0000820027-01-500442.txt : 20011009 0000820027-01-500442.hdr.sgml : 20011009 ACCESSION NUMBER: 0000820027-01-500442 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20010926 EFFECTIVENESS DATE: 20010928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP MONEY MARKET SERIES INC CENTRAL INDEX KEY: 0000049698 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 411254759 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-54516 FILM NUMBER: 1745466 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPLOS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 MAIL ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 FORMER COMPANY: FORMER CONFORMED NAME: IDS CASH MANAGEMENT FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IDS MONEY MARKET SERIES INC DATE OF NAME CHANGE: 19920917 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP MONEY MARKET SERIES INC CENTRAL INDEX KEY: 0000049698 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 411254759 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02591 FILM NUMBER: 1745467 BUSINESS ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPLOS STATE: MN ZIP: 55440 BUSINESS PHONE: 6123722772 MAIL ADDRESS: STREET 1: 80 SOUTH 8TH STREET STREET 2: T33/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55440 FORMER COMPANY: FORMER CONFORMED NAME: IDS CASH MANAGEMENT FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: IDS MONEY MARKET SERIES INC DATE OF NAME CHANGE: 19920917 485BPOS 1 partabc.txt AXP MONEY MARKET SERIES, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. _____ Post-Effective Amendment No. 53 (File No. 2-54516) [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 44 (File No. 811-2591) [X] AXP MONEY MARKET SERIES, INC. 200 AXP Financial Center Minneapolis, Minnesota 55474 Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268 (612) 330-9283 Approximate Date of Proposed Public Offering: It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [X] on Sept. 28, 2001 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of Rule 485 If appropriate, check the following box: [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. AXP(R) Cash Management Fund PROSPECTUS SEPT. 28, 2001 American Express(R) Funds (icon of) clock AXP Cash Management Fund seeks to provide shareholders with maximum current income consistent with liquidity and stability of principal. Please note that this Fund: o is not a bank deposit o is not federally insured o is not endorsed by any bank or government agency o is not guaranteed to achieve its goal Like all mutual funds, the Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. Table of Contents TAKE A CLOSER LOOK AT: The Fund 3p Goal 3p Principal Investment Strategies 3p Principal Risks 4p Past Performance 5p Fees and Expenses 6p Investment Manager 7p Buying and Selling Shares 8p Valuing Fund Shares 8p Investment Options 8p Purchasing Shares 9p Transactions Through American Express Brokerage or Third Parties 11p Sales Charges 11p Exchanging/Selling Shares 12p Distributions and Taxes 16p Financial Highlights 17p -------------------------------------------------------------------------------- 2p AXP CASH MANAGEMENT FUND -- PROSPECTUS The Fund GOAL AXP Cash Management Fund (the Fund) seeks to provide shareholders with maximum current income consistent with liquidity and stability of principal. Because any investment involves risk, the Fund cannot guarantee this goal. PRINCIPAL INVESTMENT STRATEGIES The Fund's assets primarily are invested in money market instruments, such as marketable debt obligations issued by the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper. The Fund may invest more than 25% of its total assets in U.S. banks, U.S. branches of foreign banks and U.S. government securities. Additionally, the Fund may invest up to 35% of its total assets in U.S. dollar-denominated foreign investments. Because the Fund seeks to maintain a constant net asset value of $1.00 per share, capital appreciation is not expected to play a role in the Fund's return. The Fund's yield will vary from day-to-day. The selection of short-term debt obligations is the primary decision in building the investment portfolio. The Fund restricts its investments to instruments that meet certain maturity and quality standards required by the SEC for money market funds. For example, the Fund: o limits its average portfolio maturity to ninety days or less; o buys obligations with remaining maturities of 397 days or less; and o buys only obligations that are denominated in U.S. dollars and present minimal credit risk. In pursuit of the Fund's goal, American Express Financial Corporation (AEFC), the Fund's investment manager, chooses investments by: o Considering opportunities and risks given current interest rates and anticipated interest rates. o Purchasing securities based on the timing of cash flows in and out of the Fund. In evaluating whether to sell a security, AEFC considers, among other factors, whether: -- the issuer's credit rating declines or AEFC expects a decline (the Fund, in certain cases, may continue to own securities that are down-graded until AEFC believes it is advantageous to sell), -- political, economic, or other events could affect the issuer's performance, -- AEFC identifies a more attractive opportunity, and -- the issuer or the security continues to meet the other standards described above. For more information on strategies and holdings, see the Fund's Statement of Additional Information (SAI) and the annual/semiannual reports. -------------------------------------------------------------------------------- 3p AXP CASH MANAGEMENT FUND -- PROSPECTUS PRINCIPAL RISKS Please remember that with any mutual fund investment you may lose money. Although the Fund's share price has remained constant in the past, THE FUND CANNOT GUARANTEE THAT IT WILL ALWAYS BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Principal risks associated with an investment in the Fund include: Credit Risk Foreign Risk Interest Rate Risk Market Risk Sector/Concentration Risk Credit Risk The risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable to honor a financial obligation (such as payments due on a bond or a note). Foreign Risk The following are all components of foreign risk: Country risk includes the political, economic, and other conditions of a country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. Interest Rate Risk The risk of losses attributable to changes in interest rates. This term is generally associated with bond prices (when interest rates rise, bond prices fall). In general, the longer the maturity of a bond, the higher its yield and the greater its sensitivity to changes in interest rates. Market Risk The market may drop and you may lose money. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of all securities may move up and down, sometimes rapidly and unpredictably. Sector/Concentration Risk Investments that are concentrated in a particular issuer, geographic region, or sector will be more susceptible to changes in price (the more you diversify, the more you spread risk). For example, if the Fund concentrates its investments in banks, the value of these investments may be adversely affected by economic or regulatory developments in the banking industry. -------------------------------------------------------------------------------- 4p AXP CASH MANAGEMENT FUND -- PROSPECTUS PAST PERFORMANCE The following bar chart and table indicate the risks and variability of investing in the Fund by showing how the Fund's performance has varied for each full calendar year shown. How the Fund has performed in the past does not indicate how the Fund will perform in the future. Class A Performance (based on calendar years) (bar chart) +5.52% +2.91% +2.28% +3.36% +5.45% +4.96% +5.18% +5.28% +4.76% +6.02% 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 During the period shown in the bar chart, the highest return for a calendar quarter was +1.63% (quarter ending March 1991) and the lowest return for a calendar quarter was +0.54% (quarter ending September 1993). The performance of Class B, Class C and Class Y may vary from that shown above because of differences in sales charges and fees. The Fund's Class A year to date return as of June 30, 2001 was +2.41%. Average Annual Total Returns (for the calendar year periods ending Dec. 31, 2000) 1 year 5 years 10 years Since inception Cash Management: Class A +6.02% +5.24% +4.57% N/A Class B +1.24% +4.28% N/A +4.40%(a) Class Y +6.03% +5.25% N/A +5.33%(a) (a) Inception date was March 20, 1995. This table shows total returns from hypothetical investments in shares of the Fund. The performance of different classes varies because of differences in sales charges and fees. Class C became effective June 26, 2000 and therefore performance information is not available. -------------------------------------------------------------------------------- 5p AXP CASH MANAGEMENT FUND -- PROSPECTUS For purposes of this calculation we assumed: o no sales charge for Class A shares or Class Y shares, o sales at the end of the period and deduction of the applicable contingent deferred sales charge (CDSC) for Class B shares, o conversion of Class B shares to Class A shares in the ninth calendar year of ownership, and o no adjustments for taxes paid by an investor on the reinvested income and capital gains. Yield Information For current 7-day yield information, call 1-800-862-7919, select option #2. FEES AND EXPENSES Fund investors pay various expenses. The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment) Class A Class B Class C Class Y Maximum sales charge (load) imposed on purchases(a) (as a percentage of offering price) none none none none Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) none 5% 1%(b) none Annual Fund operating expenses (expenses that are deducted from Fund assets) As a percentage of average daily net assets: Class A Class B Class C Class Y Management fees 0.30% 0.30% 0.30% 0.30% Distribution (12b-1) fees 0.00% 0.75% 0.75% 0.00% Other expenses(c) 0.29% 0.29% 0.29% 0.27% Total 0.59% 1.34% 1.34% 0.57%
(a) This charge may be reduced depending on the value of your total investments in American Express mutual funds. See "Sales Charges." (b) For all Class C purchases, a 1% sales charge applies if you sell your shares less than one year after purchase. (c) Other expenses include an administrative services fee, a transfer agency fee and other nonadvisory expenses. -------------------------------------------------------------------------------- 6p AXP CASH MANAGEMENT FUND -- PROSPECTUS Example This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. Assume you invest $10,000 and the Fund earns a 5% annual return. The operating expenses remain the same each year. If you hold your shares until the end of the years shown, your costs would be: 1 year 3 years 5 years 10 years Class A $ 60 $189 $330 $ 741 Class B(a) $536 $725 $835 $1,410(c) Class B(b) $136 $425 $735 $1,410(c) Class C $136 $425 $735 $1,618 Class Y $ 58 $183 $319 $ 717 (a) Assumes you sold your Class B shares at the end of the period and incurred the applicable CDSC. (b) Assumes you did not sell your Class B shares at the end of the period. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. This example does not represent actual expenses, past or future. Actual expenses may be higher or lower than those shown. INVESTMENT MANAGER The Fund pays AEFC a fee for managing its assets. Under the Investment Management Services Agreement, the fee for the most recent fiscal year was 0.30% of its average daily net assets. Under the agreement, the Fund also pays taxes, brokerage commissions and nonadvisory expenses. AEFC or an affiliate may make payments from its own resources, which include profits from management fees paid by the Fund, to compensate broker-dealers or other persons for providing distribution assistance. The investment manager of the Fund is AEFC, 200 AXP Financial Center, Minneapolis, MN 55474. AEFC is a wholly-owned subsidiary of American Express Company, a financial services company with headquarters at American Express Tower, World Financial Center, New York, NY 10285. Terry Seierstad, portfolio manager, joined AEFC in 1982. He has managed this Fund since January 2001. He also serves as portfolio manager of AXP Tax-Exempt Bond Fund, AXP Variable Portfolio - Cash Management Fund and IDS Life Series - Money Market Portfolio. -------------------------------------------------------------------------------- 7p AXP CASH MANAGEMENT FUND -- PROSPECTUS Buying and Selling Shares VALUING FUND SHARES The NAV is the value of a single Fund share. The NAV is calculated at the close of business of the New York Stock Exchange, normally 3 p.m. Central Time (CT), each business day (any day the New York Stock Exchange is open). The NAV also may be calculated on any other day in which there is sufficient liquidity in the securities held by the Fund. Fund shares may be purchased through various third-party organizations, including 401(k) plans, banks, brokers and investment advisers. Where authorized by the Fund, orders will be priced at the NAV next computed after receipt by the organization or their selected agent. The Fund's investments are valued at amortized cost, which approximates market value, as explained in the SAI. Although the Fund cannot guarantee it will always be able to maintain a constant net asset value of $1 per share, it will use its best efforts to do so. INVESTMENT OPTIONS New investments must be made in Class A shares of the Fund. The Fund offers Class B and Class C shares only to facilitate exchanges between classes of these shares in other American Express mutual funds. The primary differences among the classes are in the sales charge structures and in their ongoing expenses. These differences are summarized in the table below. Investment options summary: The Fund offers four different classes of shares. Although your money will be invested in the same way no matter which class of shares you buy, there are differences among the fees and expenses for each class. Not everyone is eligible to buy every class. After determining which classes you are eligible to buy, decide which class best suits your needs. Your financial advisor can help you with this decision.
The following table shows the key features of each class: ------------------- ---------------- ---------------- ---------------- ---------------- Class A Class B Class C Class Y ------------------- ---------------- ---------------- ---------------- ---------------- Availability Available to Available to Available to Limited to all investors. all investors. all investors. qualifying institutional investors. ------------------- ---------------- ---------------- ---------------- ---------------- Initial Sales No. Entire No. Entire No. Entire No. Entire Charge purchase price purchase price purchase price purchase price is invested in is invested in is invested in is invested in shares of the shares of the shares of the shares of the Fund. Fund. Fund. Fund. ------------------- ---------------- ---------------- ---------------- ---------------- Deferred Sales None. Maximum 5% 1% CDSC None. Charge CDSC during applies if you the first year sell your decreasing to shares less 0% after six than one year years. after purchase. ------------------- ---------------- ---------------- ---------------- ---------------- Distribution N/A Yes.* 0.75% Yes.* 0.75% N/A and/or Shareholder Service Fee ------------------- ---------------- ---------------- ---------------- ---------------- Conversion to N/A Yes, No. No. Class A automatically in ninth calendar year of ownership. ------------------- ---------------- ---------------- ---------------- ----------------
* The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of 1940 that allows it to pay distribution expenses for the sale of Class B and Class C shares. Because these fees are paid out of the Fund's assets on an on-going basis, the fees may cost long-term shareholders more than paying other types of sales charges imposed by some mutual funds. -------------------------------------------------------------------------------- 8p AXP CASH MANAGEMENT FUND -- PROSPECTUS PURCHASING SHARES To purchase shares through an American Express Brokerage Account or entities other than American Express Financial Advisors Inc., please refer to the American Express Brokerage Web site or consult your selling agent. The following section explains how you can purchase shares from American Express Financial Advisors (the Distributor). If you do not have a mutual fund account, you need to establish one. Your financial advisor will help you fill out and submit an application. Your application will be accepted only when federal funds (funds of the Federal Reserve System) are available to the Fund, normally within three days of receipt of your application. Once your account is set up, you can choose among several convenient ways to invest. When you purchase shares for a new or existing account, your order will be priced at the next NAV calculated after your order is accepted by the Fund. If your application does not specify which class of shares you are purchasing, we will assume you are investing in Class A shares. Important: When you open an account, you must provide your correct Taxpayer Identification Number (TIN), which is either your Social Security or Employer Identification number. If you do not provide and certify the correct TIN, you could be subject to backup withholding of 31% of taxable distributions and proceeds from certain sales and exchanges. You also could be subject to further penalties, such as: o a $50 penalty for each failure to supply your correct TIN, o a civil penalty of $500 if you make a false statement that results in no backup withholding, and o criminal penalties for falsifying information. You also could be subject to backup withholding, if the IRS notifies us to do so, because you failed to report required interest or dividends on your tax return. How to determine the correct TIN ------------------------------------ ---------------------------------------- For this type of account: Use the Social Security or Employer Identification number of: ------------------------------------ ---------------------------------------- Individual or joint account The individual or one of the owners listed on the joint account ------------------------------------ ---------------------------------------- Custodian account of a minor The minor (Uniform Gifts/Transfers to Minors Act) ------------------------------------ ---------------------------------------- A revocable living trust The grantor-trustee (the person who puts the money into the trust) ------------------------------------ ---------------------------------------- An irrevocable trust, pension The legal entity (not the personal trust or estate representative or trustee, unless no legal entity is designated in the account title) ------------------------------------ ---------------------------------------- Sole proprietorship The owner ------------------------------------ ---------------------------------------- Partnership The partnership ------------------------------------ ---------------------------------------- Corporate The corporation ------------------------------------ ---------------------------------------- Association, club or tax-exempt The organization organization ------------------------------------ ---------------------------------------- For details on TIN requirements, contact your financial advisor to obtain a copy of federal Form W-9, "Request for Taxpayer Identification Number and Certification." You also may obtain the form on the Internet at (http://www.irs.gov/prod/forms_pubs/). -------------------------------------------------------------------------------- 9p AXP CASH MANAGEMENT FUND -- PROSPECTUS Three ways to invest 1 By mail: Once your account has been established, send your check with the account number on it to: American Express Funds 70200 AXP Financial Center Minneapolis, MN 55474 Minimum amounts Initial investment: $2,000 Additional investments: $100 Account balances: $1,000 If your account balance falls below $1,000, you will be asked to increase it to $1,000 or establish a scheduled investment plan. If you do not do so within 30 days, your shares can be sold and the proceeds mailed to you. 2 By scheduled investment plan: Contact your financial advisor for assistance in setting up one of the following scheduled plans: o automatic payroll deduction, o bank authorization, o direct deposit of Social Security check, or o other plan approved by the Fund. Minimum amounts Initial investment: $2,000 Additional investments: $100 per payment Account balances: $1,000 (on a scheduled investment plan with monthly payments) If your account balance is below $2,000, you must make payments at least monthly. 3 By wire or electronic funds transfer: If you have an established account, you may wire money to: Wells Fargo Bank Minnesota, N.A. Minneapolis, MN 55479 Routing Transit No. 091000019 Give these instructions: Credit American Express Financial Advisors Account #0000030015 for personal account # (your account number) for (your name). Please be sure to include all 10 digits of the American Express Financial Advisors account number, including the zeros. If this information is not included, the order may be rejected, and all money received by the Fund, less any costs the Fund or American Express Client Service Corporation (AECSC) incurs, will be returned promptly. Minimum amounts Each wire investment: $1,000 -------------------------------------------------------------------------------- 10p AXP CASH MANAGEMENT FUND -- PROSPECTUS TRANSACTIONS THROUGH AMERICAN EXPRESS BROKERAGE OR THIRD PARTIES You may buy or sell shares through American Express Brokerage, certain 401(k) plans, banks, broker-dealers, financial advisors or other investment professionals. These organizations may charge you a fee for this service and may have different policies. Some policy differences may include different minimum investment amounts, exchange privileges, fund choices and cutoff times for investments. The Fund and the Distributor are not responsible for the failure of one of these organizations to carry out its obligations to its customers. Some organizations may receive compensation from the Distributor or its affiliates for shareholder recordkeeping and similar services. Where authorized by the Fund, some organizations may designate selected agents to accept purchase or sale orders on the Fund's behalf. To buy or sell shares through American Express Brokerage or third parties or to determine if there are policy differences, please consult the American Express Brokerage Web site or your selling agent. For other pertinent information related to buying or selling shares, please refer to the appropriate section in the prospectus. SALES CHARGES Class B and Class C -- contingent deferred sales charge (CDSC) alternative For Class B, the CDSC is based on the sale amount and the number of calendar years -- including the year of purchase -- between purchase and sale. The following table shows how CDSC percentages on sales decline after a purchase: If the sale is made during the: The CDSC percentage rate is: First year 5% Second year 4% Third year 4% Fourth year 3% Fifth year 2% Sixth year 1% Seventh year 0% For Class C, a 1% CDSC is charged if you sell your shares less than one year after purchase. For both Class B and Class C, if the amount you are selling causes the value of your investment to fall below the cost of the shares you have purchased, the CDSC is based on the lower of the cost of those shares purchased or market value. Because the CDSC is imposed only on sales that reduce your total purchase payments, you never have to pay a CDSC on any amount that represents appreciation in the value of your shares, income earned by your shares, or capital gains. In addition, the CDSC on your sale, if any, will be based on your oldest purchase payment. The CDSC on the next amount sold will be based on the next oldest purchase payment. -------------------------------------------------------------------------------- 11p AXP CASH MANAGEMENT FUND -- PROSPECTUS Example: Assume you had invested $10,000 in Class B shares and that your investment had appreciated in value to $12,000 after 15 months, including reinvested dividends and capital gain distributions. You could sell up to $2,000 worth of shares without paying a CDSC ($12,000 current value less $10,000 purchase amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500 representing part of your original purchase price. The CDSC rate would be 4% because the sale was made during the second year after the purchase. Waivers of the sales charge for Class B and Class C shares The CDSC will be waived on sales of shares: o in the event of the shareholder's death, o held in trust for an employee benefit plan, or o held in IRAs or certain qualified plans if American Express Trust Company is the custodian, such as Keogh plans, tax-sheltered custodial accounts or corporate pension plans, provided that the shareholder is: -- at least 59 1/2 years old AND -- taking a retirement distribution (if the sale is part of a transfer to an IRA or qualified plan, or a custodian-to-custodian transfer, the CDSC will not be waived) OR -- selling under an approved substantially equal periodic payment arrangement. EXCHANGING/SELLING SHARES Exchanges New investments of Class A shares may be exchanged for either Class A, Class B or Class C shares of any other publicly offered American Express mutual fund, except that exchanges into AXP Tax-Free Money Fund must be made from Class A shares. If you exchange shares from this Fund to another American Express mutual fund, any further exchanges must be between shares of the same class. For example, you may not exchange from Class B shares of another American Express mutual fund into Class A shares of this Fund. Exchange rules are illustrated in the following tables: EXCHANGES: FROM TO Cash Management Other American Express mutual funds* Class A Class B Class C Class A Yes Yes Yes Class B No Yes No Class C No No Yes EXCHANGES: FROM TO Other American Express mutual funds* Cash Management Fund Class A Class B Class C Class A Yes No No Class B No Yes No Class C No No Yes * Exchanges into Tax-Free Money Fund must be made from Class A shares. Exchanges between classes within the same fund are not permitted. For example, you cannot exchange from Cash Management Class A to Cash Management Class B. -------------------------------------------------------------------------------- 12p AXP CASH MANAGEMENT FUND -- PROSPECTUS If your initial investment was in this Fund, and you exchange into a non-money market fund, you will pay an initial sales charge if you exchange into Class A and be subject to a CDSC if you exchange into Class B. If your initial investment was in Class A shares of a non-money market fund and you exchange shares into this Fund: o you may exchange that amount to another fund, including dividends earned on that amount, without paying a sales charge. o if your initial investment was over $500,000 and the sales charge was waived, you will be subject to a 1% sales charge if you redeem those shares less than one year after the initial investment date. For complete information on the other funds, including fees and expenses, read that fund's prospectus carefully. Your exchange will be priced at the next NAV calculated after we receive your transaction request in good order. Other exchange policies: o Except as otherwise noted, exchanges must be made into the same class of shares of the new fund. o If your exchange creates a new account, it must satisfy the minimum investment amount for new purchases. o Once we receive your exchange request, you cannot cancel it. o Shares of the new fund may not be used on the same day for another exchange. o If your shares are pledged as collateral, the exchange will be delayed until AECSC receives written approval from the secured party. AECSC and the Fund reserve the right to reject any exchange, limit the amount, or modify or discontinue the exchange privilege, to prevent abuse or adverse effects on the Fund and its shareholders. For example, if exchanges are too numerous or too large, they may disrupt the Fund's investment strategies or increase its costs. The Fund does not permit market-timing. Do not invest in the Fund if you are a market timer. Selling Shares You can sell your shares at any time. AECSC will mail payment within seven days after accepting your request. When you sell shares, the amount you receive may be more or less than the amount you invested. Your sale price will be the next NAV calculated after your request is accepted by the Fund, minus any applicable CDSC. You can change your mind after requesting a sale of Class B shares and use all or part of the proceeds to purchase new shares in the same account from which you sold. If you reinvest in Class B or Class C, any CDSC you paid on the amount you are reinvesting also will be reinvested. To take advantage of this option, send a written request within 90 days of the date your sale request was received and include your account number. This privilege may be limited or withdrawn at any time and may have tax consequences. The Fund reserves the right to redeem in kind. For more details and a description of other sales policies, please see the SAI. -------------------------------------------------------------------------------- 13p AXP CASH MANAGEMENT FUND -- PROSPECTUS To sell or exchange shares held through an American Express Brokerage Account or with entities other than American Express Financial Advisors, please consult your selling agent. The section explains how you can exchange or sell shares held with American Express Financial Advisors. Requests to sell shares of the Fund are not allowed within 30 days of a telephoned-in address change. Important: If you request a sale of shares you recently purchased by a check or money order that is not guaranteed, the Fund will wait for your check to clear. It may take up to 10 days from the date of purchase before payment is made. (Payment may be made earlier if your bank provides evidence satisfactory to the Fund and AECSC that your check has cleared.) Three ways to request an exchange or sale of shares 1 By letter: Include in your letter: o the name of the fund(s), o the class of shares to be exchanged or sold, o your mutual fund account number(s) (for exchanges, both funds must be registered in the same ownership), o your Social Security number or Employer Identification number, o the dollar amount or number of shares you want to exchange or sell, o signature(s) of all registered account owners, o for sales, indicate how you want your money delivered to you, and o any paper certificates of shares you hold. Regular or express mail: American Express Funds 70100 AXP Financial Center Minneapolis, MN 55474 2 By telephone: American Express Client Service Corporation Telephone Transaction Service (800) 437-3133 o The Fund and AECSC will use reasonable procedures to confirm authenticity of telephone exchange or sale requests. o Telephone exchange and sale privileges automatically apply to all accounts except custodial, corporate or qualified retirement accounts. You may request that these privileges NOT apply by writing AECSC. Each registered owner must sign the request. o Acting on your instructions, your financial advisor may conduct telephone transactions on your behalf. o Telephone privileges may be modified or discontinued at any time. Minimum sale amount: $100 Maximum sale amount: $100,000 -------------------------------------------------------------------------------- 14p AXP CASH MANAGEMENT FUND -- PROSPECTUS 3 By draft: For Class A only, free drafts are available and can be used just like a check to withdraw $100 or more from your account. The shares in your account earn dividends until they are redeemed by the Fund to cover your drafts. Most accounts will automatically receive free drafts. However, to receive drafts on qualified or custodial business accounts, you must contact AECSC. A request form will be supplied and must be signed by each registered owner. Your draft writing privilege may be modified or discontinued at any time. Drafts are not available for accounts set up in a brokerage account and they may not be available to all investors of the Fund. Minimum amount Redemption: $100 Three ways to receive payment when you sell shares 1 By regular or express mail: o Mailed to the address on record. o Payable to names listed on the account. NOTE: The express mail delivery charges you pay will vary depending on the courier you select. 2 By wire or electronic funds transfer: o Minimum wire: $1,000. o Request that money be wired to your bank. o Bank account must be in the same ownership as the American Express mutual fund account. NOTE: Pre-authorization required. For instructions, contact your financial advisor or AECSC. 3 By scheduled payout plan: o Minimum payment: $50. o Contact your financial advisor or AECSC to set up regular payments on a monthly, bimonthly, quarterly, semiannual or annual basis. o Purchasing new shares while under a payout plan may be disadvantageous because of the sales charges. -------------------------------------------------------------------------------- 15p AXP CASH MANAGEMENT FUND -- PROSPECTUS Distributions and Taxes As a shareholder you are entitled to your share of the Fund's net income and net gains. The Fund distributes dividends and capital gains to qualify as a regulated investment company and to avoid paying corporate income and excise taxes. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS The Fund's net investment income is distributed to you as dividends. Capital gains are realized when a security is sold for a higher price than was paid for it. Each realized capital gain or loss is long-term or short-term depending on the length of time the Fund held the security. Realized capital gains and losses offset each other. The Fund offsets any net realized capital gains by any available capital loss carryovers. Net short-term capital gains are included in net investment income. Net realized long-term capital gains, if any, are distributed by the end of the calendar year as capital gain distributions. REINVESTMENTS Dividends and capital gain distributions are automatically reinvested in additional shares in the same class of the Fund, unless: o you request distributions be paid monthly in cash, or o you direct the Fund to invest your distributions monthly in any publicly offered American Express mutual fund for which you have previously opened an account. Your purchases may be subject to a sales charge. We reinvest the distributions for you at the next calculated NAV after the distribution is paid. If you choose cash distributions, you will receive cash only for distributions declared after your request has been processed. TAXES butions are subject to federal income tax and may be subject to state and local taxes in the year they are declared. You must report distributions on your tax returns, even if they are reinvested in additional shares. If you sell shares for more than their cost, the difference is a capital gain. Your gain may be short term (for shares held for one year or less) or long term (for shares held for more than one year). Selling shares held in an IRA or qualified retirement account may subject you to federal taxes, penalties and reporting requirements. Please consult your tax advisor. Important: This information is a brief and selective summary of some of the tax rules that apply to this Fund. Because tax matters are highly individual and complex, you should consult a qualified tax advisor. -------------------------------------------------------------------------------- 16p AXP CASH MANAGEMENT FUND -- PROSPECTUS Financial Highlights
Class A Per share income and capital changes(a) Fiscal period ended July 31, 2001 2000 1999 1998 1997 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) .05 .05 .05 .05 .05 Less distributions: Dividends from net investment income (.05) (.05) (.05) (.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) $6,149 $5,438 $5,032 $3,926 $3,094 Ratio of expenses to average daily net assets(c) .59% .58% .57% .56% .58% Ratio of net investment income (loss) to average daily net assets 5.18% 5.37% 4.65% 5.15% 4.96% Total return(e) 5.35% 5.55% 4.71% 5.34% 5.06% Class B Per share income and capital changes(a) Fiscal period ended July 31, 2001 2000 1999 1998 1997 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) .05 .05 .04 .04 .04 Less distributions: Dividends from net investment income (.05) (.05) (.04) (.04) (.04) 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) $273 $232 $192 $98 $147 Ratio of expenses to average daily net assets(c) 1.34% 1.33% 1.32% 1.32% 1.34% Ratio of net investment income (loss) to average daily net assets 4.37% 4.64% 3.88% 4.38% 4.14% Total return(e) 4.57% 4.76% 3.94% 4.53% 4.27%
See accompanying notes to financial highlights. -------------------------------------------------------------------------------- 17p AXP CASH MANAGEMENT FUND -- PROSPECTUS
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2001 2000(b) Net asset value, beginning of period $1.00 $1.00 Income from investment operations: Net investment income (loss) .05 -- Less distributions: Dividends from net investment income (.05) -- Net asset value, end of period $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $1 $-- Ratio of expenses to average daily net assets(c) 1.34% 1.33%(d) Ratio of net investment income (loss) to average daily net assets 3.88% 6.10%(d) Total return(e) 4.68% .63%
Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2001 2000 1999 1998 1997 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) .05 .05 .05 .05 .05 Less distributions: Dividends from net investment income (.05) (.05) (.05) (.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) $174 $142 $124 $72 $62 Ratio of expenses to average daily net assets(c) .57% .57% .56% .56% .58% Ratio of net investment income (loss) to average daily net assets 5.18% 5.42% 4.64% 5.16% 4.96% Total return(e) 5.37% 5.56% 4.72% 5.33% 5.06%
Notes to financial highlights (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) Total return does not reflect payment of a sales charge. The information in these tables has been audited by KPMG LLP, independent auditors. The independent auditors' report and additional information about the performance of the Fund are contained in the Fund's annual report which, if not included with this prospectus, may be obtained without charge. -------------------------------------------------------------------------------- 18p AXP CASH MANAGEMENT FUND -- PROSPECTUS This Fund, along with the other American Express mutual funds, is distributed by American Express Financial Advisors Inc. and can be purchased from an American Express financial advisor or from other authorized broker-dealers or third parties. The Funds can be found under the "Amer Express" banner in most mutual fund quotations. Additional information about the Fund and its investments is available in the Fund's Statement of Additional Information (SAI), annual and semiannual reports to shareholders. In the Fund's annual report, you will find a discussion of market conditions and investment strategies that significantly affected the Fund during its last fiscal year. The SAI is incorporated by reference in this prospectus. For a free copy of the SAI, the annual report or the semiannual report, contact your selling agent or American Express Client Service Corporation. American Express Funds 70100 AXP Financial Center, Minneapolis, MN 55474 (800) 862-7919 TTY: (800) 846-4852 Web site address: americanexpress.com You may review and copy information about the Fund, including the SAI, at the Securities and Exchange Commission's (Commission) Public Reference Room in Washington, D.C. (for information about the public reference room call 1-202-942-8090). Reports and other information about the Fund are available on the EDGAR Database on the Commission's Internet site at (http://www.sec.gov). Copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-0102. Investment Company Act File #811-2591 Ticker Symbol Class A: IDSXX Class B: ACBXX (logo) American Class C: N/A Class Y: IDYXX Express S-6320-99 X (9/01) AXP(R) MONEY MARKET SERIES, INC. STATEMENT OF ADDITIONAL INFORMATION FOR AXP(R) CASH MANAGEMENT FUND (the Fund) Sept. 28, 2001 This Statement of Additional Information (SAI) is not a prospectus. It should be read together with the prospectus and the financial statements contained in the most recent Annual Report to shareholders (Annual Report) that may be obtained from your financial advisor or by writing to American Express Client Service Corporation, 70100 AXP Financial Center, Minneapolis, MN 55474 or by calling 800-862-7919. The Independent Auditors' Report and the Financial Statements, including Notes to the Financial Statements and the Schedule of Investments in Securities, contained in the Annual Report are incorporated in this SAI by reference. No other portion of the Annual Report, however, is incorporated by reference. The prospectus for the Fund, dated the same date as this SAI, also is incorporated in this SAI by reference. AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- TABLE OF CONTENTS Mutual Fund Checklist p. 3 Fundamental Investment Policies p. 4 Investment Strategies and Types of Investments p. 4 Information Regarding Risks and Investment Strategies p. 5 Security Transactions p.11 Brokerage Commissions Paid to Brokers Affiliated with American Express Financial Corporation p.12 Performance Information p.12 Valuing Fund Shares p.13 Investing in the Fund p.14 Selling Shares p.15 Pay-out Plans p.15 Taxes p.16 Agreements p.17 Organizational Information p.19 Board Members and Officers p.22 Compensation for Board Members p.23 Principal Holders of Securities p.24 Independent Auditors p.24 Appendix: Description of Money Market Securities p.25 -2- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Mutual Fund Checklist [X] Mutual funds are NOT guaranteed or insured by any bank or government agency. You can lose money. [X] Mutual funds ALWAYS carry investment risks. Some types carry more risk than others. [X] A higher rate of return typically involves a higher risk of loss. [X] Past performance is not a reliable indicator of future performance. [X] ALL mutual funds have costs that lower investment return. [X] You can buy some mutual funds by contacting them directly. Others, like this one, are sold mainly through brokers, banks, financial planners, or insurance agents. If you buy through these financial professionals, you generally will pay a sales charge. [X] Shop around. Compare a mutual fund with others of the same type before you buy. OTHER IDEAS FOR SUCCESSFUL MUTUAL FUND INVESTING: Develop a Financial Plan Have a plan -- even a simple plan can help you take control of your financial future. Review your plan with your advisor at least once a year or more frequently if your circumstances change. Dollar-Cost Averaging An investment technique that works well for many investors is one that eliminates random buy and sell decisions. One such system is dollar-cost averaging. Dollar-cost averaging involves building a portfolio through the investment of fixed amounts of money on a regular basis regardless of the price or market condition. This may enable an investor to smooth out the effects of the volatility of the financial markets. By using this strategy, more shares will be purchased when the price is low and less when the price is high. As the accompanying chart illustrates, dollar-cost averaging tends to keep the average price paid for the shares lower than the average market price of shares purchased, although there is no guarantee. While this does not ensure a profit and does not protect against a loss if the market declines, it is an effective way for many shareholders who can continue investing through changing market conditions to accumulate shares to meet long-term goals. Dollar-cost averaging: Regular Market price Shares investment of a share acquired $100 $ 6.00 16.7 100 4.00 25.0 100 4.00 25.0 100 6.00 16.7 100 5.00 20.0 $500 $25.00 103.4 Average market price of a share over 5 periods: $5.00 ($25.00 divided by 5) The average price you paid for each share: $4.84 ($500 divided by 103.4) Diversify Diversify your portfolio. By investing in different asset classes and different economic environments you help protect against poor performance in one type of investment while including investments most likely to help you achieve your important goals. Understand Your Investment Know what you are buying. Make sure you understand the potential risks, rewards, costs, and expenses associated with each of your investments. -3- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Fundamental Investment Policies Fundamental investment policies adopted by the Fund cannot be changed without the approval of a majority of the outstanding voting securities of the Fund as defined in the Investment Company Act of 1940, as amended (the 1940 Act). Notwithstanding any of the Fund's other investment policies, the Fund may invest its assets in an open-end management investment company having substantially the same investment objectives, policies, and restrictions as the Fund for the purpose of having those assets managed as part of a combined pool. The policies below are fundamental policies that apply to the Fund and may be changed only with shareholder approval. Unless holders of a majority of the outstanding voting securities agree to make the change, the Fund will not: o Act as an underwriter (sell securities for others). However, under the securities laws, the Fund may be deemed to be an underwriter when it purchases securities directly from the issuer and later resells them. o Borrow money or property, except as a temporary measure for extraordinary or emergency purposes, in an amount not exceeding one-third of the market value of its total assets (including borrowings) less liabilities (other than borrowings) immediately after the borrowing. o Invest more than 5% of its total assets in securities of any one company, government, or political subdivision thereof, except the limitation will not apply to investments in securities issued by the U.S. government, its agencies, or instrumentalities. o Buy on margin, sell short or deal in options to buy or sell securities. o Buy or sell real estate, commodities or commodity contracts. For purposes of this policy, real estate includes real estate limited partnerships. o Lend Fund securities in excess of 30% of its net assets, at market value. o Purchase common stocks, preferred stocks, warrants, other equity securities, corporate bonds or debentures, state bonds, municipal bonds, or industrial revenue bonds. Except for the fundamental investment policies listed above, the other investment policies described in the prospectus and in this SAI are not fundamental and may be changed by the board at any time. Investment Strategies and Types of Investments This table shows various investment strategies and investments that many funds are allowed to engage in and purchase. It is intended to show the breadth of investments that the investment manager may make on behalf of the Fund. For a description of principal risks, please see the prospectus. Notwithstanding the Fund's ability to utilize these strategies and techniques, the investment manager is not obligated to use them at any particular time. For example, even though the investment manager is authorized to adopt temporary defensive positions and is authorized to attempt to hedge against certain types of risk, these practices are left to the investment manager's sole discretion. AXP Cash Management Fund Investment strategies & types of investments: Allowable for the Fund? Agency and Government Securities yes Borrowing yes Cash/Money Market Instruments yes Commercial Paper yes Debt Obligations yes Foreign Securities yes Illiquid and Restricted Securities yes Lending of Portfolio Securities yes Mortgage- and Asset-Backed Securities yes Repurchase Agreements yes Reverse Repurchase Agreements yes Sovereign Debt yes Variable- or Floating-Rate Securities yes -4- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- The following are guidelines that may be changed by the board at any time: o The Fund will not invest more than 10% of its net assets in securities that are illiquid whether or not registration or the filing of a notification under the Securities Act of 1933 or the taking of similar action under other securities laws relating to the sale of securities is required. A risk of any such investment is that it might not be able to be easily liquidated. For the purpose of this policy, repurchase agreements with maturities greater than seven days and non-negotiable fixed time deposits will be treated as illiquid securities. o The Fund will not invest more than 10% of its total assets in securities of investment companies. o The Fund may invest in commercial paper rated in the highest rating category by at least two nationally recognized statistical rating organizations (or by one, if only one rating is assigned) and in unrated paper determined by the board to be of comparable quality. The Fund also may invest up to 5% of its total assets in commercial paper receiving the second highest rating or in unrated paper determined to be of comparable quality. o Notwithstanding any of the Fund's other investment policies, the Fund may invest its assets in an open-end management investment company having substantially the same investment objectives, policies and restrictions as the Fund for the purpose of having those assets managed as part of a combined pool. o Depending on market conditions and the availability of other securities, the Fund may invest more than 25% of its total assets in U.S. Banks, U.S. branches of foreign banks and U.S. government securities. o The Fund may invest up to 35% of its total assets in foreign investments. Information Regarding Risks and Investment Strategies RISKS The following is a summary of common risk characteristics. Following this summary is a description of certain investments and investment strategies and the risks most commonly associated with them (including certain risks not described below and, in some cases, a more comprehensive discussion of how the risks apply to a particular investment or investment strategy). Please remember that a mutual fund's risk profile is largely defined by the fund's primary securities and investment strategies. However, most mutual funds are allowed to use certain other strategies and investments that may have different risk characteristics. Accordingly, one or more of the following types of risk may be associated with the Fund at any time (for a description of principal risks, please see the prospectus): Call/Prepayment Risk The risk that a bond or other security might be called (or otherwise converted, prepaid, or redeemed) before maturity. This type of risk is closely related to "reinvestment risk." Company Risk The prospects for a company may vary because of a variety of factors, including the success of the company, disappointing earnings, or changes in the competitive environment. As a result, the success of the companies in which the Fund invests largely determines the Fund's long-term performance. Correlation Risk The risk that a given transaction may fail to achieve its objectives due to an imperfect relationship between markets. Certain investments may react more negatively than others in response to changing market conditions. Credit Risk The risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable to honor a financial obligation (such as payments due on a bond or a note). The price of junk bonds may react more to the ability of the issuing company to pay interest and principal when due than to changes in interest rates. Junk bonds have greater price fluctuations and are more likely to experience a default than investment grade bonds. Event Risk Occasionally, the value of a security may be seriously and unexpectedly changed by a natural or industrial accident or occurrence. Foreign/Emerging Markets Risk The following are all components of foreign/emerging markets risk: Country risk includes the political, economic, and other conditions of a country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add or subtract from the value of the investment. -5- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. Emerging markets risk includes the dramatic pace of change (economic, social, and political) in emerging market countries as well as the other considerations listed above. These markets are in early stages of development and are extremely volatile. They can be marked by extreme inflation, devaluation of currencies, dependence on trade partners, and hostile relations with neighboring countries. Inflation Risk Also known as purchasing power risk, inflation risk measures the effects of continually rising prices on investments. If an investment's yield is lower than the rate of inflation, your money will have less purchasing power as time goes on. Interest Rate Risk The risk of losses attributable to changes in interest rates. This term is generally associated with bond prices (when interest rates rise, bond prices fall). In general, the longer the maturity of a bond, the higher its yield and the greater its sensitivity to changes in interest rates. Issuer Risk The risk that an issuer, or the value of its stocks or bonds, will perform poorly. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. Legal/Legislative Risk Congress and other governmental units have the power to change existing laws affecting securities. A change in law might affect an investment adversely. Leverage Risk Some derivative investments (such as options, futures, or options on futures) require little or no initial payment and base their price on a security, a currency, or an index. A small change in the value of the underlying security, currency, or index may cause a sizable gain or loss in the price of the instrument. Liquidity Risk Securities may be difficult or impossible to sell at the time that the Fund would like. The Fund may have to lower the selling price, sell other investments, or forego an investment opportunity. Management Risk The risk that a strategy or selection method utilized by the investment manager may fail to produce the intended result. When all other factors have been accounted for and the investment manager chooses an investment, there is always the possibility that the choice will be a poor one. Market Risk The market may drop and you may lose money. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of all securities may move up and down, sometimes rapidly and unpredictably. Reinvestment Risk The risk that an investor will not be able to reinvest income or principal at the same rate it currently is earning. Sector/Concentration Risk Investments that are concentrated in a particular issuer, geographic region, or industry will be more susceptible to changes in price (the more you diversify, the more you spread risk). Small Company Risk Investments in small and medium companies often involve greater risks than investments in larger, more established companies because small and medium companies may lack the management experience, financial resources, product diversification, and competitive strengths of larger companies. In addition, in many instances the securities of small and medium companies are traded only over-the-counter or on regional securities exchanges and the frequency and volume of their trading is substantially less than is typical of larger companies. -6- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- INVESTMENT STRATEGIES The following information supplements the discussion of the Fund's investment objectives, policies, and strategies that are described in the prospectus and in this SAI. The following describes many strategies that many mutual funds use and types of securities that they purchase. Please refer to the section entitled Investment Strategies and Types of Investments to see which are applicable to the Fund. Agency and Government Securities The U.S. government and its agencies issue many different types of securities. U.S. Treasury bonds, notes, and bills and securities including mortgage pass through certificates of the Government National Mortgage Association (GNMA) are guaranteed by the U.S. government. Other U.S. government securities are issued or guaranteed by federal agencies or government-sponsored enterprises but are not guaranteed by the U.S. government. This may increase the credit risk associated with these investments. Government-sponsored entities issuing securities include privately owned, publicly chartered entities created to reduce borrowing costs for certain sectors of the economy, such as farmers, homeowners, and students. They include the Federal Farm Credit Bank System, Farm Credit Financial Assistance Corporation, Federal Home Loan Bank, FHLMC, FNMA, Student Loan Marketing Association (SLMA), and Resolution Trust Corporation (RTC). Government-sponsored entities may issue discount notes (with maturities ranging from overnight to 360 days) and bonds. Agency and government securities are subject to the same concerns as other debt obligations. (See also Debt Obligations and Mortgage- and Asset-Backed Securities.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with agency and government securities include: Call/Prepayment Risk, Inflation Risk, Interest Rate Risk, Management Risk, and Reinvestment Risk. Borrowing The Fund may borrow money from banks for temporary or emergency purposes and make other investments or engage in other transactions permissible under the 1940 Act that may be considered a borrowing (such as derivative instruments). Borrowings are subject to costs (in addition to any interest that may be paid) and typically reduce the Fund's total return. Except as qualified above, however, the Fund will not buy securities on margin. Although one or more of the other risks described in this SAI may apply, the largest risks associated with borrowing include: Inflation Risk and Management Risk. Cash/Money Market Instruments The Fund may maintain a portion of its assets in cash and cash-equivalent investments. Cash-equivalent investments include short-term U.S. and Canadian government securities and negotiable certificates of deposit, non-negotiable fixed-time deposits, bankers' acceptances, and letters of credit of banks or savings and loan associations having capital, surplus, and undivided profits (as of the date of its most recently published annual financial statements) in excess of $100 million (or the equivalent in the instance of a foreign branch of a U.S. bank) at the date of investment. The Fund also may purchase short-term notes and obligations of U.S. and foreign banks and corporations and may use repurchase agreements with broker-dealers registered under the Securities Exchange Act of 1934 and with commercial banks. (See also Commercial Paper, Debt Obligations, Repurchase Agreements, and Variable- or Floating-Rate Securities.) These types of instruments generally offer low rates of return and subject the Fund to certain costs and expenses. See the appendix for a discussion of money market securities. Although one or more of the other risks described in this SAI may apply, the largest risks associated with cash/money market instruments include: Credit Risk, Inflation Risk, and Management Risk. Commercial Paper Commercial paper is a short-term debt obligation with a maturity ranging from 2 to 270 days issued by banks, corporations, and other borrowers. It is sold to investors with temporary idle cash as a way to increase returns on a short-term basis. These instruments are generally unsecured, which increases the credit risk associated with this type of investment. (See also Debt Obligations and Illiquid and Restricted Securities.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with commercial paper include: Credit Risk, Liquidity Risk, and Management Risk. Debt Obligations Many different types of debt obligations exist (for example, bills, bonds, or notes). Issuers of debt obligations have a contractual obligation to pay interest at a specified rate on specified dates and to repay principal on a specified maturity date. Certain debt obligations (usually intermediate- and long-term bonds) have provisions that allow the issuer to redeem or "call" a bond before its maturity. Issuers are most likely to call these securities during periods of falling interest rates. When this happens, an investor may have to replace these securities with lower yielding securities, which could result in a lower return. -7- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- The market value of debt obligations is affected primarily by changes in prevailing interest rates and the issuers perceived ability to repay the debt. The market value of a debt obligation generally reacts inversely to interest rate changes. When prevailing interest rates decline, the price usually rises, and when prevailing interest rates rise, the price usually declines. In general, the longer the maturity of a debt obligation, the higher its yield and the greater the sensitivity to changes in interest rates. Conversely, the shorter the maturity, the lower the yield but the greater the price stability. As noted, the values of debt obligations also may be affected by changes in the credit rating or financial condition of their issuers. Generally, the lower the quality rating of a security, the higher the degree of risk as to the payment of interest and return of principal. To compensate investors for taking on such increased risk, those issuers deemed to be less creditworthy generally must offer their investors higher interest rates than do issuers with better credit ratings. (See also Agency and Government Securities, Corporate Bonds, and High-Yield (High-Risk) Securities.) All ratings limitations are applied at the time of purchase. Subsequent to purchase, a debt security may cease to be rated or its rating may be reduced below the minimum required for purchase by the Fund. Neither event will require the sale of such a security, but it will be a factor in considering whether to continue to hold the security. To the extent that ratings change as a result of changes in a rating organization or their rating systems, the Fund will attempt to use comparable ratings as standards for selecting investments. Although one or more of the other risks described in this SAI may apply, the largest risks associated with debt obligations include: Call/Prepayment Risk, Credit Risk, Interest Rate Risk, Issuer Risk, Management Risk, and Reinvestment Risk. Foreign Investments Investments in foreign banks and branches of domestic banks outside the United States involve certain risks. Domestic banks are required to maintain specified levels of reserves, are limited in the amounts they can loan to a single borrower and are subject to other regulations designed to promote financial soundness. Not all of these laws and regulations apply to the foreign branches of domestic banks. Domestic bank regulations do not apply to foreign banks. Eurodollar CDs and non-U.S. fixed-time deposits may be subject to political and economic risks of the countries in which the investments are made, including the possibility of seizure or nationalization of foreign deposits, penalties for early withdrawal of time deposits, imposition of withholding taxes on income, establishment of exchange controls or adoption of other restrictions that might affect an investment adversely. The introduction of a single currency, the euro, on January 1, 1999 for participating European nations in the Economic and Monetary Union ("EU") presents unique uncertainties, including the legal treatment of certain outstanding financial contracts after January 1, 1999 that refer to existing currencies rather than the euro; the establishment and maintenance of exchange rates; the fluctuation of the euro relative to non-euro currencies during the transition period from January 1, 1999 to December 31, 2000 and beyond; whether the interest rate, tax or labor regimes of European countries participating in the euro will converge over time; and whether the conversion of the currencies of other EU countries such as the United Kingdom and Greece into the euro and the admission of other non-EU countries such as Poland, Latvia, and Lithuania as members of the EU may have an impact on the euro. Although one or more of the other risks described in this SAI may apply, the largest risks associated with foreign securities include: Foreign/Emerging Markets Risk, Issuer Risk, and Management Risk. Illiquid and Restricted Securities The Fund may invest in illiquid securities (i.e., securities that are not readily marketable). These securities may include, but are not limited to, certain securities that are subject to legal or contractual restrictions on resale, certain repurchase agreements, and derivative instruments. To the extent the Fund invests in illiquid or restricted securities, it may encounter difficulty in determining a market value for such securities. Disposing of illiquid or restricted securities may involve time-consuming negotiations and legal expense, and it may be difficult or impossible for the Fund to sell such an investment promptly and at an acceptable price. Although one or more of the other risks described in this SAI may apply, the largest risks associated with illiquid and restricted securities include: Liquidity Risk and Management Risk. Lending of Portfolio Securities The Fund may lend certain of its portfolio securities to broker-dealers. The current policy of the Fund's board is to make these loans, either long- or short-term, to broker-dealers. In making loans, the Fund receives the market price in cash, U.S. government securities, letters of credit, or such other collateral as may be permitted by regulatory agencies and approved by the board. If the market price of the loaned securities goes up, the Fund will get additional collateral on a daily basis. The risks are that the borrower may not provide additional collateral when required or return the securities when due. During the existence of the loan, the Fund receives cash payments equivalent to all interest or other distributions paid on the loaned securities. The Fund may pay reasonable administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash or money market instruments held as collateral to the borrower or placing broker. The Fund will receive reasonable interest on the loan or a flat fee from the borrower and amounts equivalent to any dividends, interest, or other distributions on the securities loaned. -8- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Although one or more of the other risks described in this SAI may apply, the largest risks associated with the lending of portfolio securities include: Credit Risk and Management Risk. Mortgage- and Asset-Backed Securities Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property, and include single- and multi-class pass-through securities and Collateralized Mortgage Obligations (CMOs). These securities may be issued or guaranteed by U.S. government agencies or instrumentalities (see also Agency and Government Securities), or by private issuers, generally originators and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers, and special purpose entities. Mortgage-backed securities issued by private lenders may be supported by pools of mortgage loans or other mortgage-backed securities that are guaranteed, directly or indirectly, by the U.S. government or one of its agencies or instrumentalities, or they may be issued without any governmental guarantee of the underlying mortgage assets but with some form of non-governmental credit enhancement. Stripped mortgage-backed securities are a type of mortgage-backed security that receive differing proportions of the interest and principal payments from the underlying assets. Generally, there are two classes of stripped mortgage-backed securities: Interest Only (IO) and Principal Only (PO). IOs entitle the holder to receive distributions consisting of all or a portion of the interest on the underlying pool of mortgage loans or mortgage-backed securities. POs entitle the holder to receive distributions consisting of all or a portion of the principal of the underlying pool of mortgage loans or mortgage-backed securities. The cash flows and yields on IOs and POs are extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage loans or mortgage-backed securities. A rapid rate of principal payments may adversely affect the yield to maturity of IOs. A slow rate of principal payments may adversely affect the yield to maturity of POs. If prepayments of principal are greater than anticipated, an investor in IOs may incur substantial losses. If prepayments of principal are slower than anticipated, the yield on a PO will be affected more severely than would be the case with a traditional mortgage-backed security. CMOs are hybrid mortgage-related instruments secured by pools of mortgage loans or other mortgage-related securities, such as mortgage pass through securities or stripped mortgage-backed securities. CMOs may be structured into multiple classes, often referred to as "tranches," with each class bearing a different stated maturity and entitled to a different schedule for payments of principal and interest, including prepayments. Principal prepayments on collateral underlying a CMO may cause it to be retired substantially earlier than its stated maturity. The yield characteristics of mortgage-backed securities differ from those of other debt securities. Among the differences are that interest and principal payments are made more frequently on mortgage-backed securities, usually monthly, and principal may be repaid at any time. These factors may reduce the expected yield. Asset-backed securities have structural characteristics similar to mortgage-backed securities. Asset-backed debt obligations represent direct or indirect participation in, or secured by and payable from, assets such as motor vehicle installment sales contracts, other installment loan contracts, home equity loans, leases of various types of property, and receivables from credit card or other revolving credit arrangements. The credit quality of most asset-backed securities depends primarily on the credit quality of the assets underlying such securities, how well the entity issuing the security is insulated from the credit risk of the originator or any other affiliated entities, and the amount and quality of any credit enhancement of the securities. Payments or distributions of principal and interest on asset-backed debt obligations may be supported by non-governmental credit enhancements including letters of credit, reserve funds, overcollateralization, and guarantees by third parties. The market for privately issued asset-backed debt obligations is smaller and less liquid than the market for government sponsored mortgage-backed securities. (See also Derivative Instruments.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with mortgage- and asset-backed securities include: Call/Prepayment Risk, Credit Risk, Interest Rate Risk, Liquidity Risk, and Management Risk. Repurchase Agreements The Fund may enter into repurchase agreements with certain banks or non-bank dealers. In a repurchase agreement, the Fund buys a security at one price, and at the time of sale, the seller agrees to repurchase the obligation at a mutually agreed upon time and price (usually within seven days). The repurchase agreement thereby determines the yield during the purchaser's holding period, while the seller's obligation to repurchase is secured by the value of the underlying security. Repurchase agreements could involve certain risks in the event of a default or insolvency of the other party to the agreement, including possible delays or restrictions upon the Fund's ability to dispose of the underlying securities. Although one or more of the other risks described in this SAI may apply, the largest risks associated with repurchase agreements include: Credit Risk and Management Risk. -9- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Reverse Repurchase Agreements In a reverse repurchase agreement, the investor would sell a security and enter into an agreement to repurchase the security at a specified future date and price. The investor generally retains the right to interest and principal payments on the security. Since the investor receives cash upon entering into a reverse repurchase agreement, it may be considered a borrowing. (See also Derivative Instruments.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with reverse repurchase agreements include: Credit Risk, Interest Rate Risk, and Management Risk. Sovereign Debt A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by a variety of factors, including its cash flow situation, the extent of its reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor's policy toward international lenders, and the political constraints to which a sovereign debtor may be subject. (See also Foreign Securities.) With respect to sovereign debt of emerging market issuers, investors should be aware that certain emerging market countries are among the largest debtors to commercial banks and foreign governments. At times, certain emerging market countries have declared moratoria on the payment of principal and interest on external debt. Certain emerging market countries have experienced difficulty in servicing their sovereign debt on a timely basis that led to defaults and the restructuring of certain indebtedness. Sovereign debt includes Brady Bonds, which are securities issued under the framework of the Brady Plan, an initiative announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to restructure their outstanding external commercial bank indebtedness. Although one or more of the other risks described in this SAI may apply, the largest risks associated with sovereign debt include: Credit Risk, Foreign/Emerging Markets Risk, and Management Risk. Variable- or Floating-Rate Securities The Fund may invest in securities that offer a variable- or floating-rate of interest. Variable-rate securities provide for automatic establishment of a new interest rate at fixed intervals (e.g., daily, monthly, semi-annually, etc.). Floating-rate securities generally provide for automatic adjustment of the interest rate whenever some specified interest rate index changes. Variable- or floating-rate securities frequently include a demand feature enabling the holder to sell the securities to the issuer at par. In many cases, the demand feature can be exercised at any time. Some securities that do not have variable or floating interest rates may be accompanied by puts producing similar results and price characteristics. Variable-rate demand notes include master demand notes that are obligations that permit the Fund to invest fluctuating amounts, which may change daily without penalty, pursuant to direct arrangements between the Fund as lender, and the borrower. The interest rates on these notes fluctuate from time to time. The issuer of such obligations normally has a corresponding right, after a given period, to prepay in its discretion the outstanding principal amount of the obligations plus accrued interest upon a specified number of days' notice to the holders of such obligations. Because these obligations are direct lending arrangements between the lender and borrower, it is not contemplated that such instruments generally will be traded. There generally is not an established secondary market for these obligations. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, the Fund's right to redeem is dependent on the ability of the borrower to pay principal and interest on demand. Such obligations frequently are not rated by credit rating agencies and may involve heightened risk of default by the issuer. Although one or more of the other risks described in this SAI may apply, the largest risks associated with variable- or floating-rate securities include: Credit Risk and Management Risk. -10- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Security Transactions Subject to policies set by the board, AEFC is authorized to determine, consistent with the Fund's investment goal and policies, which securities will be purchased, held, or sold. The description of policies and procedures in this section also applies to any Fund subadviser. In determining where the buy and sell orders are to be placed, AEFC has been directed to use its best efforts to obtain the best available price and the most favorable execution except where otherwise authorized by the board. In selecting broker-dealers to execute transactions, AEFC may consider the price of the security, including commission or mark-up, the size and difficulty of the order, the reliability, integrity, financial soundness, and general operation and execution capabilities of the broker, the broker's expertise in particular markets, and research services provided by the broker. The Fund, AEFC, any subadviser and American Express Financial Advisors Inc. (the Distributor) each have a strict Code of Ethics that prohibits affiliated personnel from engaging in personal investment activities that compete with or attempt to take advantage of planned portfolio transactions for the Fund. The Fund's securities may be traded on a principal rather than an agency basis. In other words, AEFC will trade directly with the issuer or with a dealer who buys or sells for its own account, rather than acting on behalf of another client. AEFC does not pay the dealer commissions. Instead, the dealer's profit, if any, is the difference, or spread, between the dealer's purchase and sale price for the security. On occasion, it may be desirable to compensate a broker for research services or for brokerage services by paying a commission that might not otherwise be charged or a commission in excess of the amount another broker might charge. The board has adopted a policy authorizing AEFC to do so to the extent authorized by law, if AEFC determines, in good faith, that such commission is reasonable in relation to the value of the brokerage or research services provided by a broker or dealer, viewed either in the light of that transaction or AEFC's overall responsibilities with respect to the Fund and the other American Express mutual funds for which it acts as investment manager. Research provided by brokers supplements AEFC's own research activities. Such services include economic data on, and analysis of, U.S. and foreign economies; information on specific industries; information about specific companies, including earnings estimates; purchase recommendations for stocks and bonds; portfolio strategy services; political, economic, business, and industry trend assessments; historical statistical information; market data services providing information on specific issues and prices; and technical analysis of various aspects of the securities markets, including technical charts. Research services may take the form of written reports, computer software, or personal contact by telephone or at seminars or other meetings. AEFC has obtained, and in the future may obtain, computer hardware from brokers, including but not limited to personal computers that will be used exclusively for investment decision-making purposes, which include the research, portfolio management, and trading functions and other services to the extent permitted under an interpretation by the SEC. When paying a commission that might not otherwise be charged or a commission in excess of the amount another broker might charge, AEFC must follow procedures authorized by the board. To date, three procedures have been authorized. One procedure permits AEFC to direct an order to buy or sell a security traded on a national securities exchange to a specific broker for research services it has provided. The second procedure permits AEFC, in order to obtain research, to direct an order on an agency basis to buy or sell a security traded in the over-the-counter market to a firm that does not make a market in that security. The commission paid generally includes compensation for research services. The third procedure permits AEFC, in order to obtain research and brokerage services, to cause the Fund to pay a commission in excess of the amount another broker might have charged. AEFC has advised the Fund that it is necessary to do business with a number of brokerage firms on a continuing basis to obtain such services as the handling of large orders, the willingness of a broker to risk its own money by taking a position in a security, and the specialized handling of a particular group of securities that only certain brokers may be able to offer. As a result of this arrangement, some portfolio transactions may not be effected at the lowest commission, but AEFC believes it may obtain better overall execution. AEFC has represented that under all three procedures the amount of commission paid will be reasonable and competitive in relation to the value of the brokerage services performed or research provided. All other transactions will be placed on the basis of obtaining the best available price and the most favorable execution. In so doing, if in the professional opinion of the person responsible for selecting the broker or dealer, several firms can execute the transaction on the same basis, consideration will be given by such person to those firms offering research services. Such services may be used by AEFC in providing advice to all American Express mutual funds even though it is not possible to relate the benefits to any particular fund. Each investment decision made for the Fund is made independently from any decision made for another portfolio, fund, or other account advised by AEFC or any of its subsidiaries. When the Fund buys or sells the same security as another portfolio, fund, or account, AEFC carries out the purchase or sale in a way the Fund agrees in advance is fair. Although sharing in large transactions may adversely affect the price or volume purchased or sold by the Fund, the Fund hopes to gain an overall advantage in execution. On occasion, the Fund may purchase and sell a security simultaneously in order to profit from short-term price disparities. On a periodic basis, AEFC makes a comprehensive review of the broker-dealers and the overall reasonableness of their commissions. The review evaluates execution, operational efficiency, and research services. -11- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- The Fund paid total brokerage commissions of $0 for fiscal year ended July 31, 2001, $0 for fiscal year 2000, and $0 for fiscal year 1999. Substantially all firms through whom transactions were executed provide research services. No transactions were directed to brokers because of research services they provided to the Fund. As of the end of the most recent fiscal year, the Fund held securities of its regular brokers or dealers of the parent of those brokers or dealers that derived more than 15% of gross revenue from securities-related activities as presented below: Value of securities Name of issuer owned at end of fiscal year Bank of America $ 99,936,421 Bear Stearns 86,642,814 Goldman Sachs Group 238,225,456 Morgan Stanley 85,025,924 Salomon Smith Barney 102,232,727 Brokerage Commissions Paid to Brokers Affiliated with American Express Financial Corporation Affiliates of American Express Company (of which AEFC is a wholly-owned subsidiary) may engage in brokerage and other securities transactions on behalf of the Fund according to procedures adopted by the board and to the extent consistent with applicable provisions of the federal securities laws. Subject to approval by the board, the same conditions apply to transactions with broker-dealer affiliates of any subadviser. AEFC will use an American Express affiliate only if (i) AEFC determines that the Fund will receive prices and executions at least as favorable as those offered by qualified independent brokers performing similar brokerage and other services for the Fund and (ii) the affiliate charges the Fund commission rates consistent with those the affiliate charges comparable unaffiliated customers in similar transactions and if such use is consistent with terms of the Investment Management Services Agreement. No brokerage commissions were paid to brokers affiliated with AEFC for the three most recent fiscal years. Performance Information The Fund may quote various performance figures to illustrate past performance. Average annual total return and current yield quotations, if applicable, used by the Fund are based on standardized methods of computing performance as required by the SEC. An explanation of the methods used by the Fund to compute performance follows below. AVERAGE ANNUAL TOTAL RETURN The Fund may calculate average annual total return for a class for certain periods by finding the average annual compounded rates of return over the period that would equate the initial amount invested to the ending redeemable value, according to the following formula: P(1 + T)(to the power of n) = ERV where: P = a hypothetical initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of a hypothetical $1,000 payment, made at the beginning of a period, at the end of the period (or fractional portion thereof) AGGREGATE TOTAL RETURN The Fund may calculate aggregate total return for a class for certain periods representing the cumulative change in the value of an investment in the Fund over a specified period of time according to the following formula: ERV - P ------- P where: P = a hypothetical initial payment of $1,000 ERV = ending redeemable value of a hypothetical $1,000 payment, made at the beginning of a period, at the end of the period (or fractional portion thereof) -12- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- ANNUALIZED YIELD The Fund calculates annualized simple and compound yields for a class based on a seven-day period. The simple yield is calculated by determining the net change in the value of a hypothetical account having a balance of one share at the beginning of the seven-day period, dividing the net change in account value by the value of the account at the beginning of the period to obtain the return for the period, and multiplying that return by 365/7 to obtain an annualized figure. The value of the hypothetical account includes the amount of any declared dividends, the value of any shares purchased with any dividend paid during the period and any dividends declared for such shares. The Fund's yield does not include any realized or unrealized gains or losses. The Fund calculates its compound yield according to the following formula: Compound Yield = (return for seven-day period + 1) x (365/7) - 1 The Fund's simple annualized yield was 3.35% for Class A, 2.60% for Class B, 2.61% for Class C and 3.37% for Class Y and its compound yield was 3.41% for Class A, 2.64% for Class B, 2.64% for Class C and 3.42% for Class Y on July 31, 2001, the last day of the Fund's fiscal year. Yield, or rate of return, on Fund shares may fluctuate daily and does not provide a basis for determining future yields. However, it may be used as one element in assessing how the Fund is meeting its goal. When comparing an investment in the Fund with savings accounts and similar investment alternatives, you must consider that such alternatives often provide an agreed to or guaranteed fixed yield for a stated period of time, whereas the Fund's yield fluctuates. In comparing the yield of one money market fund to another, you should consider the Fund's investment policies, including the types of investments permitted. In its sales material and other communications, the Fund may quote, compare or refer to rankings, yields, or returns as published by independent statistical services or publishers and publications such as The Bank Rate Monitor National Index, Barron's, Business Week, CDA Technologies, Donoghue's Money Market Fund Report, Financial Services Week, Financial Times, Financial World, Forbes, Fortune, Global Investor, Institutional Investor, Investor's Business Daily, Kiplinger's Personal Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster, Newsweek, The New York Times, Personal Investor, Shearson Lehman Aggregate Bond Index, Stanger Report, Sylvia Porter's Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal, and Wiesenberger Investment Companies Service. The Fund also may compare its performance to a wide variety of indexes or averages. There are similarities and differences between the investments that the Fund may purchase and the investments measured by the indexes or averages and the composition of the indexes or averages will differ from that of the Fund. Ibbotson Associates provides historical returns of the capital markets in the United States, including common stocks, small capitalization stocks, long-term corporate bonds, intermediate-term government bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation (based on the CPI) and combinations of various capital markets. The performance of these capital markets is based on the returns of different indexes. The Fund may use the performance of these capital markets in order to demonstrate general risk-versus-reward investment scenarios. The Fund may quote various measures of volatility in advertising. Measures of volatility seek to compare a fund's historical share price fluctuations or returns to those of a benchmark. The Distributor may provide information designed to help individuals understand their investment goals and explore various financial strategies. Materials may include discussions of asset allocation, retirement investing, brokerage products and services, model portfolios, saving for college or other goals, and charitable giving. Valuing Fund Shares All of the securities in the Fund's portfolio are valued at amortized cost. The amortized cost method of valuation is an approximation of market value determined by systematically increasing the carrying value of a security if acquired at a discount, or reducing the carrying value if acquired at a premium, so that the carrying value is equal to maturity value on the maturity date. It does not take into consideration unrealized capital gains or losses. The board has established procedures designed to stabilize the fund's price per share for purposes of sales and redemptions at $1, to the extent that it is reasonably possible to do so. These procedures include review of the Fund's securities by the board, at intervals deemed appropriate by it, to determine whether the Fund's net asset value per share computed by using available market quotations deviates from a share value of $1 as computed using the amortized cost method. The board must consider any deviation that appears and if it exceeds 0.5% it must determine what action, if any, needs to be taken. If the board determines a deviation exists that may result in a material dilution of the holdings of current shareholders or investors, or in other unfair consequences for such persons, it must undertake remedial action that it deems necessary and appropriate. Such action may include withholding dividends, calculating net asset value per share for purposes of sales and redemptions using available market quotations, making redemptions in kind, and selling securities before maturity in order to realize capital gains or losses or to shorten average portfolio maturity. -13- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- While the amortized cost method provides certainty and consistency in portfolio valuation, it may result in valuations of securities that are either somewhat higher or lower than the prices at which the securities could be sold. This means that during times of declining interest rates the yield on the Fund's shares may be higher than if valuations of securities were made based on actual market prices and estimates of market prices. Accordingly, if using the amortized cost method were to result in a lower portfolio value, a prospective investor in the Fund would be able to obtain a somewhat higher yield than he would get if portfolio valuation were based on actual market values. Existing shareholders, on the other hand, would receive a somewhat lower yield than they would otherwise receive. The opposite would happen during a period of rising interest rates. Investing in the Fund The minimum purchase for directors, officers and employees of the Fund or AEFC and AEFC financial advisors is $1,000 for the Fund (except payroll deduction plans), with a minimum additional purchase of $25. Class Y Shares Class Y shares are offered to certain institutional investors. Class Y shares are sold without a front-end sales charge or a CDSC and are not subject to a distribution fee. The following investors are eligible to purchase Class Y shares: o Qualified employee benefit plans* if the plan: -- uses a daily transfer recordkeeping service offering participants daily access to American Express mutual funds and has -- at least $10 million in plan assets or -- 500 or more participants; or -- does not use daily transfer recordkeeping and has -- at least $3 million invested in American Express mutual funds or -- 500 or more participants. o Trust companies or similar institutions, and charitable organizations that meet the definition in Section 501(c)(3) of the Internal Revenue Code.* These institutions must have at least $10 million in American Express mutual funds. o Nonqualified deferred compensation plans* whose participants are included in a qualified employee benefit described above. o State sponsored college savings plans established under Section 529 of the Internal Revenue Code. * Eligibility must be determined in advance. To do so, contact your financial advisor. SYSTEMATIC INVESTMENT PROGRAMS After you make your initial investment of $100 or more, you must make additional payments of $100 or more on at least a monthly basis until your balance reaches $2,000. These minimums do not apply to all systematic investment programs. You decide how often to make payments -- monthly, quarterly, or semiannually. You are not obligated to make any payments. You can omit payments or discontinue the investment program altogether. The Fund also can change the program or end it at any time. AUTOMATIC DIRECTED DIVIDENDS Dividends, including capital gain distributions, paid by another American Express mutual fund, may be used to automatically purchase shares in the same class of the Fund. Dividends may be directed to existing accounts only. Dividends declared by a fund are exchanged to this Fund the following day. Dividends can be exchanged into the same class of another American Express mutual fund but cannot be split to make purchases in two or more funds. Automatic directed dividends are available between accounts of any ownership except: o Between a non-custodial account and an IRA, or 401(k) plan account or other qualified retirement account of which American Express Trust Company acts as custodian; o Between two American Express Trust Company custodial accounts with different owners (for example, you may not exchange dividends from your IRA to the IRA of your spouse); and o Between different kinds of custodial accounts with the same ownership (for example, you may not exchange dividends from your IRA to your 401(k) plan account, although you may exchange dividends from one IRA to another IRA). Dividends may be directed from accounts established under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) only into other UGMA or UTMA accounts with identical ownership. The Fund's investment goal is described in its prospectus along with other information, including fees and expense ratios. Before exchanging dividends into another fund, you should read that fund's prospectus. You will receive a confirmation that the automatic directed dividend service has been set up for your account. REJECTION OF BUSINESS The Fund or AECSC reserves the right to reject any business, in its sole discretion. -14- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Selling Shares You have a right to sell your shares at any time. For an explanation of sales procedures, please see the prospectus. During an emergency, the board can suspend the computation of NAV, stop accepting payments for purchase of shares, or suspend the duty of the Fund to redeem shares for more than seven days. Such emergency situations would occur if: o The Exchange closes for reasons other than the usual weekend and holiday closings or trading on the Exchange is restricted, or o Disposal of the Fund's securities is not reasonably practicable or it is not reasonably practicable for the Fund to determine the fair value of its net assets, or o The SEC, under the provisions of the 1940 Act, declares a period of emergency to exist. Should the Fund stop selling shares, the board may make a deduction from the value of the assets held by the Fund to cover the cost of future liquidations of the assets so as to distribute fairly these costs among all shareholders. The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, which obligates the Fund to redeem shares in cash, with respect to any one shareholder during any 90-day period, up to the lesser of $250,000 or 1% of the net assets of the Fund at the beginning of the period. Although redemptions in excess of this limitation would normally be paid in cash, the Fund reserves the right to make these payments in whole or in part in securities or other assets in case of an emergency, or if the payment of a redemption in cash would be detrimental to the existing shareholders of the Fund as determined by the board. In these circumstances, the securities distributed would be valued as set forth in this SAI. Should the Fund distribute securities, a shareholder may incur brokerage fees or other transaction costs in converting the securities to cash. Pay-out Plans You can use any of several pay-out plans to redeem your investment in regular installments. If you redeem shares, you may be subject to a contingent deferred sales charge as discussed in the prospectus. While the plans differ on how the pay-out is figured, they all are based on the redemption of your investment. Net investment income dividends and any capital gain distributions will automatically be reinvested, unless you elect to receive them in cash. If you are redeeming a tax-qualified plan account for which American Express Trust Company acts as custodian, you can elect to receive your dividends and other distributions in cash when permitted by law. If you redeem an IRA or a qualified retirement account, certain restrictions, federal tax penalties, and special federal income tax reporting requirements may apply. You should consult your tax advisor about this complex area of the tax law. Applications for a systematic investment in a class of the Fund subject to a sales charge normally will not be accepted while a pay-out plan for any of those funds is in effect. Occasional investments, however, may be accepted. To start any of these plans, please consult your selling agent or write American Express Client Service Corporation, 70100 AXP Financial Center, Minneapolis, MN 55474, or call 800-437-3133. Your authorization must be received at least five days before the date you want your payments to begin. The initial payment must be at least $50. Payments will be made on a monthly, bimonthly, quarterly, semiannual, or annual basis. Your choice is effective until you change or cancel it. The following pay-out plans are designed to take care of the needs of most shareholders in a way AEFC can handle efficiently and at a reasonable cost. If you need a more irregular schedule of payments, it may be necessary for you to make a series of individual redemptions, in which case you will have to send in a separate redemption request for each pay-out. The Fund reserves the right to change or stop any pay-out plan and to stop making such plans available. Plan #1: Pay-out for a fixed period of time If you choose this plan, a varying number of shares will be redeemed at regular intervals during the time period you choose. This plan is designed to end in complete redemption of all shares in your account by the end of the fixed period. Plan #2: Redemption of a fixed number of shares If you choose this plan, a fixed number of shares will be redeemed for each payment and that amount will be sent to you. The length of time these payments continue is based on the number of shares in your account. Plan #3: Redemption of a fixed dollar amount If you decide on a fixed dollar amount, whatever number of shares is necessary to make the payment will be redeemed in regular installments until the account is closed. Plan #4: Redemption of a percentage of net asset value Payments are made based on a fixed percentage of the net asset value of the shares in the account computed on the day of each payment. Percentages range from 0.25% to 0.75%. For example, if you are on this plan and arrange to take 0.5% each month, you will get $50 if the value of your account is $10,000 on the payment date. -15- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Taxes For tax purposes, an exchange is considered a sale and purchase, and may results in a gain or loss. A sale is a taxable transaction. If you sell shares for more than their cost, the difference is a capital gain. Your gain may be short term (for shares held for one year or less) or long term (for shares held more than one year). If you sell shares for less than their cost, the difference is a capital loss. If you buy Class A shares of this or another American Express mutual fund and within 91 days exchange into this Fund, you may not include the sales charge in your calculation of tax gain or loss on the sale of the first fund you purchased. The sales charge may be included in the calculation of your tax gain or loss on a subsequent sale of this Fund. If you have a nonqualified investment in the Fund and you wish to move part or all of those shares to an IRA or qualified retirement account in the Fund, you can do so without paying a sales charge. However, this type of exchange is considered a redemption of shares and may result in a gain or loss for tax purposes. In addition, this type of exchange may result in an excess contribution under IRA or qualified plan regulations if the amount exchanged plus the amount of the initial sales charge applied to the amount exchanged exceeds annual contribution limitations. For example: If you were to exchange $2,000 in Class A shares from a nonqualified account to an IRA without considering the 5% ($100) initial sales charge applicable to that $2,000, you may be deemed to have exceeded current IRA annual contribution limitations. You should consult your tax advisor for further details about this complex subject. Net investment income dividends received should be treated as dividend income for federal income tax purposes. Corporate shareholders are generally entitled to a deduction equal to 70% of that portion of the Fund's dividend that is attributable to dividends the Fund received from domestic (U.S.) securities. For the most recent fiscal year, none of the Fund's net investment income dividends qualified for the corporate deduction. The Fund may be subject to U.S. taxes resulting from holdings in a passive foreign investment company (PFIC). A foreign corporation is a PFIC when 75% or more of its gross income for the taxable year is passive income or 50% or more of the average value of its assets consists of assets that produce or could produce passive income. Income earned by the Fund may have had foreign taxes imposed and withheld on it in foreign countries. Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes. If more than 50% of the Fund's total assets at the close of its fiscal year consists of securities of foreign corporations, the Fund will be eligible to file an election with the Internal Revenue Service under which shareholders of the Fund would be required to include their pro rata portions of foreign taxes withheld by foreign countries as gross income in their federal income tax returns. These pro rata portions of foreign taxes withheld may be taken as a credit or deduction in computing the shareholders' federal income taxes. If the election is filed, the Fund will report to its shareholders the per share amount of such foreign taxes withheld and the amount of foreign tax credit or deduction available for federal income tax purposes. Capital gain distributions, if any, received by shareholders should be treated as long-term capital gains regardless of how long they owned their shares. Short-term capital gains earned by the Fund are paid to shareholders as part of their ordinary income dividend and are taxable. A special 28% rate on capital gains may apply to sales of precious metals, if any, owned directly by the Fund. Under the Internal Revenue Code of 1986 (the Code), gains or losses attributable to fluctuations in exchange rates that occur between the time the Fund accrues interest or other receivables, or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects such receivables or pays such liabilities generally are treated as ordinary income or ordinary loss. Similarly, gains or losses on disposition of debt securities denominated in a foreign currency attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security and the date of disposition also are treated as ordinary gains or losses. These gains or losses, referred to under the Code as "section 988" gains or losses, may increase or decrease the amount of the Fund's investment company taxable income to be distributed to its shareholders as ordinary income. Under federal tax law, by the end of a calendar year the Fund must declare and pay dividends representing 98% of ordinary income for that calendar year and 98% of net capital gains (both long-term and short-term) for the 12-month period ending Oct. 31 of that calendar year. The Fund is subject to an excise tax equal to 4% of the excess, if any, of the amount required to be distributed over the amount actually distributed. The Fund intends to comply with federal tax law and avoid any excise tax. -16- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- The Internal Revenue Code imposes two asset diversification rules that apply to the Fund as of the close of each quarter. First, as to 50% of its holdings, the Fund may hold no more than 5% of its assets in securities of one issuer and no more than 10% of any one issuer's outstanding voting securities. Second, the Fund cannot have more than 25% of its assets in any one issuer. For purposes of the excise tax distributions, "section 988" ordinary gains and losses are distributable based on an Oct. 31 year end. This is an exception to the general rule that ordinary income is paid based on a calendar year end. If a mutual fund is the holder of record of any share of stock on the record date for any dividend payable with respect to the stock, the dividend will be included in gross income by the Fund as of the later of (1) the date the share became ex-dividend or (2) the date the Fund acquired the share. Because the dividends on some foreign equity investments may be received some time after the stock goes ex-dividend, and in certain rare cases may never be received by the Fund, this rule may cause the Fund to take into income dividend income that it has not received and pay that income to its shareholders. To the extent that the dividend is never received, the Fund will take a loss at the time that a determination is made that the dividend will not be received. This is a brief summary that relates to federal income taxation only. Shareholders should consult their tax advisor as to the application of federal, state, and local income tax laws to Fund distributions. Agreements INVESTMENT MANAGEMENT SERVICES AGREEMENT AEFC, a wholly-owned subsidiary of American Express Company, is the investment manager for the Fund. Under the Investment Management Services Agreement, AEFC, subject to the policies set by the board, provides investment management services. For its services, AEFC is paid a fee based on the following schedule. Each class of the Fund pays its proportionate share of the fee. Assets (billions) Annual rate at each asset level First $1.00 0.360% Next 0.50 0.343 Next 0.50 0.325 Next 0.50 0.308 Next 1.00 0.290 Next 3.00 0.270 Over 6.50 0.250 On the last day of the most recent fiscal year, the daily rate applied to the Fund's net assets was equal to 0.299% on an annual basis. The fee is calculated for each calendar day on the basis of net assets as of the close of business two business days prior to the day for which the calculation is made. The management fee is paid monthly. Under the agreement, the total amount paid was $19,147,901 for fiscal year 2001, $17,461,716 for fiscal year 2000, and $12,747,131 for fiscal year 1999. Under the agreement, the Fund also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees; audit and certain legal fees; fidelity bond premiums; registration fees for shares; office expenses; postage of confirmations except purchase confirmations; consultants' fees; compensation of board members, officers and employees; corporate filing fees; organizational expenses; expenses incurred in connection with lending securities; and expenses properly payable by the Fund, approved by the board. Under the agreement, nonadvisory expenses, net of earnings credits, paid by the Fund were $2,913,436 for fiscal year 2001, $470,653 for fiscal year 2000, and $2,071,446 for fiscal year 1999. -17- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Administrative Services Agreement The Fund has an Administrative Services Agreement with AEFC. Under this agreement, the Fund pays AEFC for providing administration and accounting services. The fee is calculated as follows: Assets (billions) Annual rate at each asset level First $1.0 0.030% Next 0.5 0.027 Next 0.5 0.025 Next 0.5 0.022 Over 2.5 0.020 On the last day of the most recent fiscal year, the daily rate applied to the Fund's net assets was equal to 0.023% on an annual basis. The fee is calculated for each calendar day on the basis of net assets as of the close of business two business days prior to the day for which the calculation is made. Under the agreement, the Fund paid fees of $1,528,832 for fiscal year 2001, $1,376,918 for fiscal year 2000, and $1,174,621 for fiscal year 1999. Third parties with which AEFC contracts to provide services for the Fund or its shareholders may pay a fee to AEFC to help defray the cost of providing administrative and accounting services. The amount of any such fee is negotiated separately with each service provider and does not constitute compensation for investment advisory, distribution, or other services. Payment of any such fee neither increases nor reduces fees or expenses paid by shareholders of the Fund. TRANSFER AGENCY AGREEMENT The Fund has a Transfer Agency Agreement with American Express Client Service Corporation (AECSC). This agreement governs AECSC's responsibility for administering and/or performing transfer agent functions, for acting as service agent in connection with dividend and distribution functions and for performing shareholder account administration agent functions in connection with the issuance, exchange and redemption or repurchase of the Fund's shares. Under the agreement, AECSC will earn a fee from the Fund determined by multiplying the number of shareholder accounts at the end of the day by a rate determined for each class and dividing by the number of days in the year. The rate for Class A is $24.00 per year, for Class B is $25.00 per year, for Class C is $24.50 per year and for Class Y is $22.00 per year. The fees paid to AECSC may be changed by the board without shareholder approval. DISTRIBUTION AGREEMENT American Express Financial Advisors Inc. is the Fund's principal underwriter (the Distributor). The Fund's shares are offered on a continuous basis. SHAREHOLDER SERVICE AGREEMENT With respect to Class Y shares, the Fund pays the Distributor a fee for service provided to shareholders by financial advisors and other servicing agents. The fee is calculated at a rate of 0.10% of average daily net assets. PLAN AND AGREEMENT OF DISTRIBUTION For Class B and Class C shares, to help defray the cost of distribution and servicing, not covered by the sales charges received under the Distribution Agreement, the Fund and the Distributor entered into a Plan and Agreement of Distribution (Plan) pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund pays a fee up to actual expenses incurred at an annual rate of up to 0.75% of the Fund's average daily net assets attributable to Class B and Class C shares. Expenses covered under this Plan include sales commissions; business, employee and financial advisor expenses charged to distribution of Class A, Class B and Class C shares; and overhead appropriately allocated to the sale of Class A, Class B and Class C shares. These expenses also include costs of providing personal service to shareholders. A substantial portion of the costs are not specifically identified to any one of the American Express mutual funds. The Plan must be approved annually by the board, including a majority of the disinterested board members, if it is to continue for more than a year. At least quarterly, the board must review written reports concerning the amounts expended under the Plan and the purposes for which such expenditures were made. The Plan and any agreement related to it may be terminated at any time by vote of a majority of board members who are not interested persons of the Fund and have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan, or by vote of a majority of the outstanding voting securities of the Fund's Class B shares or by the Distributor. The Plan (or any agreement related to it) will terminate in the event of its assignment, as that term is defined in the 1940 Act. -18- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- The Plan may not be amended to increase the amount to be spent for distribution without shareholder approval, and all material amendments to the Plan must be approved by a majority of the board members, including a majority of the board members who are not interested persons of the Fund and who do not have a financial interest in the operation of the Plan or any agreement related to it. The selection and nomination of disinterested board members is the responsibility of the other disinterested board members. No board member who is not an interested person has any direct or indirect financial interest in the operation of the Plan or any related agreement. For the most recent fiscal year, under the agreement, the Fund paid fees of $1,939,734 for Class B shares and $3,227 for Class C shares. The fee is not allocated to any one service (such as advertising, payments to underwriters, or other uses). However, a significant portion of the fee is generally used for sales and promotional expenses. CUSTODIAN AGREEMENT The Fund's securities and cash are held by American Express Trust Company, 200 AXP Financial Center, Minneapolis, MN 55474, through a custodian agreement. The custodian is permitted to deposit some or all of its securities in central depository systems as allowed by federal law. For its services, the Fund pays the custodian a maintenance charge and a charge per transaction in addition to reimbursing the custodian's out-of-pocket expenses. The custodian has entered into a sub-custodian agreement with the Bank of New York, 90 Washington Street, New York, NY 10286. As part of this arrangement, securities purchased outside the United States are maintained in the custody of various foreign branches of Bank of New York or in other financial institutions as permitted by law and by the Fund's sub-custodian agreement. Organizational Information The Fund is an open-end management investment company. The Fund headquarters are at 901 S. Marquette Ave., Suite 2810, Minneapolis, MN 55402-3268. SHARES The shares of the Fund represent an interest in that fund's assets only (and profits or losses), and, in the event of liquidation, each share of the Fund would have the same rights to dividends and assets as every other share of that Fund. VOTING RIGHTS As a shareholder in the Fund, you have voting rights over the Fund's management and fundamental policies. You are entitled to one vote for each share you own. Each class, if applicable, has exclusive voting rights with respect to matters for which separate class voting is appropriate under applicable law. All shares have cumulative voting rights with respect to the election of board members. This means that you have as many votes as the number of shares you own, including fractional shares, multiplied by the number of members to be elected. DIVIDEND RIGHTS Dividends paid by the Fund, if any, with respect to each class of shares, if applicable, will be calculated in the same manner, at the same time, on the same day, and will be in the same amount, except for differences resulting from differences in fee structures. AMERICAN EXPRESS FINANCIAL CORPORATION AEFC has been a provider of financial services since 1894. Its family of companies offers not only mutual funds but also insurance, annuities, investment certificates and a broad range of financial management services. In addition to managing assets of more than $83 billion for the American Express Funds, AEFC manages investments for itself and its subsidiaries, American Express Certificate Company and IDS Life Insurance Company. Total assets owned and managed as of the end of the most recent fiscal year were more than $227 billion. The Distributor serves individuals and businesses through its nationwide network of more than 600 supervisory offices, more than 3,800 branch offices and more than 9,600 financial advisors. -19-
AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- FUND HISTORY TABLE FOR ALL PUBLICLY OFFERED AMERICAN EXPRESS FUNDS* Date of Form of State of Fiscal Fund organization organization organization year end Diversified AXP Bond Fund, Inc. 6/27/74, 6/31/86*** Corporation NV/MN 8/31 Yes AXP California Tax-Exempt Trust 4/7/86 Business Trust**** MA 6/30 AXP California Tax-Exempt Fund No AXP Discovery Fund, Inc. 4/29/81, 6/13/86*** Corporation NV/MN 7/31 Yes AXP Equity Select Fund, Inc.** 3/18/57, 6/13/86*** Corporation NV/MN 11/30 Yes AXP Extra Income Fund, Inc. 8/17/83 Corporation MN 5/31 Yes AXP Federal Income Fund, Inc. 3/12/85 Corporation MN 5/31 Yes AXP Global Series, Inc. 10/28/88 Corporation MN 10/31 AXP Emerging Markets Fund Yes AXP Global Balanced Fund Yes AXP Global Bond Fund No AXP Global Growth Fund Yes AXP Innovations Fund Yes AXP Growth Series, Inc. 5/21/70, 6/13/86*** Corporation NV/MN 7/31 AXP Growth Fund Yes AXP Research Opportunities Fund Yes AXP High Yield Tax-Exempt Fund, Inc. 12/21/78, 6/13/86*** Corporation NV/MN 11/30 Yes AXP International Fund, Inc. 7/18/84 Corporation MN 10/31 AXP European Equity Fund No AXP International Fund Yes AXP Investment Series, Inc. 1/18/40, 6/13/86*** Corporation NV/MN 9/30 AXP Diversified Equity Income Fund Yes AXP Mutual Yes AXP Managed Series, Inc. 10/9/84 Corporation MN 9/30 AXP Managed Allocation Fund Yes AXP Market Advantage Series, Inc. 8/25/89 Corporation MN 1/31 AXP Blue Chip Advantage Fund Yes AXP International Equity Index Fund No AXP Mid Cap Index Fund No AXP Nasdaq 100 Index Fund No AXP S&P 500 Index Fund No AXP Small Company Index Fund Yes AXP Total Stock Market Index Fund No AXP Money Market Series, Inc. 8/22/75, 6/13/86*** Corporation NV/MN 7/31 AXP Cash Management Fund Yes AXP New Dimensions Fund, Inc. 2/20/68, 6/13/86*** Corporation NV/MN 7/31 AXP Growth Dimensions Fund Yes AXP New Dimensions Fund Yes AXP Precious Metals Fund, Inc. 10/5/84 Corporation MN 3/31 No AXP Progressive Fund, Inc. 4/23/68, 6/13/86*** Corporation NV/MN 9/30 Yes AXP Selective Fund, Inc. 2/10/45, 6/13/86*** Corporation NV/MN 5/31 Yes AXP Stock Fund, Inc. 2/10/45, 6/13/86*** Corporation NV/MN 9/30 Yes AXP Partners International Series, Inc. 5/9/01 Corporation MN 10/31 AXP Partners International Aggressive Growth Fund Yes AXP Partners International Select Value Fund Yes
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AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Date of Form of State of Fiscal Fund organization organization organization year end Diversified AXP Partners Series, Inc. 3/20/01 Corporation MN 5/31 AXP Partners Fundamental Value Fund Yes AXP Partners Small Cap Value Fund No AXP Partners Value Fund Yes AXP Special Tax-Exempt Series Trust 4/7/86 Business Trust**** MA 6/30 AXP Insured Tax-Exempt Fund Yes AXP Massachusetts Tax-Exempt Fund No AXP Michigan Tax-Exempt Fund No AXP Minnesota Tax-Exempt Fund No AXP New York Tax-Exempt Fund No AXP Ohio Tax-Exempt Fund No AXP Strategy Series, Inc. 1/24/84 Corporation MN 3/31 AXP Equity Value Fund** Yes AXP Focus 20 Fund No AXP Small Cap Advantage Fund Yes AXP Small Cap Growth Fund Yes AXP Strategy Aggressive Fund** Yes AXP Tax-Exempt Series, Inc. 9/30/76, 6/13/86*** Corporation NV/MN 11/30 AXP Intermediate Tax-Exempt Fund Yes AXP Tax-Exempt Bond Fund Yes AXP Tax-Free Money Fund, Inc. 2/29/80, 6/13/86*** Corporation NV/MN 12/31 Yes AXP Utilities Income Fund, Inc. 3/25/88 Corporation MN 6/30 Yes
* At the shareholders meeting held on June 16, 1999, shareholders approved the name change from IDS to AXP. In addition to substituting AXP for IDS, the following series changed their names: IDS Growth Fund, Inc. to AXP Growth Series, Inc., IDS Managed Retirement Fund, Inc. to AXP Managed Series, Inc., IDS Strategy Fund, Inc. to AXP Strategy Series, Inc., and IDS Tax-Exempt Bond Fund, Inc. to AXP Tax-Exempt Series, Inc. ** At the shareholders meeting held on Nov. 9, 1994, IDS Equity Plus Fund, Inc. changed its name to IDS Equity Select Fund, Inc. At that same time IDS Strategy Aggressive Equity Fund changed its name to IDS Strategy Aggressive Fund, and IDS Strategy Equity Fund changed its name to IDS Equity Value Fund. *** Date merged into a Minnesota corporation incorporated on 4/7/86. **** Under Massachusetts law, shareholders of a business trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the trust itself is unable to meet its obligations. -21-
AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- 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 15 Master Trust portfolios and 68 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, Position held with Principal occupations Other directorships Committee memberships address, Registrant and length during past 5 years age of service ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- H. Brewster Atwater, Jr. Board member since Retired chairman and Merck & Co., Inc. Board Effectiveness, 4900 IDS Tower 1996 chief executive (pharmaceuticals) Investment Review Minneapolis, MN 55402 officer, General Born in 1931 Mills, Inc. (consumer foods) ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Arne H. Carlson Chair of the Board Chairman, Board Contracts, Executive, 901 S. Marquette Ave. since 1999 Services Corporation Investment Review, Minneapolis, MN 55402 (provides Board Effectiveness Born in 1934 administrative services to boards) Former Governor of Minnesota ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Lynne V. Cheney Board member since Distinguished Fellow, The Reader's Digest Joint Audit, Contracts American Enterprise Institute 1994 AEI Association Inc. for Public Policy Research (AEI) 1150 17th St., N.W. Washington, D.C. 20036 Born in 1941 ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Livio D. DeSimone Board member since Retired chair of the Cargill, Incorporated Joint Audit, Contracts 30 Seventh Street 2001 board and chief (commodity merchants St. Paul, MN 55101-4901 executive officer, and processors), Born in 1936 Minnesota Mining and Target Corporation Manufacturing (3M) (department stores), General Mills, Inc. (consumer foods) and Vulcan Materials Company (construction materials/ chemicals) ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Ira D. Hall Board member since Treasurer, Texaco Inc. Joint Audit, Texaco, Inc. 2001 since 1998. Prior to Investment Review 2000 Westchester Avenue that, director, White Plains, NY 10650 International Born in 1944 Operations IBM Corp. ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Heinz F. Hutter Board member since Retired president and Board Effectiveness, P.O. Box 2187 1994 chief operating Investment Review Minneapolis, MN 55402 officer, Cargill, Born in 1929 Incorporated (commodity merchants and processors) ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Anne P. Jones Board member since Attorney and Motorola, Inc. Joint Audit, Board 5716 Bent Branch Rd. 1985 telecommunications (electronics) Effectiveness Bethesda, MD 20816 consultant Born in 1935 ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- William R. Pearce Board member since RII Weyerhaeuser World Executive, Investment 2050 One Financial Plaza 1980 Timberfund, L.P. Review, Board Minneapolis, MN 55402 (develops timber Effectiveness Born in 1927 resources) - management committee; Former chair, American Express Funds ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Alan K. Simpson Board member since Former three-term Biogen, Inc. Joint Audit, Contracts 1201 Sunshine Ave. 1997 United States Senator (bio-pharmaceuticals) Cody, WY 82414 for Wyoming Born in 1931 ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- C. Angus Wurtele Board member since Retired chair of the The Valspar Contracts, Investment Suite 1700 Foshay Tower 1994 board and chief Corporation (paints), Review Minneapolis, MN 55402 executive officer, The Bemis Corporation Born in 1934 Valspar Corporation (packaging) ------------------------------- ----------------------- ------------------------ ----------------------- -----------------------
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AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Board Members Affiliated with American Express Financial Corporation (AEFC) ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Name, Position held with Principal occupations Other directorships Committee memberships address, Registrant and length during past 5 years age of service ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- David R. Hubers Board member since Retired chief Chronimed Inc. 50643 AXP Financial Center 1993 executive officer, (specialty Minneapolis, MN 55474 director and chair of pharmaceutical Born in 1943 the board of AEFC distribution), RTW Inc. (manages worker's compensation programs), Lawson Software, Inc. (technology based business applications) ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- John R. Thomas Board member since Senior vice president Executive, Investment 50652 AXP Financial Center 1987, president since - information and Review Minneapolis, MN 55474 1997 technology of AEFC Born in 1937 ------------------------------- ----------------------- ------------------------ ----------------------- -----------------------
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. Thomas, who is president, the Fund's other officers are:
Other Officers ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Name, Position held with Principal occupations Other directorships Committee memberships address, Registrant and length during past 5 years age of service ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- John M. Knight Treasurer since 1999 Vice president - 50005 AXP Financial Center investment accounting Minneapolis, MN 55474 of AEFC Born in 1952 ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Leslie L. Ogg Vice president, President of Board 901 S. Marquette Ave. general counsel, and Services Corporation Minneapolis, MN 55402 secretary since 1978 Born in 1938 ------------------------------- ----------------------- ------------------------ ----------------------- ----------------------- Frederick C. Quirsfeld Vice president since Senior vice president 53609 AXP Financial Center 1998 - fixed income of AEFC Minneapolis, MN 55474 Born in 1947 ------------------------------- ----------------------- ------------------------ ----------------------- -----------------------
Compensation for Board Members During the most recent fiscal year, the independent members of the Fund board, for attending up to 26 meetings, received the following compensation: Compensation Table Total cash compensation from Aggregate American Express Funds and Board member compensation from the Fund Preferred Master Trust Group H. Brewster Atwater, Jr. $3,575 $123,558 Lynne V. Cheney 2,475 84,492 Livio D. DeSimone 2,125 68,717 Ira D. Hall 2,875 103,817 Heinz F. Hutter 3,475 116,608 Anne P. Jones 3,475 116,258 William R. Pearce 3,575 123,608 Alan K. Simpson 3,425 112,408 C. Angus Wurtele 3,475 116,158 As of 30 days prior to the date of this SAI, the Fund's board members and officers as a group owned less than 1% of the outstanding shares of any class. -23- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Principal Holders of Securities As of 30 days prior to the date of this SAI, Craig A. Rhymers, Fifty Lakes, MNheld 15.55% of AXP Cash Management Fund Class C shares, John A. Musso and Toni Lee A. Calvitti, Agoura, CA held 13.51% of AXP Cash Management Fund Class C shares, Jeffrey T. Barbour and Karen E. Skelton, San Francisco, CA held 8.78% of AXP Cash Management Fund Class C shares and Theodore A. Metz and Arline A. Metz, Newtown, CT held 6.94% of AXP Cash Management Fund Class C shares. Independent Auditors The financial statements contained in the Annual Report were audited by independent auditors, KPMG LLP, 4200 Wells Fargo Center, 90 S. Seventh St., Minneapolis, MN 55402-3900. The independent auditors also provide other accounting and tax-related services as requested by the Fund. -24- AXP(R) Money Market Series, Inc. AXP(R) Cash Management Fund -------------------------------------------------------------------------------- Appendix DESCRIPTION OF MONEY MARKET SECURITIES The types of instruments that form the major part of the Fund's investments are described below. Certificates of Deposit -- A certificate of deposit is a negotiable receipt issued by a bank or savings and loan association in exchange for the deposit of funds. The issuer agrees to pay the amount deposited, plus interest, on the date specified on the certificate. Time Deposit -- A time deposit is a non-negotiable deposit in a bank for a fixed period of time. Bankers' Acceptances -- A bankers' acceptance arises from a short-term credit arrangement designed to enable businesses to obtain funds to finance commercial transactions. It is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then "accepted" by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. Commercial Paper -- Commercial paper is generally defined as unsecured short-term notes issued in bearer form by large well-known corporations and finance companies. Maturities on commercial paper range from one day to nine months. Commercial paper rated A by Standard & Poor's Corporation has the following characteristics: Liquidity ratios are better than the industry average. Long-term senior debt rating is "A" or better. The issuer has access to at least two additional channels of borrowing. Basic earnings and cash flow have an upward trend with allowances made for unusual circumstances. Typically, the issuer's industry is well established, the issuer has a strong position within its industry and the reliability and quality of management is unquestioned. Issuers rated A are further rated by use of numbers 1, 2 and 3 to denote relative strength within this highest classification. A Prime rating is the highest commercial paper rating assigned by Moody's Investors Services Inc. Issuers rated Prime are further rated by use of numbers 1, 2 and 3 to denote relative strength within this highest classification. Among the factors considered by Moody's in assigning ratings for an issuer are the following: (1) management; (2) economic evaluation of the industry and an appraisal of speculative type risks which may be inherent in certain areas; (3) competition and customer acceptance of products; (4) liquidity; (5) amount and quality of long-term debt; (6) ten year earnings trends; (7) financial strength of a parent company and the relationships which exist with the issuer; and (8) recognition by management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations. Letters of Credit -- A letter of credit is a short-term note issued in bearer form with a bank letter of credit which provides that the bank pay to the bearer the amount of the note upon presentation. U.S. Treasury Bills -- Treasury bills are issued with maturities of any period up to one year. Three-month and six-month bills are currently offered by the Treasury on 13-week and 26-week cycles respectively and are auctioned each week by the Treasury. Treasury bills are issued in book entry form and are sold only on a discount basis, i.e., the difference between the purchase price and the maturity value constitutes interest income for the investor. If they are sold before maturity, a portion of the income received may be a short-term capital gain. U.S. Government Agency Securities -- Federal agency securities are debt obligations which principally result from lending programs of the U.S. government. Housing and agriculture have traditionally been the principal beneficiaries of Federal credit programs, and agencies involved in providing credit to agriculture and housing account for the bulk of the outstanding agency securities. Repurchase Agreements -- A repurchase agreement involves the acquisition of securities by the Fund, with the concurrent agreement by a bank (or securities dealer if permitted by law or regulation), to reacquire the securities at the Fund's cost, plus interest, within a specified time. The Fund thereby receives a fixed rate of return on this investment, one that is insulated from market and rate fluctuations during the holding period. In these transactions, the securities acquired by the Fund have a total value equal to or in excess of the value of the repurchase agreement and are held by the Fund's custodian until required. Floating rate instruments -- These instruments pay interest at a rate tied to an external interest rate. The rate changes whenever there is a change in the external interest rate. If AEFC becomes aware that a security owned by the Fund is downgraded below the second highest rating, AEFC will either sell the security or recommend to the Fund's board why it should not be sold. -25- S-6320-20 X (9/01) Independent Auditors' Report 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, 2001, 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, 2001, and the financial highlights for each of the years in the five-year period ended July 31, 2001. 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 auditing standards generally accepted in the United States of America. 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, 2001, by correspondence with the custodian. 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 referred to above present fairly, in all material respects, the financial position of AXP Cash Management Fund as of July 31, 2001, 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 7, 2001 -------------------------------------------------------------------------------- 10 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Financial Statements
Statement of assets and liabilities AXP Cash Management Fund July 31, 2001 Assets Investments in securities, at value (Note 1) (identified cost $6,582,490,631) $6,582,490,631 Cash in bank on demand deposit 15,730,893 Capital shares receivable 63,238 Accrued interest receivable 2,275,371 --------- Total assets 6,600,560,133 ------------- Liabilities Dividends payable to shareholders 3,577,457 Capital shares payable 50,000 Accrued investment management services fee 54,032 Accrued distribution fee 5,630 Accrued transfer agency fee 37,532 Accrued administrative services fee 4,080 Other accrued expenses 764,687 ------- Total liabilities 4,493,418 --------- Net assets applicable to outstanding capital stock $6,596,066,715 ============== Represented by Capital stock -- $.01 par value (Note 1) $ 65,961,652 Additional paid-in capital 6,530,139,702 Undistributed net investment income 146 Accumulated net realized gain (loss) (34,785) ------- Total -- representing net assets applicable to outstanding capital stock $6,596,066,715 ============== Net assets applicable to outstanding shares: Class A $6,148,527,647 Class B $ 272,569,198 Class C $ 865,141 Class Y $ 174,104,729 Net asset value per share of outstanding capital stock: Class A shares 6,148,402,729 $ 1.00 Class B shares 272,710,354 $ 1.00 Class C shares 865,176 $ 1.00 Class Y shares 174,186,968 $ 1.00 ----------- --------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 11 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT
Statement of operations AXP Cash Management Fund Year ended July 31, 2001 Investment income Income: Interest $367,353,774 ------------ Expenses (Note 2): Investment management services fee 19,147,901 Distribution fee Class B 1,939,734 Class C 3,227 Transfer agency fee 11,832,254 Incremental transfer agency fee Class A 998,998 Class B 46,399 Class C 72 Administrative services fees and expenses 1,528,832 Compensation of board members 28,475 Custodian fees 369,183 Printing and postage 2,751,356 Registration fees 975,557 Audit fees 36,000 Other 17,692 ------ Total expenses 39,675,680 Earnings credits on cash balances (Note 2) (1,264,827) ---------- Total net expenses 38,410,853 ---------- Investment income (loss) -- net 328,942,921 ----------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on security transactions (Note 3) 6,061 ----- Net increase (decrease) in net assets resulting from operations $328,948,982 ============
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 12 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT
Statements of changes in net assets AXP Cash Management Fund Year ended July 31, 2001 2000 Operations and distributions Investment income (loss) -- net $ 328,942,921 $ 307,531,854 Net realized gain (loss) on investments 6,061 59 ----- -- Net increase (decrease) in net assets resulting from operations 328,948,982 307,531,913 ----------- ----------- Distributions to shareholders from: Net investment income Class A (309,127,272) (288,378,211) Class B (11,336,961) (11,576,576) Class C (16,835) (12) Class Y (8,461,719) (7,577,042) ---------- ---------- Total distributions (328,942,787) (307,531,841) ------------ ------------ Capital share transactions at constant $1 net asset value Proceeds from sales Class A shares 16,621,476,728 17,844,618,875 Class B shares 404,002,096 503,470,676 Class C shares 1,970,087 2,000 Class Y shares 324,334,535 214,230,305 Reinvestment of distributions at net asset value Class A shares 309,605,354 277,148,053 Class B shares 11,198,696 10,999,787 Class C shares 16,103 9 Class Y shares 8,512,225 7,334,858 Payments for redemptions Class A shares (16,220,392,217) (17,716,100,955) Class B shares (375,077,786) (473,855,132) Class C shares (1,123,023) -- Class Y shares (300,272,985) (204,010,075) ------------ ------------ Increase (decrease) in net assets from capital share transactions 784,249,813 463,838,401 ----------- ----------- Total increase (decrease) in net assets 784,256,008 463,838,473 Net assets at beginning of year 5,811,810,707 5,347,972,234 ------------- ------------- Net assets at end of year $ 6,596,066,715 $ 5,811,810,707 =============== =============== Undistributed net investment income $ 146 $ 12 --------------- ---------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 13 AXP CASH MANAGEMENT FUND -- 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) as a diversified, open-end management investment company. The Fund invests in money market securities. 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. Class C shares of the Fund were offered to the public on June 26, 2000. Prior to this date, American Express Financial Corporation (AEFC) purchased 2,000 shares of capital stock at $1.00 per share, which represented the initial capital in Class C. 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. 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. 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. -------------------------------------------------------------------------------- 15 AXP CASH MANAGEMENT FUND -- 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 accrued 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 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 $24.00 o Class B $25.00 o Class C $24.50 o Class Y $22.00 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 distribution fee at an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B and Class C shares. Sales charges received by the Distributor for distributing Fund shares were $1,696,291 for Class B and $4,753 for Class C for the year ended July 31, 2001. During the year ended July 31, 2001, the Fund's custodian and transfer agency fees were reduced by $1,264,827 as a result of earnings credits from overnight cash balances. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities aggregated $34,857,939,954 and $34,072,454,070, respectively, for the year ended July 31, 2001. Realized gains and losses are determined on an identified cost basis. -------------------------------------------------------------------------------- 15 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT 4. BANK BORROWINGS The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must have asset coverage for borrowings not to exceed the aggregate of 333% of advances equal to or less than five business days plus 367% of advances over five business days. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $200 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90 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 0.05% per annum. The Fund had no borrowings outstanding during the year ended July 31, 2001. 5. NEW ACCOUNTING PRONOUNCEMENT In November 2000, the AICPA issued a revised Audit and Accounting Guide, Audits of Investment Companies, which is effective for fiscal years beginning after Dec. 15, 2000. Adopting the revised Guide is not expected to have a significant impact on the Fund's financial position, results of operations or changes in its net assets. -------------------------------------------------------------------------------- 16 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT 6. 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, 2001 2000 1999 1998 1997 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) .05 .05 .05 .05 .05 Less distributions: Dividends from net investment income (.05) (.05) (.05) (.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) $6,149 $5,438 $5,032 $3,926 $3,094 Ratio of expenses to average daily net assets(c) .59% .58% .57% .56% .58% Ratio of net investment income (loss) to average daily net assets 5.18% 5.37% 4.65% 5.15% 4.96% Total return(e) 5.35% 5.55% 4.71% 5.34% 5.06% Class B Per share income and capital changes(a) Fiscal period ended July 31, 2001 2000 1999 1998 1997 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) .05 .05 .04 .04 .04 Less distributions: Dividends from net investment income (.05) (.05) (.04) (.04) (.04) 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) $273 $232 $192 $98 $147 Ratio of expenses to average daily net assets(c) 1.34% 1.33% 1.32% 1.32% 1.34% Ratio of net investment income (loss) to average daily net assets 4.37% 4.64% 3.88% 4.38% 4.14% Total return(e) 4.57% 4.76% 3.94% 4.53% 4.27%
See accompanying notes to financial highlights. -------------------------------------------------------------------------------- 17 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2001 2000(b) Net asset value, beginning of period $1.00 $1.00 Income from investment operations: Net investment income (loss) .05 -- Less distributions: Dividends from net investment income (.05) -- Net asset value, end of period $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $1 $-- Ratio of expenses to average daily net assets(c) 1.34% 1.33%(d) Ratio of net investment income (loss) to average daily net assets 3.88% 6.10%(d) Total return(e) 4.68% .63%
Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2001 2000 1999 1998 1997 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) .05 .05 .05 .05 .05 Less distributions: Dividends from net investment income (.05) (.05) (.05) (.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) $174 $142 $124 $72 $62 Ratio of expenses to average daily net assets(c) .57% .57% .56% .56% .58% Ratio of net investment income (loss) to average daily net assets 5.18% 5.42% 4.64% 5.16% 4.96% Total return(e) 5.37% 5.56% 4.72% 5.33% 5.06%
Notes to financial highlights (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) Total return does not reflect payment of a sales charge. -------------------------------------------------------------------------------- 18 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Investments in Securities AXP Cash Management Fund July 31, 2001 (Percentages represent value of investments compared to net assets) U.S. government agencies (24.5%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Federal Home Loan Bank Disc Nts 08-03-01 3.67% $40,000,000 $39,991,844 09-12-01 3.66 32,300,000 32,162,833 09-19-01 3.59 30,000,000 29,854,225 09-21-01 3.62 36,900,000 36,711,810 09-21-01 4.42 30,000,000 29,813,425 09-26-01 3.57 30,000,000 29,834,333 10-10-01 3.61 6,100,000 6,057,537 10-12-01 4.04 20,000,000 19,839,600 10-19-01 3.55 47,000,000 46,636,951 10-24-01 3.56 30,500,000 30,248,782 10-26-01 4.08 21,100,000 20,896,362 12-14-01 3.57 26,500,000 26,150,200 12-19-01 3.54 14,500,000 14,303,203 Federal Home Loan Mtge Corp Disc Nts 08-03-01 4.46 30,000,000 29,992,575 08-03-01 4.51 30,000,000 29,992,483 08-06-01 4.46 25,000,000 24,984,514 08-09-01 3.86 30,400,000 30,373,924 08-10-01 4.52 30,000,000 29,966,175 08-16-01 3.68 25,200,000 25,161,465 08-17-01 4.46 30,000,000 29,940,667 08-31-01 3.82 31,900,000 31,798,718 08-31-01 4.42 26,800,000 26,701,733 09-11-01 3.63 30,000,000 29,876,317 10-03-01 4.07 30,800,000 30,582,244 10-05-01 4.11 19,529,000 19,385,136 10-18-01 3.61 33,900,000 33,636,682 10-25-01 3.55 27,000,000 26,775,281 10-31-01 3.82 32,900,000 32,585,641 11-16-01 3.70 25,700,000 25,420,427 12-06-01 3.72 33,000,000 32,572,751 12-06-01 3.75 31,700,000 31,286,227 12-14-01 3.57 20,000,000 19,736,000 12-21-01 3.69 30,800,000 30,357,780 Federal Natl Mtge Assn Disc Nts 08-01-01 3.84 46,800,000 46,799,999 08-02-01 4.08 30,000,000 29,996,600 08-09-01 3.90 28,300,000 28,275,474 08-16-01 3.89 36,400,000 36,341,153 08-28-01 3.70 27,100,000 27,025,001 09-06-01 4.69 18,400,000 18,314,072 09-13-01 4.55 30,000,000 29,837,675 09-14-01 3.63 30,900,000 30,763,662 09-20-01 4.44 45,500,000 45,221,313 10-04-01 4.04 4,600,000 4,567,207 10-11-01 3.83 32,400,000 32,157,180 10-25-01 4.10 34,700,000 34,366,952 11-08-01 3.90 26,800,000 26,515,887 11-15-01 3.90 26,400,000 26,099,949 11-21-01 3.85 34,500,000 34,092,133 11-29-01 3.75 35,700,000 35,259,105 11-30-01 3.76 29,100,000 28,737,131 12-13-01 3.61 27,500,000 27,135,594 12-13-01 3.65 29,200,000 28,808,720 12-14-01 3.54 30,000,000 29,607,375 12-14-01 3.73 25,000,000 24,655,000 12-20-01 3.50 22,100,000 21,801,374 12-20-01 3.54 10,000,000 9,863,308 12-21-01 3.67 27,000,000 26,614,470 Total U.S. government agencies (Cost: $1,616,484,179) $1,616,484,179 Certificates of deposit (4.3%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Banque Nationale de Paris Yankee 09-24-01 3.60% $15,000,000 $15,000,000 10-30-01 3.61 30,000,000 30,000,000 11-01-01 3.80 21,000,000 21,000,000 11-09-01 3.66 30,000,000 30,000,000 11-27-01 3.57 30,000,000 30,000,000 Canadian Imperial Bank of Commerce Yankee 08-07-01 4.89 26,000,000 26,000,000 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 19 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Certificates of deposit (continued) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Dresdner Bank Yankee 11-06-01 3.92% $27,500,000 $27,500,000 Westdeutsche Landesbank Yankee 08-14-01 4.87 22,000,000 22,000,000 10-04-01 3.82 20,000,000 20,000,000 10-22-01 3.59 29,500,000 29,500,000 10-24-01 3.60 30,000,000 30,000,000 Total certificates of deposit (Cost: $281,000,000) $281,000,000 Commercial paper (69.6%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Banks and savings & loans (14.3%) Abbey Natl North America 09-11-01 3.70% $25,100,000 $24,994,803 09-28-01 3.74 24,200,000 24,054,961 10-10-01 3.67 20,000,000 19,858,444 12-03-01 3.72 21,800,000 21,524,424 12-03-01 3.75 27,300,000 26,952,077 Bank of America 08-01-01 4.86 19,000,000 19,000,000 BBV Finance (Delaware) 08-13-01 5.05 27,000,000 26,954,640 Commerzbank U.S. Finance 08-01-01 4.21 21,700,000 21,700,000 08-15-01 5.06 27,000,000 26,946,975 09-04-01 4.79 25,000,000 24,887,375 09-07-01 3.77 35,200,000 35,063,972 09-10-01 3.80 39,000,000 38,836,200 09-25-01 3.67 24,000,000 23,866,167 10-05-01 3.70 40,000,000 39,734,222 10-09-01 3.72 20,000,000 19,858,550 10-19-01 3.64 20,000,000 19,841,561 11-19-01 3.93 22,900,000 22,628,508 Deutsche Bank Financial 08-06-01 4.77 26,000,000 25,982,775 09-11-01 3.68 25,000,000 24,895,649 09-12-01 4.77 30,000,000 29,834,100 09-17-01 4.76 22,800,000 22,659,204 10-16-01 4.52 28,100,000 27,834,236 11-02-01 3.80 25,000,000 24,756,844 Dresdner US Finance 08-27-01 4.71 27,000,000 26,908,545 11-30-01 3.72 24,000,000 23,703,953 Societe Generale North America 10-04-01 3.69 32,500,000 32,287,956 10-05-01 3.71 28,200,000 28,012,118 10-22-01 3.57 36,000,000 35,709,720 10-30-01 4.15 17,600,000 17,419,160 11-20-01 3.57 30,000,000 29,673,475 Westpac Capital 08-08-01 4.78 24,100,000 24,077,600 08-16-01 5.07 20,000,000 19,957,833 08-20-01 5.07 25,000,000 24,933,236 08-21-01 4.22 25,000,000 24,941,528 08-22-01 4.16 15,000,000 14,963,688 09-05-01 4.46 25,000,000 24,892,083 11-05-01 3.67 24,700,000 24,460,904 Total 944,607,486 Beverages & tobacco (1.1%) Coca-Cola 10-12-01 3.66 38,900,000 38,617,586 10-12-01 3.67 35,000,000 34,745,200 Total 73,362,786 Broker dealers (7.8%) Bear Stearns 08-01-01 4.60 16,700,000 16,700,000 08-09-01 4.82 22,000,000 21,976,484 08-10-01 4.82 28,000,000 27,966,330 02-21-02 3.86 20,000,000(c) 20,000,000 Goldman Sachs Group 09-19-01 4.55 30,000,000 29,815,433 09-28-01 4.55 21,500,000 21,343,432 10-01-01 4.58 20,000,000 19,846,144 10-02-01 4.48 26,700,000 26,495,374 10-10-01 3.81 15,000,000 14,889,750 10-12-01 3.81 18,000,000 17,863,920 10-12-01 4.49 20,000,000 19,822,000 10-31-01 3.92 16,000,000 15,843,076 11-14-01 3.66 22,000,000 21,767,717 11-15-01 3.77 23,800,000 23,538,610 03-21-02 3.80 27,000,000(c) 27,000,000 Morgan Stanley, Dean Witter, Discover & Co 10-03-01 3.70 26,500,000 26,329,340 10-05-01 3.71 36,400,000 36,157,486 11-16-01 3.89 22,800,000 22,539,098 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 20 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Commercial paper (continued) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Broker dealers (cont.) Salomon Smith Barney 08-01-01 3.90% $52,030,000 $52,030,000 08-13-01 3.76 20,000,000 19,974,934 08-24-01 3.74 30,300,000 30,227,793 Total 512,126,921 Chemicals (0.5%) Bayer 09-18-01 3.65 35,300,000(b) 35,129,148 Commercial finance (1.0%) CAFCO 08-06-01 3.94 24,000,000(b) 23,986,867 08-09-01 3.95 24,500,000(b) 24,478,494 08-29-01 3.83 17,000,000(b) 16,949,491 Total 65,414,852 Communications equipment & services (1.5%) Alcatel 08-20-01 3.90 25,000,000 24,948,674 10-29-01 4.13 10,500,000(b) 10,393,830 10-29-01 4.15 13,700,000 13,560,797 10-29-01 4.15 27,000,000(b) 26,725,657 11-14-01 3.91 22,500,000(b) 22,246,031 Total 97,874,989 Computers & office equipment (0.7%) Hewlett-Packard 08-07-01 3.95 25,000,000(b) 24,983,541 08-08-01 3.90 18,300,000(b) 18,286,123 Total 43,269,664 Energy (0.7%) Chevron UK Investment 08-14-01 3.95 21,000,000 20,970,122 09-13-01 3.71 26,800,000 26,681,879 Total 47,652,001 Financial services (24.2%) AEGON Funding 08-14-01 4.01 27,500,000(b) 27,460,278 09-19-01 3.80 19,313,000(b) 19,213,635 Alpine Securitization 10-17-01 4.19 25,000,000(b) 24,778,090 Amsterdam Funding 09-07-01 3.71 27,000,000(b) 26,897,325 10-05-01 3.66 27,000,000(b) 26,822,550 Barclays U.S. Funding 08-14-01 4.01 27,500,000 27,460,278 09-27-01 3.59 30,000,000 29,830,425 Caterpillar Financial Funding 08-27-01 3.83 9,830,000 9,802,880 Caterpillar Financial Services 08-06-01 3.91 25,000,000 24,986,424 10-18-01 3.63 30,000,000 29,766,000 Charta 08-08-01 3.92 27,500,000(b) 27,479,039 08-21-01 3.93 13,000,000(b) 12,971,689 08-29-01 3.91 9,000,000(b) 8,972,700 09-20-01 3.64 15,800,000(b) 15,720,561 Dexia Delaware 08-02-01 3.95 25,000,000 24,997,257 09-18-01 3.68 26,000,000 25,873,120 10-09-01 3.70 30,000,000 29,788,975 10-09-01 3.71 40,000,000 39,717,867 10-11-01 3.67 25,100,000 24,919,810 10-23-01 3.59 29,000,000 28,761,974 10-24-01 3.60 35,000,000 34,708,450 12-27-01 3.79 30,000,000 29,539,967 Edison Asset Securitization 09-04-01 3.69 26,000,000(b) 25,909,636 09-17-01 3.65 32,000,000(b) 31,848,347 Enterprise Funding 09-19-01 3.67 25,000,000(b) 24,875,799 10-15-01 3.68 20,000,000(b) 19,847,917 Falcon Asset 10-15-01 4.56 23,500,000(b) 23,278,708 IBM Credit 10-29-01 3.65 35,000,000 34,686,769 Intl Lease Finance 09-05-01 3.68 29,000,000 28,896,526 11-06-01 3.68 43,400,000 42,974,342 Kitty Hawk Funding 09-14-01 3.70 25,000,000(b) 24,887,556 09-18-01 3.73 26,802,000(b) 26,669,419 Nordea North America 08-15-01 3.90 30,000,000 29,954,617 09-06-01 3.79 18,000,000 17,931,960 09-07-01 3.90 25,000,000 24,900,306 09-14-01 3.96 27,600,000 27,467,091 09-26-01 3.94 22,200,000 22,064,629 11-07-01 3.80 25,000,000 24,744,111 11-13-01 4.00 27,500,000 27,186,194 11-21-01 3.96 30,000,000 29,635,067 11-26-01 3.55 30,000,000 29,657,775 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 21 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Commercial paper (continued) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Financial services (cont.) Nordea North America (cont.) 11-26-01 3.82% $22,000,000 $21,730,445 12-18-01 3.61 13,375,000 13,191,153 12-18-01 3.67 26,500,000 26,129,604 Preferred Receivables 10-29-01 4.17 21,915,000(b) 21,691,242 Receivables Capital 08-22-01 3.74 20,000,000(b) 19,956,483 11-13-01 3.77 27,000,000(b) 26,709,060 Sheffield Receivables 09-10-01 3.84 9,000,000(b) 8,961,800 09-24-01 4.18 20,860,000(b) 20,730,147 09-27-01 4.12 19,700,000(b) 19,572,426 09-28-01 3.66 15,000,000(b) 14,912,033 Southern Company Funding 08-07-01 3.95 21,400,000(b) 21,385,912 08-30-01 3.91 24,500,000(b) 24,423,029 08-30-01 3.92 12,000,000(b) 11,962,203 09-06-01 3.87 24,235,000(b) 24,141,453 Three Rivers Funding 08-20-01 3.75 20,000,000(b) 19,960,522 08-23-01 3.75 21,000,000(b) 20,952,003 Variable Funding Capital 08-08-01 4.16 26,000,000(b) 25,978,969 09-10-01 3.65 18,400,000(b) 18,325,582 09-12-01 3.67 30,000,000(b) 29,872,250 Verizon Funding Capital 09-14-01 3.72 20,100,000(b) 20,009,103 Verizon Network Funding 08-06-01 3.63 16,000,000 15,991,933 09-25-01 3.66 15,200,000 15,115,471 10-11-01 3.63 13,900,000 13,801,310 10-19-01 3.62 14,000,000 13,889,707 Windmill Funding 08-23-01 3.74 17,000,000(b) 16,961,249 08-31-01 3.83 25,000,000(b) 24,920,417 09-04-01 3.71 19,400,000(b) 19,332,208 Total 1,598,493,777 Food (3.5%) Campbell Soup 08-29-01 3.80 17,000,000(b) 16,949,888 09-17-01 3.65 7,500,000(b) 7,464,456 09-18-01 3.92 20,000,000 19,896,000 09-21-01 3.92 20,000,000 19,889,500 10-09-01 3.79 23,000,000 22,834,247 10-10-01 3.77 20,800,000(b) 20,648,738 10-11-01 3.56 17,900,000(b) 17,775,028 10-11-01 3.77 27,000,000 26,800,845 12-03-01 3.80 22,982,000 22,685,149 Cargill 08-01-01 3.90 35,000,000(b) 34,999,999 Sysco 08-03-01 4.21 24,000,000(b) 23,994,387 Total 233,938,237 Health care (0.5%) GlaxoSmithkline 10-03-01 3.67 34,400,000(b) 34,180,270 Insurance (2.1%) American General 11-21-01 3.91 15,900,000 15,709,059 12-28-01 3.76 30,000,000 29,540,583 American General Finance 08-16-01 4.26 25,400,000 25,355,021 09-28-01 4.78 30,000,000 29,770,900 10-30-01 3.72 41,800,000 41,414,395 Total 141,789,958 Media (2.4%) Gannett 08-22-01 3.74 11,400,000(b) 11,375,196 08-22-01 3.78 5,000,000(b) 4,989,004 Scripps (EW) 08-02-01 4.16 15,100,000(b) 15,098,255 08-02-01 4.21 21,500,000(b) 21,497,486 08-16-01 3.96 8,000,000(b) 7,986,833 08-23-01 3.94 19,500,000(b) 19,453,167 08-28-01 3.89 13,000,000(b) 12,962,170 08-28-01 3.91 20,000,000(b) 19,941,500 08-31-01 3.88 16,500,000(b) 16,446,788 09-05-01 3.82 10,000,000(b) 9,962,958 09-26-01 3.69 19,000,000(b) 18,891,531 Total 158,604,888 Miscellaneous (4.4%) CIT Group Holdings 09-05-01 3.70 30,000,000 29,892,375 09-07-01 3.78 4,000,000 3,984,501 09-10-01 3.70 22,000,000 21,910,044 10-04-01 3.74 43,900,000 43,609,674 11-01-01 3.67 18,900,000 18,724,188 12-04-01 3.69 27,500,000 27,152,431 01-18-02 3.84 27,000,000(c) 27,000,000 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 22 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Commercial paper (continued) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Miscellaneous (cont.) Corporate Receivables 08-13-01 3.93% $27,500,000(b) $27,464,067 10-23-01 3.60 30,000,000(b) 29,753,075 CXC 08-01-01 3.92 20,700,000(b) 20,700,000 08-09-01 4.15 17,000,000(b) 16,984,322 09-17-01 3.68 10,000,000(b) 9,952,217 11-15-01 3.96 16,500,000(b) 16,310,039 Total 293,436,933 Multi-industry conglomerates (1.7%) GE Capital Intl Funding 09-20-01 3.65 29,000,000(b) 28,853,792 09-24-01 3.60 30,000,000(b) 29,838,900 10-01-01 3.68 28,000,000(b) 27,826,353 General Electric Capital 08-01-01 3.90 14,370,000 14,370,000 10-17-01 3.60 14,200,000 14,091,571 Total 114,980,616 Utilities -- electric (2.3%) UBS Americas 09-06-01 4.78 25,000,000 24,881,000 UBS Finance (Delaware) 08-02-01 5.00 20,000,000 19,997,222 10-09-01 3.89 27,500,000 27,296,546 11-13-01 3.73 34,800,000 34,429,032 11-19-01 3.60 24,000,000 23,738,933 11-26-01 3.55 23,700,000 23,429,643 Total 153,772,376 Utilities -- telephone (0.6%) BellSouth 09-25-01 3.65 40,300,000(b) 40,076,503 Total commercial paper (Cost: $4,588,711,405) $4,588,711,405 Letters of credit (1.5%) Issuer Annualized Amount Value(a) yield on date payable at of purchase maturity Bank of America- AES Shady Point 08-02-01 4.18% $8,900,000 $8,898,967 08-07-01 3.95 18,700,000 18,687,689 09-06-01 3.72 30,600,000 30,486,474 09-10-01 3.80 10,100,000 10,057,580 09-19-01 3.69 12,870,000 12,805,711 UBS- River Fuel Trail 3 08-10-01 4.00 15,374,000 15,358,626 Total letters of credit (Cost: $96,295,047) $96,295,047 Total investments in securities (Cost: $6,582,490,631)(d) $6,582,490,631 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. (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, 2001. (d) Also represents the cost of securities for federal income tax purposes at July 31, 2001. PART C. OTHER INFORMATION Item 23. Exhibits (a)(1) Articles of Incorporation, as amended Nov. 14, 1991, filed as Exhibit No. 1 to Registrant's Post-Effective Amendment No. 34 to Registration Statement No. 2-54516, are incorporated by reference. (a)(2) Articles of Incorporation amended June 16, 1999, are filed electronically herewith. (b) By-laws, as amended January 12, 1989, filed as Exhibit No. 2 to Registrant's Post-Effective Amendment No. 24 to Registration Statement No. 2-54516, are incorporated by reference. (c) Stock certificate, filed as Exhibit 4 to Registrant's Amendment No. 12 to Registration Statement No. 2-54516 dated September 18, 1982, is incorporated by reference. (d) Investment Management Services Agreement dated July 1, 1999 between Registrant and American Express Financial Corporation filed as Exhibit (d) to Registrant's Post-Effective Amendment No. 49 to Registration Statement No. 2-54516, is incorporated by reference. (e) Distribution Agreement, dated July 8, 1999, between AXP Utilities Income Fund, Inc. and American Express Financial Advisors Inc. is incorporated by reference to Exhibit (e) to AXP Utilities Income Fund, Inc. Post-Effective Amendment No. 22, to Registration Statement File No. 33-20872 filed on or about August 27, 1999. Registrant's Distribution Agreement differs from the one incorporated by reference only by the fact that Registrant is one executing party. (f) All employees are eligible to participate in a profit sharing plan. Entry into the plan is Jan. 1 or July 1. The Registrant contributes each year an amount up to 15 percent of their annual salaries, the maximum deductible amount permitted under Section 404(a) of the Internal Revenue Code. (g)(1) Custodian Agreement between Registrant and American Express Trust Company, dated March 20, 1995, filed electronically as Exhibit 8(a) to Registrant's Amendment No. 47 to Registration Statement No. 2-54516 is incorporated by reference. (g)(2) Custodian Agreement Amendment between Registrant and American Express Trust Company, dated Oct. 9, 1997 is incorporated by reference to Exhibit 8(c) to Registrant's Post-Effective Amendment No. 48 filed on or about Sept. 30, 1998. (g)(3) Custodian Agreement between American Express Trust Company and The Bank of New York, dated May 13, 1999, is incorporated by reference to Exhibit (g)(3) to IDS Precious Metals Fund, Inc. Post-Effective Amendment No. 33 to Registration Statement File No. 2-93745 filed on or about May 24, 1999. (h)(1) Administrative Services Agreement between Registrant and American Express Financial Corporation, dated March 20, 1995, filed electronically as Exhibit 9(e) to Registrant's Amendment No. 47 to Registration Statement No. 2-54516 is incorporated by reference. (h)(2) License Agreement between the Registrant and IDS Financial Corporation dated Jan. 25, 1988, filed electronically as Exhibit 9(c) to Registrant's Post-Effective Amendment No. 26 to Registration Statement No. 2-54516, is incorporated by reference. (h)(3) License Agreement dated June 17, 1999, between the American Express Funds and American Express Company, filed electronically on or about September 23, 1999 as Exhibit (h)(4) to AXP Stock Fund, Inc.'s Post-Effective Amendment No. 98 to Registration Statement No. 2-11358, is incorporated by reference. (h)(4) Plan and Agreement of Merger dated April 10, 1986, filed as Exhibit 9 to Registrant's Post-Effective Amendment No. 19 to Registration Statement No. 2-54516, is incorporated by reference. (h)(5) Agreement and Plan of Reorganization, dated Sept. 8, 1994, between IDS Cash Management Fund, a series of IDS Money Market Series, Inc. and IDS Planned Investment Account, also a series of IDS Money Market Series, Inc., filed electronically as Exhibit 4 to Registrant's Pre-Effective Amendment No. 1 on Form N-14, is incorporated by reference. (h)(6) Transfer Agency Agreement dated May 10, 2001 between Registrant and American Express Client Service Corporation is filed electronically herewith. (i) Opinion and consent of counsel as to the legality of the securities being registered is filed electronically herewith. (j) Independent auditors' consent is filed electronically herewith. (k) Omitted Financial Statements: Not Applicable. (l) Initial Capital Agreements: Not Applicable. (m)(1) Plan and Agreement of Distribution between Registrant and American Express Financial Advisors Inc., dated March 20, 1995, filed electronically as Exhibit 15 to Registrant's Amendment No. 47 to Registration Statement No. 2-54516 is incorporated by reference. (m)(2) Plan and Agreement of Distribution For Class C Shares dated March 9, 2000 between Registrant and American Express Financial Advisors Inc. is filed electronically herewith. (n) Plan under Section 18f-3 dated March 9, 2000 filed electronically on or about June 26, 2000 as exhibit (n) to Registrant's Post-Effective Amendment No. 51 on Form N-1A is incorporated by reference. (o) Reserved (p)(1) Code of Ethics adopted under Rule 17j-1 for Registrant filed electronically on or about March 30, 2000 as Exhibit (p)(1) to AXP Market Advantage Series, Inc.'s Post-Effective Amendment No. 24 to Registration Statement No. 33-30770 is incorporated by reference. (p)(2) Code of Ethics adopted under Rule 17j-1 for Registrant's investment advisor and principal underwriter filed electronically on or about March 30, 2000 as Exhibit (p)(2) to AXP Market Advantage Series, Inc.'s Post-Effective Amendment No. 24 to Registration Statement No. 33-30770 is incorporated by reference. (q)(1) Directors' Power of Attorney to sign amendments to this Registration Statement, dated Jan. 11, 2001, is filed electronically herewith. (q)(2) Officers' Power of Attorney to sign amendments to this Registration Statement, dated Jan. 11, 2001, is filed electronically herewith. Item 24. Persons Controlled by or Under Common Control with Registrant. None. Item 25. Indemnification The Articles of Incorporation of the registrant provide that the Fund shall indemnify any person who was or is a party or is threatened to be made a party, by reason of the fact that she or he is or was a director, officer, employee or agent of the Fund, or is or was serving at the request of the Fund as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, to any threatened, pending or completed action, suit or proceeding, wherever brought, and the Fund may purchase liability insurance and advance legal expenses, all to the fullest extent permitted by the laws of the State of Minnesota, as now existing or hereafter amended. The By-laws of the registrant provide that present or former directors or officers of the Fund made or threatened to be made a party to or involved (including as a witness) in an actual or threatened action, suit or proceeding shall be indemnified by the Fund to the full extent authorized by the Minnesota Business Corporation Act, all as more fully set forth in the By-laws filed as an exhibit to this registration statement. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Any indemnification hereunder shall not be exclusive of any other rights of indemnification to which the directors, officers, employees or agents might otherwise be entitled. No indemnification shall be made in violation of the Investment Company Act of 1940.
Item 26. Business and Other Connections of Investment Adviser (American Express Financial Corporation) Directors and officers of American Express Financial Corporation who are directors and/or officers of one or more other companies: Name and Title Other company(s) Address Title within other company(s) ------------------------- ----------------------- ------------------------- ----------------------- Ronald G. Abrahamson American Express Financial 70100 AXP Financial Center Vice President - Business Vice President - Business Advisors Inc. Minneapolis, MN 55474 Transformation Transformation Public Employee Payment Director and Vice President Company Ruediger Adolf American Express Financial 70100 AXP Financial Center Senior Vice President Senior Vice President Advisors Inc. Minneapolis, MN 55474 Douglas A. Alger American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Human Resources Human Resources Gumer C. Alvero American Centurion Life 20 Madison Ave. Extension Director Vice President - Variable Assurance Company P.O. Box 5555 Annuities Albany, NY 12205-0555 American Enterprise Life 829 AXP Financial Center Director and Chairman of the Board Insurance Company Minneapolis, MN 55474 American Express Financial 70100 AXP Financial Center Vice President - Annuities Advisors Inc. Minneapolis, MN 55474 American Partners Life 1751 AXP Financial Center Director, President Insurance Company Minneapolis MN 55474 and Chief Executive Officer IDS Life Insurance Company 20 Madison Ave. Extension Director and Executive Vice President - P.O. Box 5555 Assured Assets Albany, NY 12205-0555 IDS Life Insurance Company P.O. Box 5144 Director of New York Albany, NY 12205 IDS Life Series Fund, Inc. Director, Chairman of the Board, President and Chief Executive Officer IDS Life Variable Annuity Manager, Chairman of the Board, Funds A & B President and Chief Executive Officer Ward D. Armstrong American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Retirement Services Retirement Services American Express Service Vice President - Workplace Corporation Financial Services American Express Trust Director and Chairman of Company the Board John M. Baker American Express Financial 70100 AXP Financial Center Vice President - Plan Vice President - Plan Sponsor Advisors Inc. Minneapolis, MN 55474 Sponsor Services Services American Express Trust Senior Vice President Company Dudley Barksdale American Express Financial 70100 AXP Financial Center Vice President - Service Vice President - Service Advisors Inc. Minneapolis, MN 55474 Development Development Joseph M. Barsky III American Express Financial 70100 AXP Financial Center Vice President - Mutual Vice President - Mutual Fund Advisors Inc. Minneapolis, MN 55474 Fund Equities Equities Timothy V. Bechtold American Centurion Life 20 Madison Ave. Extension Director and President Vice President - Risk Assurance Company P.O. Box 5555 Management Products Albany, NY 12205-0555 American Express Financial 70100 AXP Financial Center Vice President - Risk Advisors Inc. Minneapolis, MN 55474 Management Products American Express Insurance Director, President and Chief Agency of Alabama Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Arizona Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Idaho Inc. Executive Officer American Express Insurance Director and President Agency of Indiana Inc. American Express Insurance Director, President and Chief Agency of Massachusetts Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Nevada Inc. Executive Officer American Express Insurance Director, President and Chief Agency of New Mexico Inc. Executive Officer American Express Insurance Director and President Agency of Oklahoma Inc. American Express Insurance Director, President and Chief Agency of Oregon Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Wyoming Inc. Executive Officer American Partners Life Director and Chairman of the Board Insurance Company IDS Insurance Agency of Director, President and Chief Arkansas Inc. Executive Officer IDS Insurance Agency of Director, President and Chief Ohio Inc. Executive Officer IDS Life Insurance Company 70100 AXP Financial Center Director and President Minneapolis, MN 55474 IDS Life Insurance Company P.O. Box 5144 Director, President and Chief of New York Albany, NY 12205 Executive Officer IDS Life Series Fund, Inc. 70100 AXP Financial Center Director Minneapolis, MN 55474 IDS Life Variable Annuity 70100 AXP Financial Center Manager Funds A & B Minneapolis, MN 55474 Douglas W. Brewers American Express Financial 70100 AXP Financial Center Vice President - Sales Vice President - Sales Support Advisors Inc. Minneapolis, MN 55474 Support Kenneth I. Chenaut American Express Company American Express Tower President and Chief Director World Financial Center Operating Officer New York, NY 10285 Kenneth J. Ciak AMEX Assurance Company 70100 AXP Financial Center Director, President and Chief Vice President and General Minneapolis, MN 55474 Executive Officer Manager - IDS Property Casualty American Express Financial 70100 AXP Financial Center Vice President and General Advisors Inc. Minneapolis, MN 55474 Manager - IDS Property Casualty American Express Property Director, President and Chief Casualty Insurance Agency Executive Officer of Kentucky Inc. American Express Property Director, President and Chief Casualty Insurance Agency Executive Officer of Maryland Inc. American Express Property Director, President and Chief Casualty Insurance Agency Executive Officer of Pennsylvania Inc. IDS Property Casualty 1 WEG Blvd. Director and President Insurance Company DePere, WI 54115 Paul A. Connolly American Express Financial 70100 AXP Financial Center Vice President - Retail Vice President - Retail Advisors Inc. Minneapolis, MN 55474 Distribution Services Distribution Services James M. Cracchiolo American Express Financial 70100 AXP Financial Center Director, Chairman, President and Director, Chairman of Advisors Inc. Minneapolis, MN 55474 Chief Executive Officer the Board, President and Chief Executive Officer Colleen Curran American Express Financial 70100 AXP Financial Center Vice President and Vice President and Assistant Advisors Inc. Minneapolis, MN 55474 Assistant General Counsel General Counsel American Express Financial Executive Representative Advisors Japan Inc. American Express Service Vice President and Chief Corporation Legal Counsel Luz Maria Davis American Express Financial 70100 AXP Financial Center Vice President - Vice President - Advisors Inc. Minneapolis, MN 55474 Communications Communications Robert M. Elconin American Express Financial 70100 AXP Financial Center Vice President - Vice President - Government Advisors Inc. Minneapolis, MN 55474 Government Relations Relations IDS Life Insurance Company 70100 AXP Financial Center Vice President Minneapolis, MN 55474 Gordon M. Fines American Express Asset 70100 AXP Financial Center Senior Vice President and Vice President - Mutual Fund Management Group Inc. Minneapolis, MN 55474 Chief Investment Officer Equity Investments American Express Financial 70100 AXP Financial Center Vice President - Mutual Advisors Inc. Minneapolis, MN 55474 Fund Equity Investments Douglas L. Forsberg American Express Financial 70100 AXP Financial Center Vice President - Vice President - International Advisors Inc. Minneapolis, MN 55474 International American Express Financial 70100 AXP Financial Center Director, President and Advisors Japan Inc. Minneapolis, MN 55474 Chief Executive Officer Peter A. Gallus American Express Financial 70100 AXP Financial Center Vice President - Vice President - Investment Advisors Inc. Minneapolis, MN 55474 Investment Administration Administration American Express Financial 70100 AXP Financial Center Vice President and Chief Advisors Japan Inc. Minneapolis, MN 55474 Financial Officer IDS Capital Holdings, Inc. Vice President and Controller Derek M. Gledhill American Express Financial 70100 AXP Financial Center Vice President - Vice President - Integrated Advisors Inc. Minneapolis, MN 55474 Integrated Financial Financial Services Field Services Field Implementation Implementation David A. Hammer American Express Financial 70100 AXP Financial Center Vice President and Vice President and Marketing Advisors Inc. Minneapolis, MN 55474 Marketing Controller Controller Teresa A. Hanratty American Express Financial 70100 AXP Financial Center Senior Vice Senior Vice President - Advisors Inc. Minneapolis, MN 55474 President - Field Management Field Management Lorraine R. Hart AMEX Assurance Company 70100 AXP Financial Center Vice President - Vice President - Insurance Minneapolis, MN 55474 Investments Investments American Centurion Life 20 Madison Ave. Extension Vice President Assurance Company P.O. Box 5555 Albany, NY 12205-0555 American Enterprise Life 829 AXP Financial Center Vice President Insurance Company Minneapolis, MN 55474 American Express Director, President and Chief Corporation Executive Officer American Express Financial 70100 AXP Financial Center Vice President - Insurance Advisors Inc. Minneapolis, MN 55474 Investments American Partners Life 1751 AXP Financial Center Director and Vice Insurance Company Minneapolis, MN 55474 President American Express Certificate Vice President - Investments Company IDS Life Insurance Company 70100 AXP Financial Center Vice President - Investments Minneapolis, MN 55474 IDS Life Series Fund, Inc. 70100 AXP Financial Center Vice President - Investments Minneapolis, MN 55474 IDS Life Variable Annuity 70100 AXP Financial Center Vice President - Investments Funds A and B Minneapolis, MN 55474 Investors Syndicate Director and Vice Development Corp. President - Investments IDS Life Insurance Company P.O. Box 5144 Vice President of New York Albany, NY 12205 IDS Property Casualty 1 WEG Blvd. Vice President - Investment Officer Insurance Company DePere, WI 54115 Janis K. Heaney American Express Financial 70100 AXP Financial Center Vice President - Incentive Vice President - Incentive Advisors Inc. Minneapolis, MN 55474 Management Management Brian M. Heath American Express Financial 70100 AXP Financial Center Senior Vice President and Senior Vice President Advisors Inc. Minneapolis, MN 55474 General Sales Manager and General Sales Manager Carol A. Holton American Centurion Life 20 Madison Ave. Extension Director Vice President - Third Party Assurance Company Albany, NY 12205-0555 Distribution American Express Financial 70100 AXP Financial Center Vice President - Third Advisors Inc. Minneapolis, MN 55474 Party Distribution American Enterprise Life 829 AXP Financial Center Director, President and Insurance Company Minneapolis, MN 55474 Chief Executive Officer IDS Life Insurance Company 20 Madison Ave. Extension Director of New York P.O. Box 5555 Albany, NY 12205-0555 Darryl G. Horsman American Express Trust 70100 AXP Financial Center Director, President and Chief Vice President - Product Company Minneapolis, MN 55474 Executive Officer Development and Technology, American Express Retirement American Express Asset Vice President Services Management International Inc. Debra A. Hutchinson American Express Financial 70100 AXP Financial Center Vice President - Vice President - Relationship Advisors Inc. Minneapolis, MN 55474 Relationship Leader Leader James M. Jensen American Express Financial 70100 AXP Financial Center Vice President - Advice Vice President - Advice and Advisors Inc. Minneapolis, MN 55474 and Retail Distribution Retail Distribution Group, Group, Product, Product, Compensation and Compensation and Field Field Administration Administration Marietta L. Johns American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Field Management Field Management Nancy E. Jones American Express Financial 70100 AXP Financial Center Vice President - Business Vice President - Business Advisors Inc. Minneapolis, MN 55474 Development Development American Express Service Vice President - Business Corporation Development John C. Junek American Express Financial 70100 AXP Financial Center Senior Vice President and Senior Vice President Advisors Inc. Minneapolis, MN 55474 General Counsel and General Counsel American Express Financial 70100 AXP Financial Center Vice President Advisors Japan Inc. Minneapolis, MN 55474 American Express Insurance Director and Vice President Agency of Alabama Inc. American Express Insurance Director and Vice President Agency of Arizona Inc. American Express Insurance Director and Vice President Agency of Idaho Inc. American Express Insurance Director and Vice President Agency of Indiana Inc. American Express Insurance Director and Vice President Agency of Massachusetts Inc. American Express Insurance Director and Vice President Agency of Nevada Inc. American Express Insurance Director and Vice President Agency of New Mexico Inc. American Express Insurance Director and Vice President Agency of Oklahoma Inc. American Express Insurance Director and Vice President Agency of Oregon Inc. American Express Insurance Director and Vice President Agency of Wyoming Inc. American Express Property Director and Vice President Casualty Insurance Agency of Kentucky Inc. American Express Property Director and Vice President Casualty Insurance Agency of Maryland Inc. American Express Property Director and Vice President Casualty Insurance Agency of Pennsylvania Inc. IDS Insurance Agency of Director and Vice President Arkansas Inc. IDS Insurance Agency of Director and Vice President Ohio Inc. IDS Real Estate Vice President Services, Inc. Investors Syndicate Director Development Corp. Ora J. Kaine American Express Financial 70100 AXP Financial Center Vice President - Financial Vice President - Financial Advisors Inc. Minneapolis, MN 55474 Advisory Services Advisory Services Linda B. Keene American Express Financial 70100 AXP Financial Center Vice President - Market Vice President - Market Advisors Inc. Minneapolis, MN 55474 Development Development John M. Knight American Express Financial 70100 AXP Financial Center Vice President - Vice President - Investment Advisors Minneapolis, MN 55474 Investment Accounting Accounting Claire Kolmodin American Express Financial 70100 AXP Financial Center Vice President - Service Vice President - Service Advisors Inc. Minneapolis, MN 55474 Quality Quality Steven C. Kumagai American Express Financial 70100 AXP Financial Center Director and Senior Vice Senior Vice President - Advisors Inc. Minneapolis, MN 55474 President-Direct and Direct and Interactive Interactive Group Group AMEX Assurance Company 70100 AXP Financial Center Director Minneapolis, MN 55474 IDS Property Casualty 1 WEG Blvd. Director Insurance Company DePere, WI 54115 Kurt A Larson American Express Financial 70100 AXP Financial Center Vice President - Senior Vice President - Senior Advisors Inc. Minneapolis, MN 55474 Portfolio Manager Portfolio Manager Lori J. Larson American Express Financial 70100 AXP Financial Center Vice President - Brokerage Vice President - Brokerage Advisors Inc. Minneapolis, MN 55474 and Direct Services and Direct Services Daniel E. Laufenberg American Express Financial 70100 AXP Financial Center Vice President and Chief Vice President and Chief Advisors Inc. Minneapolis, MN 55474 U.S. Economist U.S. Economist Jane W. Lee American Express Financial 70100 AXP Financial Center Vice President - New Vice President - New Business Advisors Inc. Minneapolis, MN 55474 Business Development and Development and Marketing Marketing Peter A. Lefferts American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Corporate Strategy and Corporate Strategy and Development Development American Express Trust Director Company Fred A. Mandell American Express Financial 70100 AXP Financial Center Vice President - Vice President - Distribution Advisors Inc. Minneapolis, MN 55474 Distribution Channel Channel Marketing Marketing Timothy J. Masek American Express Financial 70100 AXP Financial Center Vice President and Vice President and Director Advisors Inc. Minneapolis, MN 55474 Director of Global Research of Global Research Paula R. Meyer American Express Financial 70100 AXP Financial Center Vice President - Mutual Vice President - Mutual Funds Advisors Inc. Minneapolis, MN 55474 Funds American Express Certificate Director, President and Chief Company Executive Officer Investors Syndicate Director, President and Chief Development Corp. Executive Officer Shashank B. Modak American Express Financial 70100 AXP Financial Center Vice President - Vice President - Technology Advisors Inc. Minneapolis, MN 55474 Technology Leader Leader Pamela J. Moret American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Products Group Products Group American Express Trust Vice President Company AMEX Assurance Company 70100 AXP Financial Center Director Minneapolis, MN 55474 American Express Certificate Director and Chairman of the Board Company IDS Life Insurance Company 70100 AXP Financial Center Director, Chairman and Minneapolis, MN 55474 Chief Executive Officer IDS Property Casualty 1 WEG Blvd. Director Insurance Company DePere, WI 54115 Barry J. Murphy American Express Client 70100 AXP Financial Center Director, Chairman, President Executive Vice President - Service Corporation Minneapolis, MN 55474 and Chief Executive Officer U.S. Retail Group American Express Financial 70100 AXP Financial Center Executive Vice President - Advisors Inc. Minneapolis, MN 55474 U.S. Retail Group IDS Life Insurance Company 70100 AXP Financial Center Director Minneapolis, MN 55474 Mary Owens Neal American Express Financial 70100 AXP Financial Center Vice President - Consumer Vice President - Consumer Advisors Inc. Minneapolis, MN 55474 Marketing Marketing Francois B. Odouard American Express Financial 70100 AXP Financial Center Vice President Vice President Advisors Inc. Minneapolis, MN 55474 Michael J. O'Keefe American Express Financial 70100 AXP Financial Center Vice President - Advisory Vice President - Advisory Advisors Inc. Minneapolis, MN 55474 Business Systems Business Systems James R. Palmer American Express Director Vice President - Taxes Corporation American Express Financial 70100 AXP Financial Center Vice President - Taxes Advisors Inc. Minneapolis, MN 55474 IDS Life Insurance Company 70100 AXP Financial Center Vice President Minneapolis, MN 55474 Carla P. Pavone American Express Financial 70100 AXP Financial Center Vice President - Vice President - Product Advisors Inc. Minneapolis, MN 55474 Business Development Business Development Kris Petersen American Express Financial 70100 AXP Financial Center Vice President - Vice President - Advisors Inc. Minneapolis, MN 55474 Non-proprietary Products Non-proprietary Products IDS Cable Corporation Director, President and Chief Executive Officer IDS Cable II Corporation Director, President and Chief Executive Officer IDS Futures Corporation Director and President IDS Management Corporation Director, President and Chief Executive Officer IDS Partnership Services Director, President and Chief Corporation Executive Officer IDS Realty Corporation Director, President and Chief Executive Officer Susan B. Plimpton American Express Financial 70100 AXP Financial Center Vice President - Marketing Vice President - Marketing Advisors Inc. Minneapolis, MN 55474 Services Services Ronald W. Powell American Express Financial 70100 AXP Financial Center Vice President and Vice President and Assistant Advisors Inc. Minneapolis, MN 55474 Assistant General Counsel General Counsel IDS Cable Corporation Vice President and Assistant Secretary IDS Cable II Corporation Vice President and Assistant Secretary IDS Management Corporation Vice President and Assistant Secretary IDS Partnership Services Vice President and Corporation Assistant Secretary IDS Realty Corporation Vice President and Assistant Secretary James M. Punch American Express Financial 70100 AXP Financial Center Vice President - Branded Vice President and Project Advisors Inc. Minneapolis, MN 55474 Platform Project Manager - Branded Platform Project Frederick C. Quirsfeld American Express Asset 70100 AXP Financial Center Senior Vice President and Senior Vice President - Management Group Inc. Minneapolis, MN 55474 Senior Portfolio Manager Fixed Income American Express Financial 70100 AXP Financial Center Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Fixed Income IDS Life Series Fund, Inc. Vice President, Investments Teresa J. Rasmussen American Express Financial 70100 AXP Financial Center Vice President and Vice President and Assistant Advisors Inc. Minneapolis, MN 55474 Assistant General Counsel General Counsel American Enterprise Life 829 AXP Financial Center Director, Vice President, General Insurance Company Minneapolis, MN 55474 Counsel and Secretary American Express Corporation Director, Vice President and Secretary American Partners Life Director, Vice President, General Insurance Company Counsel and Secretary IDS Life Insurance Company Vice President and General Counsel IDS Life Insurance Company Assistant General Counsel and of New York Assistant Secretary IDS Life Series Fund, Inc. General Counsel and Assistant Secretary IDS Life Variable Annuity General Counsel and Assistant Secretary Funds A & B Rollyn C. Renstrom American Express Financial 70100 AXP Financial Center Vice President - Corporate Vice President - Corporate Advisors Inc. Minneapolis, MN 55474 Planning and Analysis Planning and Analysis ReBecca K. Roloff American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Field Management and Field Management Financial Advisory Services and Financial Advisory Services Stephen W. Roszell Advisory Capital 70100 AXP Financial Center Director Senior Vice President - Strategies Group Inc. Minneapolis, MN 55474 Institutional Group American Express Asset Director, President and Management Group Inc. Chief Executive Officer American Express Asset Director Management International, Inc. American Express Asset Director Management Ltd. American Express Financial 70100 AXP Financial Center Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Institutional American Express Trust Director Company Erven A. Samsel American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Field Management Field Management American Express Insurance Vice President Agency of Alabama Inc. American Express Insurance Vice President Agency of Idaho Inc. American Express Insurance Vice President Agency of Indiana Inc. American Express Insurance Vice President Agency of Massachusetts Inc. American Express Insurance Vice President Agency of Nevada Inc. American Express Insurance Vice President Agency of New Mexico Inc. American Express Insurance Vice President Agency of Oklahoma Inc. American Express Insurance Vice President Agency of Oregon Inc. American Express Insurance Vice President Agency of Wyoming Inc. American Express Property Vice President Casualty Insurance Agency of Kentucky Inc. American Express Property Vice President Casualty Insurance Agency of Maryland Inc. American Express Property Vice President Casualty Insurance Agency of Pennsylvania Inc. IDS Insurance Agency of Vice President Arkansas Inc. IDS Insurance Agency of Vice President Ohio Inc. Theresa M. Sapp American Express Financial 70100 AXP Financial Center Vice President - Vice President - Relationship Advisors Inc. Minneapolis, MN 55474 Relationship Leader Leader Stuart A. Sedlacek American Enterprise Life 829 AXP Financial Center Executive Vice President Director, Senior Vice Insurance Company Minneapolis, MN 55474 President and Chief Financial Officer American Express Financial 70100 AXP Financial Center Senior Vice President and Advisors Inc. Minneapolis, MN 55474 Chief Financial Officer American Express Trust Director Company American Partners Life 1751 AXP Financial Center Director and Vice President Insurance Company Minneapolis, MN 55474 IDS Life Insurance Company 70100 AXP Financial Center Director and Executive Vice President Minneapolis, MN 55474 Donald K. Shanks AMEX Assurance Company 70100 AXP Financial Center Senior Vice President Vice President - Property Minneapolis, MN 55474 Casualty American Express Financial 70100 AXP Financial Center Vice President - Property Advisors Inc. Minneapolis, MN 55474 Casualty IDS Property Casualty 1 WEG Blvd. Senior Vice President Insurance Company DePere, WI 54115 Judy P. Skoglund American Express Financial 70100 AXP Financial Center Vice President - Quality Vice President - Quality and Advisors Inc. Minneapolis, MN 55474 and Service Support Service Support Bridget Sperl American Enterprise Director Senior Vice President - Investment Services Inc. Client Service American Express Client 70100 AXP Financial Center Vice President Service Corporation Minneapolis, MN 55474 American Express Financial 70100 AXP Financial Center Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Client Service IDS Life Insurance Company Executive Vice President - Client Service IDS Property Casualty Director Insurance Company Public Employee Payment Director, President and Chief Company Executive Officer Lisa A. Steffes American Express Financial 70100 AXP Financial Center Vice President - Marketing Vice President - Marketing Advisors Inc. Minneapolis, MN 55474 Offer Development Offer Development AMEX Assurance Company 70100 AXP Financial Center Director Minneapolis, MN 55474 IDS Property Casualty 1 WEG Blvd. Director Insurance Company DePere, WI 54115 James J. Strauss American Express Financial 70100 AXP Financial Center Vice President and General Vice President and General Advisors Inc. Minneapolis, MN 55474 Auditor Auditor Jeffrey J. Stremcha American Express Financial 70100 AXP Financial Center Vice President - Vice President - Information Advisors Inc. Minneapolis, MN 55474 Information Resource Resource Management/ISD Management/ISD John R. Thomas American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Information and Technology Information and Technology Keith N. Tufte American Express Financial 70100 AXP Financial Center Vice President and Vice President and Director Advisors Inc. Minneapolis, MN 55474 Director of Equity Research of Equity Research Norman Weaver Jr. American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Alliance Group Alliance Group American Express Insurance Vice President Agency of Alabama Inc. American Express Insurance Vice President Agency of Arizona Inc. American Express Insurance Vice President Agency of Idaho Inc. American Express Insurance Vice President Agency of Indiana Inc. American Express Insurance Vice President Agency of Massachusetts Inc. American Express Insurance Vice President Agency of Nevada Inc. American Express Insurance Vice President Agency of New Mexico Inc. American Express Insurance Vice President Agency of Oklahoma Inc. American Express Insurance Vice President Agency of Oregon Inc. American Express Insurance Vice President Agency of Wyoming Inc. American Express Property Vice President Casualty Insurance Agency of Kentucky Inc. American Express Property Vice President Casualty Insurance Agency of Maryland Inc. American Express Property Vice President Casualty Insurance Agency of Pennsylvania Inc. IDS Insurance Agency of Vice President Arkansas Inc. IDS Insurance Agency of Vice President Ohio Inc. Jeffry F. Welter American Express Financial 70100 AXP Financial Center Vice President - Equity Vice President - Equity and Advisors Inc. Minneapolis, MN 55474 and Fixed Income Trading Fixed Income Trading Michael D. Wolf American Express Asset 70100 AXP Financial Center Executive Vice President Vice President - Senior Management Group Inc. Minneapolis, MN 55474 and Senior Portfolio Portfolio Manager Manager American Express Financial 70100 AXP Financial Center Vice President - Senior Advisors Inc. Minneapolis, MN 55474 Portfolio Manager Michael R. Woodward American Express Financial 70100 AXP Financial Center Senior Vice President - Senior Vice President - Advisors Inc. Minneapolis, MN 55474 Field Management Field Management American Centurion Life 20 Madison Ave. Extension Director Assurance Company Albany, NY 12205-0555 American Express Insurance Vice President Agency of Alabama Inc. American Express Insurance Vice President Agency of Idaho Inc. American Express Insurance Vice President Agency of Indiana Inc. American Express Insurance Vice President Agency of Massachusetts Inc. American Express Insurance Vice President Agency of Nevada Inc. American Express Insurance Vice President Agency of New Mexico Inc. American Express Insurance Vice President Agency of Oklahoma Inc. American Express Insurance Vice President Agency of Oregon Inc. American Express Insurance Vice President Agency of Wyoming Inc. American Express Property Vice President Casualty Insurance Agency of Kentucky Inc. American Express Property Vice President Casualty Insurance Agency of Maryland Inc. American Express Property Vice President Casualty Insurance Agency of Pennsylvania Inc. IDS Insurance Agency of Vice President Arkansas Inc. IDS Insurance Agency of Vice President Ohio Inc. IDS Life Insurance Company P.O. Box 5144 Director of New York Albany, NY 12205 Doretta R. Wright American Express Financial Vice President Vice President Advisors Inc. David L. Yowan American Centurion Life 20 Madison Ave. Extension Vice President and Treasurer Vice President and Corporate Assurance Company Albany, NY 12205-0555 Treasurer American Enterprise Vice President and Investment Services Treasurer American Enterprise Life 829 AXP Financial Center Vice President and Insurance Company Minneapolis, MN 55474 Treasurer American Express Asset Vice President and Management Group Inc. Treasurer American Express Asset Vice President and Management International Treasurer Inc. American Express Vice President and Certificate Company Treasurer American Express Client 70100 AXP Financial Center Vice President and Service Corporation Minneapolis, MN 55474 Treasurer American Express Vice President and Corporation Treasurer American Express Financial 70100 AXP Financial Center Vice President and Advisors Inc. Minneapolis, MN 55474 Treasurer American Express Financial Vice President and Advisors Japan Inc. Treasurer American Express Insurance Vice President and Agency of Alabama Inc. Treasurer American Express Insurance Vice President and Agency of Arizona Inc. Treasurer American Express Insurance Vice President and Agency of Idaho Inc. Treasurer American Express Insurance Vice President and Agency of Indiana Inc. Treasurer American Express Insurance Vice President and Agency of Massachusetts Inc. Treasurer American Express Insurance Vice President and Agency of Nevada Inc. Treasurer American Express Insurance Vice President and Agency of New Mexico Inc. Treasurer American Express Insurance Vice President and Agency of Oklahoma Inc. Treasurer American Express Insurance Vice President and Agency of Oregon Inc. Treasurer American Express Insurance Vice President and Agency of Wyoming Inc. Treasurer American Express Personal Treasurer Trust Services, FSB American Express Property Vice President and Casualty Insurance Agency Treasurer of Kentucky Inc. American Express Property Vice President and Casualty Insurance Agency Treasurer of Maryland Inc. American Express Property Vice President and Casualty Insurance Agency Treasurer of Pennsylvania Inc. American Partners Life 1751 AXP Financial Center Vice President and Insurance Company Minneapolis, MN 55474 Treasurer IDS Cable Corporation Director, Vice President and Treasurer IDS Cable II Corporation Director, Vice President and Treasurer IDS Capital Holdings Inc. Vice President, Treasurer and Assistant Secretary IDS Insurance Agency of Vice President and Arkansas Inc. Treasurer IDS Insurance Agency of Vice President and Ohio Inc. Treasurer IDS Life Insurance Company 20 Madison Ave. Extension Vice President, Treasurer P.O. Box 5555 and Assistant Secretary Albany, NY 12205-0555 IDS Life Insurance Company P.O. Box 5144 Vice President and of New York Albany, NY 12205 Treasurer IDS Life Series Fund, Inc. 70100 AXP Financial Center Vice President and Minneapolis, MN 55474 Treasurer IDS Life Variable Annuity 70100 AXP Financial Center Vice President and Funds A & B Minneapolis, MN 55474 Treasurer IDS Management Corporation Director, Vice President and Treasurer IDS Partnership Services Vice President and Corporation Treasurer IDS Property Casualty 1 WEG Blvd. Vice President, Treasurer Insurance Company DePere, WI 54115 and Assistant Secretary IDS Real Estate Services, Vice President and Inc. Treasurer IDS Realty Corporation Vice President and Treasurer Investors Syndicate Vice President and Development Corporation Treasurer Public Employee Payment Vice President and Company Treasurer
Item 27. Principal Underwriters. (a) American Express Financial Advisors acts as principal underwriter for the following investment companies: AXP Bond Fund, Inc.; AXP California Tax-Exempt Trust; AXP Discovery Fund, Inc.; AXP Equity Select Fund, Inc.; AXP Extra Income Fund, Inc.; AXP Federal Income Fund, Inc.; AXP Global Series, Inc.; AXP Growth Series, Inc.; AXP High Yield Tax-Exempt Fund, Inc.; AXP International Fund, Inc.; AXP Investment Series, Inc.; AXP Managed Series, Inc.; AXP Market Advantage Series, Inc.; AXP Money Market Series, Inc.; AXP New Dimensions Fund, Inc.; AXP Partners Series, Inc.; AXP Precious Metals Fund, Inc.; AXP Progressive Fund, Inc.; AXP Selective Fund, Inc.; AXP Special Tax-Exempt Series Trust; AXP Stock Fund, Inc.; AXP Strategy Series, Inc.; AXP Tax-Exempt Series, Inc.; AXP Tax-Free Money Fund, Inc.; AXP Utilities Income Fund, Inc., Growth Trust; Growth and Income Trust; Income Trust; Tax-Free Income Trust; World Trust; American Express Certificate Company. (b) As to each director, officer or partner of the principal underwriter: Name and Principal Position and Offices with Offices with Registrant Business Address Underwriter Ronald G. Abrahamson Vice President - None 70100 AXP Financial Center Business Transformation Minneapolis, MN 55474 Ruediger Adolf Senior Vice President None 70100 AXP Financial Center Minneapolis, MN 55474 Douglas A. Alger Senior Vice President - None 70100 AXP Financial Center Human Resources Minneapolis, MN 55474 Gumer C. Alvero Vice President - None 70100 AXP Financial Center Annuities Minneapolis, MN 55474 Ward D. Armstrong Senior Vice President - None 70100 AXP Financial Center Retirement Services Minneapolis, MN 55474 John M. Baker Vice President - Plan None 70100 AXP Financial Center Sponsor Services Minneapolis, MN 55474 Dudley Barksdale Vice President - Service None 70100 AXP Financial Center Development Minneapolis, MN 55474 Joseph M. Barsky III Vice President - Mutual None 70100 AXP Financial Center Fund Equities Minneapolis, MN 55474 Timothy V. Bechtold Vice President - Risk None 70100 AXP Financial Center Management Products Minneapolis, MN 55474 Brent L. Bisson Group Vice President - None Suite 900, E. Westside Twr Los Angeles Metro 11835 West Olympic Blvd. Los Angeles, CA 90064 Walter K. Booker Group Vice President - None Suite 200, 3500 Market New Jersey Street Camp Hill, NJ 17011 Bruce J. Bordelon Group Vice President - None 1333 N. California Blvd., San Francisco Bay Area Suite 200 Walnut Creek, CA 94596 Charles R. Branch Group Vice President - None Suite 200 Northwest West 111 North River Dr. Spokane, WA 99201 Douglas W. Brewers Vice President - Sales None 70100 AXP Financial Center Support Minneapolis, MN 55474 Kenneth J. Ciak Vice President and None IDS Property Casualty General Manager - IDS 1400 Lombardi Avenue Property Casualty Green Bay, WI 54304 Paul A. Connolly Vice President - Retail None 70100 AXP Financial Center Distribution Services Minneapolis, MN 55474 Henry J. Cormier Group Vice President - None Commerce Center One Connecticut 333 East River Drive East Hartford, CT 06108 James M. Crachhiolo Director, Chairman, President and None 70100 AXP Financial Center Chief Executive Officer Minneapolis, MN 55474 John M. Crawford Group Vice President - None Suite 200 Arkansas/ 10800 Financial Ctr Pkwy Springfield/Memphis Little Rock, AR 72211 Kevin F. Crowe Group Vice President - None Suite 312 Carolinas/Eastern Georgia 7300 Carmel Executive Pk Charlotte, NC 28226 Colleen Curran Vice President and None 70100 AXP Financial Center Assistant General Counsel Minneapolis, MN 55474 Luz Maria Davis Vice President - None 70100 AXP Financial Center Communications Minneapolis, MN 55474 Arthur E. DeLorenzo Group Vice President - None 4 Atrium Drive, #100 Upstate New York Albany, NY 12205 Scott M. DiGiammarino Group Vice President - None Suite 500, 8045 Leesburg Washington/Baltimore Pike Vienna, VA 22182 Bradford L. Drew Group Vice President - None Two Datran Center Eastern Florida Penthouse One B 9130 S. Dadeland Blvd. Miami, FL 33156 Douglas K. Dunning Vice President - Assured None 70100 AXP Financial Center Assets Product Minneapolis, MN 55474 Development and Management James P. Egge Group Vice President - None 4305 South Louise, Western Iowa, Nebraska, Suite 202 Dakotas Sioux Falls, SD 57103 Robert M. Elconin Vice President - None 70100 AXP Financial Center Government Relations Minneapolis, MN 55474 Gordon M. Fines Vice President - Mutual None 70100 AXP Financial Center Fund Equity Investments Minneapolis, MN 55474 Douglas L. Forsberg Vice President - None 70100 AXP Financial Center International Minneapolis, MN 55474 William P. Fritz Group Vice President - Gateway None 12323 Olive Blvd/Westview Place #200 Creve Couer, MO 63141 Peter A. Gallus Vice President - None 70100 AXP Financial Center Investment Minneapolis, MN 55474 Administration Derek M. Gledhill Vice President - None 70100 AXP Financial Center Integrated Financial Minneapolis, MN 55474 Services Field Implementation David A. Hammer Vice President and None 70100 AXP Financial Center Marketing Controller Minneapolis, MN 55474 Teresa A. Hanratty Senior Vice President - None Suites 6&7 Field Management 169 South River Road Bedford, NH 03110 Robert L. Harden Group Vice President - None Two Constitution Plaza Boston Metro Boston, MA 02129 Lorraine R. Hart Vice President - None 70100 AXP Financial Center Insurance Investments Minneapolis, MN 55474 Janis K. Heaney Vice President - None 70100 AXP Financial Center Incentive Management Minneapolis, MN 55474 Brian M. Heath Senior Vice President None Suite 150 and General Sales Manager 801 E. Campbell Road Richardson, TX 75081 Jon E. Hjelm Group Vice President - None 319 Southbridge Street Rhode Island/Central - Auburn, MA 01501 Western Massachusetts David J. Hockenberry Group Vice President - None 30 Burton Hills Blvd. Tennessee Valley Suite 175 Nashville, TN 37215 ` Carol A. Holton Vice President - Third None 70100 AXP Financial Center Party Distribution Minneapolis, MN 55474 Debra A. Hutchinson Vice President - None 70100 AXP Financial Center Relationship Leader Minneapolis, MN 55474 Diana R. Iannarone Group Vice President - None 3030 N.W. Expressway Kansas/Oklahoma Suite 900 Oklahoma City, OK 73112 Theodore M. Jenkin Group Vice President - None 70100 AXP Financial Center Cleveland Metro Minneapolis, MN 55474 James M. Jensen Vice President - None 70100 AXP Financial Center Advice and Minneapolis, MN 55474 Retail Distribution Group, Product, Compensation and Field Administration Marietta L. Johns Senior Vice President - None 70100 AXP Financial Center Field Management Minneapolis, MN 55474 Nancy E. Jones Vice President - None 70100 AXP Financial Center Business Development Minneapolis, MN 55474 John C. Junek Senior Vice President, None 70100 AXP Financial Center General Counsel Minneapolis, MN 55474 Ora J. Kaine Vice President - None 70100 AXP Financial Center Financial Advisory Minneapolis, MN 55474 Services Linda B. Keene Vice President - Market None 70100 AXP Financial Center Development Minneapolis, MN 55474 Raymond G. Kelly Group Vice President - None Suite 250 North Texas 801 East Campbell Road Richardson, TX 75081 John M. Knight Vice President - Treasurer 70100 AXP Financial Center Investment Accounting Minneapolis, MN 55474 Claire Kolmodin Vice President - Service None 70100 AXP Financial Center Quality Minneapolis, MN 55474 Steven C. Kumagai Director and Senior Vice None 70100 AXP Financial Center President - Direct and Minneapolis, MN 55474 Interactive Group Mitre Kutanovski Group Vice President - None Suite 680 Chicago Metro 8585 Broadway Merrillville, IN 48410 Kurt A. Larson Vice President - Senior None 70100 AXP Financial Center Portfolio Manager Minneapolis, MN 55474 Lori J. Larson Vice President - None 70100 AXP Financial Center Brokerage and Direct Minneapolis, MN 55474 Services Daniel E. Laufenberg Vice President and Chief None 70100 AXP Financial Center U.S. Economist Minneapolis, MN 55474 Jane W. Lee Vice President - New None 70100 AXP Financial Center Business Development and Minneapolis, MN 55474 Marketing Peter A. Lefferts Senior Vice President - None 70100 AXP Financial Center Corporate Strategy and Minneapolis, MN 55474 Development Fred A. Mandell Vice President - None 70100 AXP Financial Center Distribution Channel Minneapolis, MN 55474 Marketing Timothy J. Masek Vice President and None 70100 AXP Financial Center Director of Global Minneapolis, MN 55474 Research Paula R. Meyer Vice President - Mutual None 70100 AXP Financial Center Funds Minneapolis, MN 55474 Shashank B. Modak Vice President - None 70100 AXP Financial Center Technology Leader Minneapolis, MN 55474 Pamela J. Moret Senior Vice President - None 70100 AXP Financial Center Products Group Minneapolis, MN 55474 Barry J. Murphy Executive Vice President - None 70100 AXP Financial Center U.S. Retail Group Minneapolis, MN 55474 Mary Owens Neal Vice President - None 70100 AXP Financial Center Consumer Marketing Minneapolis, MN 55474 Scott M. Nelson Vice President - None 70100 AXP Financial Center Alternative Investments Minneapolis, MN 55474 Thomas V. Nicolosi Group Vice President - None Suite 220 New York Metro Area 500 Mamaroneck Ave. Harrison, NY 10528 Francois B. Odouard Vice President None 70100 AXP Financial Center Minneapolis, MN 55474 Michael J. O'Keefe Vice President - None 70100 AXP Financial Center Advisory Business Systems Minneapolis, MN 55474 James R. Palmer Vice President - Taxes None 70100 AXP Financial Center Minneapolis, MN 55474 Marc A. Parker Group Vice President - None 10200 SW. Greenburg Rd. Portland/Eugene Suite 110 Portland, OR. 97223 Carla P. Pavone Vice President - None 70100 AXP Financial Center Business Development Minneapolis, MN 55474 Kris Petersen Vice President - None 70100 AXP Financial Center Non-proprietary Products Minneapolis, MN 55474 Susan B. Plimpton Vice President - None 70100 AXP Financial Center Marketing Services Minneapolis, MN 55474 Larry M. Post Group Vice President - None One Tower Bridge Philadelphia Metro and 100 Front Street 8th Fl Northern New England West Conshohocken, PA 19428 Ronald W. Powell Vice President and None 70100 AXP Financial Center Assistant General Counsel Minneapolis, MN 55474 James M. Punch Vice President - Branded None 70100 AXP Financial Center Platform Project Minneapolis, MN 55474 Frederick C. Quirsfeld Senior Vice President - Vice President 70100 AXP Financial Center Fixed Income Minneapolis, MN 55474 Teresa J. Rasmussen Vice President and None 70100 AXP Financial Center Assistant General Counsel Minneapolis, MN 55474 Rollyn C. Renstrom Vice President - None 70100 AXP Financial Center Corporate Planning and Minneapolis, MN 55474 Analysis Ralph D. Richardson III Group Vice President - None Suite 800 Southern Texas Arboretum Plaza One 9442 Capital of Texas Hyw. N. Austin, TX 78759 ReBecca K. Roloff Senior Vice President - None 70100 AXP Financial Center Field Management and Minneapolis, MN 55474 Financial Advisory Services Stephen W. Roszell Senior Vice President - None 70100 AXP Financial Center Institutional Minneapolis, MN 55474 Max G. Roth Group Vice President - None Suite 201 S. IDS Ctr Wisconsin/Upper Michigan 1400 Lombardi Avenue Green Bay, WI 54304 Diane M. Ruebling Group Vice President - None 70100 AXP Financial Center Central Minneapolis, MN 55474 California/Western Nevada Erven A. Samsel Senior Vice President - None 45 Braintree Hill Park Field Management Suite 402 Braintree, MA 02184 Theresa M. Sapp Vice President - None 70100 AXP Financial Center Relationship Leader Minneapolis, MN 55474 Russell L. Scalfano Group Vice President - None Suite 201 Illinois/Indiana/Kentucky 101 Plaza East Blvd. Evansville, IN 47715 William G. Scholz Group Vice President - None Suite 205 Arizona/Las Vegas 7333 E. Doubletree Ranch Rd. Scottsdale AZ. 85258 Stuart A. Sedlacek Senior Vice President None 70100 AXP Financial Center and Chief Financial Minneapolis, MN 55474 Officer Donald K. Shanks Vice President - None 70100 AXP Financial Center Property Casualty Minneapolis, MN 55474 Judy P. Skoglund Vice President - Quality None 70100 AXP Financial Center and Service Support Minneapolis, MN 55474 Bridget Sperl Senior Vice President - None 70100 AXP Financial Center Client Service Minneapolis, MN 55474 Paul J. Stanislaw Group Vice President - None Suite 1100 Southern California Two Park Plaza Irvine, CA 92714 Lisa A. Steffes Vice President - None 70100 AXP Financial Center Marketing Offer Minneapolis, MN 55474 Development Lois A. Stilwell Group Vice President - None Suite 433 Outstate Minnesota 9900 East Bren Rd. Area/North Dakota/ Minnetonka, MN 55343 Western Wisconsin James J. Strauss Vice President and None 70100 AXP Financial Center General Auditor Minneapolis, MN 55474 Jeffrey J. Stremcha Vice President - None 70100 AXP Financial Center Information Resource Minneapolis, MN 55474 Management/ISD Barbara Stroup Stewart Vice President - Channel None 70100 AXP Financial Center Development Minneapolis, MN 55474 Craig P. Taucher Group Vice President - None Suite 150 Orlando/Jacksonville 4190 Belfort Rd. Jackonville, FL 32216 Neil G. Taylor Group Vice President - None Suite 425 Seattle/Tacoma/Hawaii 101 Elliot Avenue West Seattle, WA 98119 John R. Thomas Senior Vice President - Board Member 70100 AXP Financial Center Information and and President Minneapolis, MN 55474 Technology Keith N. Tufte Vice President and None 70100 AXP Financial Center Director of Equity Minneapolis, MN 55474 Research Janet M. Vandenbark Group Vice President - None 3951 Westerre Parkway, Suite 250 Virginia Richmond, VA 23233 Peter S. Velardi Group Vice President - None Suite 180 Atlanta/Birmingham 1200 Ashwood Parkway Atlanta, GA 30338 Charles F. Wachendorfer Group Vice President - None Suite 100 Detroit Metro Stanford Plaza II 7979 East Tufts Ave. Pkwy. Denver, CO 80237 Donald F. Weaver Group Vice President - None 3500 Market Street, Greater Pennsylvania Suite 200 Camp Hill, PA 17011 Norman Weaver Jr. Senior Vice President - None 1010 Main St., Suite 2B Alliance Group Huntington Beach, CA 92648 Beth E. Weimer Chief Compliance Officer None 70100 AXP Financial Center Minneapolis, MN 55474 Jeffry M. Welter Vice President - Equity None 70100 AXP Financial Center and Fixed Income Trading Minneapolis, MN 55474 William J. Williams Group Vice President - None 70100 AXP Financial Center Twin Cities Metro Minneapolis, MN 55474 Michael D. Wolf Vice President - Senior None 70100 AXP Financial Center Portfolio Manager Minneapolis, MN 55474 Michael R. Woodward Senior Vice President - None 32 Ellicott St Field Management Suite 100 Batavia, NY 14020 Doretta R. Wright Vice President None 70100 AXP Financial Center Minneapolis, MN 55474 David L. Yowan Vice President and None American Express Company Treasurer New York Rande L. Zellers Group Vice President - None 1 Galleria Blvd., Suite 1900 Gulf States Metairie, LA 70001
Item 27 (c). Not Applicable. Item 28. Location of Accounts and Records American Express Financial Corporation 70100 AXP Financial Center Minneapolis, MN 55474 Item 29. Management Services Not Applicable. Item 30. Undertakings Not Applicable. SIGNATURES Pursuant to the requirements of the Securities Act and the Investment Company Act, the Registrant, AXP Money Market Series, Inc., certifies that it meets all of the requirements for effectiveness of this Registration Statement under Rule 485(b) under the Securities Act and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Minneapolis and the State of Minnesota on the 26th day of September, 2001. AXP MONEY MARKET SERIES, INC. By /s/ John R. Thomas** -------------------- John R. Thomas, President By /s/ John M. Knight ------------------ John M. Knight, Treasurer Pursuant to the requirements of the Securities Act, this Amendment to its Registration Statement has been signed below by the following persons in the capacities indicated on the 26th day of September, 2001. Signature Capacity /s/ Peter J. Anderson* Director ---------------------- Peter J. Anderson /s/ H. Brewster Atwater, Jr.* Director ------------------------------ H. Brewster Atwater, Jr. /s/ Arne H. Carlson* Chairman of the Board --------------------- Arne H. Carlson /s/ Lynne V. Cheney* Director --------------------- Lynne V. Cheney /s/ Livio D. DeSimone* Director ----------------------- Livio D. DeSimone /s/ Ira D. Hall* Director ----------------- Ira D. Hall /s/ David R. Hubers* Director --------------------- David R. Hubers /s/ Heinz F. Hutter* Director --------------------- Heinz F. Hutter /s/ Anne P. Jones* Director ------------------- Anne P. Jones /s/ William R. Pearce* Director ----------------------- William R. Pearce /s/ Alan K. Simpson* Director ---------------------- Alan K. Simpson Signature Capacity /s/ John R. Thomas* Director -------------------- John R. Thomas /s/ C. Angus Wurtele* Director ---------------------- C. Angus Wurtele *Signed pursuant to Directors' Power of Attorney, dated Jan. 11, 2001, filed electronically herewith as Exhibit (q)(1), by: /s/ Leslie L. Ogg ---------------- Leslie L. Ogg **Signed pursuant to Officers' Power of Attorney, dated Jan. 11, 2001, filed electronically herewith as Exhibit (q)(2), by: /s/ Leslie L. Ogg ----------------- Leslie L. Ogg CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 53 TO REGISTRATION STATEMENT NO. 2-54516 This Post-Effective Amendment contains the following papers and documents: The facing sheet. Part A. AXP Cash Management Fund prospectus. Part B. Statement of Additional Information for AXP Money Market Series, Inc., AXP Cash Management Fund. Financial Statements. Part C. Other information. Exhibits. The signatures. EX-99 3 ex-index.txt EXHIBIT INDEX EXHIBIT INDEX (a)(2) Articles of Incorporation amended June 16, 1999. (h)(6) Transfer Agency Agreement dated May 10, 2001 between Registrant and American Express Client Service Corporation. (i) Opinion and consent of counsel as to the legality of the securities being registered. (j) Independent auditors' consent. (m)(2) Plan and Agreement of Distribution For Class C Shares dated March 9, 2000 between Registrant and American Express Financial Advisors Inc. (q)(1) Directors' Power of Attorney to sign amendments to this Registration Statement, dated Jan. 11, 2001. (q)(2) Officers' Power of Attorney to sign amendments to this Registration Statement, dated Jan. 11, 2001. EX-99.A ARTICLES 4 a2-articles.txt ARTICLES OF INCORPORATION ARTICLES OF AMENDMENT OF IDS Cash Management Fund, Inc. Pursuant to Section 302A.135 of the Minnesota Business Corporation Act, IDS Cash Management Fund, Inc., incorporated under the laws of the State of Minnesota on April 8, 1986, amends its Articles of Incorporation to change the name of the corporation to AXP Cash Management Fund, Inc. The new Article I shall be: ARTICLE I - NAME The name of this corporation (hereinafter called the "Fund") is: AXP Cash Management Fund, Inc. The resolution to amend the Articles of Incorporation was approved by the affirmative vote of a majority of the shares present and entitled to vote at a regular meeting of shareholders on June 16, 1999, held pursuant to a written notice given to each shareholder in the manner provided in Section 302A.435. Dated this 16th day of June, 1999. AXP Cash Management Fund, Inc. By /s/ Leslie L. Ogg ------------------------ Leslie L. Ogg Vice President and Secretary STATE OF MINNESOTA) )ss. COUNTY OF DAKOTA) The foregoing instrument was acknowledge before me this 16th day of June, 1999. By /s/ Diane R. Kepp ------------------------ Diane R. Kepp Notary Public EX-99.H6 TRANS AGMT 5 h6-trans.txt TRANSFER AGENCY AGREEMENT TRANSFER AGENCY AGREEMENT AGREEMENT dated as of May 10, 2001 between AXP Money Market Series, Inc., a Minnesota corporation, (the "Company" or "Fund") on behalf of its underlying series AXP Cash Management Fund, and American Express Client Service Corporation (the "Transfer Agent"), a Minnesota corporation. In consideration of the mutual promises set forth below, the Company and the Transfer Agent agree as follows: 1. Appointment of the Transfer Agent. The Company hereby appoints the Transfer Agent, as transfer agent for its shares and as shareholder servicing agent for the Company, and the Transfer Agent accepts such appointment and agrees to perform the duties set forth below. 2. Compensation. The Company will compensate the Transfer Agent for the performance of its obligations as set forth in Schedule A. Schedule A does not include out-of-pocket disbursements of the Transfer Agent for which the Transfer Agent shall be entitled to bill the Company separately. The Transfer Agent will bill the Company monthly. The fee provided for hereunder shall be paid in cash by the Company to the Transfer Agent within five (5) business days after the last day of each month. Out-of-pocket disbursements shall include, but shall not be limited to, the items specified in Schedule B. Reimbursement by the Company for expenses incurred by the Transfer Agent in any month shall be made as soon as practicable after the receipt of an itemized bill from the Transfer Agent. Any compensation jointly agreed to hereunder may be adjusted from time to time by attaching to this Agreement a revised Schedule A, dated and signed by an officer of each party. 3. Documents. The Company will furnish from time to time such certificates, documents or opinions as the Transfer Agent deems to be appropriate or necessary for the proper performance of its duties. 4. Representations of the Company and the Transfer Agent. (a) The Company represents to the Transfer Agent that all outstanding shares are validly issued, fully paid and non-assessable by the Company. When shares are hereafter issued in accordance with the terms of the Company's Articles of Incorporation and its By-laws, such shares shall be validly issued, fully paid and non-assessable by the Company. (b) The Transfer Agent represents that it is registered under Section 17A(c) of the Securities Exchange Act of 1934. The Transfer Agent agrees to maintain the necessary facilities, equipment and personnel to perform its duties and obligations under this agreement and to comply with all applicable laws. -1- 5. Duties of the Transfer Agent. The Transfer Agent shall be responsible, separately and through its subsidiaries or affiliates, for the following functions: (a) Sale of Fund Shares. (1) On receipt of an application and payment, wired instructions and payment, or payment identified as being for the account of a shareholder, the Transfer Agent will deposit the payment, prepare and present the necessary report to the Custodian and record the purchase of shares in a timely fashion in accordance with the terms of the Fund's prospectus. All shares shall be held in book entry form and no certificate shall be issued unless the Fund is permitted to do so by its prospectus and the purchaser so requests. (2) On receipt of notice that payment was dishonored, the Transfer Agent shall stop redemptions of all shares owned by the purchaser related to that payment, place a stop payment on any checks that have been issued to redeem shares of the purchaser and take such other action as it deems appropriate. (b) Redemption of Fund Shares. On receipt of instructions to redeem shares in accordance with the terms of the Fund's prospectus, the Transfer Agent will record the redemption of shares of the Fund, prepare and present the necessary report to the Custodian and pay the proceeds of the redemption to the shareholder, an authorized agent or legal representative upon the receipt of the monies from the Custodian. (c) Transfer or Other Change Pertaining to Fund Shares. On receipt of instructions or forms acceptable to the Transfer Agent to transfer the shares to the name of a new owner, change the name or address of the present owner or take other legal action, the Transfer Agent will take such action as is requested. (d) Exchange of Fund Shares. On receipt of instructions to exchange the shares of the Fund for the shares of another American Express(R) Fund or other American Express Financial Corporation product in accordance with the terms of the prospectus, the Transfer Agent will process the exchange in the same manner as a redemption and sale of shares. (e) Right to Seek Assurance. The Transfer Agent may refuse to transfer, exchange or redeem shares of the Fund or take any action requested by a shareholder until it is satisfied that the requested transaction or action is legally authorized or until it is satisfied there is no basis for any claims adverse to the transaction or action. It may rely on the provisions of the Uniform Act for the Simplification of Fiduciary Security Transfers or the Uniform Commercial Code. The Company shall indemnify the Transfer Agent for any act done or omitted to be done in reliance on such laws or for refusing to transfer, exchange or redeem shares or taking any requested action if it acts on a good faith belief that the transaction or action is illegal or unauthorized. (f) Shareholder Records, Reports and Services. (1) The Transfer Agent shall maintain all shareholder accounts, which shall contain all required tax, legally imposed and regulatory information; shall provide shareholders, and file with federal and state agencies, all required tax and other reports pertaining to shareholder accounts; shall prepare shareholder mailing lists; shall cause to be printed and mailed all required prospectuses, annual reports, semiannual reports, statements of additional information (upon request), proxies and other mailings to shareholders; and shall cause proxies to be tabulated. -2- (2) The Transfer Agent shall respond to all valid inquiries related to its duties under this Agreement. (3) The Transfer Agent shall create and maintain all records in accordance with all applicable laws, rules and regulations, including, but not limited to, the records required by Section 31(a) of the Investment Company Act of 1940. (g) Dividends and Distributions. The Transfer Agent shall prepare and present the necessary report to the Custodian and shall cause to be prepared and transmitted the payment of income dividends and capital gains distributions or cause to be recorded the investment of such dividends and distributions in additional shares of the Fund or as directed by instructions or forms acceptable to the Transfer Agent. (h) Confirmations and Statements. The Transfer Agent shall confirm each transaction either at the time of the transaction or through periodic reports as may be legally permitted. (i) Lost or Stolen Checks. The Transfer Agent will replace lost or stolen checks issued to shareholders upon receipt of proper notification and will maintain any stop payment orders against the lost or stolen checks as it is economically desirable to do. (j) Reports to Company. The Transfer Agent will provide reports pertaining to the services provided under this Agreement as the Company may request to ascertain the quality and level of services being provided or as required by law. (k) Other Duties. The Transfer Agent may perform other duties for additional compensation if agreed to in writing by the parties to this Agreement. 6. Ownership and Confidentiality of Records. (a) General. The Transfer Agent agrees that all records prepared or maintained by it relating to the services to be performed by it under the terms of this Agreement are the property of the Company and may be inspected by the Company or any person retained by the Company at reasonable times. The Company and Transfer Agent agree to protect the confidentiality of those records. (b) Regulation S-P. (1) In accordance with Regulation S-P of the Securities and Exchange Commission "Nonpublic Personal Information" includes (1) all personally identifiable financial information; (2) any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available information; and (3) any information derived therefrom. (2) The Transfer Agent must not use or disclose Nonpublic Personal Information for any purpose other than to carry out the purpose for which Nonpublic Personal Information was provided to the Transfer Agent as set forth in this Agreement, and agrees to cause the Transfer Agent, and its employees, agents, representatives, or any other party to whom the Transfer Agent may provide access to or disclose Nonpublic Personal Information to limit the use and disclosure of Nonpublic Personal Information to that purpose. -3- (3) The Transfer Agent agrees to implement appropriate measures designed to ensure the security and confidentiality of Nonpublic Personal Information, to protect such information against any anticipated threats or hazards to the security or integrity of such information, and to protect against unauthorized access to, or use of, Nonpublic Personal Information that could result in substantial harm or inconvenience to any customer of the Company; the Transfer Agent further agrees to cause all its agents, representatives, subcontractors, or any other party to whom the Transfer Agent may provide access to, or disclose, Nonpublic Personal Information to implement appropriate measures designed to meet the objectives set forth in this paragraph. (4) With respect only to the provisions of this Section 6(b), the Transfer Agent agrees to indemnify and hold harmless the Company, and any officer or director of the Company, against losses, claims, damages, expenses, or liabilities to which the Company, or any officer or director of the Company, may become subject as the result of (1) a material breach of the provisions of this section of the Agreement or (2) any acts or omissions of the Transfer Agent, or of any of its officers, directors, employees, or agents, that are not in substantial accordance with this Agreement, including, but not limited to, any violation of any federal statute or regulation. Notwithstanding the foregoing, no party shall be entitled to indemnification pursuant to this Section 6(b)(4) if such loss, claim, damage, expense, or liability is due to the willful misfeasance, bad faith, gross negligence, or reckless disregard of duty by the party seeking indemnification. 7. Action by Board and Opinion of Counsel. The Transfer Agent may rely on resolutions of the Board of Directors (the "Board") or the Executive Committee of the Board and on opinion of counsel for the Company. 8. Duty of Care. It is understood and agreed that, in furnishing the Company with the services as herein provided, neither the Transfer Agent, nor any officer, director or agent thereof shall be held liable for any loss arising out of or in connection with their actions under this Agreement so long as they act in good faith and with due diligence, and are not negligent or guilty of any willful misconduct. It is further understood and agreed that the Transfer Agent may rely upon information furnished to it reasonably believed to be accurate and reliable. In the event the Transfer Agent is unable to perform its obligations under the terms of this Agreement because of an act of God, strike or equipment or transmission failure reasonably beyond its control, the Transfer Agent shall not be liable for any damages resulting from such failure. 9. Term and Termination. This Agreement shall become effective on the date first set forth above (the "Effective Date") and shall continue in effect from year to year thereafter as the parties may mutually agree; provided that either party may terminate this Agreement by giving the other party notice in writing specifying the date of such termination, which shall be not less than 60 days after the date of receipt of such notice. In the event such notice is given by the Company, it shall be accompanied by a vote of the Board, certified by the Secretary, electing to terminate this Agreement and designating a successor transfer agent or transfer agents. Upon such termination and at the expense of the Company, the Transfer Agent will deliver to such successor a certified list of shareholders of the Fund (with name, address and taxpayer identification or Social Security number), a historical record of the account of each shareholder and the status thereof, and all other relevant books, records, correspondence, and other data established or maintained by the Transfer Agent under this Agreement in the form reasonably acceptable to the Company, and will cooperate in the transfer of such duties and responsibilities, including provisions for assistance from the Transfer Agent's personnel in the establishment of books, records and other data by such successor or successors. -4- 10. Amendment. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties. 11. Subcontracting. The Company agrees that the Transfer Agent may subcontract for certain of the services described under this Agreement with the understanding that there shall be no diminution in the quality or level of the services and that the Transfer Agent remains fully responsible for the services. Except for out-of-pocket expenses identified in Schedule B, the Transfer Agent shall bear the cost of subcontracting such services, unless otherwise agreed by the parties. 12. Miscellaneous. (a) This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable without the written consent of the other party. (b) This Agreement shall be governed by the laws of the State of Minnesota. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers as of the day and year written above. AXP MONEY MARKET SERIES, INC. AXP CASH MANAGEMENT FUND By: /s/ Leslie L. Ogg ----------------- Leslie L. Ogg Vice President AMERICAN EXPRESS CLIENT SERVICE CORPORATION By: /s/ Bridget Sperl ----------------- Bridget Sperl Senior Vice President -5- Schedule A AXP MONEY MARKET SERIES, INC. AXP CASH MANAGEMENT FUND FEE The annual per account fee for services under this agreement, accrued daily and payable monthly, is as follows: Class A Class B Class C Class Y $24.00 $25.00 $24.50 $22.00 -6- Schedule B OUT-OF-POCKET EXPENSES The Company shall reimburse the Transfer Agent monthly for the following out-of-pocket expenses: o typesetting, printing, paper, envelopes, postage and return postage for proxy soliciting material, and proxy tabulation costs o printing, paper, envelopes and postage for dividend notices, dividend checks, records of account, purchase confirmations, exchange confirmations and exchange prospectuses, redemption confirmations, redemption checks, confirmations on changes of address and any other communication required to be sent to shareholders o typesetting, printing, paper, envelopes and postage for prospectuses, annual and semiannual reports, statements of additional information, supplements for prospectuses and statements of additional information and other required mailings to shareholders o stop orders o outgoing wire charges o other expenses incurred at the request or with the consent of the Company -7- EX-99.I OPIN COUNSEL 6 i-opincon.txt OPINION AND CONSENT OF COUNSEL September 26, 2001 AXP Money Market Series, Inc. 200 AXP Financial Center Minneapolis, Minnesota 55474 Gentlemen: I have examined the Articles of Incorporation and the By-Laws of AXP Money Market Series, Inc. (the Company) and all necessary certificates, permits, minute books, documents and records of the Company, and the applicable statutes of the State of Minnesota, and it is my opinion that the shares sold in accordance with applicable federal and state securities laws will be legally issued, fully paid, and nonassessable. This opinion may be used in connection with the Post-Effective Amendment. Sincerely, /s/ Leslie L. Ogg ----------------- Leslie L. Ogg Attorney at Law 901 S. Marquette Ave., Suite 2810 Minneapolis, Minnesota 55402-3268 EX-99.J AUDIT CONSNT 7 j-audcon.txt INDEPENDENT AUDITORS' CONSENT Independent auditors' consent The board and shareholders AXP Money Market Series, Inc.: AXP Cash Management Fund We consent to the use of our report incorporated herein by reference and to the references to our Firm under the headings "Financial Highlights" in Part A and "INDEPENDENT AUDITORS" in Part B of the Registration Statement. /s/ KPMG LLP ------------ KPMG LLP Minneapolis, Minnesota September 7, 2001 EX-99.M2 PLAN DISTRB 8 m2-planagre.txt PLAN AND AGREEMENT OF DISTRBUTION FOR CLASS C Plan and Agreement of Distribution For Class C Shares This plan and agreement, effective as of March 9, 2000, is between AXP Money Market Series, Inc. (the "Fund") on behalf of its underlying series AXP Cash Management Fund, and American Express Financial Advisors Inc. ("AEFA"), the principal underwriter of the Fund, for distribution services to the Fund. The plan and agreement has been approved by members of the Board of Directors (the "Board") of the Fund who are not interested persons of the Fund and have no direct or indirect financial interest in the operation of the plan or any related agreement, and all of the members of the Board, in person, at a meeting called for the purpose of voting on the plan and agreement. The plan and agreement provides that: 1. The Fund will reimburse AEFA for expenses incurred in connection with the distribution of the Fund's shares and providing personal service to shareholders. These expenses include sales commissions; business, employee and financial advisor expenses charged to distribution of Class C shares; and overhead appropriately allocated to the sale of Class C shares. 2. A portion of the fee under the agreement will be used to compensate AEFA, financial advisors and other servicing agents for personal service to shareholders. Fees paid will be used to help shareholders thoughtfully consider their investment goals and objectively monitor how well the goals are being achieved. 3. AEFA agrees to monitor the services it provides, to measure the level and quality of services, and to provide training and support to financial advisors and servicing agents. AEFA will use its best efforts to assure that other distributors provide comparable services to shareholders. 4. The fee under this agreement will be equal on an annual basis to 0.75% of the average daily net assets of the Fund attributable to Class C shares for distribution expenses. The amount so determined shall be paid to AEFA in cash within five (5) business days after the last day of each month. 5. The Fund understands that if a shareholder redeems Class C shares in the first year of ownership, AEFA will impose a sales charge directly on the redemption proceeds to cover those expenses it has previously incurred on the sale of those shares. 6. AEFA agrees to provide at least quarterly an analysis of expenses under this agreement and to meet with representatives of the Fund as reasonably requested to provide additional information. 7. The plan and agreement shall continue in effect for a period of more than one year provided it is reapproved at least annually in the same manner in which it was initially approved. 8. The plan and agreement may not be amended to increase materially the amount that may be paid by the Fund without the approval of a least a majority of the outstanding shares of the relevant class. Any other amendment must be approved in the manner in which the plan and agreement was initially approved. 9. This agreement may be terminated at any time without payment of any penalty by a vote of a majority of the members of the Board who are not interested persons of the Fund and have no financial interest in the operation of the plan and agreement, or by vote of a majority of the outstanding shares of the relevant class, or by AEFA. The plan and agreement will terminate automatically in the event of its assignment as that term is defined in the Investment Company Act of 1940. -1- AXP MONEY MARKET SERIES, INC. AXP CASH MANAGEMENT FUND /s/ Leslie L. Ogg ---------------------------------- Leslie L. Ogg Vice President AMERICAN EXPRESS FINANCIAL ADVISORS INC. /s/ Pamela J. Moret ----------------------------------- Pamela J. Moret Senior Vice President -2- EX-99.Q1 PWR OF ATTY 9 q1-poa.txt DIRECTORS' POWER OF ATTORNEY DIRECTORS/TRUSTEES POWER OF ATTORNEY City of Minneapolis State of Minnesota Each of the undersigned, as directors and trustees of the below listed open-end, diversified investment companies that previously have filed registration statements and amendments thereto pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940 with the Securities and Exchange Commission: 1933 Act 1940 Act Reg. Number Reg. Number ----------- ----------- AXP Bond Fund, Inc. 2-51586 811-2503 AXP California Tax-Exempt Trust 33-5103 811-4646 AXP Discovery Fund, Inc. 2-72174 811-3178 AXP Equity Select Fund, Inc. 2-13188 811-772 AXP Extra Income Fund, Inc. 2-86637 811-3848 AXP Federal Income Fund, Inc. 2-96512 811-4260 AXP Global Series, Inc. 33-25824 811-5696 AXP Growth Series, Inc. 2-38355 811-2111 AXP High Yield Tax-Exempt Fund, Inc. 2-63552 811-2901 AXP International Fund, Inc. 2-92309 811-4075 AXP Investment Series, Inc. 2-11328 811-54 AXP Managed Series, Inc. 2-93801 811-4133 AXP Market Advantage Series, Inc. 33-30770 811-5897 AXP Money Market Series, Inc. 2-54516 811-2591 AXP New Dimensions Fund, Inc. 2-28529 811-1629 AXP Precious Metals Fund, Inc. 2-93745 811-4132 AXP Progressive Fund, Inc. 2-30059 811-1714 AXP Selective Fund, Inc. 2-10700 811-499 AXP Special Tax-Exempt Series Trust 33-5102 811-4647 AXP Stock Fund, Inc. 2-11358 811-498 AXP Strategy Series, Inc. 2-89288 811-3956 AXP Tax-Exempt Series, Inc. 2-57328 811-2686 AXP Tax-Free Money Fund, Inc. 2-66868 811-3003 AXP Utilities Income Fund, Inc. 33-20872 811-5522 hereby constitutes and appoints Arne H. Carlson and Leslie L. Ogg or either one of them, as her or his attorney-in-fact and agent, to sign for her or him in her or his name, place and stead any and all further amendments to said registration statements filed pursuant to said Acts and any rules and regulations thereunder, and to file such amendments with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting to either of them the full power and authority to do and perform each and every act required and necessary to be done in connection therewith. Dated the 11th day of January, 2001. /s/ Peter J. Anderson /s/ Heinz F. Hutter ---------------------- ------------------- Peter J. Anderson Heinz F. Hutter /s/ H. Brewster Atwater, Jr /s/ Anne P. Jones ---------------------------- ----------------- H. Brewster Atwater, Jr Anne P. Jones /s/ Arne H. Carlson /s/ William R. Pearce -------------------- --------------------- Arne H. Carlson William R. Pearce /s/ Lynne V. Cheney /s/ Alan K. Simpson -------------------- ------------------- Lynne V. Cheney Alan K. Simpson /s/ Livio D. DeSimone /s/ John R. Thomas ---------------------- ------------------ Livio D. DeSimone John R. Thomas /s/ Ira D. Hall /s/ C. Angus Wurtele ---------------- -------------------- Ira D. Hall C. Angus Wurtele /s/ David R. Hubers --------------------- David R. Hubers EX-99.Q2 PWR OF ATTY 10 q2-poa.txt OFFICERS' POWER OF ATTORNEY OFFICERS' POWER OF ATTORNEY City of Minneapolis State of Minnesota Each of the undersigned, as officers of the below listed open-end, diversified investment companies that previously have filed registration statements and amendments thereto pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940 with the Securities and Exchange Commission: 1933 Act 1940 Act Reg. Number Reg. Number ----------- --------- AXP Bond Fund, Inc. 2-51586 811-2503 AXP California Tax-Exempt Trust 33-5103 811-4646 AXP Discovery Fund, Inc. 2-72174 811-3178 AXP Equity Select Fund, Inc. 2-13188 811-772 AXP Extra-Income Fund, Inc. 2-86637 811-3848 AXP Federal Income Fund, Inc. 2-96512 811-4260 AXP Global Series, Inc. 33-25824 811-5696 AXP Growth Series, Inc. 2-38355 811-2111 AXP High Yield Tax-Exempt Fund, Inc. 2-63552 811-2901 AXP International Fund, Inc. 2-92309 811-4075 AXP Investment Series, Inc. 2-11328 811-54 AXP Variable Portfolio-Investment Series, Inc. 2-73115 811-3218 AXP Variable Portfolio-Managed Series, Inc. 2-96367 811-4252 AXP Variable Portfolio-Money Market Series, Inc. 2-72584 811-3190 AXP Variable Portfolio-Income Series, Inc. 2-73113 811-3219 AXP Managed Series, Inc. 2-93801 811-4133 AXP Market Advantage Series, Inc. 33-30770 811-5897 AXP Money Market Series, Inc. 2-54516 811-2591 AXP New Dimensions Fund, Inc. 2-28529 811-1629 AXP Precious Metals Fund, Inc. 2-93745 811-4132 AXP Progressive Fund, Inc. 2-30059 811-1714 AXP Selective Fund, Inc. 2-10700 811-499 AXP Special Tax-Exempt Series Trust 33-5102 811-4647 AXP Stock Fund, Inc. 2-11358 811-498 AXP Strategy Series, Inc. 2-89288 811-3956 AXP Tax-Exempt Series, Inc. 2-57328 811-2686 AXP Tax-Free Money Fund, Inc. 2-66868 811-3003 AXP Utilities Income Fund, Inc. 33-20872 811-5522 hereby constitutes and appoints the other as his attorney-in-fact and agent, to sign for him in his name, place and stead any and all further amendments to said registration statements filed pursuant to said Acts and any rules and regulations thereunder, and to file such amendments with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting to either of them the full power and authority to do and perform each and every act required and necessary to be done in connection therewith. Dated the 11th day of January, 2001. /s/ Arne H. Carlson /s/ Leslie L. Ogg ------------------- ----------------- Arne H. Carlson Leslie L. Ogg /s/ John R. Thomas /s/ Peter J. Anderson ------------------ --------------------- John R. Thomas Peter J. Anderson /s/ Frederick C. Quirsfeld /s/ John M. Knight -------------------------- ------------------ Frederick C. Quirsfeld John M. Knight