the
beginning of the calendar year, a budget covering its expected costs to
monitor, measure, train and support services and a quarterly report of its
actual expenditures. The Distributor agrees to meet with representatives
of the Fund at their request to provide information as may be reasonably
necessary to evaluate its performance under the terms of this agreement.

The Distributor agrees that if, at the end of any month, the
expenses of the Fund, including fees under this agreement and any other
agreement between the Fund and the Distributor or American Express
<PAGE>

Financial Corporation, but excluding taxes, brokerage commissions and
charges in connection with the purchase and sale of assets exceed the most
restrictive applicable state expense limitation for the Fund's current
fiscal year, the Fund shall not pay fees and expenses under this agreement
to the extent necessary to keep the Fund's expenses from exceeding the
limitation, it being understood that the Distributor will assume all
unpaid expenses and bill the Fund for them in subsequent months but in no
event can the accumulation of unpaid expenses or billing be carried past
the end of the Fund's fiscal year.

This agreement shall continue in effect for a period of more than
one year so long as it is reapproved at least annually at a meeting called
for the purpose of voting on the agreement by a vote, in person, of the
members of the Corporation's board of directors (the "Board") who are not
interested persons of the Fund and have no financial interest in the
operation of the agreement, and of all the members of the Board.

This agreement may be terminated at any time without payment of
any penalty by a vote of a majority of the members of the Board who are
not interested persons of the Fund and have no financial interest in the
operation of the agreement or by the Distributor. The agreement will
terminate automatically in the event of its assignment as that term is
defined in the Investment Company Act of 1940. This agreement may be
amended at any time provided the amendment is approved in the same manner
the agreement was initially approved and the amendment is agreed to by the
Distributor.

Approved this ______ day of August, 1996.

IDS Market Advantage Series, Inc., on behalf of
IDS SMALL COMPANY INDEX FUND

__________________________________________
Vice President

AMERICAN EXPRESS FINANCIAL ADVISORS, INC.

___________________________________________
Vice President

- 2 -
<PAGE>

<PAGE>
EXHIBIT 9(c)

LICENSE AGREEMENT

American Express Financial Corporation
IDS Tower 10
Minneapolis, Minnesota 55440

Dear Sirs:

Each of the Funds named below hereby acknowledges that American
Express Financial Corporation ("AEFC") is the owner of the trade name and
marks "IDS" listed below, and any predecessor names and marks.

AEFC hereby grants to each Fund the nonexclusive right to use
such marks for the purpose of offering, selling and distributing any and
all shares issued or to be issued by each Fund. This license shall
continue with respect to each Fund for as long as AEFC continues to act as
the investment manager for that Fund and the Fund uses such marks in
accordance with policies and procedures established by AEFC.

AEFC and each Fund agree that in the conduct of its respective
business and activities and its rendering of services under such marks it
shall adhere to the highest ethical and business standards in the mutual
funds field and shall do nothing to bring disrepute to, nor to in any
manner damage, the good trade name and marks "IDS".

Trade Name
----------

IDS

Mark Registration
---- ------------

"IDS" 881,460
"IDS" 881,461

"IDS" Application Serial Number 73/673,985
<PAGE>

License Agreement
Page 2

Sincerely yours,

IDS Research Opportunities Fund
IDS Small Company Index Fund

By: ____________________________
Name:
Title:

Date:___________________________

Accepted and agreed to:

AMERICAN EXPRESS FINANCIAL CORPORATION

By: _____________________________
Name:
Title:
<PAGE>

<PAGE>
EXHIBIT 9(d)

ADMINISTRATIVE SERVICES AGREEMENT

THIS AGREEMENT dated August _____, 1996, is between IDS Market Advantage
Series, Inc., a Minnesota corporation (the "Corporation"), on behalf of
its underlying series fund IDS Small Company Index Fund ("Fund") and
American Express Financial Corporation (the "Administrator"), a Delaware
corporation.

Part One: SERVICES

(1) The Fund hereby retains the Administrator, and the
Administrator hereby agrees, for the period of this Agreement and under
the terms and conditions hereinafter set forth, to furnish the Fund
continuously with all administrative, accounting, clerical, statistical,
correspondence, corporate and all other services of whatever nature
required in connection with the administration of the Fund as provided
under this Agreement; and to pay such expenses as may be provided for in
Part Three hereof; subject always to the direction and control of the
Board of Directors (the "Board"), the Executive Committee and the
authorized officers of the Fund. The Administrator agrees to maintain an
adequate organization of competent persons to provide the services and to
perform the functions herein mentioned. The Administrator agrees to meet
with any persons at such times as the Board deems appropriate for the
purpose of reviewing the Administrator's performance under this Agreement.

(2) The Fund agrees that it will furnish to the Administrator
any information that the latter may reasonably request with respect to the
services performed or to be performed by the Administrator under this
Agreement.

(3) It is understood and agreed that in furnishing the Fund
with the services as herein provided, neither the Administrator, nor any
officer, director or agent thereof shall be held liable to the Fund or its
creditors or shareholders for errors of judgment or for anything except
willful misfeasance, bad faith, or gross negligence in the performance of
its duties, or reckless disregard of its obligations and duties under the
terms of this Agreement. It is further understood and agreed that the
Administrator may rely upon information furnished to it reasonably
believed to be accurate and reliable.

Part Two: COMPENSATION FOR SERVICES

(1) The Fund agrees to pay to the Administrator, and the
Administrator covenants and agrees to accept from the Fund in full payment
for the services furnished, based on the net assets of the Fund as set
forth in the following table:
<PAGE>

Assets Annual Rate At
(Billions) Each Asset Level
----------- ----------------

First $ 0.25 0.130%
Next 0.25 0.115%

Next 0.25 0.100%
Next 0.25 0.085%

Over 1 0.070%

The administrative fee for each calendar day of each year shall be equal
to 1/365th (1/366th in each leap year) of the total amount computed. The
computation shall be made for each such day on the basis of net assets as
of the close of business of the full business day two (2) business days
prior to the day for which the computation is being made. In the case of
the suspension of the computation of net asset value, the administrative
fee for each day during such suspension shall be computed as of the close
of business on the last full business day on which the net assets were
computed. As used herein, "net assets" as of the close of a full business
day shall include all transactions in shares of the Fund recorded on the
books of the Fund for that day.

(2) The administrative fee shall be paid on a monthly basis
and, in the event of the termination of this Agreement, the administrative
fee accrued shall be prorated on the basis of the number of days that this
Agreement is in effect during the month with respect to which such payment
is made.

(3) The administrative fee provided for hereunder shall be
paid in cash by the Fund to the Administrator within five (5) business
days after the last day of each month.

Part Three: ALLOCATION OF EXPENSES

(1) The Fund agrees to pay:

(a) Administrative fees payable to the Administrator
for its services under the terms of this
Agreement.

(b) Taxes.

- 2 -
<PAGE>

(d) Fees and expenses of attorneys: (i) it employs
in matters not involving the assertion of a claim
by a third party against the Corporation, its
Directors and officers, (ii) it employs in
conjunction with a claim asserted by the Board of
Directors against the Administrator, except that
the Administrator shall reimburse the Corporation
for such fees and expenses if it is ultimately
determined by a court of competent jurisdiction,
or the Administrator agrees, that it is liable in
whole or in part to the Corporation, and (iii) it
employs to assert a claim against a third party.

(e) Fees paid for the qualification and registration
for public sale of the securities of the Fund
under the laws of the United States and of the
several states in which such securities shall be
offered for sale.

(f) Office expenses which shall include a charge for
occupancy, insurance on the premises, furniture
and equipment, telephone, telegraph, electronic
information services, books, periodicals,
published services, and office supplies used by
the Fund, equal to the cost of such incurred by
the Administrator.

(g) Fees of consultants employed by the Fund.

(h) Directors', officers' and employees' expenses
which shall include fees, salaries, memberships,
dues, travel, seminars, pension, profit sharing,
and all other benefits paid to or provided for
directors, officers and employees, directors and
officers liability insurance, errors and
omissions liability insurance, worker's
compensation insurance and other expenses
applicable to the directors, officers and
employees, except the Fund will not pay any fees
or expenses of any person who is an officer or
employee of the Administrator or its affiliates.

(i) Filing fees and charges incurred by the
Corporation in connection with filing any
amendment to its articles of incorporation, or
incurred in filing any other document with the
State of Minnesota or its political subdivisions
on behalf of the Fund.

(j) Organizational expenses of the Fund.

- 3 -
<PAGE>

(k) One-half of the Investment Company Institute
membership dues charged jointly to the IDS MUTUAL
FUND GROUP and the Administrator.

(l) Expenses properly payable by the Fund, approved
by the Board.

(2) The Administrator agrees to pay all expenses associated
with the services it provides under the terms of this Agreement. Further,
the Administrator agrees that if, at the end of any month, the expenses of
the Fund under this Agreement and any other agreement between the Fund and
the Administrator, but excluding those expenses set forth in (1)(b) of
this Part Three, exceed the most restrictive applicable state expenses
limitation, the Fund shall not pay those expenses set forth in (1)(a) and
(c) through (l) of this Part Three to the extent necessary to keep the
Fund's expenses from exceeding the limitation, it being understood that
the Administrator will assume all unpaid expenses and bill the Fund for
them in subsequent months but in no event can the accumulation of unpaid
expenses or billing be carried past the end of the Fund's fiscal year.

Part Four: MISCELLANEOUS

(1) The Administrator shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent the Fund.

(2) A "full business day" shall be as defined in the
Corporation's By-laws.

(3) The Fund recognizes that the Administrator now renders
and may continue to render investment advice and other services to other
investment companies and persons which may or may not have investment
policies and investments similar to those of the Fund and that the
Administrator manages its own investments and/or those of its
subsidiaries. The Administrator shall be free to render such investment
advice and other services and the Fund hereby consents thereto.

(4) Neither this Agreement nor any transaction had pursuant
hereto shall be invalidated or in anyway affected by the fact that
directors, officers, agents and/or shareholders of the Fund are or may be
interested in the Administrator or any successor or assignee thereof, as
directors, officers, stockholders or otherwise; that directors, officers,
stockholders or agents of the Administrator are or may be interested in
the Fund as directors, officers, shareholders, or otherwise; or that the
Administrator or any successor or assignee, is or may be interested in the
Fund as shareholder or otherwise, provided, however, that neither the
Administrator, nor any officer, director or employee thereof or of the
Fund, shall sell to or buy from the Fund any property or security other
than shares issued by the Fund, except in accordance with applicable
regulations or orders of the U.S. Securities and Exchange Commission.

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<PAGE>

(5) Any notice under this Agreement shall be given in
writing, addressed, and delivered, or mailed postpaid, to the party to
this Agreement entitled to receive such, at such party's principal place
of business in Minneapolis, Minnesota, or to such other address as either
party may designate in writing mailed to the other.

(6) The Administrator agrees that no officer, director or
employee of the Administrator will deal for or on behalf of the Fund with
himself as principal or agent, or with any corporation or partnership in
which he may have a financial interest, except that this shall not
prohibit officers, directors or employees of the Administrator from having
a financial interest in the Fund or in the Administrator.

(7) The Fund agrees that the Administrator may subcontract
for certain of the services described under this Agreement with the
understanding that there shall be no diminution in the quality or level of
the services and that the Administrator remains fully responsible for the
services.

(8) This Agreement shall extend to and shall be binding upon
the parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable without the written
consent of the other party. This Agreement shall be governed by the laws
of the State of Minnesota.

Part Five: RENEWAL AND TERMINATION

(1) This Agreement shall become effective on the date first
set forth above (the "Effective Date") and shall continue in effect from
year to year thereafter as the parties may mutually agree; provided that
either party may terminate this Agreement by giving the other party notice
in writing specifying the date of such termination, which shall be not
less than 60 days after the date of receipt of such notice.

(2) This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties.

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<PAGE>

IN WITNESS THEREOF, the parties hereto have executed the foregoing
Agreement as of the day and year first above written.

IDS Market Advantage Series, Inc., on behalf of
IDS SMALL COMPANY INDEX FUND

By: ___________________________
Name:
Title:
AMERICAN EXPRESS FINANCIAL CORPORATION

By: ___________________________
Name:
Title:

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<PAGE>
EXHIBIT 15

PLAN AND AGREEMENT OF DISTRIBUTION

THIS PLAN AND AGREEMENT dated August ____, 1996, is between IDS Market
Advantage Series, Inc. (the "Corporation") on behalf of its underlying
series, IDS Small Company Index Fund (the "Fund") and American Express
Financial Advisors Inc. (the "Distributor"), the principal underwriter of
the Corporation, for distribution services to the Corporation.

The plan and agreement has been approved by members of the Board of
Directors (the "Board") of the Corporation who are not interested persons
of the Corporation and have no direct or indirect financial interest in
the operation of the plan or any related agreement, and all of the members
of the Board, in person, at a meeting called for the purpose of voting on
the plan and agreement.

The plan and agreement provides that:

1. The Fund will reimburse the Distributor for all sales and
promotional expenses attributable to the sale of Class B shares, including
sales commissions, business and employee expenses charged to distribution
of Class B shares, and corporate overhead appropriately allocated to the
sale of Class B shares.

2. The amount of the reimbursement shall be equal on an
annual basis of up to 0.75% of the average daily net assets of the Fund
attributable to Class B shares. The amount so determined shall be paid to
the Distributor in cash within five (5) business days after the last day
of each month. The Distributor agrees that if, at the end of any month,
the expenses of the Corporation, including fees under this agreement and
any other agreement between the Corporation and the Distributor or
American Express Financial Corporation, but excluding taxes, brokerage
commissions and charges in connection with the purchase and sale of assets
exceed the most restrictive applicable state expense limitation for the
Corporation's current fiscal year, the Corporation shall not pay fees and
expenses under this agreement to the extent necessary to keep the
Corporation's expenses from exceeding the limitation, it being understood
that the Distributor will assume all unpaid expenses and bill the
Corporation for them in subsequent months, but in no event can the
accumulation of unpaid expenses or billing be carried past the end of the
Corporation's fiscal year.

3. For each purchase of Class B shares, after eight years
the Class B shares will be converted to Class A shares and those assets
will no longer be included in determining the reimbursement amount.

4. The Fund understands that if a shareholder redeems Class
B shares before they are converted to Class A shares, the Distributor will

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impose a sales charge directly on the redemption proceeds to cover those
expenses it has previously incurred on the sale of those shares.

5. The Distributor agrees to provide at least quarterly an
analysis of distribution expenses incurred hereunder and to meet with
representatives of the Fund as reasonably requested to provide additional
information.

6. The plan and agreement shall continue in effect for a
period of more than one year provided it is reapproved at least annually
in the same manner in which it was initially approved.

7. The plan and agreement may not be amended to increase
materially the amount that may be paid by the Fund without the approval of
at least a majority of the outstanding shares of Class B. Any other
amendment must be approved in the manner in which the plan and agreement
was initially approved.

8. This agreement may be terminated at any time without
payment of any penalty by a vote of a majority of the members of the Board
who are not interested persons of the Fund and have no financial interest
in the operation of the plan and agreement, or by vote of a majority of
the outstanding Class B shares, or by the Distributor. The plan and
agreement will terminate automatically in the event of its assignment as
that term is defined in the Investment Company Act of 1940.

Approved this _____ day of August, 1996

IDS Market Advantage Series, Inc., on behalf of
IDS SMALL COMPANY INDEX FUND

___________________________________________
By:

AMERICAN EXPRESS FINANCIAL ADVISORS, INC.

___________________________________________
By:

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<PAGE>
EXHIBIT 18

IDS Small Company Index Fund

August ___, 1996

Plan under Section 18f-3(d)
Filed pursuant to Item 24(b)(18) of Form N-1A
---------------------------------------------

Separate Arrangements

Each class of shares will represent interests in the same portfolio of
investments of the IDS Small Company Index Fund (the "Fund") and be
identical except those differences that relate to (a) the impact of the
disproportionate payments made under the Rule 12b-1 plan; (b) the impact
of the disproportionate payments made because of service fees; (c) the
differences in class expenses including transfer agent fees and any other
expense determined by the board of directors to be a class expense; and
(d) the difference in voting rights on the 12b-1 plan, exchange privileges
and class designations. The current classes of shares are as follows:

Class A shares - 5% initial sales charge waived or reduced for
certain purchases.

Class B shares - contingent deferred sales charge ranging from 5%
down to 0% after six years.

Class Y shares - no sales charge

Expense Allocation Procedures

American Express Financial Corporation, as the Fund's administrator, on a
daily basis shall allocate the income, expenses, and realized and
unrealized gains and losses of the Fund on the basis of the relative
percentage of net assets of each class of shares, except class specific
expenses for service fees, 12b-1 distribution fees, and transfer agent
fees which shall be paid directly by each class as follows:

Class A and Class B service fee - 17.5 basis points

Class B distribution fee - 75 basis points

Class B transfer agent fee - an additional $1 for each
shareholder account

Should at any time an expense of a class be waived or reimbursed, American
Express Financial Corporation first shall determine that such waiver or
reimbursement would not result in another class subsidizing the class, is
fair and equitable to all classes and does not operate to the detriment of
another class and then shall monitor the implementation and operation to
<PAGE>

assure the waiver or reimbursement operates consistent with the
determination. The board of directors shall monitor the actions of
American Express Financial Corporation.

Exchange Privileges

Shares of a class may be exchanged for shares of the same class of another
fund in the IDS MUTUAL FUND GROUP.

Conversion Privileges

Class B shares including a proportionate amount of shares acquired through
reinvestment of distributions shall convert after eight years into Class A
shares at relative net asset values without the imposition of any fee.

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