Independent Auditors' Report


To the Board of Directors of
AXP Variable Portfolio -Investment Series, Inc.:

We have examined management's assertion, included in the accompanying Management
Statement Regarding Compliance with Certain Provisions of the Investment Company
Act of 1940, that AXP Variable Portfolio - Equity Select Fund of AXP Variable
Portfolio - Investment Series, Inc. (the Fund) complied with the provisions of
subsection (b) and (c) of Rule 17f-2 under the Investment Company Act of 1940 as
of May 31, 2001 and during the period from April 25, 2001 (when shares became
publicly available) through May 31, 2001. Management is responsible for the
Fund's compliance with those provisions. Our responsibility is to express an
opinion on management's assertion about the Fund's compliance based on our
examination.

Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
examining, on a test basis, evidence about the Fund's compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of May 31, 2001 and the period from April 25, 2001 through May 31,
2001, with respect to securities transactions:

o  Count and inspection of all securities located in the vault, if any, of
   American Express Trust Company, the Custodian, without prior notice to
   management;

o  Confirmation of all securities,  if any, held by institutions in book entry
   form  (Wells  Fargo Bank  Minnesota,  N.A.,  The Bank of New York,  and The
   Depository Trust Company);

o  Confirmation or examination of underlying documentation of all securities
   purchased but not received, hypothecated, pledged, placed in escrow, or out
   for transfer with brokers, pledges and/or transfer agents;

o  Reconciliation  of all such securities to the books and records of the Fund
   and the Custodian; and

o  Test of selected security transactions since the date of our last report.


We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Fund's compliance with
the specified requirements.

In our opinion, management's assertion that AXP Variable Portfolio - Equity
Select Fund of AXP Variable Portfolio - Investment Series, Inc. was in
compliance with the above mentioned provisions of Rule 17f-2 of the Investment
Company Act of 1940 as of May 31, 2001 and for the period from April 25, 2001
through May 31, 2001 is fairly stated in all material respects.

This report is intended solely for the information and use of management of AXP
Variable Portfolio - Equity Select Fund of AXP Variable Portfolio - Investment
Series, Inc. and the Securities and Exchange Commission and should not be used
for any other purpose and is not intended to be and should not be used by anyone
other than these specified parties.



/s/ KPMG LLP
------------
    KPMG
    Minneapolis, MN
    August 24, 2001




             Management Statement Regarding Compliance With Certain
                Provisions of the Investment Company Act of 1940

We, as members of management  of AXP Variable  Portfolio - Equity Select Fund of
AXP Variable Portfolio - Investment Series,  Inc. (the Fund) are responsible for
complying  with  the  requirements  of  subsections  (b) and (c) of Rule  17f-2,
Custody of Investments by Registered  Management  Investment  Companies,  of the
Investment  Company Act of 1940. We are also  responsible for  establishing  and
maintaining effective internal controls over compliance with those requirements.
We have performed an evaluation of the Fund's  compliance with the  requirements
of  subsections  (b) and (c) of Rule 17f-2 as of May 31, 2001 and from April 25,
2001 through May 31, 2001.

Based on this  evaluation,  we assert that the Fund was in  compliance  with the
requirements of subsections (b) and (c) of Rule 17f-2 of the Investment  Company
Act of 1940 as of May 31,  2001 and from April 25, 2001  through  May 31,  2001,
with respect to securities reflected in the investment account of the Fund.

AMERICAN EXPRESS FINANCIAL CORPORATION

By:/s/ John M. Knight
   ------------------
       John M. Knight, Vice President-Investment Accounting