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 Ameriprise 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, 2005
AXP Cash Management Fund
seeks to provide shareholders
with maximum current income
consistent with liquidity
and stability of principal.
(This annual report is intended only for the information of shareholders or
those who have received the offering prospectus of the Fund, which contains
information about the Fund's objective, investment strategy, risks, sales
charges, fees and other matters of interest. Please read the prospectus
carefully before you invest or send money.)
Table of Contents
Fund Snapshot 3
Performance Summary 4
Questions & Answers
with Portfolio Management 5
Investments in Securities 8
Financial Statements 11
Notes to Financial Statements 14
Report of Independent Registered
Public Accounting Firm 21
Federal Income Tax Information 22
Fund Expenses Example 25
Board Members and Officers 27
Approval of Investment Management
Services Agreement 30
Proxy Voting 31
CORPORATE REORGANIZATION
On Feb. 1, 2005, American Express Company (American Express) announced plans to
pursue a spin off of Ameriprise Financial, Inc. (Ameriprise Financial) (formerly
American Express Financial Corporation) to American Express shareholders. The
separation from American Express is expected to be completed on Sept. 30, 2005.
After the separation from American Express, Ameriprise Financial will no longer
be affiliated with American Express.
Ameriprise Financial provides administrative services to the Fund and, through
Sept. 30, 2005, investment management services to the Fund. Effective Oct. 1,
2005, RiverSource Investments, LLC, a wholly owned subsidiary of Ameriprise
Financial, will provide investment management services to the Fund. In addition,
Ameriprise Financial is the parent company of the Fund's distributor, Ameriprise
Financial Services, Inc. (formerly American Express Financial Advisors Inc.);
the Fund's transfer agent, RiverSource Service Corporation (formerly American
Express Client Service Corporation); and the Fund's custodian, Ameriprise Trust
Company (formerly American Express Trust Company).
Effective Oct. 1, 2005, the Fund will change its name such that it no longer
bears the American Express brand and instead will bear the RiverSource(SM)
brand. Information regarding the new name of the Fund and other changes will be
separately communicated to shareholders.
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2 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Fund Snapshot
AT JULY 31, 2005
FUND OBJECTIVE
For investors seeking maximum current income consistent with liquidity and
stability of principal.
Inception dates by class
A: 10/6/75 B: 3/20/95 C: 6/26/00 I: 3/4/04 Y: 3/20/95
Ticker symbols by class
A: IDSXX B: ACBXX C: -- I: -- Y: IDYXX
Total net assets $3.337 billion
Number of holdings 129
Weighted average maturity* 40 days
* Weighted average maturity measures the amount of time remaining before the
expected average principal repayment.
STYLE MATRIX
Shading within the style matrix indicates areas in which the Fund generally
invests.
DURATION
SHORT INT. LONG
X HIGH
MEDIUM QUALITY
LOW
SECTOR COMPOSITION
Percentage of portfolio assets
Commercial Paper 94.6%
Certificates of Deposit 5.4%
An investment in money market funds is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although these
funds seek to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in these funds.
Fund holdings are subject to change.
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3 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Performance Summary
FUND PERFORMANCE
For the year ended July 31, 2005
+1.63%
+1.63% = AXP Cash Management Fund Class A
The performance information shown represents 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 (800) 862-7919 or visiting
www.riversource.com/investments.
The Fund is neither insured nor guaranteed by the FDIC (Federal Deposit
Insurance Corporation) or any other government agency. 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. Yields will fluctuate. The seven-day current
yield more closely reflects the current earnings of the Fund than the total
return. The performance of other classes may vary from that shown because of
differences in expenses.
AVERAGE ANNUAL TOTAL RETURNS
Class A Class B Class C Class I Class Y
(Inception dates) (10/6/75) (3/20/95) (6/26/00) (3/4/04) (3/20/95)
After After
NAV(1) NAV(2) CDSC(3) NAV(2) CDSC(4) NAV(1) NAV(1)
at July 31, 2005
1 year +1.63% +0.98% -4.02% +0.98% -0.02% +2.04% +1.76%
3 years +0.92% +0.41% -0.93% +0.41% +0.41% N/A +1.03%
5 years +1.98% +1.37% +0.99% +1.40% +1.40% N/A +2.06%
10 years +3.56% +2.87% +2.87% N/A N/A N/A +3.60%
Since inception +6.23% +2.96% +2.96% +1.50% +1.50% +1.66% +3.70%
at June 30, 2005
1 year +1.46% +0.83% -4.17% +0.83% -0.17% +1.86% +1.59%
3 years +0.89% +0.38% -0.96% +0.38% +0.38% N/A +0.99%
5 years +2.05% +1.43% +1.05% +1.47% +1.47% N/A +2.12%
10 years +3.59% +2.89% +2.89% N/A N/A N/A +3.63%
Since inception +6.25% +2.97% +2.97% +1.49% +1.49% +1.58% +3.71%
(1) Sales charge is not applicable to these shares. Class I shares available to
eligible investors only, currently limited to AXP Portfolio Builder Funds,
six affiliated funds-of-funds. Class Y shares available to institutional
investors only.
(2) Excluding sales charges.
(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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4 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Questions & Answers
WITH PORTFOLIO MANAGEMENT
Below is the discussion of AXP Cash Management Fund's results and positioning
for the fiscal year ended July 31, 2005.
Q: How did AXP Cash Management Fund perform for the 12 months ended July 31,
2005?
A: AXP Cash Management Fund's Class A shares returned 1.63% for the fiscal
year. The Fund's annualized simple yield was 2.81% and the annualized
compound yield was 2.85% for the seven-day period ended July 31, 2005. The
Fund serves as a conservative, shorter-term investment choice for
individuals seeking current income.
Q: What factors significantly affected the Fund's performance?
A: Market interpretation of economic data and reaction to the Federal Reserve
Board (the Fed) statements shifted back and forth several times over the
annual period. At times, it was expected that the Fed would continue to
raise interest rates at a measured pace. At other times, the market
anticipated a pause in the Fed's tightening cycle. Toward the end of the
period, the market tended to interpret every microeconomic hiccup as macro
evidence that the Fed was almost done raising rates. As changing
expectations of Fed actions were priced into the market, we adjusted the
Fund's duration accordingly, while maintaining the duration for the Fund
fairly short overall.
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5 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Questions & Answers
[BEGIN CALLOUT QUOTE] > As the Fed raised rates, money market yields moved
higher. [END CALLOUT QUOTE]
The Fed raised the targeted federal funds rate eight times during the fiscal
year, each time by a measured 25 basis points (0.25%). At the end of the
fiscal year, the targeted federal funds rate stood at 3.25%. As the Fed
raised rates, money market yields moved higher. We managed the Fund's
portfolio using a somewhat bulleted portfolio strategy, whereby a particular
segment of the money market yield curve was emphasized. We focused on
securities with a three-to-six month maturity and generally avoided
purchasing securities with more than a nine-month maturity. In all, we kept
the Fund's weighted average maturity in the 35 to 40 day range. As of July
31, 2005, the Fund's weighted average maturity was 40 days.
Q: What changes did you make to the Fund during the period?
A: We increased the Fund's allocation to floating rate securities. Since these
securities reset to higher or lower interest rates as market rates rise or
fall, we believed floating rate securities offered good value in a rising
interest rate environment versus fixed products and should enable us to
continue to take advantage of anticipated rate increases. We also increased
the Fund's exposure to asset-backed commercial paper over the fiscal year,
as these securities offered attractive relative value and higher yields than
most other money market asset classes.
As always, we attempt to maximize the Fund's yield without taking
unnecessary risks. We continue to invest in high quality securities.
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6 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Questions & Answers
Q: How do you plan to manage the Fund in the coming months?
A: We expect the Fed to continue to raise the targeted federal funds rate, and,
thus, we believe money market yields will continue to move higher in the
months ahead. We intend to maintain positions that should benefit the Fund
in this environment.
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.
DISTRIBUTION SUMMARY
The table below details the Fund's income and capital gain distributions for the
fiscal years shown. More information on the other classes can be found in the
Financial Highlights section of this report's Notes to Financial Statements.
Class A
Short-term Long-term
Fiscal year ended Income capital gains capital gains Total
July 31, 2005 $0.02 $-- $-- $0.02
July 31, 2004 -- -- -- --
July 31, 2003 0.01 -- -- 0.01
July 31, 2002 0.02 -- -- 0.02
July 31, 2001 0.05 -- -- 0.05
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7 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Investments in Securities
AXP Cash Management Fund
July 31, 2005
(Percentages represent value of investments compared to net assets)
Certificates of Deposit (5.4%)
Issuer Effective Principal Value(a)
yield amount
Barclays Bank
06-01-06 3.29% $30,000,000(b) $29,997,493
Citibank
09-16-05 3.42 30,000,000 30,000,000
Credit Suisse First Boston NY
02-14-06 3.24 60,000,000(b) 60,000,000
DEPFA Bank
08-23-05 3.22 13,000,000 13,000,000
10-13-05 3.53 27,000,000 27,000,000
SunTrust Banks
05-12-06 3.20 20,000,000(b) 19,999,227
Total Certificates of Deposit
(Cost: $179,996,720) $179,996,720
Commercial Paper (94.3%)
Issuer Effective Principal Value(a)
yield amount
Asset-Backed (59.6%)
Alpine Securitization
08-17-05 3.04% $19,000,000(c) $18,969,600
10-03-05 3.48 25,000,000(c) 24,841,563
Amstel Funding
08-22-05 3.07 55,000,000(c) 54,887,555
09-19-05 3.30 30,000,000(c) 29,857,625
10-03-05 3.43 26,300,000(c) 26,135,698
12-21-05 3.74 20,000,000(c) 19,703,200
Amsterdam Funding
08-05-05 2.81 42,300,000 42,276,876
08-17-05 3.15 23,000,000(c) 22,961,820
08-19-05 3.17 25,700,000(c) 25,652,598
Beta Finance
09-29-05 3.38 24,100,000 23,960,341
10-20-05 3.51 34,500,000 34,223,387
10-21-05 3.54 30,000,000 29,754,332
Bryant Park Funding LLC
08-11-05 3.06 22,500,000(c) 22,475,175
09-12-05 3.35 26,000,000(c) 25,891,638
10-17-05 3.51 11,800,000(c) 11,708,593
10-25-05 3.56 22,300,000(c) 22,107,607
Commercial Paper (continued)
Issuer Effective Principal Value(a)
yield amount
Asset-Backed (cont.)
CAFCO LLC
08-12-05 3.06% $44,500,000(c) $44,447,080
09-02-05 3.31 21,900,000(c) 21,829,677
CC (USA)/Centari
09-12-05 3.26 32,000,000 31,870,151
09-15-05 3.38 28,900,000 28,770,207
Chariot Funding LLC
08-16-05 3.15 17,400,000(c) 17,372,639
CHARTA LLC
08-17-05 3.12 15,000,000(c) 14,975,325
08-23-05 3.12 20,000,000(c) 19,956,800
09-08-05 3.38 30,000,000(c) 29,885,000
10-05-05 3.41 26,300,000(c) 26,131,622
CIESCO LLC
08-18-05 3.16 17,100,000(c) 17,070,037
Citibank Credit Card Dakota Nts
10-19-05 3.54 22,800,000(c) 22,617,372
CRC Funding LLC
08-09-05 2.88 19,700,000 19,682,708
09-21-05 3.40 21,600,000(c) 21,490,290
Dorado Finance
08-01-05 2.09 24,500,000 24,495,726
09-12-05 3.26 15,000,000 14,939,133
09-19-05 3.27 18,500,000 18,412,988
10-24-05 3.59 13,700,000 13,582,180
Emerald Certificates MBNA MCCT
08-18-05 3.14 37,100,000(c) 37,035,384
08-25-05 3.23 27,500,000(c) 27,433,465
08-30-05 3.26 18,200,000(c) 18,147,341
09-01-05 3.29 28,800,000(c) 28,710,768
09-27-05 3.39 15,400,000(c) 15,313,431
Fairway Finance
08-03-05 2.54 22,000,000 21,992,251
09-13-05 3.26 16,500,000(c) 16,431,525
Falcon Asset Securitization
08-05-05 2.72 26,000,000 25,986,263
09-13-05 3.36 32,900,000(c) 32,759,353
See accompanying notes to investments in securities.
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8 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Commercial Paper (continued)
Issuer Effective Principal Value(a)
yield amount
Asset-Backed (cont.)
FCAR Owner Trust I
08-04-05 2.65% $27,000,000 $26,988,075
09-07-05 3.25 23,000,000 22,917,277
10-17-05 3.48 25,000,000 24,807,986
Galaxy Funding
08-01-05 2.09 30,000,000 29,994,783
08-04-05 2.67 21,300,000 21,290,533
09-13-05 3.26 15,000,000(c) 14,937,750
09-16-05 3.30 25,000,000(c) 24,888,333
10-27-05 3.59 20,300,000(c) 20,119,330
Grampian Funding LLC
09-01-05 3.28 25,000,000(c) 24,922,771
10-20-05 3.52 10,200,000(c) 10,117,986
01-17-06 3.80 9,000,000(c) 8,839,688
Greyhawk Funding LLC
08-02-05 2.35 25,000,000 24,993,479
08-03-05 2.50 26,500,000 26,490,784
08-04-05 2.61 26,500,000 26,488,480
08-16-05 3.12 9,550,000(c) 9,535,118
09-12-05 3.26 14,200,000(c) 14,142,380
Harrier Finance Funding (US) LLC
08-25-05 3.11 25,000,000 24,941,861
K2 (USA) LLC
09-16-05 3.27 16,600,000 16,526,517
09-22-05 3.31 45,600,000 45,370,859
09-26-05 3.37 27,700,000 27,547,819
01-17-06 3.34 30,000,000(b) 29,997,301
Nieuw Amsterdam
08-23-05 3.12 14,167,000(c) 14,136,399
08-24-05 3.23 16,900,000(c) 16,860,684
10-21-05 3.54 22,700,000(c) 22,514,207
10-24-05 3.56 19,000,000(c) 18,837,962
Scaldis Capital LLC
08-15-05 3.00 30,000,000(c) 29,957,600
10-31-05 3.60 22,900,000(c) 22,687,030
Sigma Finance
08-02-05 2.39 21,000,000 20,994,435
08-09-05 2.88 12,500,000 12,489,028
08-30-05 3.28 17,000,000 16,950,521
06-16-06 3.32 85,000,000(b) 84,996,251
Variable Funding Capital
08-29-05 3.27 45,400,000(c) 45,272,501
09-06-05 3.31 21,500,000(c) 21,423,293
09-21-05 3.39 18,700,000(c) 18,605,295
Commercial Paper (continued)
Issuer Effective Principal Value(a)
yield amount
Asset-Backed (cont.)
White Pine Finance LLC
08-10-05 2.90% $30,325,000 $30,295,720
08-16-05 3.03 29,000,000 28,956,178
02-10-06 3.31 32,000,000(b) 31,996,581
03-15-06 3.34 23,000,000(b) 22,996,086
03-15-06 3.35 5,000,000(b) 4,999,298
Total 1,987,574,503
Banking (21.8%)
ABN Amro North America Finance
10-11-05 3.44 24,000,000 23,831,613
Barclays US Funding
08-08-05 2.87 29,000,000 28,976,909
Credit Suisse First Boston NY
08-15-05 3.04 20,000,000 19,971,289
Danske
08-08-05 2.85 26,700,000 26,678,907
DekaBank Deutsche Girozentrale
08-18-06 3.61 24,000,000(b) 24,000,000
DEPFA Bank
08-10-05 2.90 25,000,000 24,975,861
08-24-05 3.11 18,000,000(c) 17,959,625
06-15-06 3.42 50,000,000(b) 50,000,000
ING (US) Funding LLC
09-07-05 3.30 36,900,000 36,765,284
10-28-05 3.56 19,100,000 18,929,533
Norddeutsche Landesbank Girozentrale
08-09-05 2.88 31,600,000 31,572,262
Nordea Bank
09-06-05 3.31 25,000,000 24,910,806
Northern Rock
10-14-05 3.53 25,000,000(c) 24,812,639
10-26-05 3.57 30,000,000(c) 29,737,467
07-07-06 3.41 59,300,000(b) 59,300,000
08-03-06 3.35 15,000,000(b) 15,000,000
Skandinaviska Enskilda Banken
12-31-40 3.38 20,000,000(b) 20,000,000
12-31-40 3.42 30,000,000(b) 30,000,000
Societe Generale North America
08-05-05 2.72 28,900,000 28,884,730
09-06-05 3.20 24,000,000 23,917,160
Wells Fargo Bank
08-03-06 3.30 20,000,000(b) 20,000,000
Westdeutsche Landesbank Girozentrale
08-02-05 2.37 25,000,000 24,993,406
08-11-05 2.97 31,000,000(c) 30,966,830
08-10-06 3.36 25,000,000(b) 25,000,000
See accompanying notes to investments in securities.
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9 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Commercial Paper (continued)
Issuer Effective Principal Value(a)
yield amount
Banking (cont.)
Westpac Banking
07-11-06 3.40% $59,300,000(b) $59,300,000
Westpac Capital
11-14-05 3.64 8,000,000 7,913,687
Total 728,398,008
Brokerage (7.2%)
Bear Stearns Companies
09-08-05 3.34 23,500,000 23,410,961
08-15-06 3.40 25,000,000(b) 25,000,000
08-28-06 3.49 30,000,000(b) 30,000,000
Goldman Sachs Group
05-24-06 3.43 20,000,000(b,c) 20,000,000
05-25-06 3.35 30,000,000(b,c) 30,000,000
08-15-06 3.38 25,000,000(b) 25,000,000
Lehman Brothers Holdings
08-22-06 3.53 42,000,000(b) 42,000,000
Morgan Stanley & Co
08-19-05 3.22 23,400,000 23,356,190
08-26-05 3.14 20,800,000 20,749,300
Total 239,516,451
Commercial Paper (continued)
Issuer Effective Principal Value(a)
yield amount
Life Insurance (2.4%)
Irish Life & Permanent
10-11-05 3.51% $18,000,000(c) $17,871,155
10-13-05 3.51 8,300,000(c) 8,238,960
10-27-05 3.58 20,000,000(c) 19,822,494
08-21-06 3.43 35,000,000(b) 34,996,259
Total 80,928,868
Non Captive Consumer (2.5%)
SLM
03-15-06 3.39 42,500,000(b) 42,500,000
08-18-06 3.43 40,000,000(b) 40,000,000
Total 82,500,000
Other Financial Institutions (0.7%)
HSBC Finance
01-11-10 3.45 25,000,000(b) 25,000,000
Total Commercial Paper
(Cost: $3,143,917,830) $3,143,917,830
Total Investments in Securities
(Cost: $3,323,914,550)(d) $3,323,914,550
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Interest rate varies either based on a predetermined schedule or to
reflect current market conditions; rate shown is the effective rate on
July 31, 2005. The maturity date disclosed represents the final maturity.
For purposes of Rule 2a-7, maturity is the later of the next put or
interest rate reset date.
(c) 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 Fund's Board of Directors. These
securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At July 31, 2005, the value of
these securities amounted to $1,254,007,278 or 37.6% of net assets.
(d) Also represents the cost of securities for federal income tax purposes at
July 31, 2005.
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.riversource.com/investments.
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10 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Financial Statements
Statement of assets and liabilities
AXP Cash Management Fund
July 31, 2005
Assets
Investments in securities, at value (Note 1)
(identified cost $3,323,914,550) $3,323,914,550
Cash in bank on demand deposit 10,752,708
Capital shares receivable 362,574
Accrued interest receivable 2,570,754
---------
Total assets 3,337,600,586
-------------
Liabilities
Dividends payable to shareholders 255,629
Capital shares payable 24,822
Accrued investment management services fee 29,873
Accrued distribution fee 11,065
Accrued transfer agency fee 7,105
Accrued administrative services fee 2,294
Other accrued expenses 620,309
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Total liabilities 951,097
-------
Net assets applicable to outstanding capital stock $3,336,649,489
==============
Represented by
Capital stock -- $.01 par value (Note 1) $ 33,366,988
Additional paid-in capital 3,303,274,709
Undistributed net investment income 568
Accumulated net realized gain (loss) 7,224
-----
Total -- representing net assets applicable to outstanding capital stock $3,336,649,489
==============
Net assets applicable to outstanding shares: Class A $3,053,596,963
Class B $ 129,253,208
Class C $ 2,169,631
Class I $ 12,099,006
Class Y $ 139,530,681
Net asset value per share of outstanding capital stock: Class A shares 3,053,389,372 $ 1.00
Class B shares 129,443,572 $ 1.00
Class C shares 2,169,977 $ 1.00
Class I shares 12,099,403 $ 1.00
Class Y shares 139,596,472 $ 1.00
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See accompanying notes to financial statements.
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11 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Statement of operations
AXP Cash Management Fund
Year ended July 31, 2005
Investment income
Income:
Interest $88,531,150
-----------
Expenses (Note 2):
Investment management services fee 12,052,160
Distribution fee
Class A 3,303,424
Class B 1,141,431
Class C 20,261
Transfer agency fee 10,404,829
Incremental transfer agency fee
Class A 925,424
Class B 43,521
Class C 804
Administrative services fees and expenses 1,016,703
Compensation of board members 28,570
Custodian fees 450,360
Printing and postage 808,846
Registration fees 313,032
Audit fees 37,000
Other 122,665
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Total expenses 30,669,030
Expenses waived/reimbursed by Ameriprise Financial (formerly AEFC) (Note 2) (17,330)
-------
30,651,700
Earnings credits on cash balances (Note 2) (522,471)
--------
Total net expenses 30,129,229
----------
Investment income (loss) -- net 58,401,921
----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on security transactions (Note 3) 7,225
-----
Net increase (decrease) in net assets resulting from operations $58,409,146
===========
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Statements of changes in net assets
AXP Cash Management Fund
Year ended July 31, 2005 2004
Operations and distributions
Investment income (loss) -- net $ 58,401,921 $ 15,421,079
Net realized gain (loss) on investments 7,225 568
----- ---
Net increase (decrease) in net assets resulting from operations 58,409,146 15,421,647
---------- ----------
Distributions to shareholders from:
Net investment income
Class A (52,351,323) (14,160,516)
Class B (1,396,268) (125,090)
Class C (24,726) (1,867)
Class I (178,347) (6,853)
Class Y (4,451,257) (1,129,354)
---------- ----------
Total distributions (58,401,921) (15,423,680)
----------- -----------
Capital share transactions at constant $1 net asset value
Proceeds from sales
Class A shares (Note 2) 4,887,009,614 5,680,515,833
Class B shares 210,343,122 283,348,104
Class C shares 6,916,934 10,376,462
Class I shares 8,702,782 4,495,636
Class Y shares 423,393,174 155,083,714
Reinvestment of distributions at net asset value
Class A shares 51,326,424 14,185,892
Class B shares 1,340,779 124,964
Class C shares 23,481 1,819
Class I shares 177,156 6,715
Class Y shares 4,417,983 1,129,058
Payments for redemptions
Class A shares (5,564,771,727) (6,663,553,410)
Class B shares (Note 2) (262,086,267) (382,008,022)
Class C shares (Note 2) (8,234,019) (11,347,919)
Class I shares (636,149) (646,737)
Class Y shares (497,190,019) (209,572,966)
------------ ------------
Increase (decrease) in net assets from capital share transactions (739,266,732) (1,117,860,857)
------------ --------------
Total increase (decrease) in net assets (739,259,507) (1,117,862,890)
Net assets at beginning of year 4,075,908,996 5,193,771,886
------------- -------------
Net assets at end of year $ 3,336,649,489 $ 4,075,908,996
=============== ===============
Undistributed net investment income $ 568 $ --
--------------- ---------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
13 -- AXP CASH MANAGEMENT FUND -- 2005 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 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.
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. At July 31, 2005, Ameriprise Financial, Inc.
(Ameriprise Financial) (formerly American Express Financial Corporation) and the
AXP Portfolio Builder Funds owned 100% of Class I shares, which represents 0.36%
of the Fund's net assets.
All classes of shares have identical voting, dividend and liquidation rights.
The distribution fee and transfer agency fees (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 U.S. generally accepted
accounting principles 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.
Guarantees and indemnifications
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
- --------------------------------------------------------------------------------
14 -- AXP CASH MANAGEMENT FUND -- 2005 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.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $568 and
accumulated net realized gain has been decreased by $568.
The tax character of distributions paid for the years indicated is as follows:
Year ended July 31, 2005 2004
Class A
Distributions paid from:
Ordinary income $52,351,323 $14,160,516
Long-term capital gain -- --
Class B
Distributions paid from:
Ordinary income 1,396,268 125,090
Long-term capital gain -- --
Class C
Distributions paid from:
Ordinary income 24,726 1,867
Long-term capital gain -- --
Class I*
Distributions paid from:
Ordinary income 178,347 6,853
Long-term capital gain -- --
Class Y
Distributions paid from:
Ordinary income 4,451,257 1,129,354
Long-term capital gain -- --
* Inception date is March 4, 2004.
At July 31, 2005, the components of distributable earnings on a tax basis are as
follows:
Undistributed ordinary income $263,421
Accumulated long-term gain (loss) $ --
Unrealized appreciation (depreciation) $ --
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.
- --------------------------------------------------------------------------------
15 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
2. EXPENSES AND SALES CHARGES
Under an Investment Management Services Agreement, RiverSource Investments, LLC
(the Investment Manager) determines which securities will be purchased, held or
sold. Prior to Oct. 1, 2005, investment management services were provided by
Ameriprise Financial. The management fee is a percentage of the Fund's average
daily net assets that declines from 0.36% to 0.25% annually as the Fund's assets
increase.
Under the current Administrative Services Agreement, the Fund pays Ameriprise
Financial a fee for administration and accounting services at a percentage of
the Fund's average daily net assets that declines from 0.03% to 0.02% annually
as the Fund's assets increase. It is expected that the fee schedule to the
agreement will be revised effective Oct. 1, 2005. Under the new agreement, the
fee percentage of the Fund's average daily net asset will decline from 0.06% to
0.03% annually as the Fund's assets increase. 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, RiverSource Service Corporation
(formerly American Express Client Service Corporation) (the Transfer Agent)
maintains shareholder accounts and records. The Fund pays the Transfer Agent 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.
Beginning May 20, 2005, the Transfer Agent implemented an annual closed account
fee of $5 per inactive account, charged on a pro rata basis for 12 months from
the date the account becomes inactive. These fees were insignificant for the
year ended July 31, 2005 and are included in the transfer agency fees on the
statement of operations.
The Fund has agreements with Ameriprise Financial Services, Inc. (formerly
American Express Financial Advisors Inc.) (the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual
- --------------------------------------------------------------------------------
16 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
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. At
July 31, 2005, 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
$744,112 for Class B and $4,400 for Class C for the year ended July 31, 2005.
Ameriprise Financial 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. At July 31, 2005,
Ameriprise Financial and its affiliates waived certain fees and expenses to
1.44% for Class B and 1.44% for Class C. Of these waived fees and expenses, the
distribution (12b-1) fees waived for Class B and Class C were $17,001, and $329,
respectively. It is expected that a new agreement to waive certain fees and
expenses will be effective on Oct. 1, 2005 until July 31, 2006, such that net
expenses will not exceed 0.73% for Class A, 1.38% for Class B, 1.39% for Class
C, 0.53% for Class I and 0.60% for Class Y of the Fund's average daily net
assets.
During the year ended July 31, 2005, the Fund's custodian and transfer agency
fees were reduced by $522,471 as a result of earnings credits from overnight
cash balances. The Fund also pays custodian fees to Ameriprise Trust Company
(formerly American Express Trust Company), an affiliate of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities aggregated
$16,090,168,089 and $16,825,937,225, respectively, for the year ended July 31,
2005. 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
The Bank of New York, whereby the Fund may borrow for the temporary funding of
shareholder redemptions or for other temporary or emergency purposes. The
agreement went into effect Sept. 21, 2004. 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 higher of the Federal Funds Effective
Rate plus 0.50% or 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. Prior to this agreement, the Fund had a revolving credit agreement that
permitted borrowings up to $500 million with Deutsche Bank. The Fund had no
borrowings outstanding during the year ended July 31, 2005.
- --------------------------------------------------------------------------------
17 -- AXP CASH MANAGEMENT FUND -- 2005 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, 2005 2004 2003 2002 2001
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .02 -- .01 .02 .05
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.02) -- (.01) (.02) (.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) $3,054 $3,680 $4,649 $5,766 $6,149
Ratio of expenses to average daily net assets(b) .80% .78% .69% .59% .59%
Ratio of net investment income (loss) to average daily net assets 1.58% .35% .78% 1.89% 5.18%
Total return(c) 1.63% .35% .77% 1.93% 5.35%
(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, 2005 2004 2003 2002 2001
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 -- -- .01 .05
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.01) -- -- (.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) $129 $180 $278 $380 $273
Ratio of expenses to average daily net assets(b) 1.44%(c) 1.07%(c) 1.26%(c) 1.34% 1.34%
Ratio of net investment income (loss) to average daily net assets .91% .05% .21% 1.13% 4.37%
Total return(d) .98% .06% .20% 1.13% 4.57%
(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) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had
Ameriprise Financial not done so, the annual ratios of expenses for Class B
would have been 1.45%, 1.43% and 1.38% for the years ended July 31, 2005,
2004 and 2003, respectively.
(d) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
18 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Class C
Per share income and capital changes(a)
Fiscal period ended July 31, 2005 2004 2003 2002 2001
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 -- -- .01 .05
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.01) -- -- (.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) $2 $3 $4 $4 $1
Ratio of expenses to average daily net assets(b) 1.44%(c) 1.07%(c) 1.27%(c) 1.34% 1.34%
Ratio of net investment income (loss) to average daily net assets .91% .06% .21% .99% 3.88%
Total return(d) .98% .06% .20% 1.14% 4.68%
(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) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had
Ameriprise Financial not done so, the annual ratios of expenses for Class C
would have been 1.45%, 1.43% and 1.38% for the years ended July 31, 2005,
2004 and 2003, respectively.
(d) Total return does not reflect payment of a sales charge.
Class I
Per share income and capital changes(a)
Fiscal period ended July 31, 2005 2004(b)
Net asset value, beginning of period $1.00 $1.00
----- -----
Income from investment operations:
Net investment income (loss) .02 --
----- -----
Less distributions:
Dividends from net investment income (.02) --
----- -----
Net asset value, end of period $1.00 $1.00
----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $12 $4
Ratio of expenses to average daily net assets(c) .39% .43%(d)
Ratio of net investment income (loss) to average daily net assets 2.21% .77%(d)
Total return(e) 2.04% .30%(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Inception date is 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.
- --------------------------------------------------------------------------------
19 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Class Y
Per share income and capital changes(a)
Fiscal period ended July 31, 2005 2004 2003 2002 2001
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .02 -- .01 .02 .05
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (.02) -- (.01) (.02) (.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) $140 $209 $262 $203 $174
Ratio of expenses to average daily net assets(b) .66% .65% .62% .57% .57%
Ratio of net investment income (loss) to average daily net assets 1.55% .47% .82% 1.86% 5.18%
Total return(c) 1.76% .48% .85% 1.95% 5.37%
(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.
- --------------------------------------------------------------------------------
20 -- AXP CASH MANAGEMENT FUND -- 2005 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, 2005, 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, 2005, and the financial
highlights for each of the years in the five-year period ended July 31, 2005.
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, 2005, 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, 2005, 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 U.S. generally accepted
accounting principles.
KPMG LLP
Minneapolis, Minnesota
September 20, 2005
- --------------------------------------------------------------------------------
21 -- AXP CASH MANAGEMENT FUND -- 2005 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, 2005
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. 30, 2004 $0.00047
Sept. 29, 2004 0.00069
Oct. 28, 2004 0.00078
Nov. 29, 2004 0.00093
Dec. 30, 2004 0.00120
Jan. 27, 2005 0.00128
Feb. 24, 2005 0.00144
March 30, 2005 0.00180
April 28, 2005 0.00161
May 26, 2005 0.00169
June 29, 2005 0.00220
July 28, 2005 0.00204
Total distributions $0.01613
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. 30, 2004 $0.00004
Sept. 29, 2004 0.00012
Oct. 28, 2004 0.00027
Nov. 29, 2004 0.00040
Dec. 30, 2004 0.00061
Jan. 27, 2005 0.00076
Feb. 24, 2005 0.00093
March 30, 2005 0.00121
April 28, 2005 0.00109
May 26, 2005 0.00119
June 29, 2005 0.00159
July 28, 2005 0.00152
Total distributions $0.00973
- --------------------------------------------------------------------------------
22 -- AXP CASH MANAGEMENT FUND -- 2005 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. 30, 2004 $0.00004
Sept. 29, 2004 0.00012
Oct. 28, 2004 0.00026
Nov. 29, 2004 0.00041
Dec. 30, 2004 0.00060
Jan. 27, 2005 0.00076
Feb. 24, 2005 0.00093
March 30, 2005 0.00121
April 28, 2005 0.00111
May 26, 2005 0.00119
June 29, 2005 0.00159
July 28, 2005 0.00151
Total distributions $0.00973
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
Aug. 30, 2004 $0.00079
Sept. 29, 2004 0.00102
Oct. 28, 2004 0.00108
Nov. 29, 2004 0.00125
Dec. 30, 2004 0.00155
Jan. 27, 2005 0.00160
Feb. 24, 2005 0.00176
March 30, 2005 0.00217
April 28, 2005 0.00194
May 26, 2005 0.00201
June 29, 2005 0.00262
July 28, 2005 0.00239
Total distributions $0.02018
- --------------------------------------------------------------------------------
23 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
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. 30, 2004 $0.00057
Sept. 29, 2004 0.00081
Oct. 28, 2004 0.00088
Nov. 29, 2004 0.00104
Dec. 30, 2004 0.00131
Jan. 27, 2005 0.00138
Feb. 24, 2005 0.00154
March 30, 2005 0.00191
April 28, 2005 0.00171
May 26, 2005 0.00179
June 29, 2005 0.00235
July 28, 2005 0.00216
Total distributions $0.01745
- --------------------------------------------------------------------------------
24 -- AXP CASH MANAGEMENT FUND -- 2005 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, 2005.
Actual Expenses
The first line of the table 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 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 -- 2005 ANNUAL REPORT
Beginning Ending Expenses
account value account value paid during Annualized
Feb. 1, 2005 July 31, 2005 the period(a) expense ratio
Class A
Actual(b) $1,000 $1,010.70 $4.04(C) .82%
Hypothetical (5% return before expenses) $1,000 $1,020.50 $4.06(C) .82%
Class B
Actual(b) $1,000 $1,007.50 $7.29(C) 1.48%
Hypothetical (5% return before expenses) $1,000 $1,017.26 $7.32(C) 1.48%
Class C
Actual(b) $1,000 $1,007.50 $7.29(C) 1.48%
Hypothetical (5% return before expenses) $1,000 $1,017.26 $7.32(C) 1.48%
Class I
Actual(b) $1,000 $1,012.80 $1.92(C) .39%
Hypothetical (5% return before expenses) $1,000 $1,022.61 $1.93(C) .39%
Class Y
Actual(b) $1,000 $1,011.40 $3.40(C) .69%
Hypothetical (5% return before expenses) $1,000 $1,021.14 $3.42(C) .69%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 179/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended July 31, 2005: +1.07%
for Class A, +0.75% for Class B, +0.75% for Class C, +1.28% for Class I and
+1.14% for Class Y.
(c) Pending final approval from the Fund's Board of Directors (Board), it is
expected that, effective Oct. 1, 2005, the fee schedule under the
Administrative Services Agreement between Ameriprise Financial and the Fund
will be revised. It is also expected that Ameriprise Financial and its
affiliates will contractually agree to waive certain fees and to absorb
certain expenses until July 31, 2006, unless sooner terminated at the
discretion of the Board. Under this expense cap/fee waiver agreement, net
expenses will not exceed 0.73% for Class A; 1.38% for Class B; 1.39% for
Class C; 0.53% for Class I and 0.60% for Class Y. If the revised fee
schedule under the Administrative Services Agreement and the cap/waiver
agreement had been in place for the entire six-month period ended July 31,
2005, the actual expenses paid would have been $3.60 for Class A, $6.79 for
Class B, $6.84 for Class C, $2.62 for Class I and $2.96 for Class Y; the
hypothetical expenses paid would have been $3.62 for Class A, $6.83 for
Class B, $6.88 for Class C, $2.63 for Class I and $2.97 for Class Y.
- --------------------------------------------------------------------------------
26 -- AXP CASH MANAGEMENT FUND -- 2005 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 90 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 Principal occupation Other directorships
with Fund and during past five
length of years
service
- --------------------------------------- ----------------- ---------------------- --------------------------------
Arne H. Carlson Board member Chair, Board
901 S. Marquette Ave. since 1999 Services Corporation
Minneapolis, MN 55402 (provides
Age 70 administrative
services to boards).
Former Governor
of Minnesota
- --------------------------------------- ----------------- ---------------------- --------------------------------
Philip J. Carroll, Jr. Board member Retired Chairman and Scottish Power PLC, Vulcan
901 S. Marquette Ave. since 2002 CEO, Fluor Corporation Materials Company, Inc.
Minneapolis, MN 55402 (engineering and (construction
Age 67 construction) since materials/chemicals)
1998
- --------------------------------------- ----------------- ---------------------- --------------------------------
Livio D. DeSimone* Board member Retired Chair of the Cargill, Incorporated
30 Seventh Street East since 2001 Board and (commodity merchants and
Suite 3050 St. Paul, MN Chief Executive processors), General Mills,
55101-4901 Officer, Minnesota Inc. (consumer foods), Vulcan
Age 71 Mining and Materials Company (construction
Manufacturing (3M) materials/chemicals), Milliken &
Company (textiles and chemicals),
and Nexia Biotechnologies, Inc.
- --------------------------------------- ----------------- ---------------------- --------------------------------
Patricia M. Flynn Board member Trustee Professor of BostonFed Bancorp, Inc.
901 S. Marquette Ave. since 2004 Economics and (holding company) and its
Minneapolis, MN 55402 Management, Bentley subsidiary Boston Federal
Age 54 College since 2002; Savings Bank
former Dean,
McCallum Graduate
School of Business,
Bentley College from
1999 to 2002
- --------------------------------------- ----------------- ---------------------- --------------------------------
Anne P. Jones Board member Attorney and
901 S. Marquette Ave. since 1985 Consultant
Minneapolis, MN 55402
Age 70
- --------------------------------------- ----------------- ---------------------- --------------------------------
Stephen R. Lewis, Jr. Board member Retired President Valmont Industries, Inc.
901 S. Marquette Ave. since 2002 and Professor of (manufactures irrigation
Minneapolis, MN 55402 Economics, Carleton systems)
Age 66 College
- --------------------------------------- ----------------- ---------------------- --------------------------------
* Livio D. DeSimone retired as a member of the Board, effective Sept. 8,
2005.
- --------------------------------------------------------------------------------
27 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Independent Board Members (continued)
Name, address, age Position held Principal occupation Other directorships
with Fund and during past five
length of service years
- -------------------------------------- ------------------ ---------------------- --------------------------------
Catherine James Paglia Board member Director, Enterprise Strategic Distribution, Inc.
901 S. Marquette Ave. since 2004 Asset Management, (transportation, distribution
Minneapolis, MN 55402 Inc. (private real and logistics consultants)
Age 52 estate and asset
management company)
since 1999
- -------------------------------------- ------------------ ---------------------- --------------------------------
Alan K. Simpson Board member Former three-term
1201 Sunshine Ave. since 1997 United States
Cody, WY 82414 Senator for Wyoming
Age 73
- -------------------------------------- ------------------ ---------------------- --------------------------------
Alison Taunton-Rigby Board member Founder and Chief Hybridon, Inc. (biotechnology)
901 S. Marquette Ave. since 2002 Executive Officer,
Minneapolis, MN 55402 RiboNovix, Inc.
Age 61 since 2004;
President, Forester
Biotech since 2000;
prior to that,
President and CEO,
Aquila
Biopharmaceuticals,
Inc.
- -------------------------------------- ------------------ ---------------------- --------------------------------
Board Member Affiliated with Ameriprise Financial, Inc. (formerly AEFC)**
Name, address, age Position held Principal occupation Other directorships
with Fund and during past five
length of service years
- -------------------------------------- ------------------ ---------------------- --------------------------------
William F. Truscott Board member Senior Vice
53600 Ameriprise Financial Center since 2001, President - Chief
Minneapolis, MN 55474 Vice President Investment Officer
Age 44 since 2002 of Ameriprise
Financial, Inc. and
RiverSource
Investments, LLC
since 2001. Former
Chief Investment
Officer and Managing
Director, Zurich
Scudder Investments
- -------------------------------------- ------------------ ---------------------- --------------------------------
** Interested person by reason of being an officer, director and/or employee of
Ameriprise Financial, Inc. (formerly American Express Financial Corporation)
or of RiverSource Investments, LLC, its wholly owned subsidiary.
- --------------------------------------------------------------------------------
28 -- AXP CASH MANAGEMENT FUND -- 2005 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 Principal occupation Other directorships
with Fund and during past five
length of service years
- -------------------------------------- ------------------ ---------------------- --------------------------------
Jeffrey P. Fox Treasurer Vice President -
105 Ameriprise Financial Center since 2002 Investment
Minneapolis, MN 55474 Accounting,
Age 50 Ameriprise
Financial, Inc.,
since 2002; Vice
President - Finance,
American Express
Company, 2000-2002;
Vice President -
Corporate
Controller,
Ameriprise
Financial, Inc.,
1996-2000
- -------------------------------------- ------------------ ---------------------- --------------------------------
Paula R. Meyer President Senior Vice President
596 Ameriprise Financial Center since 2002 and General Manager -
Minneapolis, MN 55474 Mutual Funds,
Age 51 Ameriprise
Financial, Inc.,
since 2002 and
Senior Vice
President,
RiverSource
Investments, LLC
since 2004; Vice
President and
Managing Director -
American Express
Funds, Ameriprise
Financial, Inc.,
2000-2002;
Vice President,
Ameriprise
Financial, Inc.,
1998-2000
- -------------------------------------- ------------------ ---------------------- --------------------------------
Leslie L. Ogg Vice President, President of Board
901 S. Marquette Ave. General Counsel, Services Corporation
Minneapolis, MN 55402 and Secretary
Age 66 since 1978
- -------------------------------------- ------------------ ---------------------- --------------------------------
Beth E. Weimer Chief Compliance Vice President and
172 Ameriprise Financial Center Officer since Chief Compliance
Minneapolis, MN 55474 2004 Officer, Ameriprise
Age 52 Financial, Inc.,
since 2001 and Chief
Compliance Officer,
RiverSource
Investments, LLC
since 2005; Vice
President and
Chief Compliance
Officer, Ameriprise
Financial Services,
Inc. (formerly
American Express
Financial Advisors),
2001-2005; Partner,
Arthur Andersen
Regulatory Risk
Services, 1998-2001
- -------------------------------------- ------------------ ---------------------- --------------------------------
The SAI has additional information about the Fund's directors and is available,
without charge, upon request by calling (800) 862-7919.
- --------------------------------------------------------------------------------
29 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Approval of Investment Management Services Agreement
Ameriprise Financial, Inc. (formerly American Express Financial Corporation or
AEFC) (the investment manager) is a wholly-owned subsidiary of American Express
Company. Under an Investment Management Services Agreement (the Agreement), the
investment manager provides investment advice and other services to the Fund.
Throughout the year, the Funds' Board of Directors and the Board's Investment
Review Committee monitor these services.
Each year the Board determines whether to continue the Agreement by evaluating
the quality and level of service received and the costs associated with those
services. The investment manager prepares detailed reports for the Board and its
Contracts Committee in March and April and provides data prepared by independent
organizations to assist the Board in making this determination. The Board gives
considerable weight to the work, deliberations and conclusions of the Contracts
and Investment Review Committees in determining whether to continue the
Agreement. On February 1, 2005, American Express Company announced its intention
to pursue a spin-off of AEFC by distributing shares of the common stock of AEFC
to shareholders of American Express Company. At a meeting held in person on
April 14, 2005, the Board, including a majority of the independent members,
approved the continuation of the Agreement for an interim period, not to exceed
one year, ending on the later of (i) the effective date of the spin-off or (ii)
the approval by the Fund's shareholders of a new investment management services
agreement with the investment manager (the Interim Period). The spin-off will
not result in an "assignment" of the Agreement under the Investment Company Act
of 1940 and, therefore, will not cause the termination of the Agreement
according to its terms. In connection with the spin-off the investment manager
has proposed that going forward, services under the Agreement be provided by an
affiliate, RiverSource Investments, LLC (RiverSource). Independent counsel
advised the Board that it would be prudent, in connection with the spin-off, to
consider a new agreement with RiverSource and to seek shareholder approval of
that agreement as soon as practical thereafter.
Investment performance is a major factor in the evaluation process, and the
Board reviewed the Fund's performance over a range of different periods by
comparing its performance to relevant Lipper and broader market indices. The
Board considered that over time the Fund's investment performance should
approximate the median for a peer group of funds with similar investment goals
and noted that the Fund's investment performance was consistent with its peer
group in 2004.
The Board noted that, in addition to portfolio management and investment
research, the investment manager provides portfolio trading, daily net asset
value calculation, management of cash flow, product development, administration
of its compliance and legal departments, access to distribution, accounting and
recordkeeping, and reporting to the Board and shareholders. To evaluate these
services, the Board referred to surveys and benchmarks established by commercial
providers, trade associations and the investment manager's internal processes.
The Board concluded that the services provided were consistent with services
provided by investment managers to comparable mutual funds.
- --------------------------------------------------------------------------------
30 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
The Board also evaluated the price paid for the services provided by the
investment manager, noting the existence of a pricing philosophy, established by
the Board and the investment manager, that seeks to maintain total Fund expenses
within a range of the median expenses charged to comparable funds sold through
financial advisors. The Board considered detailed information set forth in an
annual report on fees and expenses, including, among other things, data showing
a comparison of the Fund's expenses with median expenses paid by funds in its
comparison group and data showing the Fund's contribution to the investment
manager's profitability. The Board determined that while the Fund's expenses are
above median and its yield has been competitive with other money market funds
within its comparison group, a fee waiver has been added to reduce further the
expenses the Fund will pay.
The Board considered the economies of scale that might be realized by the
investment manager as the Fund grew and took note of the extent to which Fund
shareholders also might benefit from such growth. The Board considered that the
Agreement provided for lower fees as assets increase at pre-established
breakpoints and concluded that the Agreement satisfactorily provided for sharing
these economies of scale.
The Board took into account the Contracts Committee's discussion comparing the
fees the investment manager charges to the Fund with those it charges to
institutional clients, noting that the relatively higher fees paid by the Fund
were principally attributable to the additional services required to manage a
regulated mutual fund, like the Fund, and the operation of a large mutual fund
family. The Board also considered the profitability realized by the investment
manager and its affiliates from its relationship with the Fund. The Board took
into account the services acquired by the investment manager through the use of
commission dollars paid by the Fund on portfolio transactions. The Board
concluded that the investment manager's overall costs and profitability were
appropriate, although profitability may be too low on an ongoing basis.
The Board noted that the fees paid by the Fund should permit the investment
manager to offer competitive compensation to its personnel, make necessary
investments in its business and earn an appropriate profit. Based on the
foregoing, the Board concluded that the fees paid to the investment manager
under the Agreement were fair and reasonable and determined to approve renewal
of the Agreement for the Interim Period.
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 website www.riversource.com/investments; or by
searching the website of the Securities and Exchange Commission (SEC) at
www.sec.gov. Information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 is
available without charge by calling the Fund's administrator, Board Services
Corporation, collect at (612) 330-9283; through the investment manager's
website, www.riversource.com/investments; or by searching the website of the SEC
at www.sec.gov.
- --------------------------------------------------------------------------------
31 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
American Express Funds
70100 Ameriprise Financial Center
Minneapolis, MN 55474
This report must be accompanied or preceded by the Fund's current prospectus.
Distributed by Ameriprise Financial Services, Inc. (formerly known as American
Express Financial Advisors Inc.). Member NASD.
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:
2005 - $36,500; 2004 - $37,027
(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:
2005 - $806; 2004 - $879
(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:
2005 - $2,639; 2004 - $2,275
(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:
2005 - $958; 2004 - None
(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 2005 and 2004 were pre-approved by the audit committee.
(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:
2005 - None; 2004 - 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:
2005 - $38,450; 2004 - $88,450
(h) 100% of the services performed in item (g) above during 2005 and 2004
were pre-approved by the audit committee.
*2004 represents bills paid 8/1/03 - 7/31/04
2005 represents bills paid 8/1/04 - 7/31/05
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. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. 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 12. 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 Oct. 3, 2005
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 Oct. 3, 2005
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date Oct. 3, 2005