UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-2591
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AXP MONEY MARKET SERIES, INC.
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(Exact name of registrant as specified in charter)
50606 AXP Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 330-9283
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Date of fiscal year end: 7/31
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Date of reporting period: 7/31
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AXP(R)
Cash
Management
Fund
Annual Report
for the Period Ended
July 31, 2004
AXP Cash Management Fund seeks to provide shareholders with maximum current
income consistent with liquidity and stability of principal.
(logo) (logo)
American AMERICAN
Express(R) EXPRESS
Funds (R)
Table of Contents
Fund Snapshot 3
Questions & Answers
with Portfolio Management 4
Investments in Securities 8
Financial Statements 12
Notes to Financial Statements 15
Report of Independent Registered
Public Accounting Firm 22
Federal Income Tax Information 23
Fund Expenses Example 25
Board Members and Officers 27
Proxy Voting 29
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2 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Fund Snapshot
AS OF JULY 31, 2004
PORTFOLIO MANAGER
Portfolio manager Since Years in industry
Jamie Jackson, CFA* 7/04 16
* The Fund is managed by a team of portfolio managers led by Jamie Jackson. The
Fund was managed by Jerri Cohen, former team leader, for most of the fiscal
year.
FUND OBJECTIVE
For investors seeking maximum current income consistent with liquidity and
conservation of capital.
Inception dates
A: 10/6/75 B: 3/20/95 C: 6/26/00 Y: 3/20/95
Ticker symbols
A: IDSXX B: ACBXX C: -- Y: IDYXX
Total net assets $4.076 billion
Number of holdings 156
Weighted average maturity 40 days
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT LONG
X HIGH
MEDIUM
LOW
SECTOR COMPOSITION
Percentage of portfolio assets
(pie chart)
Commercial paper 75.3%
Certificates of deposit 21.7%
Bank notes 3.0%
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
Fund holdings are subject to change.
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3 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below, portfolio manager Jamie Jackson discusses AXP Cash Management Fund's
results and positioning for the fiscal year ended July 31, 2004. Mr. Jackson
assumed Fund management responsibilities on July 22, 2004.
Q: How did AXP Cash Management Fund perform for the 12 months ended July 31,
2004?
A: AXP Cash Management Fund's Class A shares returned 0.35% for the fiscal
year. The annualized simple yield was 0.46% and the annualized compound
yield was 0.46% for the seven-day period ended July 31, 2004.*
Q: What factors significantly affected the Fund's performance?
A: Solid economic data and subtle shifts in statements from the Federal Reserve
Board (the Fed), which caused a steepening in the short-term yield curve,
were the predominant factors affecting the Fund's annual results.
As the Fund's fiscal year began in August 2003, the Fed stated that it
believed its accommodative policy could be maintained for a considerable
period. As a result, the short-term yield curve remained relatively flat
through much of the first half of the fiscal year, and most investors
believed there would be no official increase in interest rates until well
into 2004. The Fed's accommodative monetary policy, along with federal tax
cuts, successfully reinvigorated the economy during the second half of 2003.
On Jan. 28, 2004, the Fed substituted the word patient for considerable
period. On May 4, 2004, the Fed indicated it believed its policy
accommodation could be
(bar chart)
FUND PERFORMANCE
For the year ended July 31, 2004
1.0%
0.8%
0.6%
0.4% (bar 1)
+0.35%
0.2%
0.0%
(bar 1) AXP Cash Management Fund
Class A
Past performance is no guarantee of future results. The performance of Class B,
Class C and Class Y may vary from that shown above because of differences in
expenses.
* Past performance does not guarantee future results. The Fund is neither
insured nor guaranteed by the FDIC (Federal Deposit Insurance Corporation)
or any other government agency. Yields will fluctuate. Although the Fund
seeks to preserve the value of your investment at $1 per share, it is
possible to lose money by investing in the Fund. The seven-day current
yield more closely reflects the current earnings of the Fund than the total
return.
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4 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Questions & Answers
(begin callout quote)> We believe the Fund is strategically positioned to
navigate the anticipated higher interest rate environment.(end callout quote)
removed at "a pace that is likely to be measured." This change served to
remind investors that short-term interest rates would rise eventually.
Indeed, in April 2004, the markets were already pricing in the probability
of an interest rate hike by the Fed some time this summer.
AVERAGE ANNUAL TOTAL RETURNS
Class A Class B Class C Class Y
(Inception dates) (10/6/75) (3/20/95) (6/26/00) (3/20/95)
NAV(1) NAV(2) After CDSC(3) NAV(2) After CDSC(4) NAV(1)
as of July 31, 2004
1 year +0.35% +0.06% -3.94% +0.06% +0.06% +0.48%
3 years +1.00% +0.46% -0.54% +0.46% +0.46% +1.08%
5 years +2.76% +2.12% +1.93% N/A N/A +2.81%
10 years +3.91% N/A N/A N/A N/A N/A
Since inception +6.40% +3.18% +3.18% +1.62% +1.62% +3.91%
as of June 30, 2004
1 year +0.34% +0.06% -3.94% +0.06% +0.06% +0.47%
3 years +1.09% +0.54% -0.46% +0.54% +0.54% +1.16%
5 years +2.82% +2.18% +2.00% N/A N/A +2.87%
10 years +3.93% N/A N/A N/A N/A N/A
Since inception +6.42% +3.21% +3.21% +1.66% +1.66% +3.94%
The performance information shown represents the past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by calling (888) 723-8476 or visiting
www.americanexpress.com/funds. You should consider the investment objectives,
risks, and charges and expenses of the Fund carefully before investing.
(1) Sales charge is not applicable to these shares. Class Y shares available to
institutional investors only.
(2) Excluding sales charge.
(3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as
follows: first year 5%; second and third year 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter.
(4) 1% CDSC applies to redemptions made within the first year of purchase.
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5 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Questions & Answers
During these same spring months, indicators started appearing that the U.S.
economy was continuing to expand, the idea of a jobless recovery dissipated,
and the market became concerned about an uptick in inflation. As a result,
the money market yield curve began to steepen. Finally, after much
anticipation, the Fed raised the targeted federal funds rate on June 30,
2004 by a quarter-percentage point, to 1.25%, stating that its monetary
policy remained accommodative, even after this action. The interest rate
environment was rather benign in July, as investors awaited another quarter
percentage point increase by the Fed at its August 10 meeting.
Q: What changes did you make to the Fund during the period?
A: As always, we attempt to maximize the Fund's yield without taking
unnecessary risks. During the first half of the fiscal year, it appeared
that interest rates were likely to stay low for a considerable period of
time. Thus, we tried to selectively extend the maturity of the Fund when the
yield curve provided attractive opportunities. In October and November, when
the yield curve steepened slightly, we extended the average maturity to lock
in some higher rates. When the yield curve flattened again, we moved back to
a neutral duration. Indeed, during most of the second half of the fiscal
year, we gradually reduced the Fund's average maturity by purchasing shorter
maturities and by shifting from fixed rate securities to variable rate
securities. Since variable rate securities reset to higher or lower interest
rates as market rates rise or fall, we believe these securities offer good
value in a rising interest rate environment.
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6 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Questions & Answers
After strong payroll numbers were released in April, indicating that more
than 300,000 new jobs had been added to the economy in March, sentiment grew
that a change in the Fed's monetary policy may come sooner rather than
later. Thus, we shortened the Fund's average maturity further. At the end of
the fiscal year, the Fund had a shorter average maturity and a higher
position in variable rate securities than it did at the start of the annual
period. All of the Fund's investments continued to be in high- quality
securities with minimal credit risk. With these adjustments, we believe the
Fund is strategically positioned to navigate the anticipated higher interest
rate environment.
Q: How do you intend to manage the Fund in the coming months?
A: We believe money market interest rates will continue to move higher in the
months ahead, as the U.S. economy continues to expand. We believe modestly
rising inflation, estimated to reach an annualized rate of about 2.3% by the
end of 2004, may prompt the Federal Reserve Board to move the targeted
federal funds rate from its current 1.25% to approximately 2.00% by the end
of 2004 in a series of gradual increases. As a result, the money market
yield curve may steepen further, as anticipated rate hikes get priced in.
We will continue to closely monitor economic data, Fed policy, and any
shifts in the money market yield curve, striving to strategically adjust our
portfolio positioning accordingly.
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7 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Investments in Securities
AXP Cash Management Fund
July 31, 2004
(Percentages represent value of investments compared to net assets)
Bank notes (3.0%)
Issuer Effective Amount Value(a)
yield payable at
maturity
La Salle Bank
09-16-04 1.15% $35,100,000 $35,100,000
10-13-04 1.15 42,500,000 42,500,000
Natl City Bank of Indiana
01-10-05 1.32 43,000,000(c) 42,998,078
Total bank notes
(Cost: $120,598,078) $120,598,078
Certificates of deposit (21.6%)
Issuer Effective Amount Value(a)
yield payable at
maturity
AmSouth Bank
05-06-05 1.30% $33,000,000(c) $32,994,885
Bayerische Landesbank Girozentrale
10-22-04 1.53 23,000,000 22,983,159
Bayerische Landesbank Girozentrale NY Yankee
08-26-04 1.12 50,000,000 50,000,000
BNP Paribas NY Yankee
09-04-04 1.39 27,000,000 27,000,000
11-16-04 1.43 42,000,000 42,000,000
11-19-04 1.49 42,000,000 41,998,089
Calyon NY Yankee
10-19-04 1.54 25,000,000 25,000,000
Canadian Imperial Bank of Commerce Yankee
05-31-05 1.41 42,000,000(c) 41,990,490
Credit Agricole Indosuez NY Yankee
08-23-04 1.12 18,000,000 18,000,000
09-13-04 1.13 34,700,000 34,700,000
10-29-04 1.17 37,700,000 37,700,000
Credit Suisse First Boston NY
09-14-04 1.42 24,000,000 24,000,000
Deutsche Bank NY Yankee
11-02-04 1.24 28,500,000 28,500,000
Fortis Bank NY Yankee
09-16-04 1.15 34,600,000 34,600,000
HBOS Treasury Services
10-26-04 1.58 40,000,000 40,000,000
HBOS Treasury Services NY Yankee
08-05-04 1.10 34,000,000 34,000,000
Landesbank Baden-Wuerttemberg Girozentrale NY
Yankee
08-20-04 1.19 33,000,000 33,000,091
Natexis Banques Populair NY Yankee
09-03-04 1.10 28,000,000 28,000,000
09-17-04 1.11 43,000,000 43,000,000
10-18-04 1.20 38,000,000 38,000,000
Standard Chartered NY Yankee
10-15-04 1.54 33,000,000 33,000,000
Toronto Dominion NY Yankee
09-15-04 1.43 33,600,000 33,600,000
Wells Fargo Bank
08-11-04 1.30 34,100,000 34,100,000
08-13-04 1.31 24,000,000 24,000,000
Westdeutsche Landesbank Girozentrale
09-15-04 1.16 35,000,000 35,000,000
Westdeutsche Landesbank NY Yankee
08-02-04 1.14 21,500,000 21,500,000
09-23-04 1.38 21,000,000(c) 20,999,376
Total certificates of deposit
(Cost: $879,666,090) $879,666,090
Commercial paper (75.1%)
Issuer Effective Amount Value(a)
yield payable at
maturity
Asset-backed (46.4%)
Alpine Securitization
08-04-04 0.95% $19,800,000(b) $19,797,382
08-23-04 1.25 4,000,000(b) 3,996,678
Amsterdam Funding
08-10-04 1.20 30,000,000(b) 29,989,000
09-14-04 1.40 42,400,000 42,324,210
09-21-04 1.44 31,100,000 31,034,414
See accompanying notes to investments in securities.
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8 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Commercial paper (continued)
Issuer Effective Amount Value(a)
yield payable at
maturity
Asset-backed (cont.)
Beta Finance
08-16-04 1.17% $ 8,000,000(b) $ 7,995,591
09-03-04 1.41 14,700,000(b) 14,679,869
09-08-04 1.43 28,000,000 27,955,713
09-20-04 1.42 15,000,000 14,969,400
CAFCO LLC
09-09-04 1.39 29,000,000 28,954,244
CC (USA)/Centari
08-03-04 0.84 52,400,000(b) 52,395,108
08-12-04 1.09 13,000,000(b) 12,994,887
08-31-04 1.07 10,000,000(b) 9,990,528
10-12-04 1.51 30,000,000 29,906,925
CHARTA LLC
08-02-04 0.81 42,000,000(b) 41,997,177
08-09-04 1.12 26,600,000(b) 26,591,754
09-24-04 1.48 28,500,000 28,434,688
CIESCO LLC
08-25-04 1.32 8,200,000 8,192,199
CRC Funding LLC
08-04-04 0.94 30,900,000(b) 30,895,949
08-06-04 1.11 24,500,000(b) 24,494,692
08-09-04 1.16 16,400,000 16,394,711
CXC LLP
08-06-04 1.00 23,700,000(b) 23,695,379
08-19-04 1.25 7,500,000 7,494,775
09-09-04 1.43 23,900,000 23,861,229
11-15-04 1.47 18,000,000(b) 17,920,820
Dorado Finance
08-13-04 1.09 9,500,000(b) 9,495,986
08-16-04 1.18 15,000,000(b) 14,991,667
09-10-04 1.37 30,000,000(b) 29,952,167
09-13-04 1.40 24,400,000 24,357,354
Edison Asset Securitization
08-10-04 1.06 48,700,000(b) 48,684,172
09-08-04 1.09 10,600,000(b) 10,587,139
10-01-04 1.12 18,000,000(b) 17,964,660
Fairway Finance
08-18-04 1.28 5,900,000 5,896,018
08-24-04 1.37 20,000,000 19,980,933
08-27-04 1.35 22,000,000 21,976,983
09-24-04 1.44 35,000,000 34,921,701
09-27-04 1.47 16,277,000 16,237,926
Falcon Asset Securitization
08-05-04 1.08 17,700,000 17,696,804
FCAR Owner Trust I
08-16-04 1.05 31,600,000 31,584,270
08-19-04 1.09 17,000,000 16,989,682
09-16-04 1.43 21,900,000 21,858,256
10-05-04 1.51 10,000,000 9,971,950
Galaxy Funding
08-11-04 1.06 45,600,000(b) 45,583,836
08-13-04 1.08 16,700,000(b) 16,693,005
09-02-04 1.41 23,500,000 23,468,765
10-15-04 1.53 28,000,000 27,908,378
10-19-04 1.54 10,000,000 9,965,556
Grampian Funding LLC
08-18-04 1.00 26,000,000(b) 25,986,220
08-30-04 1.04 32,300,000(b) 32,271,199
09-22-04 1.07 13,600,000(b) 13,578,176
09-27-04 1.07 9,600,000(b) 9,583,141
10-05-04 1.18 25,000,000(b) 24,945,000
Greyhawk Funding LLC
09-20-04 1.52 20,000,000(b) 19,956,083
09-22-04 1.45 30,000,000 29,935,075
10-20-04 1.54 22,000,000 21,923,275
Jupiter Securitization
08-03-04 1.00 14,300,000 14,298,415
08-17-04 1.27 21,000,000 20,986,712
K2 (USA) LLC
08-02-04 0.83 6,000,000(b) 5,999,583
08-09-04 0.98 27,200,000(b) 27,192,588
09-28-04 1.47 8,300,000 8,279,732
10-04-04 1.25 35,500,000(b) 35,418,705
10-15-04 1.54 10,000,000 9,967,067
Kitty Hawk Funding
08-12-04 1.20 21,400,000 21,390,727
08-18-04 1.28 21,000,000 20,985,825
08-23-04 1.32 30,000,000 29,973,550
Old Line Funding
09-01-04 1.36 10,000,000 9,987,556
09-07-04 1.41 22,900,000 22,865,192
Park Avenue Receivables
08-06-04 1.04 22,800,000(b) 22,795,402
09-17-04 1.41 21,000,000 20,959,680
09-20-04 1.42 20,800,000 20,757,568
Preferred Receivables Funding
08-24-04 1.35 4,900,000 4,895,427
Receivables Capital
08-23-04 1.31 4,500,000 4,496,061
10-15-04 1.52 17,000,000 16,944,731
See accompanying notes to investments in securities.
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9 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Commercial paper (continued)
Issuer Effective Amount Value(a)
yield payable at
maturity
Asset-backed (cont.)
Scaldis Capital LLC
08-12-04 1.08% $ 8,000,000(b) $ 7,996,880
08-26-04 1.03 18,896,000(b) 18,881,398
10-26-04 1.60 21,000,000 20,918,293
Sheffield Receivables
08-16-04 1.16 7,000,000(b) 6,996,173
09-02-04 1.25 14,700,000(b) 14,682,617
Sigma Finance
06-10-05 1.41 85,000,000(c) 85,059,108
White Pine Finance LLC
08-25-04 1.26 30,000,000(b,c) 29,999,479
09-15-04 1.33 16,700,000(b,c) 16,699,361
10-27-04 1.61 8,064,000 8,032,067
10-28-04 1.61 11,554,000 11,507,726
12-15-04 1.34 15,000,000(b,c) 14,998,865
Windmill Funding
08-31-04 1.35 33,000,000 32,960,501
09-01-04 1.35 28,000,000 27,965,404
09-23-04 1.46 17,500,000 17,461,150
10-05-04 1.49 15,000,000 14,958,475
10-06-04 1.50 10,000,000 9,971,711
Total 1,889,186,428
Banks and savings & loans (20.0%)
Abbey National North America LLC
08-30-04 1.35 27,000,000 26,968,725
09-28-04 1.48 30,000,000 29,926,250
09-29-04 1.50 29,100,000 29,026,280
Bank of Ireland
08-02-04 0.78 17,900,000(b) 17,898,837
08-20-04 1.08 38,000,000(b) 37,976,144
09-08-04 1.20 17,000,000(b) 16,977,347
09-14-04 1.39 23,000,000 22,959,175
Barclays U.S. Funding
09-20-04 1.42 31,000,000 30,936,760
Danske
09-30-04 1.11 30,000,000 29,942,558
DEPFA Bank
08-18-04 1.27 10,000,000(b) 9,993,300
10-04-04 1.49 41,600,000 41,486,582
10-07-04 1.49 20,000,000 19,942,956
06-15-05 1.27 50,000,000(b,c) 49,997,946
Deutsche Bank Financial LLC
08-24-04 1.08 34,000,000 33,974,613
Dexia Delaware LLC
10-04-04 1.51 10,000,000 9,972,375
HBOS Treasury Services
09-21-04 1.09 18,000,000 17,971,140
ING (US) Funding LLC
08-12-04 1.01 12,000,000 11,995,640
09-02-04 1.25 27,500,000 27,467,481
10-08-04 1.50 29,200,000 29,114,931
Northern Rock
08-27-04 1.21 42,500,000(b) 42,460,156
07-08-05 1.42 59,300,000(c) 59,300,001
Societe Generale North America
09-17-04 1.39 31,000,000 30,941,513
Spintab
08-12-04 1.02 25,000,000 24,990,750
Svenska Handelsbaken
08-03-04 0.90 5,368,000 5,367,463
Swedbank
11-22-04 1.18 35,000,000 34,868,108
UBS Finance (Delaware) LLC
09-07-04 1.27 1,900,000 1,897,393
Westpac Banking
07-11-05 1.41 59,300,000(c) 59,300,001
Westpac Capital
08-17-04 1.00 19,400,000 19,390,289
10-01-04 1.13 43,400,000 43,314,044
Total 816,358,758
See accompanying notes to investments in securities.
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10 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Commercial paper (continued)
Issuer Effective Amount Value(a)
yield payable at
maturity
Broker dealers (5.3%)
Goldman Sachs Group
01-18-05 1.39% $42,500,000(b,c) $42,500,000
Lehman Brothers Holdings
05-16-05 1.38 42,500,000(c) 42,500,000
08-22-05 1.50 42,000,000(c) 42,000,000
Merrill Lynch
02-23-05 1.32 60,000,000(c) 60,000,000
Morgan Stanley
08-25-04 1.33 28,300,000 28,272,879
Total 215,272,879
Finance companies (1.4%)
Household Finance
10-06-04 1.49 56,900,000 56,740,095
Financial services (2.0%)
American Honda Finance
05-06-05 1.13 55,000,000(b,c) 55,000,000
General Electric Capital
09-03-04 1.24 12,100,000 12,085,372
09-20-04 1.46 14,800,000 14,768,760
Total 81,854,132
Total commercial paper
(Cost: $3,059,412,292) $3,059,412,292
Total investments in securities
(Cost: $4,059,676,460)(d) $4,059,676,460
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the board. As of July 31, 2004, the value
of these securities amounted to $1,112,172,046 or 27.3% of net assets.
(c) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on July 31,
2004.
(d) Also represents the cost of securities for federal income tax purposes at
July 31, 2004.
How to find information about the Fund's portfolio holdings
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's
Public Reference Room in Washington, DC (information on the operations of
the Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at www.americanexpress.com/funds.
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11 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Cash Management Fund
July 31, 2004
Assets
Investments in securities, at value (Note 1)
(identified cost $4,059,676,460) $4,059,676,460
Cash in bank on demand deposit 12,679,546
Capital shares receivable 193,665
Accrued interest receivable 4,184,942
---------
Total assets 4,076,734,613
-------------
Liabilities
Dividends payable to shareholders 103,073
Capital shares payable 289,138
Accrued investment management services fee 35,378
Accrued distribution fee 13,823
Accrued transfer agency fee 15,532
Accrued administrative services fee 2,694
Other accrued expenses 365,979
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Total liabilities 825,617
-------
Net assets applicable to outstanding capital stock $4,075,908,996
==============
Represented by
Capital stock -- $.01 par value (Note 1) $ 40,759,751
Additional paid-in capital 4,035,148,678
Accumulated net realized gain (loss) 567
---
Total -- representing net assets applicable to outstanding capital stock $4,075,908,996
==============
Net assets applicable to outstanding shares: Class A $3,680,034,168
Class B $ 179,662,934
Class C $ 3,463,379
Class I $ 3,855,589
Class Y $ 208,892,926
Net asset value per share of outstanding capital stock: Class A shares 3,679,836,403 $ 1.00
Class B shares 179,844,168 $ 1.00
Class C shares 3,463,583 $ 1.00
Class I shares 3,855,614 $ 1.00
Class Y shares 208,975,333 $ 1.00
----------- --------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Statement of operations
AXP Cash Management Fund
Year ended July 31, 2004
Investment income
Income:
Interest $50,918,032
-----------
Expenses (Note 2):
Investment management services fee 14,155,568
Distribution fee
Class A 4,057,483
Class B 1,720,400
Class C 24,969
Transfer agency fee 11,085,816
Incremental transfer agency fee
Class A 978,880
Class B 57,733
Class C 785
Administrative services fees and expenses 1,171,667
Compensation of board members 31,596
Custodian fees 563,200
Printing and postage 2,115,775
Registration fees 460,545
Audit fees 36,500
Other 74,898
------
Total expenses 36,535,815
Expenses waived/reimbursed by AEFC (Note 2) (830,974)
--------
35,704,841
Earnings credits on cash balances (Note 2) (207,888)
--------
Total net expenses 35,496,953
----------
Investment income (loss) -- net 15,421,079
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 568
---
Net increase (decrease) in net assets resulting from operations $15,421,647
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
13 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Statements of changes in net assets
AXP Cash Management Fund
Year ended July 31, 2004 2003
Operations and distributions
Investment income (loss) -- net $ 15,421,079 $ 43,432,989
Net realized gain (loss) on investments 568 --
---------- ----------
Net increase (decrease) in net assets resulting from operations 15,421,647 43,432,989
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (14,160,516) (40,755,461)
Class B (125,090) (747,377)
Class C (1,867) (9,174)
Class I (6,853) --
Class Y (1,129,354) (1,920,977)
---------- ----------
Total distributions (15,423,680) (43,432,989)
----------- -----------
Capital share transactions at constant $1 net asset value
Proceeds from sales
Class A shares (Note 2) 5,680,515,833 7,310,087,893
Class B shares 283,348,104 399,414,994
Class C shares 10,376,462 19,021,332
Class I shares 4,495,636 --
Class Y shares 155,083,714 263,665,221
Reinvestment of distributions at net asset value
Class A shares 14,185,892 40,976,910
Class B shares 124,964 754,160
Class C shares 1,819 8,811
Class I shares 6,715 --
Class Y shares 1,129,058 1,907,585
Payments for redemptions
Class A shares (6,663,553,410) (8,468,383,146)
Class B shares (Note 2) (382,008,022) (501,593,543)
Class C shares (Note 2) (11,347,919) (18,156,196)
Class I shares (646,737) --
Class Y shares (209,572,966) (205,942,507)
------------ ------------
Increase (decrease) in net assets from capital share transactions (1,117,860,857) (1,158,238,486)
-------------- --------------
Total increase (decrease) in net assets (1,117,862,890) (1,158,238,486)
Net assets at beginning of year 5,193,771,886 6,352,010,372
------------- -------------
Net assets at end of year $ 4,075,908,996 $ 5,193,771,886
=============== ===============
Undistributed net investment income $ -- $ 2,601
--------------- ---------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Notes to Financial Statements
AXP Cash Management Fund
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund is a series of AXP Money Market Series, Inc. and is registered under
the Investment Company Act of 1940 (as amended) (the 1940 Act) as a diversified,
open-end management investment company. AXP Money Market Series, Inc. has 10
billion authorized shares of capital stock that can be allocated among the
separate series as designated by the board. The Fund invests primarily in money
market instruments.
The Fund offers Class A, Class B, Class C and Class Y shares.
o Class A shares have no sales charge.
o Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class C shares may be subject to a CDSC.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
Effective March 4, 2004, the Fund offers an additional class of shares, Class I,
exclusively to certain institutional investors. Class I shares have no sales
charge and are made available through a separate prospectus supplement provided
to investors eligible to purchase the shares. As of July 31, 2004, American
Express Financial Corporation (AEFC) and the AXP Portfolio Builder Series funds
owned 100% of Class I shares, which represents 0.09% of the Fund's net assets.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee and incremental transfer agency fee (class specific
expenses) differ among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to accounting principles generally
accepted in the United States of America requires management to make estimates
(e.g., on assets, liabilities and contingent assets and liabilities) that could
differ from actual results.
Valuation of securities
Pursuant to Rule 2a-7 of the 1940 Act, all securities are valued daily at
amortized cost, which approximates market value, in order to maintain a constant
net asset value of $1 per share.
- --------------------------------------------------------------------------------
15 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to shareholders. No provision for income or excise taxes
is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes. The character of distributions made during
the year from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. Also, due to the
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains (losses)
were recorded by the Fund.
The tax character of distributions paid for the years indicated is as follows:
Year ended July 31, 2004 2003
Class A
Distributions paid from:
Ordinary income $14,160,516 $40,755,461
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income 125,090 747,377
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income 1,867 9,174
Long-term capital gain -- --
Class I*
Distributions paid from:
Ordinary income 6,853 N/A
Long-term capital gain -- N/A
Class Y
Distributions paid from:
Ordinary income 1,129,354 1,920,977
Long-term capital gain -- --
* Inception date was March 4, 2004.
As of July 31, 2004, the components of distributable earnings on a tax basis are
as follows:
Undistributed ordinary income $103,640
Accumulated long-term gain (loss) $ --
Unrealized appreciation (depreciation) $ --
- --------------------------------------------------------------------------------
16 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the Fund at net asset value or payable in
cash.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Interest income, including amortization of premium and discount, is
recognized daily.
2. EXPENSES AND SALES CHARGES
The Fund has agreements with AEFC to manage its portfolio and provide
administrative services. Under an Investment Management Services Agreement, AEFC
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets in reducing percentages
from 0.36% to 0.25% annually.
Under an Administrative Services Agreement, the Fund pays AEFC a fee for
administration and accounting services at a percentage of the Fund's average
daily net assets in reducing percentages from 0.03% to 0.02% annually. A minor
portion of additional administrative service expenses paid by the Fund are
consultants' fees and fund office expenses. Under this agreement, the Fund also
pays taxes, audit and certain legal fees, registration fees for shares,
compensation of board members, corporate filing fees and any other expenses
properly payable by the Fund and approved by the board.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
American Express mutual funds. The Fund's liability for these amounts is
adjusted for market value changes and remains in the Fund until distributed in
accordance with the Plan.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $22.00
o Class B $23.00
o Class C $22.50
o Class Y $20.00
The incremental transfer agency fee is the amount charged to the specific
classes for the additional expense above the fee for Class Y.
Class I pays a transfer agency fee at an annual rate per shareholder account of
$1. This amount is included in the transfer agency fee on the statement of
operations.
- --------------------------------------------------------------------------------
17 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
In addition, AECSC is entitled to charge an annual closed account fee of $5 per
inactive account, charged on a pro rata basis from the date the account becomes
inactive until the date the account is purged from the transfer agent system
generally within one year. However, the closed account fee is currently not
effective.
The Fund has agreements with American Express Financial Advisors Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution, the Fund pays a fee at an annual rate up to 0.10% of
the Fund's average daily net assets attributable to Class A shares, up to 0.85%
for Class B shares and up to 0.75% for Class C shares. As of July 31, 2004, the
Fund paid an annual rate of 0.75% of the Fund's average daily net assets
attributable to Class B shares.
Sales charges received by the Distributor for distributing Fund shares were
$1,549,521 for Class B and $6,724 for Class C for the year ended July 31, 2004.
AEFC and its affiliates may limit the expenses of one or more classes for the
purpose of increasing its yield. This expense limitation policy may be revised
or terminated at any time without notice. As of July 31, 2004, AEFC and its
affiliates waived certain fees and expenses to 1.07% for Class B and 1.07% for
Class C.
During the year ended July 31, 2004, the Fund's custodian and transfer agency
fees were reduced by $207,888 as a result of earnings credits from overnight
cash balances.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities aggregated
$17,406,799,461 and $18,557,270,202, respectively, for the year ended July 31,
2004. Realized gains and losses are determined on an identified cost basis.
4. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
Deutsche Bank, whereby the Fund is permitted to have bank borrowings for
temporary or emergency purposes to fund shareholder redemptions. The Fund must
maintain asset coverage for borrowings of at least 300%. The agreement, which
enables the Fund to participate with other American Express mutual funds,
permits borrowings up to $500 million, collectively. Interest is charged to each
Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the
IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime
Lending Rate. Borrowings are payable within 60 days after such loan is executed.
The Fund also pays a commitment fee equal to its pro rata share of the amount of
the credit facility at a rate of 0.09% per annum. The Fund had no borrowings
outstanding during the year ended July 31, 2004.
- --------------------------------------------------------------------------------
18 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
5. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Class A
Per share income and capital changes(a)
Fiscal period ended July 31, 2004 2003 2002 2001 2000
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income (loss) -- .01 .02 .05 .05
Less distributions:
Dividends from net investment income -- (.01) (.02) (.05) (.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
Ratios/supplemental data
Net assets, end of period (in millions) $3,680 $4,649 $5,766 $6,149 $5,438
Ratio of expenses to average daily net assets(b) .78% .69% .59% .59% .58%
Ratio of net investment income (loss) to average daily net assets .35% .78% 1.89% 5.18% 5.37%
Total return(c) .35% .77% 1.93% 5.35% 5.55%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Total return does not reflect payment of a sales charge.
Class B
Per share income and capital changes(a)
Fiscal period ended July 31, 2004 2003 2002 2001 2000
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income (loss) -- -- .01 .05 .05
Less distributions:
Dividends from net investment income -- -- (.01) (.05) (.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
Ratios/supplemental data
Net assets, end of period (in millions) $180 $278 $380 $273 $232
Ratio of expenses to average daily net assets(b) 1.07%(c) 1.26%(c) 1.34% 1.34% 1.33%
Ratio of net investment income (loss) to average daily net assets .05% .21% 1.13% 4.37% 4.64%
Total return(d) .06% .20% 1.13% 4.57% 4.76%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class B would have been 1.43% and 1.38%
for the years ended July 31, 2004 and 2003, respectively.
(d) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
19 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended July 31, 2004 2003 2002 2001 2000(b)
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income (loss) -- -- .01 .05 --
Less distributions:
Dividends from net investment income -- -- (.01) (.05) --
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
Ratios/supplemental data
Net assets, end of period (in millions) $3 $4 $4 $1 $--
Ratio of expenses to average daily net assets(c) 1.07%(e) 1.27%(e) 1.34% 1.34% 1.33%(d)
Ratio of net investment income (loss) to average daily net assets .06% .21% .99% 3.88% 6.10%(d)
Total return(f) .06% .20% 1.14% 4.68% .63%(g)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was June 26, 2000.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so,
the annual ratios of expenses for Class C would have been 1.43% and 1.38%
for the years ended July 31, 2004 and 2003, respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
Class I
Per share income and capital changes(a)
Fiscal period ended July 31, 2004(b)
Net asset value, beginning of period $1.00
Income from investment operations:
Net investment income (loss) --
Less distributions:
Dividends from net investment income --
Net asset value, end of period $1.00
Ratios/supplemental data
Net assets, end of period (in millions) $4
Ratio of expenses to average daily net assets(c) .43%(d)
Ratio of net investment income (loss) to average daily net assets .77%(d)
Total return(e) .30%(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date was March 4, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
- --------------------------------------------------------------------------------
20 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended July 31, 2004 2003 2002 2001 2000
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income (loss) -- .01 .02 .05 .05
Less distributions:
Dividends from net investment income -- (.01) (.02) (.05) (.05)
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
Ratios/supplemental data
Net assets, end of period (in millions) $209 $262 $203 $174 $142
Ratio of expenses to average daily net assets(b) .65% .62% .57% .57% .57%
Ratio of net investment income (loss) to average daily net assets .47% .82% 1.86% 5.18% 5.42%
Total return(c) .48% .85% 1.95% 5.37% 5.56%
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(c) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
21 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Report of Independent
Registered Public Accounting Firm
THE BOARD AND SHAREHOLDERS
AXP MONEY MARKET SERIES, INC.
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of AXP Cash Management Fund (a series
of AXP Money Market Series, Inc.) as of July 31, 2004, the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period ended July 31, 2004, and the financial
highlights for each of the years in the five-year period ended July 31, 2004.
These financial statements and the financial highlights are the responsibility
of fund management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2004, by correspondence with the custodian or by
other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AXP
Cash Management Fund as of July 31, 2004, and the results of its operations,
changes in its net assets, and the financial highlights for each of the periods
stated in the first paragraph above, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
September 20, 2004
- --------------------------------------------------------------------------------
22 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Federal Income Tax Information
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
AXP Cash Management Fund
Fiscal year ended July 31, 2004
Class A
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
Aug. 22, 2003 $0.00025
Sept. 22, 2003 0.00026
Oct. 23, 2003 0.00033
Nov. 21, 2003 0.00028
Dec. 30, 2003 0.00039
Jan. 29, 2004 0.00030
Feb. 26, 2004 0.00027
March 30, 2004 0.00029
April 29, 2004 0.00026
May 27, 2004 0.00025
June 29, 2004 0.00033
July 29, 2004 0.00034
Total distributions $0.00355
Class B
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
Aug. 22, 2003 $0.00004
Sept. 22, 2003 0.00005
Oct. 23, 2003 0.00005
Nov. 21, 2003 0.00005
Dec. 30, 2003 0.00006
Jan. 29, 2004 0.00004
Feb. 26, 2004 0.00004
March 30, 2004 0.00005
April 29, 2004 0.00004
May 27, 2004 0.00004
June 29, 2004 0.00005
July 29, 2004 0.00005
Total distributions $0.00056
- --------------------------------------------------------------------------------
23 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Class C
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
Aug. 22, 2003 $0.00005
Sept. 22, 2003 0.00004
Oct. 23, 2003 0.00005
Nov. 21, 2003 0.00004
Dec. 30, 2003 0.00005
Jan. 29, 2004 0.00004
Feb. 26, 2004 0.00007
March 30, 2004 0.00004
April 29, 2004 0.00004
May 27, 2004 0.00006
June 29, 2004 0.00005
July 29, 2004 0.00005
Total distributions $0.00058
Class I
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
March 30, 2004 0.00070
April 29, 2004 0.00057
May 27, 2004 0.00054
June 29, 2004 0.00068
July 29, 2004 0.00066
Total distributions $0.00315
Class Y
Income distributions -- taxable as dividend income:
Qualified Dividend Income for individuals 0.00%
Dividends Received Deduction for corporations 0.00%
Payable date Per share
Aug. 22, 2003 $0.00035
Sept. 22, 2003 0.00036
Oct. 23, 2003 0.00044
Nov. 21, 2003 0.00038
Dec. 30, 2003 0.00052
Jan. 29, 2004 0.00040
Feb. 26, 2004 0.00037
March 30, 2004 0.00040
April 29, 2004 0.00036
May 27, 2004 0.00034
June 29, 2004 0.00044
July 29, 2004 0.00045
Total distributions $0.00481
- --------------------------------------------------------------------------------
24 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Fund Expenses Example
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads); and (2) ongoing costs, including
management fees; distribution and service (12b-1) fees; and other Fund expenses.
This example is intended to help you understand your ongoing costs (in dollars)
of investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended July 31, 2004.
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading titled "Expenses paid during the period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
25 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Beginning Ending Expenses paid
account value account value during the period
Feb. 1, 2004 July 31, 2004 Feb. 1, 2004-July 31, 2004
Class A
Actual(e) $1,000 $1,001.70 $3.98(a)
Hypothetical (5% return before expenses) $1,000 $1,020.89 $4.02(a)
Class B
Actual(e) $1,000 $1,000.30 $5.42(b), (g)
Hypothetical (5% return before expenses) $1,000 $1,019.44 $5.47(b), (g)
Class C
Actual(e) $1,000 $1,000.30 $5.42(c), (g)
Hypothetical (5% return before expenses) $1,000 $1,019.44 $5.47(c), (g)
Class I(f)
Actual N/A N/A N/A
Hypothetical (5% return before expenses) N/A N/A N/A
Class Y
Actual(e) $1,000 $1,002.40 $3.34(d)
Hypothetical (5% return before expenses) $1,000 $1,021.53 $3.37(d)
(a) Expenses are equal to the Fund's Class A annualized expense ratio of 0.80%,
multiplied by the average account value over the period, multiplied by
182/366 (to reflect the one-half year period).
(b) Expenses are equal to the Fund's Class B annualized expense ratio of 1.09%,
multiplied by the average account value over the period, multiplied by
182/366 (to reflect the one-half year period).
(c) Expenses are equal to the Fund's Class C annualized expense ratio of 1.09%,
multiplied by the average account value over the period, multiplied by
182/366 (to reflect the one-half year period).
(d) Expenses are equal to the Fund's Class Y annualized expense ratio of 0.67%,
multiplied by the average account value over the period, multiplied by
182/366 (to reflect the one-half year period).
(e) Based on the actual return for the six months ended July 31, 2004: 0.17%
for Class A, 0.03% for Class B, 0.03% for Class C and 0.24% for Class Y
(f) The values and expenses paid are not presented because Class I does not
have a full six months of history. The inception date for Class I was March
4, 2004.
(g) From time to time, AEFC and its affiliates may limit the expenses of one or
more classes for the purpose of increasing its yield. This expense
limitation policy may be revised or terminated at any time without notice.
For the six-month period ended July 31, 2004, AEFC and its affiliates
waived certain fees and expenses for Class B and Class C. If this fee
waiver had not been in place for the entire six-month period ended July 31,
2004, the actual expenses paid would have been: $7.71 for Class B and $7.21
for Class C; the hypothetical expenses paid would have been: $7.77 for
Class B and $7.27 for Class C.
- --------------------------------------------------------------------------------
26 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Board Members and Officers
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the board.
The following is a list of the Fund's board members. Each member oversees 14
Master Trust portfolios and 87 American Express mutual funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the board.
Independent Board Members
Name, address, age Position held with Fund Principal occupation during past Other directorships
and length of service five years
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Arne H. Carlson Board member since 1999 Chair, Board Services
901 S. Marquette Ave. Corporation (provides
Minneapolis, MN 55402 administrative services to
Age 69 boards). Former Governor of
Minnesota
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Philip J. Carroll, Jr. Board member since 2002 Retired Chairman and CEO, Fluor Scottish Power PLC,
901 S. Marquette Ave. Corporation (engineering and Vulcan Materials Company,
Minneapolis, MN 55402 construction) since 1998 Inc. (construction
Age 66 materials/chemicals)
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Livio D. DeSimone Board member since 2001 Retired Chair of the Board and Cargill, Incorporated
0 Seventh Street East Chief Executive Officer, (commodity merchants and
Suite 3050 Minnesota Mining and processors), General
St. Paul, MN 55101-4901 Manufacturing (3M) Mills, Inc. (consumer
Age 70 foods), Vulcan Materials
Company (construction
materials/chemicals),
Milliken & Company
(textiles and chemicals),
and Nexia Biotechnologies,
Inc.
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Anne P. Jones Board member since 1985 Attorney and Consultant
901 S. Marquette Ave.
Minneapolis, MN 55402
Age 69
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Stephen R. Lewis, Jr.* Board member since 2002 Retired President and Professor Valmont Industries, Inc.
901 S. Marquette Ave. of Economics, Carleton College (manufactures irrigation
Minneapolis, MN 55402 systems)
Age 65
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
* Interested person of AXP Partners International Aggressive Growth Fund by
reason of being a security holder of FleetBoston Financial Corporation,
parent company of Columbia Wanger Asset Management, L.P., one of the fund's
subadvisers.
- --------------------------------------------------------------------------------
27 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Independent Board Members (continued)
Name, address, age Position held with Fund Principal occupation during past Other directorships
and length of service five years
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Alan K. Simpson Board member since 1997 Former three-term United States
1201 Sunshine Ave. Senator for Wyoming
Cody, WY 82414
Age 72
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Alison Taunton-Rigby Board member since 2002 Founder and Chief Executive
901 S. Marquette Ave. Officer, RiboNovix, Inc. since
Minneapolis, MN 55402 2004; President, Forester
Age 60 Biotech since 2000; prior to
that, President and CEO, Aquila
Biopharmaceuticals, Inc.
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Board Member Affiliated with AEFC**
Name, address, age Position held with Fund Principal occupation during past Other directorships
and length of service five years
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
William F. Truscott Board member since Senior Vice President - Chief
53600 AXP Financial Center 2001, Vice President Investment Officer of AEFC since
Minneapolis, MN 55474 since 2002 2001. Former Chief Investment
Age 43 Officer and Managing Director,
Zurich Scudder Investments
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
** Interested person by reason of being an officer, director and/or employee
of AEFC.
- --------------------------------------------------------------------------------
28 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the board. In addition to Mr. Truscott, who is vice president, the
Fund's other officers are:
Other Officers
Name, address, age Position held with Fund Principal occupation during past Other directorships
and length of service five years
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President - Investment
50005 AXP Financial Center Accounting, AEFC, since 2002;
Minneapolis, MN 55474 Vice President - Finance,
Age 49 American Express Company,
2000-2002; Vice President -
Corporate Controller, AEFC,
1996-2000
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Paula R. Meyer President since 2002 Senior Vice President and
596 AXP Financial Center General Manager - Mutual Funds,
Minneapolis, MN 55474 AEFC, since 2002; Vice President
Age 50 and Managing Director - American
Express Funds, AEFC, 2000-2002;
Vice President, AEFC, 1998-2000
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
Leslie L. Ogg Vice President, General President of Board Services
901 S. Marquette Ave. Counsel, and Secretary Corporation
Minneapolis, MN 55402 since 1978
Age 65
- -------------------------------------- ------------------------- ---------------------------------- ---------------------------
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
Proxy Voting
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are stated in the Statement of Additional
Information (SAI). You may obtain a copy of the SAI without charge by calling
(800) 862-7919; by looking at the Web site americanexpress.com/funds; or by
searching the Web site of the Securities and Exchange Commission
http://www.sec.gov. You may view the Fund's voting record for all portfolio
companies whose shareholders meetings were completed the previous quarter on
americanexpress.com/funds or obtain a copy by calling the Fund's administrator,
Board Services Corporation, collect at (612) 330-9283. In addition, information
regarding how the Fund voted proxies relating to portfolio securities during the
most recent 12-month period ended June 30 will be available at
http://www.sec.gov.
- --------------------------------------------------------------------------------
29 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
(logo)
AMERICAN
EXPRESS
(R)
American Express Funds
70100 AXP Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by American Express Financial Advisors Inc. Member NASD. American
Express Company is separate from American Express Financial Advisors Inc. and
is not a broker-dealer.
Item 2. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial
officer. A copy of the code of ethics is filed as an exhibit to this
form N-CSR.
(b) During the period covered by this report, there were not any
amendments to the provisions of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any
implicit or explicit waivers to the provisions of the code of ethics
adopted in 2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Livio D. DeSimone and Anne P. Jones, each qualify as audit
committee financial experts.
Item 4. Principal Accountant Fees and Services
Fund - Related Fees*
(a) Audit Fees. The fees paid for the years ended July 31, to KPMG LLP for
professional services rendered for the audits of the annual financial
statements for AXP Money Market Series, Inc. were as follows:
2004 - $37,027; 2003 - $31,439
(b) Audit - Related Fees. The fees paid for the years ended July 31, to
KPMG LLP for additional professional services rendered in connection
with the registrant's security count pursuant to Rule 17f-2 for AXP
Money Market Series, Inc. were as follows:
2004 - $879; 2003 - $1,149
(c) Tax Fees. The fees paid for the years ended July 31, to KPMG LLP for
tax compliance related services for AXP Money Market Series, Inc. were
as follows:
2004 - $2,275; 2003 - $2,150
(d) All Other Fees. The fees paid for the years ended July 31, to KPMG LLP
for additional professional services rendered in connection to proxy
filing for AXP Money Market Series, Inc. were as follows:
2004 - None; 2003 - $76
(e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley
pre-approval requirements, all services to be performed by KPMG LLP for
the registrant and to the registrant's investment adviser and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
must be pre-approved by the audit committee.
(e) (2) 100% of the services performed for items (b) through (d) above
during 2004 and 2003 were pre-approved by the audit committee with the
exception of the 2003 tax fees.
(f) Not applicable.
(g) Non-Audit Fees. The fees paid for the years ended July 31, by the
registrant for non-audit services to KPMG LLP were as follows:
2004 - None; 2003 - None
The fees paid for the years ended July 31, to KPMG LLP by the
registrant's investment adviser, and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant were as follows:
2004 - $88,450; 2003 - $184,000
(h) For the fees disclosed in item (g) above, 100% and 97% of the fees for
services performed during 2004 and 2003, respectively, were
pre-approved by the audit committee. The exception was a 2003 tax
research request by the adviser on defaulted securities for $5,000. The
amounts not pre-approved are compatible with maintaining KPMG LLP's
independence.
* 2003 represents bills paid 8/1/02 - 7/31/03
2004 represents bills paid 8/1/03 - 7/31/04
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 9. Submission of matters to a vote of security holders. Not applicable.
Item 10. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing
date of this Form N-CSR, the registrant's Principal Financial
Officer and Principal Executive Officer have concluded that those
disclosure controls and procedures provide reasonable assurance
that the material information required to be disclosed by the
registrant on this report is recorded, processed, summarized and
reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting.
Item 11. Exhibits.
(a)(1) Code of ethics as applies to the Registrant's principal
executive officer and principal financial officer, as required to be
disclosed under Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(a)(2) Separate certification for the Registrant's principal
executive officer and principal financial officer, as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a)
under the Investment Company Act of 1940, are attached as
EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) AXP Money Market Series, Inc.
By /s/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date October 1, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Paula R. Meyer
------------------
Paula R. Meyer
President and Principal Executive Officer
Date October 1, 2004
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date October 1, 2004