N-30D 1 s-6320x.txt AXP CASH MANAGEMENT FUND AXP(R) Cash Management Fund 2001 ANNUAL REPORT (PROSPECTUS ENCLOSED) 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. (This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money.) A Cache for Cash Keeping a portion of your investment portfolio in a cash reserve is a cornerstone of a sound financial strategy. And a money market mutual fund that stresses stability of your investment principal and easy access when you need it is an excellent way to meet that need. That's what AXP Cash Management Fund is all about. Table of Contents 2001 ANNUAL REPORT The purpose of this annual report is to tell investors how the Fund performed. From the Chairman 3 From the Portfolio Manager 3 Fund Facts 5 Making the Most of the Fund 7 Board Members and Officers 8 Independent Auditors' Report 10 Financial Statements 11 Notes to Financial Statements 14 Investments in Securities 19 Federal Income Tax Information 24 -------------------------------------------------------------------------------- 2 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT (picture of) Arne H. Carlson Arne H. Carlson Chairman of the board From the Chairman First, I want to thank you for being a shareholder in American Express funds. While we strongly believe in the virtues of investment, we also are very sensitive to the fluctuations of the financial markets. That is why we want to re-emphasize the importance of making certain that you frequently review your investments and regularly meet with your financial advisor. By doing so, you can take advantage of shifts in the markets to position your portfolio relative to expected market volatility and, possibly, achieve better overall performance. Second, I strongly advise that you keep a focus on the long-term. Reviewing past performance is helpful, but it should not be viewed as a leading indicator of the future. One constant is the necessity to have a financial plan based on appropriate asset allocation. Make sure that the plan provides what you need and expect. Our job, as a Board, is to monitor and confirm that the Fund complies with its investment objective and that its management style stays on target. We want the Fund to be able to deliver to you, the shareholder, the type of performance you expect and the best results that can be obtained. Toward that end, American Express has made significant changes in its investment management capability, and will continue to make changes as it strives to provide a consistent standard of excellence. On behalf of the Board, Arne H. Carlson (picture of) Terry L. Seierstad Terry L. Seierstad Portfolio manager From the Portfolio Manager AXP Cash Management Fund's yield fell during the past fiscal year -- August 2000 through July 2001 -- reflecting a substantial decline in short-term interest rates. For the 12 months, the return for the Fund's Class A shares was 5.35% and the seven-day yield was 3.35%. (The yield more closely reflects the current earnings of the money market fund than does total return.) In keeping with its objective, the Fund maintained a $1 per share price throughout the period. (Keep in mind that an investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the Fund.) -------------------------------------------------------------------------------- 3 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT SLOWER GROWTH, LOWER RATES Although the economy continued to grow during the period, the rate of growth slowed down markedly. In fact, some observers forecasted that a recession was imminent. While it refrained from joining the recession debate, the Federal Reserve (the Fed) made its concern about the economy's health clear when it began reducing short-term interest rates in early January, then followed that up with five more rate cuts. (By way of background, the Fed adjusts short-term interest rates based largely on the condition of the economy and the inflation outlook. When the economy appears weak and inflation is low, the Fed usually lowers rates to stimulate economic growth. When the economy is especially strong and inflation threatens to pick up, the Fed usually raises rates to temper economic growth and thereby keep inflation in check.) In response to the slowing economy, issuers of commercial paper -- the core of the Fund's investment portfolio -- began offering lower interest rates on their securities in December, a trend that continued through the end of the fiscal year. As these new securities were added to the portfolio, the result was a decline in the Fund's yield. In anticipation of the drop in short-term interest rates, I substantially lengthened the average maturity of the portfolio during the winter. That strategy lessened the degree of yield decline over the ensuing months. Another change worth noting was a substantial increase in the amount of U.S. government and government-agency securities in the portfolio, a move designed to increase the overall quality of the portfolio in light of the weakening economy. At period-end, such securities comprised about 25% of the portfolio. The rest remained in high-quality commercial paper. Looking ahead to the new fiscal year, I think the economy is likely to find itself on more solid ground, which should persuade the Fed to suspend its interest-rate cuts. Therefore, yields on short-term securities are likely to stabilize before long. In the meantime, I plan to maintain a longer-than-average maturity in the portfolio to keep the yield as high as possible within prudent investment guidelines. Terry L. Seierstad -------------------------------------------------------------------------------- 4 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Fund Facts Class A -- 12-month performance (All figures per share) Net asset value (NAV) July 31, 2001 $1.00 July 31, 2000 $1.00 Increase $ -- Distributions -- Aug. 1, 2000 - July 31, 2001 From income $0.05 From long-term capital gains $ -- Total distributions $0.05 Total return* +5.35% 7-day yield** +3.35% Class B -- 12-month performance (All figures per share) Net asset value (NAV) July 31, 2001 $1.00 July 31, 2000 $1.00 Increase $ -- Distributions -- Aug. 1, 2000 - July 31, 2001 From income $0.05 From long-term capital gains $ -- Total distributions $0.05 Total return* +4.57% 7-day yield** +2.60% -------------------------------------------------------------------------------- 5 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Class C -- 12-month performance (All figures per share) Net asset value (NAV) July 31, 2001 $1.00 July 31, 2000 $1.00 Increase $ -- Distributions -- Aug. 1, 2000 - July 31, 2001 From income $0.05 From long-term capital gains $ -- Total distributions $0.05 Total return* +4.68% 7-day yield** +2.61% Class Y -- 12-month performance (All figures per share) Net asset value (NAV) July 31, 2001 $1.00 July 31, 2000 $1.00 Increase $ -- Distributions -- Aug. 1, 2000 - July 31, 2001 From income $0.05 From long-term capital gains $ -- Total distributions $0.05 Total return* +5.37% 7-day yield** +3.37% * The total return is a hypothetical investment in the Fund with all distributions reinvested. Returns do not include sales load. The prospectus discusses the effect of sales charges, if any, on the various classes. ** The yield quotation more closely reflects the current earnings of the money market fund than the total return quotation. -------------------------------------------------------------------------------- 6 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Making the Most of the Fund BUILD YOUR ASSETS SYSTEMATICALLY One of the best ways to invest in the Fund is by dollar-cost averaging -- a time-tested strategy that can make market fluctuations work for you. To dollar-cost average, simply invest a fixed amount of money regularly. You'll automatically buy more shares when the Fund's share price is low, fewer shares when it is high. The chart below shows how dollar-cost averaging works. In these three hypothetical scenarios, you will see six months of share price fluctuations. This strategy does not ensure a profit or avoid a loss if the market declines. But, if you can continue to invest regularly through changing market conditions even when the price of your shares falls or the market declines, it can be an effective way to accumulate shares to meet your long-term goals. How dollar-cost averaging works Jan Feb Mar Apr May Jun $15 $16 $18 $20 $10 $10 $12 $14 $ 5 Accumulated shares* Average market Your average price per share cost per share 42.25 $15 $14.20 ------------------------------------------------------------------------------- Jan Feb Mar Apr May Jun $15 $10 $10 $10 $ 5 $8 $5 $5 $8 Accumulated shares* Average market Your average price per share cost per share 85.0 $7.66 $7.05 ------------------------------------------------------------------------------- Jan Feb Mar Apr May Jun $15 $10 $10 $ 5 $8 $6 $4 $4 $7 Accumulated shares* Average market Your average price per share cost per share 103.5 $6.50 $5.80 ------------------------------------------------------------------------------- $100 invested per month. Total invested: $600. * Shares purchased is determined by dividing the amount invested per month by the current share price. THREE WAYS TO BENEFIT FROM A MUTUAL FUND: o your shares increase in value when the Fund's investments do well o you receive capital gains when the gains on investments sold by the Fund exceed losses o you receive income when the Fund's stock dividends, interest and short-term gains exceed its expenses. All three make up your total return. You potentially can increase your investment if, like most investors, you reinvest your dividends and capital gain distributions to buy additional shares of the Fund or another fund. -------------------------------------------------------------------------------- 7 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Board Members and Officers Shareholders elect a board that oversees the Fund's operations. The board appoints officers who are responsible for day-to-day business decisions based on policies set by the board. The following is a list of the Fund's board members. Each member oversees 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 address, Registrant and length during past five years age of service -------------------------------------- ------------------------- -------------------------- ------------------------- H. Brewster Atwater, Jr. Board member since 1996 Retired chair and chief Merck & Co., Inc. 4900 IDS Tower executive officer, (pharmaceuticals) Minneapolis, MN 55402 General Mills, Inc. Born in 1931 (consumer foods) -------------------------------------- ------------------------- -------------------------- ------------------------- Arne H. Carlson Chair of the Board Chair, Board Services 901 S. Marquette Ave. since 1999 Corporation (provides Minneapolis, MN 55402 administrative services Born in 1934 to boards) Former Governor of Minnesota -------------------------------------- ------------------------- -------------------------- ------------------------- Lynne V. Cheney Board member since 1994 Distinguished Fellow, AEI The Reader's Digest American Enterprise Institute 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 2001 Retired chair of the Cargill, Incorporated 30 Seventh Street board and chief (commodity merchants St. Paul, MN 55101-4901 executive officer, and processors), Target Born in 1936 Minnesota Mining and Corporation (department Manufacturing (3M) stores), General Mills, Inc. (consumer foods) and Vulcan Materials Company (construction materials/chemicals) -------------------------------------- ------------------------- -------------------------- ------------------------- Ira D. Hall Board member since 2001 Treasurer, Texaco Inc. Texaco, Inc since 1998. Prior to 2000 Westchester Avenue that, director, White Plains, NY 10650 International Operations Born in 1944 IBM Corp. -------------------------------------- ------------------------- -------------------------- ------------------------- Heinz F. Hutter Board member since 1994 Retired president and P.O. Box 2187 chief operating officer, Minneapolis, MN 55402 Cargill, Incorporated Born in 1929 (commodity merchants and processors) -------------------------------------- ------------------------- -------------------------- ------------------------- Anne P. Jones Board member since 1985 Attorney and Motorola, Inc. 5716 Bent Branch Rd. telecommunications (electronics) Bethesda, MD 20816 consultant Born in 1935 -------------------------------------- ------------------------- -------------------------- ------------------------- William R. Pearce Board member since 1980 RII Weyerhaeuser World 2050 One Financial Plaza Timberfund, L.P. Minneapolis, MN 55402 (develops timber Born in 1927 resources) - management committee; Former chair, American Express Funds -------------------------------------- ------------------------- -------------------------- -------------------------
-------------------------------------------------------------------------------- 8 AXP CASH MANAGEMENT FUND-- ANNUAL REPORT
Independent Board Members -------------------------------------- ------------------------- -------------------------- ------------------------- Name, Position held with Principal occupations Other directorships address, Registrant and length during past five years age of service -------------------------------------- ------------------------- -------------------------- ------------------------- Alan K. Simpson Board member since 1997 Former three-term United Biogen, Inc. 1201 Sunshine Ave. States Senator for (bio-pharmaceuticals) Cody, WY 82414 Wyoming Born in 1931 -------------------------------------- ------------------------- -------------------------- ------------------------- C. Angus Wurtele Board member since 1994 Retired chair of the The Valspar Corporation Suite 1700, Foshay Tower board and chief (paints), Bemis Minneapolis, MN 55402 executive officer, The Corporation (packaging) Born in 1934 Valspar Corporation -------------------------------------- ------------------------- -------------------------- ------------------------- Board Members Affiliated with American Express Financial Corporation (AEFC) Name, Position held with Principal occupations Other directorships address, Registrant and length during past five years age of service -------------------------------------- ------------------------- -------------------------- ------------------------- David R. Hubers Board member since 1993 Retired chief executive Chronimed Inc. 50643 AXP Financial Center officer, director and (specialty Minneapolis, MN 55474 chair of the board of pharmaceutical Born in 1943 AEFC distribution) RTW Inc. (manages workers compensation programs) Lawson Software, Inc. (technology based business applications) -------------------------------------- ------------------------- -------------------------- ------------------------- John R. Thomas Board member since Senior vice president - 50652 AXP Financial Center 1987, president since information and 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 address, Registrant and length during past five years age of service -------------------------------------- ------------------------- -------------------------- ------------------------- John M. Knight Treasurer since 1999 Vice president - 50005 AXP Financial Center investment accounting of Minneapolis, MN 55474 AEFC Born in 1952 -------------------------------------- ------------------------- -------------------------- ------------------------- Leslie L. Ogg Vice president, general President of Board 901 S. Marquette Ave. counsel and secretary Services Corporation Minneapolis, MN 55402 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 -------------------------------------- ------------------------- -------------------------- -------------------------
The SAI has additional information about the Fund's directors and is available, without charge, upon request by calling (800) 862-7919. -------------------------------------------------------------------------------- 9 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT 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. -------------------------------------------------------------------------------- 23 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Federal Income Tax Information (Unaudited) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. AXP Cash Management Fund Fiscal year ended July 31, 2001 Class A Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Aug. 24, 2000 $0.00553 Sept. 22, 2000 0.00483 Oct. 24, 2000 0.00534 Nov. 21, 2000 0.00471 Dec. 20, 2000 0.00487 Jan. 26, 2001 0.00601 Feb. 26, 2001 0.00427 March 26, 2001 0.00381 April 26, 2001 0.00414 May 24, 2001 0.00333 June 26, 2001 0.00357 July 26, 2001 0.00293 Total distributions $0.05334 Class B Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Aug. 24, 2000 $0.00485 Sept. 22, 2000 0.00423 Oct. 24, 2000 0.00467 Nov. 21, 2000 0.00414 Dec. 20, 2000 0.00428 Jan. 26, 2001 0.00525 Feb. 26, 2001 0.00367 March 26, 2001 0.00324 April 26, 2001 0.00344 May 24, 2001 0.00275 June 26, 2001 0.00289 July 26, 2001 0.00231 Total distributions $0.04572 -------------------------------------------------------------------------------- 24 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT Class C Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Aug. 24, 2000 $0.00542 Sept. 22, 2000 0.00469 Oct. 24, 2000 0.00495 Nov. 21, 2000 0.00415 Dec. 20, 2000 0.00431 Jan. 26, 2001 0.00530 Feb. 26, 2001 0.00366 March 26, 2001 0.00326 April 26, 2001 0.00346 May 24, 2001 0.00275 June 26, 2001 0.00290 July 26, 2001 0.00232 Total distributions $0.04717 Class Y Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Aug. 24, 2000 $0.00554 Sept. 22, 2000 0.00484 Oct. 24, 2000 0.00535 Nov. 21, 2000 0.00472 Dec. 20, 2000 0.00488 Jan. 26, 2001 0.00602 Feb. 26, 2001 0.00428 March 26, 2001 0.00382 April 26, 2001 0.00416 May 24, 2001 0.00334 June 26, 2001 0.00359 July 26, 2001 0.00295 Total distributions $0.05349 -------------------------------------------------------------------------------- 25 AXP CASH MANAGEMENT FUND -- ANNUAL REPORT AXP Cash Management Fund PRSRT STD AUTO 70100 AXP Financial Center U.S. POSTAGE Minneapolis, MN 55474 PAID AMERICAN americanexpress.com EXPRESS Ticker Symbol Class A: IDSXX Class B: ACBXX Class C: N/A Class Y: IDYXX This report must be accompanied or preceded by the Fund's current prospectus. Distributed by American Express Financial Advisors Inc. Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer. (logo) American Express S-6320 X (9/01)