N-30D 1 s6320y.txt AXP CASH MANAGEMENT FUND AXP(R) Cash Management Fund 2002 ANNUAL REPORT (Prospectus Enclosed) 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.) American Express(R) Funds AMERICAN EXPRESS(R) From the Chairman (photo of) Arne H. Carlson Arne H. Carlson Chairman of the board Dear Shareholders, It is a very difficult period for investors caused by corporate management misconduct and its impact on the market as well as the economy. The integrity of corporations at large is being questioned. However, there is optimism that the resulting reforms will give Americans the kind of integrity they deserve. Many corporate leaders are strongly supportive of these reforms. We all have a right to expect financial statements to be fully accurate and business leaders to place the interests of shareholders above personal desires. Your Board is truly independent, comprised of 12 members (nominated by independent members) and three recommended by American Express Financial Corporation. These individuals come from a variety of geographic areas with the diverse skill sets necessary to oversee the operations of the Fund. Investment performance is, and remains, our primary concern. The Fund's auditors, KPMG LLP, are truly independent of American Express Financial Corporation. KPMG serves the interest of shareholders by supporting the work of the Board and certifying unbiased financial reports. The Board has confidence in Ted Truscott, American Express Financial Corporation's new Chief Investment Officer, and shares his enthusiasm in the management changes he has effected to improve the investment performance of all American Express funds. These changes include the hiring of several new portfolio managers and investment leaders and the addition of eight sub-advised funds. The focus of the Board and American Express Financial Corporation is simple; we strive for consistent, competitive investment performance. If you were a shareholder of record on September 14, you will receive a proxy statement for a shareholder meeting to be held on November 13, 2002. Please take time to consider each proposal and vote promptly. On behalf of the Board, Arne H. Carlson CONTENTS From the Chairman 2 Economic and Market Update 3 Fund Snapshot 5 Questions & Answers with Portfolio Management 6 Investments in Securities 8 Financial Statements 13 Notes to Financial Statements 16 Independent Auditors' Report 21 Federal Income Tax Information 22 Board Members and Officers 24 -------------------------------------------------------------------------------- 2 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Economic and Market Update FROM CIO WILLIAM F. "TED" TRUSCOTT (photo of) William F. "Ted" Truscott William F. "Ted" Truscott Chief Investment Officer American Express Financial Corporation Dear Shareholders, Major U.S. financial markets lost ground for the three-month period ending July 31, 2002, although a late rally put them above earlier lows. The same factors that have driven markets down for most of the year so far were still in play during this period. These include concerns about the truthfulness of accounting practices and the perception that stocks remain too expensive relative to company earnings. I expect we'll need to see consistent improvement in earnings before stocks rebound significantly. If corporate revenue growth becomes apparent and widespread, it will effectively make stock valuations cheaper. Increased demand should then have a positive impact on prices. Economic fundamentals have continued to look positive despite volatility in the financial markets. Inflation and interest rates remain low, unemployment and job growth are at reasonable levels, and there are signs that business spending is beginning to pick up. In addition, a weaker dollar should help U.S. companies that export goods overseas, even though it crimps our wallets when we travel abroad. These and other factors make it highly unlikely that we will experience a so-called "double-dip" recession. I remain optimistic about the direction of the economy and believe that, eventually, markets will start paying attention to these very favorable conditions. Nevertheless, we should remember that risk still exists. For one, bonds have been experiencing their own bear market. This has created something of a credit crunch for businesses, as liquidity declines and spreads widen. Related to this has been a crisis of confidence -- the unfortunate legacy of recent corporate scandal. In some cases, investors who thought they were buying high-quality corporate bonds were actually getting riskier high-yield securities due to dishonest accounting. Everyone agrees that some type of reform is needed, but the challenge for regulators will be to discourage misleading practices without sacrificing entrepreneurial incentive. Prudent regulation will boost confidence, while misguided efforts will simply make markets less efficient. What I think all investors need to understand is that we're still working through the excess capacity and inflated demand forecasts that were created in the late `90s. This process has been painful, but it has helped to reorient expectations to levels that are more sustainable. Historically speaking, the late `90s were an aberration and will likely not be repeated soon. -------------------------------------------------------------------------------- 3 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Economic and Market Update However, a more sober outlook need not be cause for special concern. We should all ask ourselves, "Have my goals changed in the last couple of years?" For many of us, the answer will be "no." If you're saving for long-term goals like retirement, I would still advise a substantial weighting in equities for your portfolio. Over time, stocks will probably continue to outperform bonds or other investments. And if you're in retirement or getting close, you may want to invest more heavily in bonds and cash, with a smaller portion devoted to equities. See your financial advisor or retirement plan administrator for more information about different types of securities and asset allocation. As always, thank you for investing with American Express Financial Advisors. William F. Truscott KEY POINTS -- Economic fundamentals remain positive. -- Credit "crunch" for business sector persists. -- Re-evaluation of personal financial goals key. -------------------------------------------------------------------------------- 4 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Fund Snapshot AS OF JULY 31, 2002 PORTFOLIO MANAGER Portfolio manager Mary McQuillen Tenure/since 1/15/02 Years in industry 23 FUND OBJECTIVE For investors seeking maximum current income consistent with liquidity and stability of principal. Inception dates A: 10/6/75 B: 3/20/95 C: 6/26/00 Y: 3/20/95 Ticker symbols A: IDSXX B: ACBXX C: -- Y: IDYXX Total net assets $6.352 billion Number of holdings approximately 280 For the period, the Fund's 7-day yield was 1.26%. STYLE MATRIX DURATION SHORT INT. LONG X HIGH MEDIUM QUALITY LOW PORTFOLIO ASSET MIX Percentage of portfolio assets (pie graph) U.S. government agencies 24.5% Certificates of deposit 8.3% Commercial paper 67.2% 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 $1.00 per share, it is possible to lose money by investing in the Fund. Fund holdings are subject to change. -------------------------------------------------------------------------------- 5 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Questions & Answers WITH PORTFOLIO MANAGEMENT Q: How did the Fund perform for the 12-month period ended July 31, 2002? A: The Fund's yield fell during the 12-month period, reflecting a decline in short-term interest rates. For the period, the Fund's Class A shares returned 1.93% and its seven-day yield was 1.26%. As it has historically, the Fund maintained a $1 per share net asset value throughout the period, in accordance with its objective.(1) Q: What factors most significantly impacted performance? A: The main factors affecting the Fund's performance are the actions of the Federal Reserve Board (the Fed), the overall Treasury yield curve and the average maturity of the Fund. As the economic recovery remained slow, the Fed aggressively cut short-term interest rates resulting in one of the lowest interest rate environments we have seen in many years. Despite the absolute low level of rates, the Fund's performance has been above the mean for the period, beating the average(2) by about 15 to 20 basis points. Q: What changes to the Portfolio did you make this period? A: Given overall expectation that interest rates are headed lower, we lengthened the Fund's average maturity. Longer-term securities offered a higher interest rate and an ability to lock in those rates. We believed that was more attractive than having to continually reinvest in shorter-term securities in a market where yields were declining. More recently, we have adopted a more conservative stance as a result of the turbulent commercial paper market. We've increased our allocation to government and agency paper, which typically offers a relatively lower yield. Q: What is your outlook for the months ahead? A: The Fund outlook for the remainder of the year will in a large sense depend on Federal Reserve expectations. While there are signs that an economic recovery may be underway, we expect it to be a rather slow-moving rebound. We expect the federal funds rate(3) to increase, but not until 2003. We will wait for these higher rates to extend the average maturity of the (1) Past performance does not guarantee future results. The Fund is neither insured nor guaranteed by the FDIC (Federal Deposit Insurance Corporation) or any other government agency. Yields will fluctuate. Although the Fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the Fund. The seven-day current yield more closely reflects the current earnings of the Fund than the total return. (2) Based on information from Money Market Institute, a weekly publication capturing the industry's weekly money market fund report based on all money market funds. (3) The federal funds rate is the interest rate charged by one institution lending federal funds to another. (In other words, it's the interest rate banks charge each other for loans.) -------------------------------------------------------------------------------- 6 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Questions & Answers (begin callout quote)> More recently, we have adopted a more conservative stance as a result of the turbulent commercial paper market. (end callout quote) Fund. We expect stabilization in the commercial paper market as the recovery moves forward. As always, we are focused on an investment approach designed to maintain the Fund's stable net asset value first, and secondarily, on maximizing dividend income for our shareholders. AVERAGE ANNUAL TOTAL RETURNS as of July 31, 2002 At Net Asset Value (NAV)* Class A Class B Class C Class Y 1 year +1.93% +1.13% +1.14% +1.95% 5 years +4.58% +3.79% N/A +4.59% 10 years +4.30% N/A N/A N/A Since inception N/A +4.02%** +3.0 +4.82%** With Sales Charge Class A Class B Class C Class Y 1 year +1.93% -2.87% +1.14% +1.95% 5 years +4.58% +3.62% N/A +4.59% 10 years +4.30% N/A N/A N/A Since inception N/A +4.02%** +3.0 +4.82%** For the period, the Fund's 7-day yield was 1.26%. * Excluding sales charge. ** Inception date was March 20, 1995. *** Inception date was June 26, 2000. Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than the original cost. The performance shown for each class of shares will vary due to differences in sales charges and fees. Short term performance may be higher or lower than the figures shown. Visit americanexpress.com for current information. -------------------------------------------------------------------------------- 7 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Investments in Securities AXP Cash Management Fund July 31, 2002 (Percentages represent value of investments compared to net assets) U.S. government agencies (24.4%) Issuer Annualized Amount Value(a) Yield on date payable at of purchase maturity Federal Home Loan Bank Disc Nts 08-02-02 1.71% $14,800,000 $14,799,297 08-14-02 1.78 22,000,000 21,985,859 08-26-02 1.72 17,400,000 17,379,217 08-30-02 1.74 24,750,000 24,715,309 09-04-02 1.71 18,400,000 18,370,284 09-13-02 1.69 8,600,000 8,582,640 09-18-02 1.73 6,300,000 6,285,468 10-09-02 1.74 18,700,000 18,637,994 10-11-02 1.74 35,000,000 34,880,582 11-06-02 1.74 28,600,000 28,466,684 Federal Home Loan Mtge Corp Disc Nts 08-08-02 1.77 36,700,000 36,687,405 08-09-02 1.83 5,600,000 5,597,723 08-09-02 1.86 50,000,000 49,979,332 08-09-02 1.95 30,000,000 29,987,000 08-20-02 1.71 26,500,000 26,476,084 08-21-02 1.78 31,800,000 31,768,553 08-22-02 1.74 62,500,000 62,436,700 08-23-02 1.77 7,000,000 6,992,428 08-23-02 1.78 83,200,000 83,109,496 08-27-02 1.72 9,600,000 9,588,075 08-29-02 1.75 38,700,000 38,647,325 09-03-02 1.72 24,300,000 24,261,687 09-05-02 1.73 29,900,000 29,849,710 09-12-02 1.72 21,200,000 21,157,459 09-12-02 1.73 23,400,000 23,352,771 09-24-02 1.69 34,600,000 34,512,289 09-26-02 1.71 46,400,000 46,276,576 10-10-02 1.74 35,900,000 35,778,887 10-24-02 1.65 29,000,000 28,889,027 11-22-02 1.74 29,600,000 29,439,264 12-30-02 1.74 17,700,000 17,571,562 12-30-02 1.75 15,500,000 15,386,876 Federal Natl Mtge Assn Disc Nts 08-05-02 1.85 10,600,000 10,597,821 08-07-02 1.77 23,000,000 22,993,215 08-13-02 1.94 39,000,000 38,974,780 08-14-02 1.77 25,000,000 24,984,021 08-14-02 1.97 34,000,000 33,975,813 08-16-02 1.71 42,700,000 42,669,576 08-28-02 1.74 38,000,000 37,950,410 08-28-02 1.75 60,800,000 60,720,333 09-04-02 1.74 29,600,000 29,551,357 09-04-02 1.75 30,100,000 30,050,394 09-11-02 1.71 24,600,000 24,552,092 09-11-02 1.72 52,100,000 51,997,942 09-11-02 1.73 18,200,000 18,164,141 09-11-02 1.74 23,000,000 22,954,422 09-18-02 1.72 32,900,000 32,824,549 09-18-02 1.74 11,100,000 11,074,248 09-25-02 1.72 39,000,000 38,897,516 09-25-02 1.73 11,700,000 11,669,076 11-29-02 1.78 25,200,000 25,051,320 12-04-02 1.73 36,800,000 36,580,222 12-11-02 1.73 24,800,000 24,643,595 12-13-02 1.74 39,500,000 39,245,642 Total U.S. Government Agencies (Cost: $1,551,972,048) $1,551,972,048 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 8 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Certificates of deposit (8.3%) Issuer Annualized Amount Value(a) Yield on date payable at of purchase maturity Barclays Bank Yankee 09-10-02 1.79% $23,000,000 $23,000,000 11-07-02 1.80 31,200,000 31,200,000 BNP Paribas Yankee 09-06-02 1.79 31,400,000 31,400,000 09-09-02 1.79 29,000,000 29,000,000 11-08-02 1.78 25,000,000 25,000,000 11-14-02 1.83 17,000,000 17,000,000 11-18-02 1.81 24,000,000 24,000,000 01-14-03 1.83 24,200,000 24,200,000 01-17-03 1.84 18,000,000 18,000,000 Canadian Imperial Bank of Commerce Yankee 10-15-02 1.78 30,000,000 30,000,000 01-15-03 1.83 30,000,000 30,000,000 Credit Agricole Indosuez Yankee 08-19-02 1.88 31,000,000 31,000,000 11-15-02 1.83 18,000,000 18,000,000 Societe Generale Yankee 11-21-02 1.84 24,700,000 24,700,000 Westdeutsche Landesbank Yankee 08-15-02 1.87 22,000,000 22,000,000 08-19-02 1.89 20,000,000 20,000,000 08-29-02 1.81 22,900,000 22,900,000 10-18-02 1.80 28,000,000 28,000,000 11-22-02 1.84 30,000,000 30,000,000 11-25-02 1.84 22,400,000 22,400,000 01-21-03 1.78 26,600,000 26,600,000 Total Certificates of deposit (Cost: $528,400,000) $528,400,000 Commercial paper (67.0%) Issuer Annualized Amount Value(a) Yield on date payable at of purchase maturity Asset-backed (33.1%) Alpine Securitization 08-26-02 1.80% $30,200,000(b) $30,162,250 09-19-02 1.80 20,000,000(b) 19,951,000 10-02-02 1.79 21,000,000(b) 20,935,623 11-22-02 1.76 25,000,000(b) 24,862,674 Amsterdam Funding 08-02-02 1.80 20,000,000(b) 19,999,000 09-17-02 1.78 26,000,000(b) 25,939,579 10-01-02 1.78 22,500,000(b) 22,432,519 11-14-02 1.80 26,300,000(b) 26,162,692 Barton Capital 08-19-02 1.81 21,000,000(b) 20,980,995 08-21-02 1.81 27,000,000(b) 26,972,850 09-06-02 1.81 21,600,000(b) 21,560,904 10-04-02 1.81 15,000,000(b) 14,952,000 10-11-02 1.80 31,677,000(b) 31,565,171 CAFCO 08-08-02 1.82 30,000,000(b) 29,989,384 08-22-02 1.82 15,000,000(b) 14,984,075 09-03-02 1.80 53,000,000(b) 52,912,550 09-06-02 1.80 15,200,000(b) 15,172,640 09-09-02 1.79 19,600,000(b) 19,561,992 Charta 08-02-02 1.81 26,000,000(b) 25,998,693 08-05-02 1.81 26,000,000(b) 25,994,771 08-21-02 1.80 27,000,000(b) 26,973,000 08-27-02 1.80 24,000,000(b) 23,968,800 08-30-02 1.81 22,000,000(b) 21,967,923 Ciesco LP 08-12-02 1.74 15,000,000 14,992,025 09-04-02 1.80 25,000,000 24,957,500 09-13-02 1.78 19,200,000 19,159,293 09-19-02 1.78 28,000,000 27,932,162 Corporate Receivables 08-05-02 1.82 30,000,000(b) 29,993,933 08-08-02 1.81 25,000,000(b) 24,991,201 08-27-02 1.80 23,000,000(b) 22,970,100 09-10-02 1.78 8,700,000(b) 8,682,793 10-03-02 1.81 25,500,000(b) 25,419,675 CXC 08-02-02 1.82 30,000,000(b) 29,998,483 08-20-02 1.82 25,000,000(b) 24,975,986 08-22-02 1.81 19,000,000(b) 18,979,939 08-28-02 1.80 17,000,000(b) 16,977,050 10-17-02 1.79 8,600,000(b) 8,567,258 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 9 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Commercial paper (continued) Issuer Annualized Amount Value(a) Yield on date payable at of purchase maturity Asset-backed (continued) Delaware Funding 09-13-02 1.78% $26,000,000(b) $25,944,721 Edison Asset Securitization 08-01-02 2.04 28,000,000(b) 28,000,000 08-07-02 1.93 30,000,000(b) 29,990,350 08-19-02 1.88 33,500,000(b) 33,468,510 01-10-03 1.84 30,000,000(b) 29,754,300 Enterprise Funding 08-06-02 1.81 30,000,000(b) 29,992,458 08-27-02 1.83 6,928,000(b) 6,918,843 09-11-02 1.78 11,033,000(b) 11,010,634 09-20-02 1.78 12,105,000(b) 12,075,074 10-15-02 1.79 31,000,000(b) 30,885,042 Falcon Asset Securitization 08-12-02 1.81 4,056,000(b) 4,053,757 09-05-02 1.81 23,632,000(b) 23,590,414 09-20-02 1.78 24,101,000(b) 24,041,417 10-07-02 1.80 15,000,000(b) 14,950,029 10-15-02 1.79 15,583,000(b) 15,525,213 11-05-02 1.80 15,000,000(b) 14,928,400 Fleet Funding 08-06-02 1.82 25,000,000(b) 24,993,681 08-16-02 1.92 29,500,000(b) 29,476,400 08-20-02 1.84 19,000,000(b) 18,981,549 08-21-02 1.85 19,500,000(b) 19,479,958 09-24-02 1.75 28,000,000(b) 27,926,500 Kitty Hawk Funding 08-09-02 2.10 6,000,000(b) 5,997,200 08-30-02 1.83 8,088,000(b) 8,076,077 09-06-02 1.79 22,000,000(b) 21,960,620 09-09-02 1.81 8,039,000(B) 8,023,237 09-13-02 1.78 18,689,000(b) 18,649,265 09-30-02 1.78 21,000,000(b) 20,938,050 10-22-02 1.79 20,000,000(b) 19,918,911 Old Line Funding 08-05-02 1.81 16,732,000(b) 16,728,635 08-06-02 1.81 13,945,000(b) 13,941,494 08-16-02 1.81 13,835,000(b) 13,824,566 08-19-02 1.80 4,000,000(b) 3,996,400 08-20-02 1.83 15,093,000(b) 15,078,423 09-13-02 1.80 27,000,000(b) 26,941,950 09-19-02 1.76 7,029,000(b) 7,012,162 10-01-02 1.79 16,036,000(b) 15,987,634 Park Avenue Receivables 08-06-02 1.79 30,000,000(b) 29,992,542 08-07-02 1.79 15,000,000(b) 14,995,525 08-13-02 1.78 23,000,000(b) 22,986,353 09-17-02 1.78 5,000,000(b) 4,988,381 Preferred Receivables Funding 08-06-02 1.79 20,000,000(b) 19,995,028 08-29-02 1.81 25,000,000(b) 24,964,806 08-29-02 1.82 25,000,000(b) 24,964,611 09-03-02 1.77 22,500,000(b) 22,463,494 10-24-02 1.76 14,215,000(b) 14,156,955 Receivables Capital 08-16-02 1.82 19,695,000(b) 19,680,065 08-30-02 1.79 17,000,000(b) 16,975,487 09-12-02 1.78 22,000,000(b) 21,954,313 09-16-02 1.78 25,000,000(b) 24,943,139 Sheffield Receivables 08-15-02 1.81 24,630,000(b) 24,612,663 08-28-02 1.75 30,000,000(b) 29,960,625 09-10-02 1.80 10,000,000(b) 9,980,000 09-20-02 1.78 19,700,000(b) 19,651,297 Variable Funding Capital 08-07-02 1.78 20,000,000(b) 19,994,067 08-07-02 1.80 19,000,000(b) 18,994,300 09-05-02 1.81 26,000,000(b) 25,954,247 10-02-02 1.79 23,000,000(b) 22,929,492 01-16-03 1.83 8,000,000(b) 7,932,427 Windmill Funding 08-02-02 1.79 21,000,000(b) 20,998,956 08-22-02 1.81 21,000,000(b) 20,977,828 08-26-02 1.82 26,000,000(b) 25,967,229 09-23-02 1.78 26,000,000(b) 25,931,866 11-13-02 1.80 29,200,000(b) 29,049,004 Total 2,101,655,057 Banks and savings & loans (11.1%) Abbey Natl North America 08-12-02 2.00 22,000,000 21,986,556 08-30-02 1.81 27,000,000 26,960,741 Barclays U.S. Funding 08-15-02 1.81 28,500,000 28,479,939 08-16-02 1.80 31,000,000 30,976,750 10-10-02 1.79 23,800,000 23,717,626 10-18-02 1.79 26,000,000 25,899,727 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 10 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Commercial paper (continued) Issuer Annualized Amount Value(a) Yield on date payable at of purchase maturity Banks and savings & loans (continued) Dresdner US Finance 08-07-02 2.05% $30,000,000 $29,989,750 08-09-02 2.04 29,000,000 28,986,853 08-13-02 2.03 26,100,000 26,082,339 11-20-02 1.84 28,000,000 27,842,010 ING US Funding 08-01-02 2.01 30,000,000 30,000,000 Natl Australia Funding (Delaware) 08-14-02 2.00 27,000,000 26,980,500 Nordea North America 08-15-02 1.82 30,000,000 29,978,767 08-20-02 1.80 23,500,000 23,477,675 09-04-02 1.79 23,000,000 22,961,117 09-20-02 1.78 28,500,000 28,429,542 10-11-02 1.79 40,000,000 39,859,578 10-21-02 1.81 40,000,000 39,838,000 10-21-02 1.82 15,000,000 14,938,913 11-26-02 1.81 26,000,000 25,847,900 Rabobank Nederland 08-07-02 2.06 30,000,000 29,989,700 Societe Generale North America 08-01-02 1.84 65,000,000 64,999,998 08-23-02 1.82 10,650,000 10,638,155 08-23-02 1.83 25,000,000 24,972,042 11-19-02 1.81 20,000,000 19,890,000 Total 703,724,178 Broker dealers (3.0%) Goldman Sachs Group 08-02-02 2.05 30,000,000 29,998,292 08-06-02 2.03 11,500,000 11,496,758 08-08-02 2.05 22,000,000 21,991,231 12-12-02 1.80 18,000,000(c) 18,000,000 Merrill Lynch 03-05-03 1.82 18,000,000(c) 18,000,000 Salomon Smith Barney 09-06-02 1.80 28,600,000 28,548,520 11-12-02 1.80 28,100,000 27,956,089 11-26-02 1.78 32,000,000 31,815,919 Total 187,806,809 Commercial finance (1.2%) Nestle Capital 08-12-02 2.04 27,500,000(b) 27,482,900 08-15-02 1.94 15,000,000(b) 14,988,683 08-16-02 1.87 34,000,000(b) 33,973,509 Total 76,445,092 Energy (0.5%) Chevron Transport 08-06-02 2.00 21,000,000(b) 20,994,166 Chevron UK Investment 08-08-02 1.80 3,300,000(b) 3,298,845 08-14-02 1.81 5,100,000(b) 5,096,667 Total 29,389,678 Financial services (8.9%) AEGON Funding 12-19-02 1.78 29,000,000(b) 28,800,383 12-19-02 1.79 21,500,000(b) 21,351,172 12-20-02 1.79 23,000,000(b) 22,839,652 01-17-03 1.81 56,000,000(b) 55,529,429 01-17-03 1.84 30,000,000(b) 29,743,683 01-28-03 1.82 27,500,000(b) 27,252,500 Caterpillar Financial Services 08-07-02 1.92 9,000,000 8,997,120 08-13-02 1.92 9,150,000 9,144,144 Intl Lease Finance 08-20-02 1.81 10,000,000 9,990,447 09-23-02 1.75 6,150,000 6,134,155 10-22-02 1.81 30,000,000 29,877,000 11-19-02 1.79 20,000,000 19,891,222 01-07-03 1.81 19,000,000 18,848,950 01-08-03 1.80 23,200,000 23,015,431 Southern Co Funding 08-09-02 1.81 14,000,000(b) 13,994,369 08-22-02 1.82 5,000,000(b) 4,994,692 09-09-02 1.78 25,000,000(b) 24,951,792 09-12-02 1.82 13,000,000(b) 12,972,397 10-09-02 1.79 13,000,000(b) 12,955,648 10-16-02 1.79 32,800,000(b) 32,676,744 11-06-02 1.79 21,245,000(b) 21,143,107 Verizon Global Funding 08-21-02 1.85 15,000,000(b) 14,984,583 10-17-02 1.81 6,400,000(b) 6,375,360 Verizon Network Funding 08-21-02 1.81 19,245,000 19,225,648 08-26-02 1.81 24,150,000 24,119,645 08-27-02 1.83 30,708,000 30,667,415 10-15-02 1.81 10,000,000 9,962,500 11-15-02 1.95 25,292,000 25,147,526 Total 565,586,714 See accompanying notes to investments in securities. -------------------------------------------------------------------------------- 11 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Commercial paper (continued) Issuer Annualized Amount Value(a) Yield on date payable at of purchase maturity Health care (0.2%) Pfizer 08-02-02 1.75% $10,000,000(b) $9,999,514 Household products (0.4%) Procter & Gamble 10-17-02 1.74 25,000,000(b) 24,907,493 Insurance (0.3%) Marsh & McLennan 10-24-02 1.81 19,050,000(b) 18,969,990 Media (0.4%) Gannett 08-12-02 1.75 20,000,000(b) 19,989,305 08-19-02 1.75 7,300,000(b) 7,293,613 Total 27,282,918 Metals (0.5%) Alcoa 09-20-02 1.76 35,000,000 34,914,444 Multi-industry conglomerates (2.4%) GE Capital Intl Funding 08-12-02 1.80 20,000,000(b) 19,989,000 08-20-02 1.80 25,000,000(b) 24,976,250 08-27-02 1.84 19,000,000(b) 18,974,751 08-28-02 1.85 15,000,000(b) 14,979,188 09-05-02 1.80 28,000,000(b) 27,951,000 01-27-03 1.81 29,000,000(b) 28,741,892 General Electric Capital 08-14-02 2.14 20,000,000 19,984,544 Total 155,596,625 Utilities -- electric (3.9%) Duke Energy 09-24-02 1.75 30,000,000 29,921,250 10-04-02 1.79 19,600,000 19,537,977 11-18-02 1.79 10,000,000 9,946,106 11-19-02 1.79 10,000,000 9,945,611 11-20-02 1.79 23,000,000 22,873,768 11-21-02 1.79 30,000,000 29,833,867 11-27-02 1.78 43,000,000 42,750,528 01-03-03 1.78 25,000,000 24,809,479 01-06-03 1.81 33,000,000 32,739,300 UBS Finance (Delaware) 08-05-02 1.99 28,000,000 27,993,809 Total 250,351,695 Utilities -- telephone (1.1%) SBC Intl 09-04-02 1.79 17,000,000(b) 16,971,261 09-10-02 1.79 20,380,000(b) 20,339,466 09-17-02 1.77 30,000,000(b) 29,930,675 Total 67,241,402 Total commercial paper (Cost: $4,253,871,609) $4,253,871,609 Total investments in securities (Cost: $6,334,243,657)(d) $6,334,243,657 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, 2002. (d) Also represents the cost of securities for federal income tax purposes at July 31, 2002. -------------------------------------------------------------------------------- 12 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Financial Statements
Statement of assets and liabilities AXP Cash Management Fund July 31, 2002 Assets Investments in securities, at value (Note 1) (identified cost $6,334,243,657) $6,334,243,657 Cash in bank on demand deposit 18,510,412 Capital shares receivable 168,600 Accrued interest receivable 1,224,610 -------------- Total assets 6,354,147,279 ------------- Liabilities Dividends payable to shareholders 1,255,108 Capital shares payable 80,362 Accrued investment management services fee 52,365 Accrued distribution fee 7,910 Accrued transfer agency fee 7,785 Accrued administrative services fee 3,953 Other accrued expenses 729,424 -------------- Total liabilities 2,136,907 -------------- Net assets applicable to outstanding capital stock $6,352,010,372 ============== Represented by Capital stock -- $.01 par value (Note 1) $ 63,520,772 Additional paid-in capital 6,288,487,000 Excess of distributions over net investment income (1) Accumulated net realized gain (loss) 2,601 -------------- Total -- representing net assets applicable to outstanding capital stock $6,352,010,372 ============== Net assets applicable to outstanding shares: Class A $5,766,208,544 Class B $ 379,626,926 Class C $ 3,559,144 Class Y $ 202,615,758 Net asset value per share of outstanding capital stock: Class A shares 5,766,024,170 $ 1.00 Class B shares 379,788,520 $ 1.00 Class C shares 3,559,274 $ 1.00 Class Y shares 202,705,228 $ 1.00 ----------- --------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 13 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT
Statement of operations AXP Cash Management Fund Year ended July 31, 2002 Investment income Income: Interest $162,785,643 ------------ Expenses (Note 2): Investment management services fee 19,698,010 Distribution fee Class B 2,374,649 Class C 16,705 Transfer agency fee 13,071,478 Incremental transfer agency fee Class A 1,063,498 Class B 59,708 Class C 402 Administrative services fees and expenses 1,584,135 Compensation of board members 45,931 Custodian fees 419,906 Printing and postage 1,996,570 Registration fees 841,839 Audit fees 36,250 Other 25,247 ------ Total expenses 41,234,328 Earnings credits on cash balances (Note 2) (453,577) -------- Total net expenses 40,780,751 ---------- Investment income (loss) -- net 122,004,892 ----------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on security transactions (Note 3) 37,386 ------ Net increase (decrease) in net assets resulting from operations $122,042,278 ------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 14 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT
Statements of changes in net assets AXP Cash Management Fund Year ended July 31, 2002 2001 Operations and distributions Investment income (loss) -- net $ 122,004,892 $ 328,942,921 Net realized gain (loss) on investments 37,386 6,061 ------ ----- Net increase (decrease) in net assets resulting from operations 122,042,278 328,948,982 ----------- ----------- Distributions to shareholders from: Net investment income Class A (114,798,111) (309,127,272) Class B (3,590,767) (11,336,961) Class C (22,053) (16,835) Class Y (3,594,108) (8,461,719) ---------- ---------- Total distributions (122,005,039) (328,942,787) ------------ ------------ Capital share transactions at constant $1 net asset value Proceeds from sales Class A shares 15,251,379,851 16,621,476,728 Class B shares 557,524,233 404,002,096 Class C shares 12,962,225 1,970,087 Class Y shares 212,427,535 324,334,535 Reinvestment of distributions at net asset value Class A shares 115,021,206 309,605,354 Class B shares 3,560,788 11,198,696 Class C shares 20,690 16,103 Class Y shares 3,612,868 8,512,225 Payments for redemptions Class A shares (15,748,777,409) (16,220,392,217) Class B shares (Note 2) (454,014,609) (375,077,786) Class C shares (Note 2) (10,288,817) (1,123,023) Class Y shares (187,522,143) (300,272,985) ------------ ------------ Increase (decrease) in net assets from capital share transactions (244,093,582) 784,249,813 ------------ ----------- Total increase (decrease) in net assets (244,056,343) 784,256,008 Net assets at beginning of year 6,596,066,715 5,811,810,707 ------------- ------------- Net assets at end of year $ 6,352,010,372 $ 6,596,066,715 ================ ================ Undistributed (excess of distributions over) net investment income $ (1) $ 146 ---------------- ----------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 15 -- AXP CASH MANAGEMENT FUND -- 2002 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 primarily in money market instruments. AXP Money Market Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. The Fund 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. -------------------------------------------------------------------------------- 16 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT The tax character of distributions paid for the years indicated is as follows: Year ended July 31 2002 2001 Class A Distributions paid from: Ordinary income $114,798,111 $309,127,272 Long-term capital gain -- -- Class B Distributions paid from: Ordinary income 3,590,767 11,336,961 Long-term capital gain -- -- Class C Distributions paid from: Ordinary income 22,053 16,835 Long-term capital gain -- -- Class Y Distributions paid from: Ordinary income 3,594,108 8,461,719 Long-term capital gain -- -- As of July 31, 2002, the components of distributable earnings on a tax basis are as follows: Undistributed ordinary income $1,257,710 Accumulated gain (loss) $ -- Unrealized appreciation (depreciation) $ -- Dividends to shareholders Dividends from net investment income, declared daily and payable monthly, are reinvested in additional shares of the Fund at net asset value or payable in cash. Other Security transactions are accounted for on the date securities are purchased or sold. Interest income, including amortization of premium and discount, is accrued daily. 2. EXPENSES AND SALES CHARGES The Fund has agreements with American Express Financial Corporation (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. -------------------------------------------------------------------------------- 17 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The incremental transfer agency fee is the amount charged to the specific classes for the additional expense above the fee for Class Y. 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 $2,311,910 for Class B and $10,253 for Class C for the year ended July 31, 2002. During the year ended July 31, 2002, the Fund's custodian and transfer agency fees were reduced by $453,577 as a result of earnings credits from overnight cash balances. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities aggregated $32,191,725,115 and $32,440,009,475, respectively, for the year ended July 31, 2002. Realized gains and losses are determined on an identified cost basis. 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, 2002. -------------------------------------------------------------------------------- 18 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT 5. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results. Class A Per share income and capital changes(a)
Fiscal period ended July 31, 2002 2001 2000 1999 1998 Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------- ------ ------ Income from investment operations: Net investment income (loss) .02 .05 .05 .05 .05 --- --- --- --- --- Less distributions: Dividends from net investment income (.02) (.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) $5,766 $6,149 $ 5,438 $5,032 $3,926 Ratio of expenses to average daily net assets(c) .59% .59% .58% .57% .56% Ratio of net investment income (loss) to average daily net 1.89% 5.18% 5.37% 4.65% 5.15% Total return(e) 1.93% 5.35% 5.55% 4.71% 5.34% Class B Per share income and capital changes(a) Fiscal period ended July 31, 2002 2001 2000 1999 1998 Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------- ------ ------ Income from investment operations: Net investment income (loss) .01 .05 .05 .04 .04 --- --- --- --- --- Less distributions: Dividends from net investment income (.01) (.05) (.05) (.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) $ 380 $ 273 $ 232 $ 192 $ 98 Ratio of expenses to average daily net assets(c) 1.34% 1.34% 1.33% 1.32% 1.32% Ratio of net investment income (loss) to average daily net assets 1.13% 4.37% 4.64% 3.88% 4.38% Total return(e) 1.13% 4.57% 4.76% 3.94% 4.53%
See accompanying notes to financial highlights. -------------------------------------------------------------------------------- 19 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2002 2001 2000(b) Net asset value, beginning of period $1.00 $1.00 $1.00 ----- ----- ----- Income from investment operations: Net investment income (loss) .01 .05 -- --- --- --- Less distributions: Dividends from net investment income (.01) (.05) -- ---- ---- --- Net asset value, end of period $1.00 $1.00 $1.00 ----- ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $4 $1 $-- Ratio of expenses to average daily net assets(c) 1.34% 1.34% 1.33%(d) Ratio of net investment income (loss) to average daily net assets .99% 3.88% 6.10%(d) Total return(e) 1.14% 4.68% .63%
Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2002 2001 2000 1999 1998 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Income from investment operations: Net investment income (loss) .02 .05 .05 .05 .05 --- --- --- --- --- Less distributions: Dividends from net investment income (.02) (.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) $203 $174 $142 $124 $72 Ratio of expenses to average daily net assets(c) .57% .57% .57% .56% .56% Ratio of net investment income (loss) to average daily net 1.86% 5.18% 5.42% 4.64% 5.16% Total return(e) 1.95% 5.37% 5.56% 4.72% 5.33%
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. -------------------------------------------------------------------------------- 20 -- AXP CASH MANAGEMENT FUND -- 2002 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, 2002, 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, 2002, and the financial highlights for each of the years in the five-year period ended July 31, 2002. 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, 2002, by correspondence with the custodian or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AXP Cash Management Fund as of July 31, 2002, 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 6, 2002 -------------------------------------------------------------------------------- 21 -- AXP CASH MANAGEMENT FUND -- 2002 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, 2002 Class A Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Aug. 27, 2001 $0.00267 Sept. 26, 2001 0.00273 Oct. 26, 2001 0.00226 Nov. 26, 2001 0.00180 Dec. 20, 2001 0.00146 Jan. 25, 2002 0.00161 Feb. 26, 2002 0.00128 March 26, 2002 0.00100 April 26, 2002 0.00110 May 24, 2002 0.00099 June 26, 2002 0.00115 July 26, 2002 0.00107 Total distributions $0.01912 Class B Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Aug. 27, 2001 $0.00206 Sept. 26, 2001 0.00209 Oct. 26, 2001 0.00164 Nov. 26, 2001 0.00120 Dec. 20, 2001 0.00092 Jan. 25, 2002 0.00087 Feb. 26, 2002 0.00062 March 26, 2002 0.00042 April 26, 2002 0.00046 May 24, 2002 0.00041 June 26, 2002 0.00048 July 26, 2002 0.00045 Total distributions $0.01162 -------------------------------------------------------------------------------- 22 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT Class C Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Aug. 27, 2001 $0.00207 Sept. 26, 2001 0.00210 Oct. 26, 2001 0.00160 Nov. 26, 2001 0.00121 Dec. 20, 2001 0.00096 Jan. 25, 2002 0.00082 Feb. 26, 2002 0.00063 March 26, 2002 0.00043 April 26, 2002 0.00046 May 24, 2002 0.00042 June 26, 2002 0.00047 July 26, 2002 0.00045 Total distributions $0.01162 Class Y Income distributions taxable as dividend income, none qualifying for deduction by corporations. Payable date Per share Aug. 27, 2001 $0.00269 Sept. 26, 2001 0.00274 Oct. 26, 2001 0.00227 Nov. 26, 2001 0.00181 Dec. 20, 2001 0.00147 Jan. 25, 2002 0.00163 Feb. 26, 2002 0.00129 March 26, 2002 0.00101 April 26, 2002 0.00112 May 24, 2002 0.00100 June 26, 2002 0.00117 July 26, 2002 0.00108 Total distributions $0.01928 -------------------------------------------------------------------------------- 23 -- AXP CASH MANAGEMENT FUND -- 2002 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 78 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 Other address, Registrant and length occupations directorships age of service during past five years ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ H. Brewster Atwater, Jr. Board member Retired chair and 4900 IDS Tower since 1996 chief executive Minneapolis, MN 55402 officer, General Born in 1931 Mills, Inc. (consumer foods) ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Arne H. Carlson Chair of the Board Chair, Board 901 S. Marquette Ave. since 1999 Services Minneapolis, MN 55402 Corporation Born in 1934 (provides administrative services to boards), former Governor of Minnesota ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Lynne V. Cheney Board member since 1994 Distinguished The Reader's American Enterprise Fellow, AEI Digest 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 Retired chair of Cargill, 30 Seventh Street East since 2001 the board and Incorporated Suite 3050 chief executive (commodity St. Paul, MN 55101-4901 officer, merchants and Born in 1936 Minnesota Mining processors), and Manufacturing Target (3M) Corporation (department stores), General Mills, Inc. (consumer foods), Vulcan Materials Company (construction materials/chemicals), Milliken & Company (textiles and chemicals) and Nexia Biotechnologies, Inc. ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Ira D. Hall Board member Private investor; Imagistics Texaco, Inc. since 2001 formerly with International, 2000 Westchester Avenue Texaco Inc., Inc. (office White Plains, NY 10650 treasurer, equipment), Born in 1944 1999-2001 and Reynolds & general manager, Reynolds Company alliance (information management services), TECO operations, Energy, Inc. 1998-1999. Prior (energy holding to that, company), The director, Williams International Companies, Inc. Operations IBM (energy Corp. distribution company) ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Heinz F. Hutter Board member Retired president P.O. Box 2187 since 1994 and chief Minneapolis, MN 55402 operating Born in 1929 officer, Cargill, Incorporated (commodity merchants and processors) ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Anne P. Jones Board member Attorney and Motorola, Inc. 5716 Bent Branch Rd. since 1985 consultant (electronics) Bethesda, MD 20816 Born in 1935 ---------------------------- ------------------------ ------------------- ------------------
-------------------------------------------------------------------------------- 24 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT
Independent Board Members (continued) ---------------------------- ------------------------ ------------------- ------------------ Name, Position held with Principal Other address, Registrant and length occupations directorships age of service during past five years ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Stephen R. Lewis, Jr. Board member Retired president 901 S. Marquette Ave. since 2002 and professor of Minneapolis, MN 55402 economics, Born in 1939 Carleton College ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ William R. Pearce Board member RII Weyerhaeuser 2050 One Financial Plaza since 1980 World Timberfund, Minneapolis, MN 55402 L.P. (develops Born in 1927 timber resources) - management committee; former chair, American Express Funds ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Alan G. Quasha Board member President, Compagnie 720 Fifth Avenue since 2002 Quadrant Financiere New York, NY 10019 Management, Inc. Richemont AG Born in 1949 (management of (luxury goods) private equities) ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Alan K. Simpson Board member Former three-term Biogen, Inc. 1201 Sunshine Ave. since 1997 United States (bio-pharmaceuticals) Cody, WY 82414 Senator for Born in 1931 Wyoming ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ C. Angus Wurtele Board member Retired chair of Bemis 4900 IDS Tower since 1994 the board and Corporation Minneapolis, MN 55402 chief executive (packaging) Born in 1934 officer, The Valspar Corporation ---------------------------- ------------------------ ------------------- ------------------
Board Members Affiliated with American Express Financial Corporation (AEFC) ---------------------------- ------------------------ ------------------- ------------------ Name, Position held with Principal Other address, Registrant and length occupations directorships age of service during past five years ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ David R. Hubers Board member Retired chief Chronimed Inc. 50643 AXP Financial Center since 1993 executive officer (specialty Minneapolis, MN 55474 and director 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 Senior vice 50652 AXP Financial Center since 1987, president - Minneapolis, MN 55474 president information and Born in 1937 since 1997 technology of AEFC ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ William F. Truscott Board member Senior vice 53600 AXP Financial Center since 2001, president - chief Minneapolis, MN 55474 vice president investment Born in 1960 since 2002 officer of AEFC; former chief investment officer and managing director, Zurich Scudder Investments ---------------------------- ------------------------ ------------------- ------------------
-------------------------------------------------------------------------------- 25 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT The board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the board. In addition to Mr. Thomas, who is president, and Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers ---------------------------- ------------------------ ------------------- ------------------ Name, address, age Position held with Principal Other Registrant and length occupations directorships of service during past five years ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Jeffrey P. Fox Treasurer Vice president - 50005 AXP Financial Center since 2002 investment Minneapolis, MN 55474 accounting, AEFC, Born in 1955 since 2002; vice president - finance, American Express Company, 2000-2002; vice president - corporate controller, AEFC, 1996-2000 ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Leslie L. Ogg Vice president, President of 901 S. Marquette Ave. general counsel Board Services Minneapolis, MN 55402 and secretary Corporation Born in 1938 since 1978 ---------------------------- ------------------------ ------------------- ------------------ ---------------------------- ------------------------ ------------------- ------------------ Stephen W. Roszell Vice president Senior vice 50239 AXP Financial Center since 2002 president - Minneapolis, MN 55474 institutional Born in 1949 group of AEFC ---------------------------- ------------------------ ------------------- ------------------
The SAI has additional information about the Fund's directors and is available, without charge, upon request by calling (800) 862-7919. -------------------------------------------------------------------------------- 26 -- AXP CASH MANAGEMENT FUND -- 2002 ANNUAL REPORT American Express(R) Funds Growth Funds AXP(R) Emerging Markets Fund AXP Equity Select Fund AXP Focused Growth Fund AXP Global Growth Fund AXP Growth Fund AXP Growth Dimensions Fund AXP New Dimensions Fund(R) AXP Partners International Aggressive Growth Fund AXP Partners Small Cap Growth Fund AXP Strategy Aggressive Fund Blend Funds AXP Blue Chip Advantage Fund AXP Discovery Fund* AXP European Equity Fund AXP Global Balanced Fund AXP International Fund AXP International Equity Index Fund AXP Large Cap Equity Fund AXP Managed Allocation Fund AXP Mid Cap Index Fund AXP Nasdaq 100 Index(R) Fund AXP Partners Small Cap Core Fund AXP Research Opportunities Fund AXP S&P 500 Index Fund AXP Small Cap Advantage Fund AXP Small Company Index Fund AXP Stock Fund AXP Total Stock Market Index Fund Value Funds AXP Diversified Equity Income Fund AXP Equity Value Fund AXP Large Cap Value Fund AXP Mid Cap Value Fund AXP Mutual AXP Partners Fundamental Value Fund AXP Partners International Select Value Fund AXP Partners Select Value Fund AXP Partners Small Cap Value Fund AXP Partners Value Fund AXP Progressive Fund* Income/Tax-Exempt Income Funds AXP Bond Fund AXP Cash Management Fund** AXP Extra Income Fund AXP Federal Income Fund AXP Global Bond Fund AXP High Yield Tax-Exempt Fund AXP Insured Tax-Exempt Fund AXP Intermediate Tax-Exempt Fund AXP Selective Fund AXP State Tax-Exempt Funds AXP Tax-Exempt Bond Fund AXP Tax-Free Money Fund** AXP U.S. Government Mortgage Fund Sector Funds AXP Global Technology Fund AXP Precious Metals Fund AXP Utilities Fund These funds are also listed in the categories above. AXP(R) Partners Funds AXP Partners Fundamental Value Fund AXP Partners International Aggressive Growth Fund AXP Partners International Select Value Fund AXP Partners Select Value Fund AXP Partners Small Cap Core Fund AXP Partners Small Cap Growth Fund AXP Partners Small Cap Value Fund AXP Partners Value Fund International Funds AXP Emerging Markets Fund AXP European Equity Fund AXP Global Balanced Fund AXP Global Bond Fund AXP Global Growth Fund AXP International Fund AXP Partners International Aggressive Growth Fund AXP Partners International Select Value Fund * Closed to new investors. ** 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 $1.00 per share, it is possible to lose money by investing in the Fund. For more complete information about our funds, including fees and expenses, please call (800) 862-7919 for prospectuses. Read them carefully before you invest. (9/02) AXP Cash Management Fund 70100 AXP Financial Center Minneapolis, MN 55474 americanexpress.com American Express(R) Funds AMERICAN EXPRESS(R) 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. S-6320 Y (9/02)