-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D+AnW09tOBfrSA4u942EJVh3Q3jbPVHgHOv4t/qp3S/ZGV4nDtgINAYwo9Ce1ClR N17TUqoDYy5+hkt+QZm9pQ== 0000820027-04-000809.txt : 20040927 0000820027-04-000809.hdr.sgml : 20040927 20040927143134 ACCESSION NUMBER: 0000820027-04-000809 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20040927 DATE AS OF CHANGE: 20040927 EFFECTIVENESS DATE: 20040929 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP MONEY MARKET SERIES INC CENTRAL INDEX KEY: 0000049698 IRS NUMBER: 411254759 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-54516 FILM NUMBER: 041046875 BUSINESS ADDRESS: STREET 1: 50606 AXP FINANCIAL CENTER STREET 2: H27/52 CITY: MINNEAPLOS STATE: MN ZIP: 55474 BUSINESS PHONE: 6123722772 MAIL ADDRESS: STREET 1: 50606 AXP FINANCIAL CENTER STREET 2: H27/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: IDS MONEY MARKET SERIES INC DATE OF NAME CHANGE: 19920917 FORMER COMPANY: FORMER CONFORMED NAME: IDS CASH MANAGEMENT FUND INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP MONEY MARKET SERIES INC CENTRAL INDEX KEY: 0000049698 IRS NUMBER: 411254759 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02591 FILM NUMBER: 041046876 BUSINESS ADDRESS: STREET 1: 50606 AXP FINANCIAL CENTER STREET 2: H27/52 CITY: MINNEAPLOS STATE: MN ZIP: 55474 BUSINESS PHONE: 6123722772 MAIL ADDRESS: STREET 1: 50606 AXP FINANCIAL CENTER STREET 2: H27/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: IDS MONEY MARKET SERIES INC DATE OF NAME CHANGE: 19920917 FORMER COMPANY: FORMER CONFORMED NAME: IDS CASH MANAGEMENT FUND INC DATE OF NAME CHANGE: 19920703 485BPOS 1 partabc.txt AXP MONEY MARKET SERIES, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. _____ Post-Effective Amendment No. 58 (File No. 2-54516) [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 49 (File No. 811-2591) [X] AXP MONEY MARKET SERIES, INC. 50606 AXP Financial Center Minneapolis, Minnesota 55474 Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268 (612) 330-9283 It is proposed that this filing will become effective (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [X] on Sept. 29, 2004 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on (date) pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of Rule 485 If appropriate, check the following box: [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. AXP(R) Cash Management Fund AXP Cash Management Fund seeks to provide shareholders with maximum current income consistent with liquidity and stability of principal. Prospectus Sept. 29, 2004 Please note that this Fund: o is not a bank deposit o is not federally insured o is not endorsed by any bank or government agency o is not guaranteed to achieve its goal As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. (logo) (logo) American AMERICAN Express(R) EXPRESS Funds (R) Table of Contents TAKE A CLOSER LOOK AT: The Fund 3p Goal 3p Principal Investment Strategies 3p Principal Risks 4p Past Performance 5p Fees and Expenses 6p Investment Manager 7p Buying and Selling Shares 9p Valuing Fund Shares 9p Investment Options 10p Purchasing Shares 11p Transactions Through Third Parties 13p Sales Charges 13p Exchanging/Selling Shares 15p Distributions and Taxes 19p Financial Highlights 20p - -------------------------------------------------------------------------------- 2p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS The Fund GOAL AXP Cash Management Fund (the Fund) seeks to provide shareholders with maximum current income consistent with liquidity and stability of principal. Because any investment involves risk, the Fund cannot guarantee this goal. PRINCIPAL INVESTMENT STRATEGIES The Fund's assets primarily are invested in money market instruments, such as marketable debt obligations issued by corporations or the U.S. government or its agencies, bank certificates of deposit, bankers' acceptances, letters of credit, and commercial paper, including asset-backed commercial paper. The Fund may invest more than 25% of its total assets in U.S. banks, U.S. branches of foreign banks and U.S. government securities. Additionally, the Fund may invest up to 35% of its total assets in U.S. dollar-denominated foreign investments. Because the Fund seeks to maintain a constant net asset value of $1.00 per share, capital appreciation is not expected to play a role in the Fund's return. The Fund's yield will vary from day-to-day. The Fund restricts its investments to instruments that meet certain maturity and quality standards required by the SEC for money market funds. For example, the Fund: o Limits its average portfolio maturity to ninety days or less. o Buys obligations with remaining maturities of 397 days or less. o Buys only obligations that are denominated in U.S. dollars and present minimal credit risk. In pursuit of the Fund's goal, American Express Financial Corporation (AEFC), the Fund's investment manager, chooses investments by: o Considering opportunities and risks given current interest rates and anticipated interest rates. o Purchasing securities based on the timing of cash flows in and out of the Fund. In evaluating whether to sell a security, AEFC considers, among other factors, whether: o The issuer's credit rating declines or AEFC expects a decline (the Fund, in certain cases, may continue to own securities that are down-graded until AEFC believes it is advantageous to sell). o Political, economic, or other events could affect the issuer's performance. o AEFC identifies a more attractive opportunity. o The issuer or the security continues to meet the other standards described above. For more information on strategies and holdings, see the Fund's Statement of Additional Information (SAI) and the annual and semiannual reports. - -------------------------------------------------------------------------------- 3p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS PRINCIPAL RISKS Please remember that with any mutual fund investment you may lose money. Although the Fund's share price has remained constant in the past, THE FUND CANNOT GUARANTEE THAT IT WILL ALWAYS BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Principal risks associated with an investment in the Fund include: Reinvestment Risk Inflation Risk Credit Risk Sector/Concentration Risk Reinvestment Risk The risk that an investor will not be able to reinvest income or principal at the same rate it currently is earning. Inflation Risk Also known as purchasing power risk, inflation risk measures the effects of continually rising prices on investments. If an investment's yield is lower than the rate of inflation, your money will have less purchasing power as time goes on. Credit Risk The risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable to honor a financial obligation (such as payments due on a bond or a note). Sector/Concentration Risk Investments that are concentrated in a particular issuer, geographic region, or sector will be more susceptible to changes in price (the more you diversify, the more you spread risk). For example, if the Fund concentrates its investments in banks, the value of these investments may be adversely affected by economic or regulatory developments in the banking industry. - -------------------------------------------------------------------------------- 4p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS PAST PERFORMANCE The following bar chart and table indicate the risks and variability of investing in the Fund by showing how the Fund's performance has varied for each full calendar year shown. How the Fund has performed in the past does not indicate how the Fund will perform in the future. (bar graph) CLASS A PERFORMANCE (based on calendar years) 8% 7% 6% +6.02% 5% +5.45% +5.18% +5.28% 4% +4.96% +4.76% 3% +3.36% +3.85% 2% 1% +1.27% +0.44% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 During the period shown in the bar chart, the highest return for a calendar quarter was +1.54% (quarter ending December 2000) and the lowest return for a calendar quarter was +0.08% (quarter ending September 2003). The performance of other classes may vary from that shown above because of differences in expenses. The Fund's Class A year to date return as of June 30, 2004 was +0.17%. Average Annual Total Returns (for the calendar year periods ending Dec. 31, 2003) Since Since 1 year 5 years 10 years inception (B&Y) inception (C) Class A +0.44% +3.24% +4.04% N/A N/A Class B -3.94% +2.37% N/A +3.39%(a) N/A Class C +0.06% N/A N/A N/A +1.88%(b) Class Y +0.56% +3.28% N/A +4.14%(a) N/A (a) Inception date was March 20, 1995. (b) Inception date was June 26, 2000. This table shows total returns from hypothetical investments in shares of the Fund. The performance of different classes varies because of differences in expenses. - -------------------------------------------------------------------------------- 5p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS For purposes of this calculation we assumed: o no sales charge for Class A shares or Class Y shares, o sales at the end of the period and deduction of the applicable contingent deferred sales charge (CDSC) for Class B shares, o conversion of Class B shares to Class A shares in the ninth calendar year of ownership, o no sales charge for Class C shares, and o no adjustments for taxes paid by an investor on the reinvested income and capital gains. Yield Information For current 7-day yield information, call (800) 862-7919 and select option #2. FEES AND EXPENSES Fund investors pay various expenses. The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment) Class A Class B Class C Class Y Maximum sales charge (load) imposed on purchases(a) (as a percentage of offering price) none none none none Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) none 5% 1%(b) none
Annual Fund operating expenses (expenses that are deducted from Fund assets) As a percentage of average daily net assets: Class A Class B Class C Class Y Management fees 0.31% 0.31% 0.31% 0.31% Distribution (12b-1) fees 0.10% 0.85% 0.75% 0.00% Other expenses(c) 0.37% 0.37% 0.37% 0.34% Total 0.78% 1.53% 1.43% 0.65% (a) This charge may be reduced depending on the value of your total investments in American Express mutual funds. See "Sales Charges." (b) For all Class C purchases, a 1% sales charge applies if you sell your shares less than one year after purchase. (c) Other expenses include an administrative services fee, a transfer agency fee and other nonadvisory expenses. From time to time, AEFC and its affiliates may limit the expenses of one or more classes for the purpose of increasing its yield. This expense limitation policy may be revised or terminated at any time without notice. - -------------------------------------------------------------------------------- 6p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS Examples These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. Assume you invest $10,000 and the Fund earns a 5% annual return each year. The operating expenses remain the same each year. You would pay the following expenses if you redeem all of your shares at the end of the time periods indicated:
1 year 3 years 5 years 10 years Class A $ 80 $249 $434 $ 970 Class B $556(a) $784(a) $935(a) $1,625(b) Class C $146 $453 $783 $1,718 Class Y $ 66 $208 $363 $ 814
(a) Includes the applicable CDSC. (b) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. You would pay the following expenses if you did not redeem your shares:
1 year 3 years 5 years 10 years Class A $ 80 $249 $434 $ 970 Class B $156 $484 $835 $1,625(a) Class C $146 $453 $783 $1,718 Class Y $ 66 $208 $363 $ 814
(a) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. These examples do not represent actual expenses, past or future. Actual expenses may be higher or lower than those shown. INVESTMENT MANAGER The team that manages the Fund's portfolio is led by: Jamie Jackson, Portfolio Manager o Leader of the liquid assets sector team. o Joined AEFC in June 2003. o Prior to that, co-head of U.S. Investment Grade Fixed Income, UBS Global Asset Management from 1997 to 2003, responsible for strategy formulating and trading. o Began investment career in 1988. o MBA, Marquette University. AEFC's investment professionals who manage fixed income funds are organized into teams. Each team specializes in a particular sector of the fixed income market. - -------------------------------------------------------------------------------- 7p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS AEFC The Fund pays AEFC a fee for managing its assets. Under the Investment Management Services Agreement, the fee for the most recent fiscal year was 0.31% of the Fund's average daily net assets. Under the agreement, the Fund also pays taxes, brokerage commissions, and nonadvisory expenses. AEFC or an affiliate may make payments from its own resources, which include profits from management fees paid by the Fund, to compensate broker-dealers or other persons for providing distribution assistance. AEFC, located at 200 AXP Financial Center, Minneapolis, Minnesota 55474, is a wholly-owned subsidiary of American Express Company, a financial services company with headquarters at American Express Tower, World Financial Center, New York, New York 10285. In addition to managing investments for all of the AXP funds, AEFC manages investments for itself and its affiliates. For institutional clients, AEFC and its subsidiaries also provide investment management and related services such as separate account asset management, institutional trust and custody, and employee benefit plan administration, as well as investment products. AEFC also serves as investment manager to the AXP Portfolio Builder Funds, which are six affiliated fund-of-funds that provide asset-allocation services to shareholders by investing in shares of other AXP Funds, including the Fund. The Fund may experience relatively large purchases or redemptions from the Portfolio Builder Funds. Although AEFC seeks to minimize the impact of these transactions by structuring them over a reasonable period of time, the Fund may experience increased expenses as it buys and sells portfolio securities to manage these Portfolio Builder related transactions. In addition, because the Portfolio Builder Funds may own a substantial portion of the Fund, a redemption by the Portfolio Builder Funds could cause the Fund's expense ratio to increase as the Fund's fixed costs would be spread over a smaller asset base. AEFC monitors expense levels and is committed to offering funds that are competitively priced. AEFC will report to the Fund's Board of Directors the steps it has taken to manage any potential conflicts. The Fund has received an order from the Securities and Exchange Commission that permits AEFC, subject to the approval of the Board of Directors, to appoint a subadviser or change the terms of a subadvisory agreement for the Fund without first obtaining shareholder approval. Before the Fund may rely on the order, a majority of the Fund's outstanding voting securities will need to approve operating the Fund in this manner. If shareholder approval is received, the Fund may add or change unaffiliated subadvisers or the fees paid to subadvisers from time to time without the expense and delays associated with obtaining shareholder approval of the change. There is no assurance shareholder approval will be received, and no changes will be made without shareholder approval until that time. - -------------------------------------------------------------------------------- 8p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS Buying and Selling Shares The public offering price for each class of shares of the Fund is the net asset value (NAV). In addition to buying and selling shares through the Fund's distributor, American Express Financial Advisors Inc. (the Distributor), you may buy or sell shares through third parties, including 401(k) plans, banks, brokers, and investment advisers. Where authorized by the Fund, orders in good form are priced using the NAV next determined after your order is placed with the third party. Good form or good order means that your instructions have been received in the form required by the Distributor. This may include, for example, providing the fund name and account number, the amount of the transaction and all required signatures. For more information, refer to the sections on "Purchasing Shares" and "Exchanging/Selling Shares," or contact your financial advisor. If you buy or redeem shares through a third party, consult that firm to determine whether your order will be priced at the time it is placed with the third party or at the time it is placed with the Fund. The third party may charge a fee for its services. VALUING FUND SHARES The NAV is the value of a single share of the Fund. The NAV is determined by dividing the value of the Fund's assets, minus any liabilities, by the number of shares outstanding. AEFC calculates the NAV as of the close of business on the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day that the NYSE is open. The Fund's investments are valued at amortized cost, which approximates market value, as explained in the SAI. Although the Fund cannot guarantee it will always be able to maintain a constant net asset value of $1 per share, it will use its best efforts to do so. - -------------------------------------------------------------------------------- 9p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS INVESTMENT OPTIONS New investments must be made in Class A shares of the Fund. The Fund offers Class B and Class C shares only to facilitate exchanges between classes of these shares in other American Express mutual funds. The primary differences among the classes are in the sales charge structures and in their ongoing expenses. These differences are summarized in the table below. The Fund also offers an additional class of shares, Class I, exclusively to certain institutional investors. Class I shares are made available through a separate prospectus supplement provided to investors eligible to purchase the shares. Investment options summary The Fund offers different classes of shares. Although your money will be invested in the same way no matter which class of shares you buy, there are differences among the fees and expenses for each class. Not everyone is eligible to buy every class. After determining which classes you are eligible to buy, decide which class best suits your needs. Your financial advisor can help you with this decision. The following table shows the key features of each class: Class A Class B Class C Class Y - ---------------- ------------- ---------------- ------------- ----------------- Availability Available Available to Available Limited to to all all investors. to all qualifying investors. investors. institutional investors. - ---------------- ------------- ---------------- ------------- ----------------- Initial Sales No. Entire No. Entire No. Entire No. Entire Charge purchase purchase price purchase purchase price price is is invested in price is is invested in invested in shares of the invested in shares of the shares of Fund. shares of Fund. the Fund. the Fund. - ---------------- ------------- ---------------- ------------- ----------------- Deferred Sales None. Maximum 5% 1% CDSC None. Charge CDSC during applies if the first year you sell decreasing to your shares 0% after six less than years. one year after purchase. - ---------------- ------------- ---------------- ------------- ----------------- Distribution Yes.* 0.10% Yes.* 0.85% Yes.* 0.75% N/A and/or Shareholder Service Fee - ---------------- ------------- ---------------- ------------- ----------------- Conversion to N/A Yes, No. No. Class A automatically in ninth calendar year of ownership. - ---------------- ------------- ---------------- ------------- ----------------- * Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of 1940 that allows it to pay distribution expenses for the sale of Class A, Class B and Class C shares. Because these fees are paid out of the Fund's assets on an on-going basis, the fees may cost long-term shareholders more than paying other types of sales charges imposed by some mutual funds. - -------------------------------------------------------------------------------- 10p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS PURCHASING SHARES To purchase shares through entities other than the Distributor, please consult your selling agent. The following section explains how you can purchase shares from the Distributor. If you do not have an existing American Express mutual fund account, you will need to establish a brokerage account. Your financial advisor will help you fill out and submit an application. Your application will be accepted only when federal funds (funds of the Federal Reserve System) are available to the Fund, normally within three days of receipt of your application. Once your account is set up, you can choose among several convenient ways to invest. When you purchase, your order will be priced at the next NAV calculated after your order is accepted by the Fund. If your application does not specify which class of shares you are purchasing, we will assume you are investing in Class A shares. Important: When you open an account, you must provide your correct Taxpayer Identification Number (TIN), which is either your Social Security or Employer Identification number. If you do not provide and certify the correct TIN, you could be subject to backup withholding of 28% of taxable distributions and proceeds from certain sales and exchanges. You also could be subject to further penalties, such as: o a $50 penalty for each failure to supply your correct TIN, o a civil penalty of $500 if you make a false statement that results in no backup withholding, and o criminal penalties for falsifying information. You also could be subject to backup withholding, if the IRS notifies us to do so, because you failed to report required interest or dividends on your tax return. How to determine the correct TIN For this type of account: Use the Social Security or Employer Identification number of: - ----------------------------------- --------------------------------------- Individual or joint account The individual or one of the owners listed on the joint account - ----------------------------------- --------------------------------------- Custodian account of a minor The minor (Uniform Gifts/Transfers to Minors Act) - ----------------------------------- --------------------------------------- A revocable living trust The grantor-trustee (the person who puts the money into the trust) - ----------------------------------- --------------------------------------- An irrevocable trust, pension The legal entity (not the personal trust or estate representative or trustee, unless no legal entity is designated in the account title) - ----------------------------------- --------------------------------------- Sole proprietorship or The owner single-owner LLC - ----------------------------------- --------------------------------------- Partnership or multi-member LLC The partnership - ----------------------------------- --------------------------------------- Corporate or LLC electing The corporation corporate status on Form 8837 - ----------------------------------- --------------------------------------- Association, club or tax-exempt The organization organization - ----------------------------------- --------------------------------------- For details on TIN requirements, contact your financial advisor to obtain a copy of federal Form W-9, "Request for Taxpayer Identification Number and Certification." You also may obtain the form on the Internet at www.irs.gov. - -------------------------------------------------------------------------------- 11p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS Methods of purchasing shares By mail Once your account has been established, send your check to: American Express Funds 70200 AXP Financial Center Minneapolis, MN 55474 Minimum amounts Initial investment: $2,000* Additional investments: $500** Account balances: $1,000 Qualified account balances: none If your Fund account balance falls below $1,000 for any reason, including a market decline, you will be asked to increase it to $1,000 or establish a scheduled investment plan. If you do not do so within 30 days, your shares can be sold and the proceeds mailed to you. * $1,000 for tax qualified accounts. ** $100 minimum add-on for existing mutual fund accounts outside of a brokerage account (direct at fund accounts). By scheduled investment plan Minimum amounts Initial investment: $2,000 Additional investments: $100* Account balances: $1,000 (on a scheduled investment plan with monthly payments) If your Fund account balance is below $2,000, you must make payments at least monthly. * $50 minimum per payment for qualified accounts in a direct at fund account. By wire or electronic funds transfer Please contact your financial advisor or selling agent for specific instructions. Minimum wire purchase amount: $1,000 or new account minimum, as applicable. By telephone If you have a brokerage account, you may use the money in your account to make initial and subsequent purchases. To place your order, call: (800) 297-7378 for brokerage accounts (800) 967-4377 for wrap accounts - -------------------------------------------------------------------------------- 12p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS TRANSACTIONS THROUGH THIRD PARTIES You may buy or sell shares through certain 401(k) plans, banks, broker-dealers, financial advisors or other investment professionals. These organizations may charge you a fee for this service and may have different policies. Some policy differences may include different minimum investment amounts, exchange privileges, fund choices and cutoff times for investments. The Fund and the Distributor are not responsible for the failure of one of these organizations to carry out its obligations to its customers. Some organizations may receive compensation from the Distributor or its affiliates for shareholder recordkeeping and similar services. Where authorized by the Fund, some organizations may designate selected agents to accept purchase or sale orders on the Fund's behalf. To buy or sell shares through third parties or to determine if there are policy differences, please consult your selling agent. For other pertinent information related to buying or selling shares, please refer to the appropriate section in the prospectus. SALES CHARGES Class B and Class C -- contingent deferred sales charge (CDSC) alternative For Class B, the CDSC is based on the sale amount and the number of calendar years -- including the year of purchase -- between purchase and sale. The following table shows how CDSC percentages on sales decline after a purchase: If the sale is made during the: The CDSC percentage rate is: First year 5% Second year 4% Third year 4% Fourth year 3% Fifth year 2% Sixth year 1% Seventh year 0% For Class C, a 1% CDSC is charged if you sell your shares less than one year after purchase. For both Class B and Class C, if the amount you are selling causes the value of your investment to fall below the cost of the shares you have purchased, the CDSC is based on the lower of the cost of those shares purchased or market value. Because the CDSC is imposed only on sales that reduce your total purchase payments, you never have to pay a CDSC on any amount that represents appreciation in the value of your shares, income earned by your shares, or capital gains. In addition, the CDSC on your sale, if any, will be based on your oldest purchase payment. The CDSC on the next amount sold will be based on the next oldest purchase payment. - -------------------------------------------------------------------------------- 13p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS Example Assume you had invested $10,000 in Class B shares and that your investment had appreciated in value to $12,000 after 3 1/2 years, including reinvested dividends and capital gain distributions. You could sell up to $2,000 worth of shares without paying a CDSC ($12,000 current value less $10,000 purchase amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500 representing part of your original purchase price. The CDSC rate would be 3% because the sale was made during the fourth year after the purchase. Waivers of the sales charge for Class B and Class C shares The CDSC will be waived on sales of shares: o in the event of the shareholder's death, o held in trust for an employee benefit plan, or o held in IRAs or certain qualified plans if American Express Trust Company is the custodian, such as Keogh plans, tax-sheltered custodial accounts or corporate pension plans, provided that the shareholder is: o at least 59 1/2 years old AND o taking a retirement distribution (if the sale is part of a transfer to an IRA or qualified plan, or a custodian-to-custodian transfer, the CDSC will not be waived) OR o selling under an approved substantially equal periodic payment arrangement. - -------------------------------------------------------------------------------- 14p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS EXCHANGING/SELLING SHARES To sell or exchange shares held with entities other than the Distributor, please consult your selling agent. The section explains how you can exchange or sell shares held with the Distributor. Exchanges New investments of Class A shares may be exchanged for either Class A, Class B or Class C shares of any other publicly offered American Express mutual fund, except that exchanges into AXP Tax-Free Money Fund must be made from Class A shares. If you exchange shares from this Fund to another American Express mutual fund, any further exchanges must be between shares of the same class. For example, you may not exchange from Class B shares of another American Express mutual fund into Class A shares of this Fund. Exchange rules are illustrated in the following tables: EXCHANGES FROM TO Cash Management Other American Express mutual funds* Class A Class B Class C Class A Yes Yes Yes Class B No Yes No Class C No No Yes EXCHANGES FROM TO Other American Express mutual funds* Cash Management Class A Class B Class C Class A Yes No No Class B No Yes No Class C No No Yes * Exchanges into Tax-Free Money Fund must be made from Class A shares. Exchanges between classes within the same fund are not permitted. For example, you cannot exchange from Cash Management Class A to Cash Management Class B. If your initial investment was in this Fund, and you exchange into a non-money market fund, you will pay an initial sales charge if you exchange into Class A and be subject to a CDSC if you exchange into Class B. If your initial investment was in Class A shares of a non-money market fund and you exchange shares into this Fund: o you may exchange that amount to another fund, including dividends earned on that amount, without paying a sales charge. o if your initial investment was over $1,000,000 and the sales charge was waived, you will be subject to a 1% sales charge if you redeem those shares less than one year after the initial investment date. - -------------------------------------------------------------------------------- 15p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS For complete information on the other funds, including fees and expenses, read that fund's prospectus carefully. Your exchange will be priced at the next NAV calculated after we receive your transaction request in good order. Other exchange policies: o Except as otherwise noted, exchanges must be made into the same class of shares of the new fund. o If your exchange creates a new account, it must satisfy the minimum investment amount for new purchases. o Once we receive your exchange request, you cannot cancel it. o Shares of the new fund may not be used on the same day for another exchange. o If your shares are pledged as collateral, the exchange will be delayed until written approval is received from the secured party. Selling Shares You may sell your shares at any time. The payment will be mailed within seven days after your request is received in good order. When you sell shares, the amount you receive may be more or less than the amount you invested. Your sale price will be the next NAV calculated after your request is received in good order by the Fund, minus any applicable CDSC. You can change your mind after requesting a sale of Class B shares and use all or part of the proceeds to purchase new shares in the same account from which you sold. If you reinvest in Class B or Class C, any CDSC you paid on the amount you are reinvesting also will be reinvested. To take advantage of this waiver, send a written request within 90 days of the date your sale request was processed and include your account number. This privilege may be limited or withdrawn at any time and use of this option may have tax consequences. The Fund reserves the right to redeem in kind. For more details and a description of other sales policies, please see the SAI. If you decide to sell your shares within 30 days of a telephoned-in address change, a written request is required. Important: If you request a sale of shares you recently purchased by a check or money order that is not guaranteed, the Fund will wait for your check to clear. It may take up to 10 days from the date of purchase before payment is made. Payment may be made earlier if your bank provides evidence satisfactory to the Fund and the Distributor that your check has cleared. - -------------------------------------------------------------------------------- 16p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS Ways to request an exchange or sale of shares By regular or express mail American Express Funds 70100 AXP Financial Center Minneapolis, MN 55474 Include in your letter: o your account number o the name of the fund(s) o the class of shares to be exchanged or sold o your Social Security number or Employer Identification number o the dollar amount or number of shares you want to exchange or sell o specific instructions regarding delivery or exchange destination o signature(s) of registered account owner(s) (All signatures may be required. Contact your financial advisor for more information.) o delivery instructions, if applicable o any paper certificates of shares you hold Payment will be mailed to the address of record and made payable to the names listed on the account, unless your request specifies differently and is signed by all owners. The express mail delivery charges you pay will vary depending on domestic or international delivery instructions. By telephone (800) 297-7378 for brokerage accounts (800) 862-7919 for direct at fund accounts (800) 967-4377 for wrap accounts o The Fund and the Distributor will use reasonable procedures to confirm authenticity of telephone exchange or sale requests. o Telephone exchange and sale privileges automatically apply to all accounts except custodial, corporate or qualified retirement accounts. You may request that these privileges NOT apply by writing the Distributor. Each registered owner must sign the request. o Acting on your instructions, your financial advisor may conduct telephone transactions on your behalf. o Telephone privileges may be modified or discontinued at any time. Minimum sale amount: $100 Maximum sale amount: $100,000 - -------------------------------------------------------------------------------- 17p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS By wire Money can be wired from your account to your bank account. Contact your financial advisor or the Distributor at the above numbers for additional information. o Minimum amount: $1,000 o Pre-authorization is required. o A service fee may be charged against your account for each wire sent. By scheduled payout plan o Minimum payment: $100* o Contact your financial advisor or the Distributor to set up regular payments. o Purchasing new shares while under a payout plan may be disadvantageous because of the sales charges. * Minimum is $50 in a direct at fund account. Electronic transactions The ability to initiate transactions via the internet may be unavailable or delayed at certain times (for example, during periods of unusual market activity). The Fund and the Distributor are not responsible for any losses associated with unexecuted transactions. In addition, the Fund and the Distributor are not responsible for any losses resulting from unauthorized transactions if reasonable security measures are followed to validate the investor's identity. The Fund may modify or discontinue electronic privileges at any time. By draft Drafts are not available for accounts set up in a brokerage account and may not be available to all investors of the Fund. For Class A only, free drafts are available and can be used just like checks to withdraw $100 or more from your account. The shares in your account earn dividends until they are redeemed by the Fund to cover your drafts. Most accounts will automatically receive free drafts. However, to receive drafts on qualified or custodial business accounts, you must contact the Distributor. A request form will be supplied and must be signed by each registered owner. Your draft writing privilege may be modified or discontinued at any time. o Minimum amount redemption: $100 - -------------------------------------------------------------------------------- 18p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS Distributions and Taxes As a shareholder you are entitled to your share of the Fund's net income and net gains. The Fund distributes dividends and capital gains to qualify as a regulated investment company and to avoid paying corporate income and excise taxes. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS The Fund's net investment income is distributed to you as dividends. Dividends will generally be composed of ordinary dividend income (which may include interest income, short-term capital gains and non-qualifying dividends). It is unlikely the Fund will distribute qualifying dividend income, which is eligible for preferential tax rates under current tax law. Capital gains are realized when a security is sold for a higher price than was paid for it. Each realized capital gain or loss is long-term or short-term depending on the length of time the Fund held the security. Realized capital gains and losses offset each other. The Fund offsets any net realized capital gains by any available capital loss carryovers. Net short-term capital gains are included in net investment income. Net realized long-term capital gains, if any, are distributed by the end of the calendar year as capital gain distributions. REINVESTMENTS Dividends and capital gain distributions are automatically reinvested in additional shares in the same class of the Fund, unless: o you request distributions be paid monthly in cash, or o you direct the Fund to invest your distributions monthly in any publicly offered American Express mutual fund for which you have previously opened an account. Your purchases may be subject to a sales charge. We reinvest the distributions for you at the next calculated NAV after the distribution is paid. If you choose cash distributions, you will receive cash only for distributions declared after your request has been processed. TAXES Distributions are subject to federal income tax and may be subject to state and local taxes in the year they are declared. You must report distributions on your tax returns, even if they are reinvested in additional shares. If you sell shares for more than their cost, the difference is a capital gain. Your gain may be short term (for shares held for one year or less) or long term (for shares held for more than one year). Selling shares held in an IRA or qualified retirement account may subject you to federal taxes, penalties and reporting requirements. Please consult your tax advisor. Important: This information is a brief and selective summary of some of the tax rules that apply to this Fund. Because tax matters are highly individual and complex, you should consult a qualified tax advisor. - -------------------------------------------------------------------------------- 19p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS Financial Highlights The financial highlights tables are intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single Fund share. The total returns in the tables represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with the Fund's financial statements, is included in the annual report which, if not included with this prospectus, is available upon request.
Class A Per share income and capital changes(a) Fiscal period ended July 31, 2004 2003 2002 2001 2000 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) -- .01 .02 .05 .05 Less distributions: Dividends from net investment income -- (.01) (.02) (.05) (.05) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $3,680 $4,649 $5,766 $6,149 $5,438 Ratio of expenses to average daily net assets(b) .78% .69% .59% .59% .58% Ratio of net investment income (loss) to average daily net assets .35% .78% 1.89% 5.18% 5.37% Total return(c) .35% .77% 1.93% 5.35% 5.55%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of a sales charge. - -------------------------------------------------------------------------------- 20p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS
Class B Per share income and capital changes(a) Fiscal period ended July 31, 2004 2003 2002 2001 2000 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) -- -- .01 .05 .05 Less distributions: Dividends from net investment income -- -- (.01) (.05) (.05) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $180 $278 $380 $273 $232 Ratio of expenses to average daily net assets(b) 1.07%(c) 1.26%(c) 1.34% 1.34% 1.33% Ratio of net investment income (loss) to average daily net assets .05% .21% 1.13% 4.37% 4.64% Total return(d) .06% .20% 1.13% 4.57% 4.76%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class B would have been 1.43% and 1.38% for the years ended July 31, 2004 and 2003, respectively. (d) Total return does not reflect payment of a sales charge.
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2004 2003 2002 2001 2000(b) Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) -- -- .01 .05 -- Less distributions: Dividends from net investment income -- -- (.01) (.05) -- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $3 $4 $4 $1 $-- Ratio of expenses to average daily net assets(c) 1.07%(e) 1.27%(e) 1.34% 1.34% 1.33%(d) Ratio of net investment income (loss) to average daily net assets .06% .21% .99% 3.88% 6.10%(d) Total return(f) .06% .20% 1.14% 4.68% .63%(g)
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was June 26, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class C would have been 1.43% and 1.38% for the years ended July 31, 2004 and 2003, respectively. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. - -------------------------------------------------------------------------------- 21p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS
Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2004 2003 2002 2001 2000 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) -- .01 .02 .05 .05 Less distributions: Dividends from net investment income -- (.01) (.02) (.05) (.05) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $209 $262 $203 $174 $142 Ratio of expenses to average daily net assets(b) .65% .62% .57% .57% .57% Ratio of net investment income (loss) to average daily net assets .47% .82% 1.86% 5.18% 5.42% Total return(c) .48% .85% 1.95% 5.37% 5.56%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of a sales charge. - -------------------------------------------------------------------------------- 22p -- AXP CASH MANAGEMENT FUND -- 2004 PROSPECTUS This Fund, along with the other American Express mutual funds, is distributed by American Express Financial Advisors Inc. and can be purchased from an American Express financial advisor or from other authorized broker-dealers or third parties. The Funds can be found under the "Amer Express" banner in most mutual fund quotations. Additional information about the Fund and its investments is available in the Fund's Statement of Additional Information (SAI), annual and semiannual reports to shareholders. In the Fund's annual report, you will find a discussion of market conditions and investment strategies that significantly affected the Fund during its last fiscal year. The SAI is incorporated by reference in this prospectus. For a free copy of the SAI, the annual report or the semiannual report, contact your selling agent or American Express Client Service Corporation. American Express Funds 70100 AXP Financial Center Minneapolis, MN 55474 (800) 862-7919 TTY: (800) 846-4852 Website address: americanexpress.com/funds You may review and copy information about the Fund, including the SAI, at the Securities and Exchange Commission's (Commission) Public Reference Room in Washington, D.C. (for information about the public reference room call 1-202-942-8090). Reports and other information about the Fund are available on the EDGAR Database on the Commission's Internet site at (http://www.sec.gov). Copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-0102. Investment Company Act File #811-2591 Ticker Symbol Class A: IDSXX Class B:ACBXX Class C: -- Class Y:IDYXX (logo) AMERICAN EXPRESS (R) American Express Funds 70100 AXP Financial Center Minneapolis, MN 55474 S-6320-99 AA (9/04) AXP(R) Cash Management Fund Supplement to the Sept. 29, 2004 Prospectus This supplement describes the Fund's Class I shares and it supplements certain information in the Fund's prospectus dated Sept. 29, 2004. The caption headings used in this Supplement correspond with the caption headings used in the prospectus. You may purchase Class I shares only if you are an eligible investor, as described under the caption "Buying and Selling Shares" below. PAST PERFORMANCE Class I has not been in existence for a full calendar year and therefore performance information is not shown. The performance table is intended to indicate some of the risks of investing in the Fund by showing changes in the Fund's performance over time. Please note that you will find performance returns, after the deduction of certain taxes, for other classes of shares of the Fund, together with returns of one or more broad measures of market performance, in the performance table of the prospectus. Past performance for Class I for the period prior to March 4, 2004 may be calculated based on the performance of Class A, adjusted to reflect differences in sales charges, although not for other differences in expenses. The use of blended performance generally results in lower performance than Class I shares would have experienced had they been offered for the entire period. FEES AND EXPENSES Fund investors pay various expenses. The table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. The table is supplemented as follows: Shareholder Fees (fees paid directly from your investment) Class I Maximum sales charge (load) imposed on purchases (as a percentage of offering price) none Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) none Annual Fund operating expenses (expenses that are deducted from Fund assets) As a percentage of average daily net assets: Class I Management fees 0.31% Distribution (12b-1) fees 0.00% Other expenses(a) 0.12% Total 0.43% (a) Other expenses include an administrative services fee and other nonadvisory expenses. Example This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The table is supplemented as follows: 1 year 3 years 5 years 10 years Class I $44 $138 $241 $545 BUYING AND SELLING SHARES The description of Investment Options is supplemented as follows: If you are an eligible investor, you may purchase Class I shares at net asset value without an initial sales charge or CDSC on redemption. Class I shares do not have annual distribution and service fees, and do not convert to any other class of shares. The following eligible investors may purchase Class I shares: o Any fund distributed by American Express Financial Advisors Inc. (AEFA), if the fund seeks to achieve its investment objective by investing primarily in shares of the Fund and other American Express Funds. In addition, AEFA, at its sole discretion, may accept investments from other purchasers not listed above. The discussion of buying and selling shares is supplemented as follows: You may purchase, redeem or exchange Class I shares only through AEFA (see the back cover of the prospectus for address and telephone number). You may exchange your Class I shares only for Class I shares of another American Express Fund. FINANCIAL HIGHLIGHTS The Financial Highlights table is intended to help you understand the Fund's financial performance. It is supplemented as follows: Class I Per share income and capital changes(a) Fiscal period ended July 31, 2004(b) Net asset value, beginning of period $1.00 Income from investment operations: Net investment income (loss) -- Less distributions: Dividends from net investment income -- Net asset value, end of period $1.00 Ratios/supplemental data Net assets, end of period (in millions) $4 Ratio of expenses to average daily net assets(c) .43%(d) Ratio of net investment income (loss) to average daily net assets .77%(d) Total return(e) .30%(f) (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was March 4, 2004. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. (f) Not annualized. S-6320-79 AA (9/04) AXP(R) MONEY MARKET SERIES, INC. STATEMENT OF ADDITIONAL INFORMATION FOR AXP(R) CASH MANAGEMENT FUND (the Fund) SEPT. 29, 2004 This Statement of Additional Information (SAI) is not a prospectus. It should be read together with the prospectus and the financial statements contained in the most recent Annual Report to shareholders (Annual Report) that may be obtained, without charge, from your financial advisor or by writing to American Express Client Service Corporation, 70100 AXP Financial Center, Minneapolis, MN 55474 or by calling (800) 862-7919. The Independent Registered Public Accounting Firm's Report and the Financial Statements, including Notes to the Financial Statements and the Schedule of Investments in Securities, contained in the Annual Report are incorporated in this SAI by reference. No other portion of the Annual Report, however, is incorporated by reference. The prospectus for the Fund, dated the same date as this SAI, also is incorporated in this SAI by reference. Table of Contents Mutual Fund Checklist p. 3 Fundamental Investment Policies p. 4 Investment Strategies and Types of Investments p. 4 Information Regarding Risks and Investment Strategies p. 5 Security Transactions p. 11 Brokerage Commissions Paid to Brokers Affiliated with American Express Financial Corporation p. 12 Valuing Fund Shares p. 12 Proxy Voting p. 13 Investing in the Fund p. 14 Selling Shares p. 15 Pay-out Plans p. 15 Taxes p. 16 Agreements p. 17 Organizational Information p. 20 Board Members and Officers p. 24 Principal Holders of Securities p. 27 Independent Registered Public Accounting Firm p. 27 Appendix: Description of Money Market Securities and Short-Term Ratings p. 28 - -------------------------------------------------------------------------------- 2 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Mutual Fund Checklist [X] Mutual funds are NOT guaranteed or insured by any bank or government agency. You can lose money. [X] Mutual funds ALWAYS carry investment risks. Some types carry more risk than others. [X] A higher rate of return typically involves a higher risk of loss. [X] Past performance is not a reliable indicator of future performance. [X] ALL mutual funds have costs that lower investment return. [X] You can buy some mutual funds by contacting them directly. Others, like this one, are sold mainly through brokers, banks, financial planners, or insurance agents. If you buy through these financial professionals, you generally will pay a sales charge. [X] Shop around. Compare a mutual fund with others of the same type before you buy. OTHER IDEAS FOR SUCCESSFUL MUTUAL FUND INVESTING Develop a Financial Plan Have a plan -- even a simple plan can help you take control of your financial future. Review your plan with your advisor at least once a year or more frequently if your circumstances change. Dollar-Cost Averaging An investment technique that works well for many investors is one that eliminates random buy and sell decisions. One such system is dollar-cost averaging. Dollar-cost averaging involves building a portfolio through the investment of fixed amounts of money on a regular basis regardless of the price or market condition. This may enable an investor to smooth out the effects of the volatility of the financial markets. By using this strategy, more shares will be purchased when the price is low and less when the price is high. As the accompanying chart illustrates, dollar-cost averaging tends to keep the average price paid for the shares lower than the average market price of shares purchased, although there is no guarantee. While this does not ensure a profit and does not protect against a loss if the market declines, it is an effective way for many shareholders who can continue investing through changing market conditions to accumulate shares to meet long-term goals. Dollar-cost averaging Regular Market price Shares investment of a share acquired $100 $ 6.00 16.7 100 4.00 25.0 100 4.00 25.0 100 6.00 16.7 100 5.00 20.0 --- ---- ---- $500 $25.00 103.4 Average market price of a share over 5 periods: $5.00 ($25.00 divided by 5) The average price you paid for each share: $4.84 ($500 divided by 103.4) Diversify Diversify your portfolio. By investing in different asset classes and different economic environments you help protect against poor performance in one type of investment while including investments most likely to help you achieve your important goals. Understand Your Investment Know what you are buying. Make sure you understand the potential risks, rewards, costs, and expenses associated with each of your investments. - -------------------------------------------------------------------------------- 3 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Fundamental Investment Policies Fundamental investment policies adopted by the Fund cannot be changed without the approval of a majority of the outstanding voting securities of the Fund as defined in the Investment Company Act of 1940, as amended (the 1940 Act). Notwithstanding any of the Fund's other investment policies, the Fund may invest its assets in an open-end management investment company having substantially the same investment objectives, policies, and restrictions as the Fund for the purpose of having those assets managed as part of a combined pool. The policies below are fundamental policies that apply to the Fund and may be changed only with shareholder approval. Unless holders of a majority of the outstanding voting securities agree to make the change, the Fund will not: o Act as an underwriter (sell securities for others). However, under the securities laws, the Fund may be deemed to be an underwriter when it purchases securities directly from the issuer and later resells them. o Borrow money or property, except as a temporary measure for extraordinary or emergency purposes, in an amount not exceeding one-third of the market value of its total assets (including borrowings) less liabilities (other than borrowings) immediately after the borrowing. o Invest more than 5% of its total assets in securities of any one company, government, or political subdivision thereof, except the limitation will not apply to investments in securities issued by the U.S. government, its agencies, or instrumentalities. o Buy on margin, sell short or deal in options to buy or sell securities. o Buy or sell real estate, commodities or commodity contracts. For purposes of this policy, real estate includes real estate limited partnerships. o Lend Fund securities in excess of 30% of its net assets, at market value. o Purchase common stocks, preferred stocks, warrants, other equity securities, corporate bonds or debentures, state bonds, municipal bonds, or industrial revenue bonds. Except for the fundamental investment policies listed above, the other investment policies described in the prospectus and in this SAI are not fundamental and may be changed by the board at any time. Investment Strategies and Types of Investments This table shows various investment strategies and investments that many funds are allowed to engage in and purchase. It is intended to show the breadth of investments that the investment manager may make on behalf of the Fund. For a description of principal risks, please see the prospectus. Notwithstanding the Fund's ability to utilize these strategies and techniques, the investment manager is not obligated to use them at any particular time. For example, even though the investment manager is authorized to adopt temporary defensive positions and is authorized to attempt to hedge against certain types of risk, these practices are left to the investment manager's sole discretion. AXP Cash Management Fund Investment strategies and types of investments Allowable for the Fund? Agency and Government Securities yes Borrowing yes Cash/Money Market Instruments yes Commercial Paper yes Debt Obligations yes Foreign Securities yes Funding Agreements yes Illiquid and Restricted Securities yes Lending of Portfolio Securities yes Mortgage- and Asset-Backed Securities yes Repurchase Agreements yes Reverse Repurchase Agreements yes Sovereign Debt yes Variable- or Floating-Rate Securities yes - -------------------------------------------------------------------------------- 4 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND The following are guidelines that may be changed by the board at any time: o The Fund will not invest more than 10% of its net assets in securities that are illiquid whether or not registration or the filing of a notification under the Securities Act of 1933 or the taking of similar action under other securities laws relating to the sale of securities is required. A risk of any such investment is that it might not be able to be easily liquidated. For the purpose of this policy, repurchase agreements with maturities greater than seven days and non-negotiable fixed time deposits will be treated as illiquid securities. o The Fund will not invest more than 10% of its total assets in securities of investment companies. o The Fund may invest in commercial paper rated in the highest rating category by at least two nationally recognized statistical rating organizations (or by one, if only one rating is assigned) and in unrated paper determined by the board to be of comparable quality. The Fund also may invest up to 5% of its total assets in commercial paper receiving the second highest rating or in unrated paper determined to be of comparable quality. o Notwithstanding any of the Fund's other investment policies, the Fund may invest its assets in an open-end management investment company having substantially the same investment objectives, policies and restrictions as the Fund for the purpose of having those assets managed as part of a combined pool. Information Regarding Risks and Investment Strategies RISKS The following is a summary of common risk characteristics. Following this summary is a description of certain investments and investment strategies and the risks most commonly associated with them (including certain risks not described below and, in some cases, a more comprehensive discussion of how the risks apply to a particular investment or investment strategy). Please remember that a mutual fund's risk profile is largely defined by the fund's primary securities and investment strategies. However, most mutual funds are allowed to use certain other strategies and investments that may have different risk characteristics. Accordingly, one or more of the following types of risk may be associated with the Fund at any time (for a description of principal risks, please see the prospectus): Call/Prepayment Risk The risk that a bond or other security might be called (or otherwise converted, prepaid, or redeemed) before maturity. This type of risk is closely related to "reinvestment risk." Correlation Risk The risk that a given transaction may fail to achieve its objectives due to an imperfect relationship between markets. Certain investments may react more negatively than others in response to changing market conditions. Credit Risk The risk that the issuer of a security, or the counterparty to a contract, will default or otherwise become unable to honor a financial obligation (such as payments due on a bond or a note). The price of junk bonds may react more to the ability of the issuing company to pay interest and principal when due than to changes in interest rates. Junk bonds have greater price fluctuations and are more likely to experience a default than investment grade bonds. Event Risk Occasionally, the value of a security may be seriously and unexpectedly changed by a natural or industrial accident or occurrence. Foreign/Emerging Markets Risk The following are all components of foreign/emerging markets risk: Country risk includes the political, economic, and other conditions of a country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. Currency risk results from the constantly changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add or subtract from the value of the investment. - -------------------------------------------------------------------------------- 5 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Custody risk refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. Emerging markets risk includes the dramatic pace of change (economic, social, and political) in emerging market countries as well as the other considerations listed above. These markets are in early stages of development and are extremely volatile. They can be marked by extreme inflation, devaluation of currencies, dependence on trade partners, and hostile relations with neighboring countries. Inflation Risk Also known as purchasing power risk, inflation risk measures the effects of continually rising prices on investments. If an investment's yield is lower than the rate of inflation, your money will have less purchasing power as time goes on. Interest Rate Risk The risk of losses attributable to changes in interest rates. Interest rate risk is generally associated with bond prices (when interest rates rise, bond prices fall). In general, the longer the maturity of a bond, the higher its yield and the greater its sensitivity to changes in interest rates. Issuer Risk An issuer, or the value of its stocks or bonds, may perform poorly. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. Legal/Legislative Risk Congress and other governmental units have the power to change existing laws affecting securities. A change in law might affect an investment adversely. Leverage Risk Some derivative investments (such as options, futures, or options on futures) require little or no initial payment and base their price on a security, a currency, or an index. A small change in the value of the underlying security, currency, or index may cause a sizable gain or loss in the price of the instrument. Liquidity Risk Securities may be difficult or impossible to sell at the time that the Fund would like. The Fund may have to lower the selling price, sell other investments, or forego an investment opportunity. Management Risk The risk that a strategy or selection method utilized by the investment manager may fail to produce the intended result. When all other factors have been accounted for and the investment manager chooses an investment, there is always the possibility that the choice will be a poor one. Market Risk The market value of securities may drop and you may lose money. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of all securities may move up and down, sometimes rapidly and unpredictably. Reinvestment Risk The risk that an investor will not be able to reinvest income or principal at the same rate it currently is earning. Sector/Concentration Risk Investments that are concentrated in a particular issuer, geographic region, or industry will be more susceptible to changes in price (the more you diversify, the more you spread risk). Small and Medium Company Risk Investments in small and medium companies often involve greater risks than investments in larger, more established companies because small and medium companies may lack the management experience, financial resources, product diversification, and competitive strengths of larger companies. In addition, in many instances the securities of small and medium companies are traded only over-the-counter or on regional securities exchanges and the frequency and volume of their trading is substantially less than is typical of larger companies. - -------------------------------------------------------------------------------- 6 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND INVESTMENT STRATEGIES The following information supplements the discussion of the Fund's investment objectives, policies, and strategies that are described in the prospectus and in this SAI. The following describes many strategies that many mutual funds use and types of securities that they purchase. Please refer to the section titled Investment Strategies and Types of Investments to see which are applicable to the Fund. Agency and Government Securities The U.S. government and its agencies issue many different types of securities. U.S. Treasury bonds, notes, and bills and securities, including mortgage pass through certificates of the Government National Mortgage Association (GNMA), are guaranteed by the U.S. government. Other U.S. government securities are issued or guaranteed by federal agencies or government-sponsored enterprises but are not guaranteed by the U.S. government. This may increase the credit risk associated with these investments. Government-sponsored entities issuing securities include privately owned, publicly chartered entities created to reduce borrowing costs for certain sectors of the economy, such as farmers, homeowners, and students. They include the Federal Farm Credit Bank System, Farm Credit Financial Assistance Corporation, Federal Home Loan Bank, Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA), Student Loan Marketing Association (SLMA), and Resolution Trust Corporation (RTC). Government-sponsored entities may issue discount notes (with maturities ranging from overnight to 360 days) and bonds. Agency and government securities are subject to the same concerns as other debt obligations. (See also Debt Obligations and Mortgage- and Asset-Backed Securities.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with agency and government securities include: Call/Prepayment Risk, Inflation Risk, Interest Rate Risk, Management Risk, and Reinvestment Risk. Borrowing A fund may borrow money for temporary or emergency purposes, to make other investments or to engage in other transactions permissible under the 1940 Act that may be considered a borrowing (such as derivative instruments). Borrowings are subject to costs (in addition to any interest that may be paid) and typically reduce a fund's total return. Except as qualified above, however, a fund may not buy securities on margin. Although one or more of the other risks described in this SAI may apply, the largest risks associated with borrowing include: Inflation Risk and Management Risk. Cash/Money Market Instruments Cash-equivalent investments include short-term U.S. and Canadian government securities and negotiable certificates of deposit, non-negotiable fixed-time deposits, bankers' acceptances, and letters of credit of banks or savings and loan associations having capital, surplus, and undivided profits (as of the date of its most recently published annual financial statements) in excess of $100 million (or the equivalent in the instance of a foreign branch of a U.S. bank) at the date of investment. A fund also may purchase short-term notes and obligations of U.S. and foreign banks and corporations and may use repurchase agreements with broker-dealers registered under the Securities Exchange Act of 1934 and with commercial banks. (See also Commercial Paper, Debt Obligations, Repurchase Agreements, and Variable- or Floating-Rate Securities.) These types of instruments generally offer low rates of return and subject a fund to certain costs and expenses. See the appendix for a discussion of money market securities. Although one or more of the other risks described in this SAI may apply, the largest risks associated with cash/money market instruments include: Credit Risk, Inflation Risk, and Management Risk. Commercial Paper Commercial paper is a short-term debt obligation with a maturity ranging from 2 to 270 days issued by banks, corporations, and other borrowers. It is sold to investors with temporary idle cash as a way to increase returns on a short-term basis. These instruments are generally unsecured, which increases the credit risk associated with this type of investment. (See also Debt Obligations and Illiquid and Restricted Securities.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with commercial paper include: Credit Risk, Liquidity Risk, and Management Risk. - -------------------------------------------------------------------------------- 7 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Debt Obligations Many different types of debt obligations exist (for example, bills, bonds, or notes). Issuers of debt obligations have a contractual obligation to pay interest at a fixed, variable or floating rate on specified dates and to repay principal on a specified maturity date. Certain debt obligations (usually intermediate- and long-term bonds) have provisions that allow the issuer to redeem or "call" a bond before its maturity. Issuers are most likely to call these securities during periods of falling interest rates. When this happens, an investor may have to replace these securities with lower yielding securities, which could result in a lower return. The market value of debt obligations is affected primarily by changes in prevailing interest rates and the issuers perceived ability to repay the debt. The market value of a debt obligation generally reacts inversely to interest rate changes. When prevailing interest rates decline, the price usually rises, and when prevailing interest rates rise, the price usually declines. In general, the longer the maturity of a debt obligation, the higher its yield and the greater the sensitivity to changes in interest rates. Conversely, the shorter the maturity, the lower the yield but the greater the price stability. As noted, the values of debt obligations also may be affected by changes in the credit rating or financial condition of their issuers. Generally, the lower the quality rating of a security, the higher the degree of risk as to the payment of interest and return of principal. To compensate investors for taking on such increased risk, those issuers deemed to be less creditworthy generally must offer their investors higher interest rates than do issuers with better credit ratings. (See also Agency and Government Securities, Corporate Bonds, and High-Yield (High-Risk) Securities.) All ratings limitations are applied at the time of purchase. Subsequent to purchase, a debt security may cease to be rated or its rating may be reduced below the minimum required for purchase by the Fund. Neither event will require the sale of such a security, but it will be a factor in considering whether to continue to hold the security. To the extent that ratings change as a result of changes in a rating organization or their rating systems, the Fund will attempt to use comparable ratings as standards for selecting investments. Although one or more of the other risks described in this SAI may apply, the largest risks associated with debt obligations include: Call/Prepayment Risk, Credit Risk, Interest Rate Risk, Issuer Risk, Management Risk, and Reinvestment Risk. Foreign Investments Investments in foreign banks and branches of domestic banks outside the United States involve certain risks. Domestic banks are required to maintain specified levels of reserves, are limited in the amounts they can loan to a single borrower and are subject to other regulations designed to promote financial soundness. Not all of these laws and regulations apply to the foreign branches of domestic banks. Domestic bank regulations do not apply to foreign banks. Eurodollar CDs and non-U.S. fixed-time deposits may be subject to political and economic risks of the countries in which the investments are made, including the possibility of seizure or nationalization of foreign deposits, penalties for early withdrawal of time deposits, imposition of withholding taxes on income, establishment of exchange controls or adoption of other restrictions that might affect an investment adversely. Although one or more of the other risks described in this SAI may apply, the largest risks associated with foreign securities include: Foreign/Emerging Markets Risk, Issuer Risk, and Management Risk. Funding Agreements A fund may invest in funding agreements issued by domestic insurance companies. Funding agreements are short-term, privately placed, debt obligations of insurance companies that offer a fixed- or floating-rate of interest. These investments are not readily marketable and therefore are considered to be illiquid securities. (See also Illiquid and Restricted Securities.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with funding agreements include: Credit Risk and Liquidity Risk. Illiquid and Restricted Securities Illiquid securities are securities that are not readily marketable. These securities may include, but are not limited to, certain securities that are subject to legal or contractual restrictions on resale, certain repurchase agreements, and derivative instruments. To the extent a fund invests in illiquid or restricted securities, it may encounter difficulty in determining a market value for the securities. Disposing of illiquid or restricted securities may involve time-consuming negotiations and legal expense, and it may be difficult or impossible for a fund to sell the investment promptly and at an acceptable price. Although one or more of the other risks described in this SAI may apply, the largest risks associated with illiquid and restricted securities include: Liquidity Risk and Management Risk. - -------------------------------------------------------------------------------- 8 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Lending of Portfolio Securities A fund may lend certain of its portfolio securities. The current policy of the Fund's board is to make these loans, either long- or short-term, to broker-dealers. In making loans, the lender receives the market price in cash, U.S. government securities, letters of credit, or such other collateral as may be permitted by regulatory agencies and approved by the board. If the market price of the loaned securities goes up, the lender will get additional collateral on a daily basis. If the market price of the loaned securities goes down, the borrower may request that some collateral be returned. The risks are that the borrower may not provide additional collateral when required or return the securities when due. During the existence of the loan, the lender receives cash payments equivalent to all interest or other distributions paid on the loaned securities. The lender may pay reasonable administrative and custodial fees in connection with a loan and may pay a negotiated portion of the interest earned on the cash or money market instruments held as collateral to the borrower or placing broker. The lender will receive reasonable interest on the loan or a flat fee from the borrower and amounts equivalent to any dividends, interest, or other distributions on the securities loaned. Although one or more of the other risks described in this SAI may apply, the largest risks associated with the lending of portfolio securities include: Credit Risk and Management Risk. Mortgage- and Asset-Backed Securities Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property, and include single- and multi-class pass-through securities and Collateralized Mortgage Obligations (CMOs). These securities may be issued or guaranteed by U.S. government agencies or instrumentalities (see also Agency and Government Securities), or by private issuers, generally originators and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers, and special purpose entities. Mortgage-backed securities issued by private lenders may be supported by pools of mortgage loans or other mortgage-backed securities that are guaranteed, directly or indirectly, by the U.S. government or one of its agencies or instrumentalities, or they may be issued without any governmental guarantee of the underlying mortgage assets but with some form of non-governmental credit enhancement. Stripped mortgage-backed securities are a type of mortgage-backed security that receive differing proportions of the interest and principal payments from the underlying assets. Generally, there are two classes of stripped mortgage-backed securities: Interest Only (IO) and Principal Only (PO). IOs entitle the holder to receive distributions consisting of all or a portion of the interest on the underlying pool of mortgage loans or mortgage-backed securities. POs entitle the holder to receive distributions consisting of all or a portion of the principal of the underlying pool of mortgage loans or mortgage-backed securities. The cash flows and yields on IOs and POs are extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage loans or mortgage-backed securities. A rapid rate of principal payments may adversely affect the yield to maturity of IOs. A slow rate of principal payments may adversely affect the yield to maturity of POs. If prepayments of principal are greater than anticipated, an investor in IOs may incur substantial losses. If prepayments of principal are slower than anticipated, the yield on a PO will be affected more severely than would be the case with a traditional mortgage-backed security. CMOs are hybrid mortgage-related instruments secured by pools of mortgage loans or other mortgage-related securities, such as mortgage pass through securities or stripped mortgage-backed securities. CMOs may be structured into multiple classes, often referred to as "tranches," with each class bearing a different stated maturity and entitled to a different schedule for payments of principal and interest, including prepayments. Principal prepayments on collateral underlying a CMO may cause it to be retired substantially earlier than its stated maturity. The yield characteristics of mortgage-backed securities differ from those of other debt securities. Among the differences are that interest and principal payments are made more frequently on mortgage-backed securities, usually monthly, and principal may be repaid at any time. These factors may reduce the expected yield. Asset-backed securities have structural characteristics similar to mortgage-backed securities. Asset-backed debt obligations represent direct or indirect participation in, or secured by and payable from, assets such as motor vehicle installment sales contracts, other installment loan contracts, home equity loans, leases of various types of property, and receivables from credit card or other revolving credit arrangements. The credit quality of most asset-backed securities depends primarily on the credit quality of the assets underlying such securities, how well the entity issuing the security is insulated from the credit risk of the originator or any other affiliated entities, and the amount and quality of any credit enhancement of the securities. Payments or distributions of principal and interest on asset-backed debt obligations may be supported by non-governmental credit enhancements including letters of credit, reserve funds, overcollateralization, and guarantees by third parties. The market for privately issued asset-backed debt obligations is smaller and less liquid than the market for government sponsored mortgage-backed securities. (See also Derivative Instruments.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with mortgage- and asset-backed securities include: Call/Prepayment Risk, Credit Risk, Interest Rate Risk, Liquidity Risk, and Management Risk. - -------------------------------------------------------------------------------- 9 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Repurchase Agreements Repurchase agreements may be entered into with certain banks or non-bank dealers. In a repurchase agreement, the purchaser buys a security at one price, and at the time of sale, the seller agrees to repurchase the obligation at a mutually agreed upon time and price (usually within seven days). The repurchase agreement determines the yield during the purchaser's holding period, while the seller's obligation to repurchase is secured by the value of the underlying security. Repurchase agreements could involve certain risks in the event of a default or insolvency of the other party to the agreement, including possible delays or restrictions upon the purchaser's ability to dispose of the underlying securities. Although one or more of the other risks described in this SAI may apply, the largest risks associated with repurchase agreements include: Credit Risk and Management Risk. Reverse Repurchase Agreements In a reverse repurchase agreement, an investor sells a security and enters into an agreement to repurchase the security at a specified future date and price. The investor generally retains the right to interest and principal payments on the security. Since the investor receives cash upon entering into a reverse repurchase agreement, it may be considered a borrowing. (See also Derivative Instruments.) Although one or more of the other risks described in this SAI may apply, the largest risks associated with reverse repurchase agreements include: Credit Risk, Interest Rate Risk, and Management Risk. Sovereign Debt A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by a variety of factors, including its cash flow situation, the extent of its reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor's policy toward international lenders, and the political constraints to which a sovereign debtor may be subject. (See also Foreign Securities.) With respect to sovereign debt of emerging market issuers, investors should be aware that certain emerging market countries are among the largest debtors to commercial banks and foreign governments. At times, certain emerging market countries have declared moratoria on the payment of principal and interest on external debt. Certain emerging market countries have experienced difficulty in servicing their sovereign debt on a timely basis that led to defaults and the restructuring of certain indebtedness. Sovereign debt includes Brady Bonds, which are securities issued under the framework of the Brady Plan, an initiative announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to restructure their outstanding external commercial bank indebtedness. Although one or more of the other risks described in this SAI may apply, the largest risks associated with sovereign debt include: Credit Risk, Foreign/Emerging Markets Risk, and Management Risk. Variable- or Floating-Rate Securities Variable-rate securities provide for automatic establishment of a new interest rate at fixed intervals (e.g., daily, monthly, semiannually, etc.). Floating-rate securities generally provide for automatic adjustment of the interest rate whenever some specified interest rate index changes. Variable- or floating-rate securities frequently include a demand feature enabling the holder to sell the securities to the issuer at par. In many cases, the demand feature can be exercised at any time. Some securities that do not have variable or floating interest rates may be accompanied by puts producing similar results and price characteristics. Variable-rate demand notes include master demand notes that are obligations that permit the investor to invest fluctuating amounts, which may change daily without penalty, pursuant to direct arrangements between the investor as lender, and the borrower. The interest rates on these notes fluctuate from time to time. The issuer of such obligations normally has a corresponding right, after a given period, to prepay in its discretion the outstanding principal amount of the obligations plus accrued interest upon a specified number of days' notice to the holders of such obligations. Because these obligations are direct lending arrangements between the lender and borrower, it is not contemplated that such instruments generally will be traded. There generally is not an established secondary market for these obligations. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, the lender's right to redeem is dependent on the ability of the borrower to pay principal and interest on demand. Such obligations frequently are not rated by credit rating agencies and may involve heightened risk of default by the issuer. Although one or more of the other risks described in this SAI may apply, the largest risks associated with variable- or floating-rate securities include: Credit Risk and Management Risk. - -------------------------------------------------------------------------------- 10 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Security Transactions Subject to policies set by the board, AEFC is authorized to determine, consistent with the Fund's investment goal and policies, which securities will be purchased, held, or sold. The description of policies and procedures in this section also applies to any Fund subadviser. In determining where the buy and sell orders are to be placed, AEFC has been directed to use its best efforts to obtain the best available price and the most favorable execution except where otherwise authorized by the board. In selecting broker-dealers to execute transactions, AEFC may consider the price of the security, including commission or mark-up, the size and difficulty of the order, the reliability, integrity, financial soundness, and general operation and execution capabilities of the broker, the broker's expertise in particular markets, and research services provided by the broker. The Fund, AEFC, any subadviser and American Express Financial Advisors Inc. (the Distributor) each have a strict Code of Ethics that prohibits affiliated personnel from engaging in personal investment activities that compete with or attempt to take advantage of planned portfolio transactions for the Fund. The Fund's securities may be traded on a principal rather than an agency basis. In other words, AEFC will trade directly with the issuer or with a dealer who buys or sells for its own account, rather than acting on behalf of another client. AEFC does not pay the dealer commissions. Instead, the dealer's profit, if any, is the difference, or spread, between the dealer's purchase and sale price for the security. On occasion, it may be desirable to compensate a broker for research services or for brokerage services by paying a commission that might not otherwise be charged or a commission in excess of the amount another broker might charge. The board has adopted a policy authorizing AEFC to do so to the extent authorized by law, if AEFC determines, in good faith, that such commission is reasonable in relation to the value of the brokerage or research services provided by a broker or dealer, viewed either in the light of that transaction or AEFC's overall responsibilities with respect to the Fund and the other American Express mutual funds for which it acts as investment manager. Research provided by brokers supplements AEFC's own research activities. Such services include economic data on, and analysis of, U.S. and foreign economies; information on specific industries; information about specific companies, including earnings estimates; purchase recommendations for stocks and bonds; portfolio strategy services; political, economic, business, and industry trend assessments; historical statistical information; market data services providing information on specific issues and prices; and technical analysis of various aspects of the securities markets, including technical charts. Research services may take the form of written reports, computer software, or personal contact by telephone or at seminars or other meetings. AEFC has obtained, and in the future may obtain, computer hardware from brokers, including but not limited to personal computers that will be used exclusively for investment decision-making purposes, which include the research, portfolio management, and trading functions and other services to the extent permitted under an interpretation by the SEC. When paying a commission that might not otherwise be charged or a commission in excess of the amount another broker might charge, AEFC must follow procedures authorized by the board. To date, three procedures have been authorized. One procedure permits AEFC to direct an order to buy or sell a security traded on a national securities exchange to a specific broker for research services it has provided. The second procedure permits AEFC, in order to obtain research, to direct an order on an agency basis to buy or sell a security traded in the over-the-counter market to a firm that does not make a market in that security. The commission paid generally includes compensation for research services. The third procedure permits AEFC, in order to obtain research and brokerage services, to cause the Fund to pay a commission in excess of the amount another broker might have charged. AEFC has advised the Fund that it is necessary to do business with a number of brokerage firms on a continuing basis to obtain such services as the handling of large orders, the willingness of a broker to risk its own money by taking a position in a security, and the specialized handling of a particular group of securities that only certain brokers may be able to offer. As a result of this arrangement, some portfolio transactions may not be effected at the lowest commission, but AEFC believes it may obtain better overall execution. AEFC has represented that under all three procedures the amount of commission paid will be reasonable and competitive in relation to the value of the brokerage services performed or research provided. All other transactions will be placed on the basis of obtaining the best available price and the most favorable execution. In so doing, if in the professional opinion of the person responsible for selecting the broker or dealer, several firms can execute the transaction on the same basis, consideration will be given by such person to those firms offering research services. Such services may be used by AEFC in providing advice to all American Express mutual funds even though it is not possible to relate the benefits to any particular fund. Each investment decision made for the Fund is made independently from any decision made for another portfolio, fund, or other account advised by AEFC or any of its subsidiaries. When the Fund buys or sells the same security as another portfolio, fund, or account, AEFC carries out the purchase or sale in a way the Fund agrees in advance is fair. Although sharing in large transactions may adversely affect the price or volume purchased or sold by the Fund, the Fund hopes to gain an overall advantage in execution. On occasion, the Fund may purchase and sell a security simultaneously in order to profit from short-term price disparities. - -------------------------------------------------------------------------------- 11 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND On a periodic basis, AEFC makes a comprehensive review of the broker-dealers and the overall reasonableness of their commissions. The review evaluates execution, operational efficiency, and research services. The Fund paid total brokerage commissions of $0 for fiscal year ended July 31, 2004, $0 for fiscal year 2003, and $0 for fiscal year 2002. Substantially all firms through whom transactions were executed provide research services. No transactions were directed to brokers because of research services they provided to the Fund. As of the end of the most recent fiscal year, the Fund held securities of its regular brokers or dealers of the parent of those brokers or dealers that derived more than 15% of gross revenue from securities-related activities as presented below: Name of issuer Value of securities owned at end of fiscal year Credit Suisse First Boston NY $24,000,000 Goldman Sachs Group 42,500,000 Lehman Brothers Holdings 84,500,000 Merrill Lynch 60,000,000 Morgan Stanley 28,272,879 Brokerage Commissions Paid to Brokers Affiliated with American Express Financial Corporation Affiliates of American Express Company (of which AEFC is a wholly-owned subsidiary) may engage in brokerage and other securities transactions on behalf of the Fund according to procedures adopted by the board and to the extent consistent with applicable provisions of the federal securities laws. Subject to approval by the board, the same conditions apply to transactions with broker-dealer affiliates of any subadviser. AEFC will use an American Express affiliate only if (i) AEFC determines that the Fund will receive prices and executions at least as favorable as those offered by qualified independent brokers performing similar brokerage and other services for the Fund and (ii) the affiliate charges the Fund commission rates consistent with those the affiliate charges comparable unaffiliated customers in similar transactions and if such use is consistent with terms of the Investment Management Services Agreement. No brokerage commissions were paid to brokers affiliated with AEFC for the three most recent fiscal years. Valuing Fund Shares In accordance with Rule 2a-7 of the 1940 Act, all of the securities in the Fund's portfolio are valued at amortized cost. The amortized cost method of valuation is an approximation of market value determined by systematically increasing the carrying value of a security if acquired at a discount, or reducing the carrying value if acquired at a premium, so that the carrying value is equal to maturity value on the maturity date. It does not take into consideration unrealized capital gains or losses. The board has established procedures designed to stabilize the fund's price per share for purposes of sales and redemptions at $1, to the extent that it is reasonably possible to do so. These procedures include review of the Fund's securities by the board, at intervals deemed appropriate by it, to determine whether the Fund's net asset value per share computed by using available market quotations deviates from a share value of $1 as computed using the amortized cost method. The board must consider any deviation that appears and if it exceeds 0.5% it must determine what action, if any, needs to be taken. If the board determines a deviation exists that may result in a material dilution of the holdings of current shareholders or investors, or in other unfair consequences for such persons, it must undertake remedial action that it deems necessary and appropriate. Such action may include withholding dividends, calculating net asset value per share for purposes of sales and redemptions using available market quotations, making redemptions in kind, and selling securities before maturity in order to realize capital gains or losses or to shorten average portfolio maturity. While the amortized cost method provides certainty and consistency in portfolio valuation, it may result in valuations of securities that are either somewhat higher or lower than the prices at which the securities could be sold. This means that during times of declining interest rates the yield on the Fund's shares may be higher than if valuations of securities were made based on actual market prices and estimates of market prices. Accordingly, if using the amortized cost method were to result in a lower portfolio value, a prospective investor in the Fund would be able to obtain a somewhat higher yield than the investor would get if portfolio valuation were based on actual market values. Existing shareholders, on the other hand, would receive a somewhat lower yield than they would otherwise receive. The opposite would happen during a period of rising interest rates. - -------------------------------------------------------------------------------- 12 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Proxy Voting GENERAL GUIDELINES The Fund upholds a long tradition of sound and principled corporate governance. For approximately 30 years, the Board of Directors, which consists of a majority of independent directors, has voted proxies. General guidelines are: o Corporate governance matters -- The board supports proxy proposals that require changes or encourage decisions that have been shown to add shareholder value over time and votes against proxy proposals that entrench management. o Changes in capital structure -- The board votes for amendments to corporate documents that strengthen the financial condition of a business. o Stock option plans and other management compensation issues -- The board expects thoughtful consideration to be given by a company's management to developing a balanced compensation structure providing competitive current income with long-term employee incentives directly tied to the interest of shareholders and votes against proxy proposals that dilute shareholder value excessively. o Social and corporate policy issues -- The board believes that proxy proposals should address the business interests of the corporation. Each proposal is viewed in light of the circumstances of the company submitting the proposal. POLICY AND PROCEDURES The policy of the board is to vote all proxies of the companies in which the Fund holds investments, ensuring there are no conflicts between interests of Fund shareholders and those of the Fund's investment manager, AEFC. The recommendation of the management of a company as set out in the company's proxy statement is considered. In each instance in which the Fund votes against the recommendation, the board sends a letter to senior management of the company explaining the basis for its vote. This has permitted both the company's management and the Fund's board to gain better insight into issues presented by proxy proposals. In the case of foreign corporations, proxies of companies located in some countries may not be voted due to requirements of locking up the voting shares and when time constraints prohibit the processing of proxies. From time to time a proxy proposal is presented that has not been previously considered by the board or that AEFC recommends be voted different from the votes cast for similar proposals. In making recommendations to the board about voting on a proposal, AEFC relies on its own investment personnel and information obtained from outside resources, including Institutional Shareholder Services (ISS). AEFC makes the recommendation in writing. The process established by the board to vote proxies requires that either board members or officers who are independent from AEFC consider the recommendation and decide how to vote the proxy proposal. PROXY VOTING RECORD The proxy voting record is available on a quarterly basis after the end of the quarter for all companies whose shareholders meetings were completed during the quarter. The information is on a website maintained by ISS and can be accessed through American Express Company's web page, www.americanexpress.com. For anyone seeking information on how the Fund voted all proxies during a year, the information can be obtained without cost: o On the ISS website accessible through www.americanexpress.com/funds o On a website maintained by the Securities and Exchange Commission, www.sec.gov o By calling the Fund's administrator, Board Services Corporation, collect at (612) 330-9283. - -------------------------------------------------------------------------------- 13 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Investing in the Fund The minimum purchase amount for directors, officers and employees of the Fund or AEFC and AEFC financial advisors is $1,000 (except payroll deduction plans), with a minimum additional purchase of $100 on a monthly systematic purchase plan.* * Minimum additional purchases for direct at fund accounts are $25 monthly. Class Y Shares Class Y shares are offered to certain institutional investors. Class Y shares are sold without a front-end sales charge or a CDSC and are not subject to a distribution fee. The following investors are eligible to purchase Class Y shares: o Qualified employee benefit plans* if the plan: o uses a daily transfer recordkeeping service offering participants daily access to American Express mutual funds and has o at least $10 million in plan assets or o 500 or more participants; or o does not use daily transfer recordkeeping and has o at least $3 million invested in American Express mutual funds or o 500 or more participants. o Trust companies or similar institutions, and charitable organizations that meet the definition in Section 501(c)(3) of the Internal Revenue Code.* These institutions must have at least $10 million in American Express mutual funds. o Nonqualified deferred compensation plans* whose participants are included in a qualified employee benefit plan described above. o State sponsored college savings plans established under Section 529 of the Internal Revenue Code. * Eligibility must be determined in advance. To do so, contact your financial advisor. SYSTEMATIC INVESTMENT PROGRAMS You decide how often to make payments -- monthly, quarterly, or semiannually. Provided your account meets the minimum balance requirement, you are not obligated to make any payments. You can omit payments or discontinue the investment program altogether. The Fund also can change the program or end it at any time. AUTOMATIC DIRECTED DIVIDENDS Dividends, including capital gain distributions, paid by another American Express mutual fund may be used to automatically purchase shares in the same class of this Fund. Dividends may be directed to existing accounts only. Dividends declared by a fund are exchanged to this Fund the following day. Dividends can be exchanged into the same class of another American Express mutual fund but cannot be split to make purchases in two or more funds. Automatic directed dividends are available between accounts of any ownership except: o Between a non-custodial account and an IRA, or 401(k) plan account or other qualified retirement account of which American Express Trust Company acts as custodian; o Between two American Express Trust Company custodial accounts with different owners (for example, you may not exchange dividends from your IRA to the IRA of your spouse); and o Between different kinds of custodial accounts with the same ownership (for example, you may not exchange dividends from your IRA to your 401(k) plan account, although you may exchange dividends from one IRA to another IRA). Dividends may be directed from accounts established under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) only into other UGMA or UTMA accounts with identical ownership. The Fund's investment goal is described in its prospectus along with other information, including fees and expense ratios. Before exchanging dividends into another fund, you should read that fund's prospectus. You will receive a confirmation that the automatic directed dividend service has been set up for your account. REJECTION OF BUSINESS The Fund or AECSC reserves the right to reject any business, in its sole discretion. - -------------------------------------------------------------------------------- 14 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Selling Shares You have a right to sell your shares at any time. For an explanation of sales procedures, please see the prospectus. During an emergency, the board can suspend the computation of NAV, stop accepting payments for purchase of shares, or suspend the duty of the Fund to redeem shares for more than seven days. Such emergency situations would occur if: o The Exchange closes for reasons other than the usual weekend and holiday closings or trading on the Exchange is restricted, or o Disposal of the Fund's securities is not reasonably practicable or it is not reasonably practicable for the Fund to determine the fair value of its net assets, or o The SEC, under the provisions of the 1940 Act, declares a period of emergency to exist. Should the Fund stop selling shares, the board may make a deduction from the value of the assets held by the Fund to cover the cost of future liquidations of the assets so as to distribute these costs fairly among all shareholders. The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, which obligates the Fund to redeem shares in cash, with respect to any one shareholder during any 90-day period, up to the lesser of $250,000 or 1% of the net assets of the Fund at the beginning of the period. Although redemptions in excess of this limitation would normally be paid in cash, the Fund reserves the right to make these payments in whole or in part in securities or other assets in case of an emergency, or if the payment of a redemption in cash would be detrimental to the existing shareholders of the Fund as determined by the board. In these circumstances, the securities distributed would be valued as set forth in this SAI. Should the Fund distribute securities, a shareholder may incur brokerage fees or other transaction costs in converting the securities to cash. Pay-out Plans You can use any of several pay-out plans to redeem your investment in regular installments. If you redeem shares, you may be subject to a contingent deferred sales charge as discussed in the prospectus. While the plans differ on how the pay-out is figured, they all are based on the redemption of your investment. Net investment income dividends and any capital gain distributions will automatically be reinvested, unless you elect to receive them in cash. If you are redeeming a tax-qualified plan account for which American Express Trust Company acts as custodian, you can elect to receive your dividends and other distributions in cash when permitted by law. If you redeem an IRA or a qualified retirement account, certain restrictions, federal tax penalties, and special federal income tax reporting requirements may apply. You should consult your tax advisor about this complex area of the tax law. Applications for a systematic investment in a class of the Fund subject to a sales charge normally will not be accepted while a pay-out plan for any of those funds is in effect. Occasional investments, however, may be accepted. To start any of these plans, please consult your selling agent or write American Express Client Service Corporation, 70100 AXP Financial Center, Minneapolis, MN 55474, or call (800) 437-3133. Your authorization must be received at least five days before the date you want your payments to begin. Payments will be made on a monthly, bimonthly, quarterly, semiannual, or annual basis. Your choice is effective until you change or cancel it. The following pay-out plans are designed to take care of the needs of most shareholders in a way AEFC can handle efficiently and at a reasonable cost. If you need a more irregular schedule of payments, it may be necessary for you to make a series of individual redemptions, in which case you will have to send in a separate redemption request for each pay-out. The Fund reserves the right to change or stop any pay-out plan and to stop making such plans available. Plan #1: Pay-out for a fixed period of time If you choose this plan, a varying number of shares will be redeemed at regular intervals during the time period you choose. This plan is designed to end in complete redemption of all shares in your account by the end of the fixed period. Plan #2: Redemption of a fixed number of shares If you choose this plan, a fixed number of shares will be redeemed for each payment and that amount will be sent to you. The length of time these payments continue is based on the number of shares in your account. Plan #3: Redemption of a fixed dollar amount If you decide on a fixed dollar amount, whatever number of shares is necessary to make the payment will be redeemed in regular installments until the account is closed. Plan #4: Redemption of a percentage of net asset value Payments are made based on a fixed percentage of the net asset value of the shares in the account computed on the day of each payment. Percentages range from 0.25% to 0.75%. For example, if you are on this plan and arrange to take 0.5% each month, you will get $100 if the value of your account is $20,000 on the payment date. - -------------------------------------------------------------------------------- 15 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Taxes For tax purposes, an exchange is considered a sale and purchase, and may result in a gain or loss. A sale is a taxable transaction. If you sell shares for more than their cost, the difference is a capital gain. Your gain may be short term (for shares held for one year or less) or long term (for shares held more than one year). If you sell shares for less than their cost, the difference is a capital loss. If you buy Class A shares of another American Express mutual fund and within 91 days exchange into this Fund, you may not include the sales charge in your calculation of tax gain or loss on the sale of the first fund you purchased. The sales charge may be included in the calculation of your tax gain or loss on a subsequent sale of this Fund. If you have a nonqualified investment in the Fund and you wish to move part or all of those shares to an IRA or qualified retirement account in the Fund, you can do so. However, this type of exchange is considered a redemption of shares and may result in a gain or loss for tax purposes. You should consult your tax advisor for further details about this complex subject. Net investment income dividends received should be treated as dividend income for federal income tax purposes. Corporate shareholders are generally entitled to a deduction equal to 70% of that portion of the Fund's dividend that is attributable to dividends the Fund received from domestic (U.S.) securities. For the most recent fiscal year, 0% of the Fund's net investment income dividends qualified for the corporate deduction. Under provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the Act), the maximum tax paid on dividends by individuals is reduced to 15% (5% for taxpayers in the 10% and 15% brackets) for tax years 2003 through 2008. The Act also reduces the maximum capital gain rate for securities sold on or after May 6, 2003 through 2008 from 20% to 15% (5% for taxpayers in the 10% and 15% brackets). The Act provides that only certain qualified dividend income (QDI) will be subject to the 15% and 5% tax rates. QDI is dividends earned from domestic corporations and qualified foreign corporations. Qualified foreign corporations are corporations incorporated in a U.S. possession, corporations whose stock is readily tradable on an established U.S. securities market (ADRs), and certain other corporations eligible for relief under an income tax treaty with the U.S. that includes an exchange of information agreement (except Barbados). Excluded are passive foreign investment companies (PFICs), foreign investment companies and foreign personal holding companies. Holding periods for shares must also be met to be eligible for QDI treatment (60 days for stock and 90 days for preferreds). The QDI for individuals for the most recent fiscal year was 0%. The Fund may be subject to U.S. taxes resulting from holdings in a passive foreign investment company (PFIC). A foreign corporation is a PFIC when 75% or more of its gross income for the taxable year is passive income or 50% or more of the average value of its assets consists of assets that produce or could produce passive income. Income earned by the Fund may have had foreign taxes imposed and withheld on it in foreign countries. Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes. If more than 50% of the Fund's total assets at the close of its fiscal year consists of securities of foreign corporations, the Fund will be eligible to file an election with the Internal Revenue Service under which shareholders of the Fund would be required to include their pro rata portions of foreign taxes withheld by foreign countries as gross income in their federal income tax returns. These pro rata portions of foreign taxes withheld may be taken as a credit or deduction in computing the shareholders' federal income taxes. If the election is filed, the Fund will report to its shareholders the per share amount of such foreign taxes withheld and the amount of foreign tax credit or deduction available for federal income tax purposes. Capital gain distributions, if any, received by shareholders should be treated as long-term capital gains regardless of how long shareholders owned their shares. Short-term capital gains earned by the Fund are paid to shareholders as part of their ordinary income dividend and are taxable. Special rates on capital gains may apply to sales of precious metals, if any, owned directly by the Fund. Under the Internal Revenue Code of 1986 (the Code), gains or losses attributable to fluctuations in exchange rates that occur between the time the Fund accrues interest or other receivables, or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects such receivables or pays such liabilities generally are treated as ordinary income or ordinary loss. Similarly, gains or losses on disposition of debt securities denominated in a foreign currency attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security and the date of disposition also are treated as ordinary gains or losses. These gains or losses, referred to under the Code as "section 988" gains or losses, may increase or decrease the amount of the Fund's investment company taxable income to be distributed to its shareholders as ordinary income. Under federal tax law, by the end of a calendar year the Fund must declare and pay dividends representing 98% of ordinary income for that calendar year and 98% of net capital gains (both long-term and short-term) for the 12-month period ending Oct. 31 of that calendar year. The Fund is subject to an excise tax equal to 4% of the excess, if any, of the amount required to be distributed over the amount actually distributed. The Fund intends to comply with federal tax law and avoid any excise tax. - -------------------------------------------------------------------------------- 16 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND The Internal Revenue Code imposes two asset diversification rules that apply to the Fund as of the close of each quarter. First, as to 50% of its holdings, the Fund may hold no more than 5% of its assets in securities of one issuer and no more than 10% of any one issuer's outstanding voting securities. Second, the Fund cannot have more than 25% of its assets in any one issuer. For purposes of the excise tax distributions, "section 988" ordinary gains and losses are distributable based on an Oct. 31 year end. This is an exception to the general rule that ordinary income is paid based on a calendar year end. If a mutual fund is the holder of record of any share of stock on the record date for any dividend payable with respect to the stock, the dividend will be included in gross income by the Fund as of the later of (1) the date the share became ex-dividend or (2) the date the Fund acquired the share. Because the dividends on some foreign equity investments may be received some time after the stock goes ex-dividend, and in certain rare cases may never be received by the Fund, this rule may cause the Fund to pay income to its shareholders that it has not actually received. To the extent that the dividend is never received, the Fund will take a loss at the time that a determination is made that the dividend will not be received. Distributions, if any, that are in excess of the Fund's current or accumulated earnings and profits will first reduce a shareholder's tax basis in the Fund and, after the basis is reduced to zero, will generally result in capital gains to a shareholder when the shares are sold. This is a brief summary that relates to federal income taxation only. Shareholders should consult their tax advisor as to the application of federal, state, and local income tax laws to Fund distributions. Agreements INVESTMENT MANAGEMENT SERVICES AGREEMENT AEFC, a wholly-owned subsidiary of American Express Company, is the investment manager for the Fund. Under the Investment Management Services Agreement, AEFC, subject to the policies set by the board, provides investment management services. For its services, AEFC is paid a fee based on the following schedule. Each class of the Fund pays its proportionate share of the fee. Assets (billions) Annual rate at each asset level First $1.00 0.360% Next 0.50 0.343 Next 0.50 0.325 Next 0.50 0.308 Next 1.00 0.290 Next 3.00 0.270 Over 6.50 0.250 On the last day of the most recent fiscal year, the daily rate applied to the Fund's net assets was equal to 0.317% on an annual basis. The fee is calculated for each calendar day on the basis of net assets as of the close of the preceding business day. The management fee is paid monthly. Under the agreement, the total amount paid was $14,155,568 for fiscal year 2004, $17,632,026 for fiscal year 2003, and $19,698,010 for fiscal year 2002. Under the agreement, the Fund also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees; audit and certain legal fees; fidelity bond premiums; registration fees for shares; office expenses; postage of confirmations except purchase confirmations; consultants' fees; compensation of board members, officers and employees; corporate filing fees; organizational expenses; expenses incurred in connection with lending securities; and expenses properly payable by the Fund, approved by the board. Under the agreement, nonadvisory expenses, net of earnings credits, waivers and expenses (reimbursed by AEFC), paid by the Fund were $2,243,652 for fiscal year 2004, $2,781,187 for fiscal year 2003, and $2,912,166 for fiscal year 2002. - -------------------------------------------------------------------------------- 17 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Basis for board approving the investment advisory contract Contracts between the Fund and AEFC or its affiliates, including the investment advisory contract, were renewed in April 2004, generally based on data as of the end of calendar year 2003. In renewing the contracts, members of the contracts committee first reviewed detailed written reports prepared by AEFC, then the reports were reviewed by all other board members. The reports were presented in meetings at which board members asked questions in order to further understand the data. In addition, data prepared by independent sources, including Lipper Inc. (detailed fund data) and Strategic Insight (industry trends) was considered. The board obtained representations that it had received all the information that AEFC believed was reasonably necessary to evaluate the terms of the contract. The factors used by the board and the conclusions drawn are set forth below. The board considered that: o AEFC must provide those services necessary to effectively manage the Fund's assets and to provide shareholders a range of investment options to meet long-term investment goals. These services include implementing investment decisions, managing cash flow, administering effective compliance programs, developing products, accessing distribution, and operating processes to compute daily net assets and maintain financial records. The board reviewed the services using surveys and benchmarks that are available from commercial providers, trade associations, and internal standards; compared those services with services required by other types of clients of AEFC; and considered the allocation of costs among the services. Based on these comparisons the board concluded that the services provided by AEFC were those provided by other investment managers that offer mutual funds through personal investment advisers, the prices paid for the services were in line with those charged by these management companies, and the services are in the interest of shareholders. o AEFC must provide quality services at a fair price with shareholders benefiting from economies of scale as assets increase. To assist the board in making an assessment, Lipper provided an analysis of a small comparison group comprised of up to 20 funds similar in all respects to the Fund and a larger comparison group that excluded funds that differ significantly. The board found that the graduated fee scale set a fair price that recognized the potential economies of scale. o AEFC should be paid a fee that allows it to offer competitive compensation, make necessary investments and earn an appropriate profit. The board considered the benefits derived by AEFC from the use of commission dollars to buy services and from other business relationships with Fund shareholders, compared publicly-available profitability reports of other investment managers, and concluded that the level of overall profitability in 2003 was appropriate in the short term though it may be too low on an ongoing basis. ADMINISTRATIVE SERVICES AGREEMENT The Fund has an Administrative Services Agreement with AEFC. Under this agreement, the Fund pays AEFC for providing administration and accounting services. The fee is calculated as follows: Assets (billions) Annual rate at each asset level First $1.0 0.030% Next 0.5 0.027 Next 0.5 0.025 Next 0.5 0.022 Over 2.5 0.020 On the last day of the most recent fiscal year, the daily rate applied to the Fund's net assets was equal to 0.024% on an annual basis. The fee is calculated for each calendar day on the basis of net assets as of the close of the preceding business day. Under the agreement, the Fund paid fees of $1,171,667 for fiscal year 2004, $1,445,919 for fiscal year 2003, and $1,584,135 for fiscal year 2002. TRANSFER AGENCY AGREEMENT The Fund has a Transfer Agency Agreement with American Express Client Service Corporation (AECSC) located at 70100 AXP Financial Center, Minneapolis, MN 55474. This agreement governs AECSC's responsibility for administering and/or performing transfer agent functions, for acting as service agent in connection with dividend and distribution functions and for performing shareholder account administration agent functions in connection with the issuance, exchange and redemption or repurchase of the Fund's shares. Under the agreement, AECSC will earn a fee from the Fund determined by multiplying the number of shareholder accounts at the end of the day by a rate determined for each class and dividing by the number of days in the year. The rate for Class A is $22.00 per year, for Class B is $23.00 per year, for Class C is $22.50 per year, for Class I is $1.00 per year and for Class Y is $20.00 per year. In addition, an annual closed-account fee of $5.00 per inactive account may be charged on a pro rata basis from the date the account becomes inactive until the date the account is purged from the transfer agent system, generally within one year. The fees paid to AECSC may be changed by the board without shareholder approval. - -------------------------------------------------------------------------------- 18 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND DISTRIBUTION AGREEMENT American Express Financial Advisors Inc., located at 200 AXP Financial Center, Minneapolis, MN 55474, is the Fund's principal underwriter (the Distributor). The Fund's shares are offered on a continuous basis. Under a Distribution Agreement, sales charges deducted for distributing Fund shares are paid to the Distributor daily. These charges amounted to $1,556,245 for fiscal year 2004. After paying commissions to personal financial advisors, and other expenses, the amount retained was $1,554,374. The amounts were $2,570,091 and $2,568,224 for fiscal year 2003 and $2,322,163 and $2,321,694 for fiscal year 2002. Part of the sales charge may be paid to selling dealers who have agreements with the Distributor. The Distributor will retain the balance of the sales charges. At times the entire sales charge may be paid to selling dealers. PLAN AND AGREEMENT OF DISTRIBUTION For Class A, Class B and Class C shares, to help defray the cost of distribution and servicing, not covered by the sales charges received under the Distribution Agreement, the Fund and the Distributor entered into a Plan and Agreement of Distribution (Plan) pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, of the type known as a reimbursement plan, the Fund pays a fee up to actual expenses incurred at an annual rate of up to 0.10% of the Fund's average daily net assets attributable to Class A shares, up to 0.85% of Class B shares and up to 0.75% of Class C shares. For Class B shares, of the 0.85% amount, 0.75% shall be reimbursed for distribution expenses and 0.10% shall be paid to the Distributor for shareholder service related activities. Each class has exclusive voting rights on the Plan as it applies to that class. In addition, because Class B shares convert to Class A shares, Class B shareholders have the right to vote on any material increase to expenses charged under the Class A plan. Expenses covered under this Plan include sales commissions; business, employee and financial advisor expenses charged to distribution of Class A, Class B and Class C shares; and overhead appropriately allocated to the sale of Class A, Class B and Class C shares. These expenses also include costs of providing personal service to shareholders. A substantial portion of the costs are not specifically identified to any one of the American Express mutual funds. The Plan must be approved annually by the board, including a majority of the disinterested board members, if it is to continue for more than a year. At least quarterly, the board must review written reports concerning the amounts expended under the Plan and the purposes for which such expenditures were made. The Plan and any agreement related to it may be terminated at any time by vote of a majority of board members who are not interested persons of the Fund and have no direct or indirect financial interest in the operation of the Plan or in any agreement related to the Plan, or by vote of a majority of the outstanding voting securities of the relevant class of shares or by the Distributor. The Plan (or any agreement related to it) will terminate in the event of its assignment, as that term is defined in the 1940 Act. The Plan may not be amended to increase the amount to be spent for distribution without shareholder approval, and all material amendments to the Plan must be approved by a majority of the board members, including a majority of the board members who are not interested persons of the Fund and who do not have a financial interest in the operation of the Plan or any agreement related to it. The selection and nomination of disinterested board members is the responsibility of the other disinterested board members. No board member who is not an interested person has any direct or indirect financial interest in the operation of the Plan or any related agreement. For the most recent fiscal year, under the agreement, the Fund paid fees of $4,057,483 for Class A shares, $1,720,400 for Class B shares and $24,969 for Class C shares. The fee is not allocated to any one service (such as advertising, payments to underwriters, or other uses). However, a significant portion of the fee is generally used for sales and promotional expenses. CUSTODIAN AGREEMENT The Fund's securities and cash are held by American Express Trust Company, 200 AXP Financial Center, Minneapolis, MN 55474, through a custodian agreement. The custodian is permitted to deposit some or all of its securities in central depository systems as allowed by federal law. For its services, the Fund pays the custodian a maintenance charge and a charge per transaction in addition to reimbursing the custodian's out-of-pocket expenses. The custodian may enter into a sub-custodian agreement with the Bank of New York, 90 Washington Street, New York, NY 10286. As part of this arrangement, securities purchased outside the United States are maintained in the custody of various foreign branches of Bank of New York or in other financial institutions as permitted by law and by the Fund's sub-custodian agreement. - -------------------------------------------------------------------------------- 19 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Organizational Information The Fund is an open-end management investment company. The Fund headquarters are at 901 S. Marquette Ave., Suite 2810, Minneapolis, MN 55402-3268. SHARES The shares of the Fund represent an interest in that fund's assets only (and profits or losses), and, in the event of liquidation, each share of the Fund would have the same rights to dividends and assets as every other share of that Fund. VOTING RIGHTS As a shareholder in the Fund, you have voting rights over the Fund's management and fundamental policies. You are entitled to vote based on your total dollar interest in the Fund. Each class, if applicable, has exclusive voting rights with respect to matters for which separate class voting is appropriate under applicable law. All shares have cumulative voting rights with respect to the election of board members. This means that you have as many votes as the dollar amount you own, including the fractional amount, multiplied by the number of members to be elected. DIVIDEND RIGHTS Dividends paid by the Fund, if any, with respect to each class of shares, if applicable, will be calculated in the same manner, at the same time, on the same day, and will be in the same amount, except for differences resulting from differences in fee structures. - -------------------------------------------------------------------------------- 20 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND
FUND HISTORY TABLE FOR ALL PUBLICLY OFFERED AMERICAN EXPRESS FUNDS Date of Form of State of Fiscal Fund organization organization organization year end Diversified AXP(R) California Tax-Exempt Trust 4/7/86 Business Trust(2) MA 6/30 AXP(R) California Tax-Exempt Fund No AXP(R) Dimensions Series, Inc.(4) 2/20/68, 6/13/86(1) Corporation NV/MN 7/31 AXP(R) New Dimensions Fund Yes AXP(R) Discovery Series, Inc.(4) 4/29/81, 6/13/86(1) Corporation NV/MN 7/31 AXP(R) Core Bond Fund Yes AXP(R) Discovery Fund Yes AXP(R) Income Opportunities Fund Yes AXP(R) Inflation Protected Securities Fund No AXP(R) Limited Duration Bond Fund Yes AXP(R) Equity Series, Inc.(4) 3/18/57, 6/13/86(1) Corporation NV/MN 11/30 AXP(R) Equity Select Fund Yes AXP(R) Fixed Income Series, Inc.(4) 6/27/74, 6/31/86(1) Corporation NV/MN 8/31 AXP(R) Diversified Bond Fund(5) Yes AXP(R) Global Series, Inc. 10/28/88 Corporation MN 10/31 AXP(R) Threadneedle Emerging Markets Fund(8) Yes AXP(R) Threadneedle Global Balanced Fund(8) Yes AXP(R) Global Bond Fund No AXP(R) Threadneedle Global Equity Fund(6),(8) Yes AXP(R) Global Technology Fund(3) No AXP(R) Government Income Series, Inc.(4) 3/12/85 Corporation MN 5/31 AXP(R) Short Duration U.S. Government Fund(5) Yes AXP(R) U.S. Government Mortgage Fund Yes AXP(R) Growth Series, Inc. 5/21/70, 6/13/86(1) Corporation NV/MN 7/31 AXP(R) Growth Fund Yes AXP(R) Large Cap Equity Fund Yes AXP(R) Large Cap Value Fund Yes AXP(R) Quantitative Large Cap Equity Fund Yes AXP(R) High Yield Income Series, Inc.(4) 8/17/83 Corporation MN 5/31 AXP(R) High Yield Bond Fund(5) Yes AXP(R) High Yield Tax-Exempt Series, Inc.(4) 12/21/78, 6/13/86(1) Corporation NV/MN 11/30 AXP(R) High Yield Tax-Exempt Fund Yes AXP(R) Income Series, Inc.(4) 2/10/45, 6/13/86(1) Corporation NV/MN 5/31 AXP(R) Selective Fund Yes AXP(R) International Series, Inc.(4) 7/18/84 Corporation MN 10/31 AXP(R) Threadneedle European Equity Fund(8) No AXP(R) Threadneedle International Fund(8) Yes AXP(R) Investment Series, Inc. 1/18/40, 6/13/86(1) Corporation NV/MN 9/30 AXP(R) Diversified Equity Income Fund Yes AXP(R) Mid Cap Value Fund Yes AXP(R) Mutual Yes
- -------------------------------------------------------------------------------- 21 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND
FUND HISTORY TABLE FOR ALL PUBLICLY OFFERED AMERICAN EXPRESS FUNDS (continued) Date of Form of State of Fiscal Fund organization organization organization year end Diversified AXP(R) Managed Series, Inc. 10/9/84 Corporation MN 9/30 AXP(R) Managed Allocation Fund Yes AXP(R) Market Advantage Series, Inc. 8/25/89 Corporation MN 1/31 AXP(R) Portfolio Builder Conservative Fund No AXP(R) Portfolio Builder Moderate Conservative Fund No AXP(R) Portfolio Builder Moderate Fund No AXP(R) Portfolio Builder Moderate Aggressive Fund No AXP(R) Portfolio Builder Aggressive Fund No AXP(R) Portfolio Builder Total Equity Fund No AXP(R) S&P 500 Index Fund No AXP(R) Small Company Index Fund Yes AXP(R) Money Market Series, Inc. 8/22/75, 6/13/86(1) Corporation NV/MN 7/31 AXP(R) Cash Management Fund Yes AXP(R) Partners Series, Inc. 3/20/01 Corporation MN 5/31 AXP(R) Partners Aggressive Growth Fund Yes AXP(R) Partners Fundamental Value Fund Yes AXP(R) Partners Growth Fund Yes AXP(R) Partners Select Value Fund Yes AXP(R) Partners Small Cap Core Fund Yes AXP(R) Partners Small Cap Value Fund No AXP(R) Partners Value Fund Yes AXP(R) Partners International Series, Inc. 5/9/01 Corporation MN 10/31 AXP(R) Partners International Aggressive Growth Fund Yes AXP(R) Partners International Core Fund Yes AXP(R) Partners International Select Value Fund Yes AXP(R) Partners International Small Cap Fund Yes AXP(R) Sector Series, Inc.(3),(4) 3/25/88 Corporation MN 6/30 AXP(R) Dividend Opportunity Fund(7) Yes AXP(R) Real Estate Fund No AXP(R) Selected Series, Inc.(4) 10/5/84 Corporation MN 3/31 AXP(R) Precious Metals Fund No AXP(R) Special Tax-Exempt Series Trust 4/7/86 Business Trust(2) MA 6/30 AXP(R) Insured Tax-Exempt Fund Yes AXP(R) Massachusetts Tax-Exempt Fund No AXP(R) Michigan Tax-Exempt Fund No AXP(R) Minnesota Tax-Exempt Fund No AXP(R) New York Tax-Exempt Fund No AXP(R) Ohio Tax-Exempt Fund No
- -------------------------------------------------------------------------------- 22 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND
FUND HISTORY TABLE FOR ALL PUBLICLY OFFERED AMERICAN EXPRESS FUNDS (continued) Date of Form of State of Fiscal Fund organization organization organization year end Diversified AXP(R) Stock Series, Inc.(4) 2/10/45, 6/13/86(1) Corporation NV/MN 9/30 AXP(R) Stock Fund Yes AXP(R) Strategy Series, Inc. 1/24/84 Corporation MN 3/31 AXP(R) Equity Value Fund Yes AXP(R) Partners Small Cap Growth Fund(3) Yes AXP(R) Small Cap Advantage Fund Yes AXP(R) Strategy Aggressive Fund Yes AXP(R) Tax-Exempt Series, Inc. 9/30/76, 6/13/86(1) Corporation NV/MN 11/30 AXP(R) Intermediate Tax-Exempt Fund Yes AXP(R) Tax-Exempt Bond Fund Yes AXP(R) Tax-Free Money Series, Inc.(4) 2/29/80, 6/13/86(1) Corporation NV/MN 12/31 AXP(R) Tax-Free Money Fund Yes
(1) Date merged into a Minnesota corporation incorporated on April 7, 1986. (2) Under Massachusetts law, shareholders of a business trust may, under certain circumstances, be held personally liable as partners for its obligations. However, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the trust itself is unable to meet its obligations. (3) Effective Feb. 7, 2002, AXP(R) Innovations Fund changed its name to AXP(R) Global Technology Fund, AXP(R) Small Cap Growth Fund changed its name to AXP(R) Partners Small Cap Growth Fund and AXP(R) Utilities Income Fund, Inc. created a series, AXP(R) Utilities Fund. (4) Effective Nov. 13, 2002, AXP(R) Bond Fund, Inc. changed its name to AXP(R) Fixed Income Series, Inc. and created a series, AXP(R) Bond Fund, AXP(R) Discovery Fund, Inc. changed its name to AXP(R) Discovery Series, Inc. and created a series, AXP(R) Discovery Fund, AXP(R) Equity Select Fund, Inc. changed its name to AXP(R) Equity Series, Inc. and created a series, AXP(R) Equity Select Fund, AXP(R) Extra Income Fund, Inc. changed its name to AXP(R) High Yield Income Series, Inc. and created a series, AXP(R) Extra Income Fund, AXP(R) Federal Income Fund, Inc. changed its name to AXP(R) Government Income Series, Inc., AXP(R) High Yield Tax-Exempt Fund, Inc. changed its name to AXP(R) High Yield Tax-Exempt Series, Inc. and created a series, AXP(R) High Yield Tax-Exempt Fund, AXP(R) International Fund, Inc. changed its name to AXP(R) International Series, Inc., AXP(R) New Dimensions Fund, Inc. changed its name to AXP(R) Dimensions Series, Inc., AXP(R) Precious Metals Fund, Inc. changed its name to AXP(R) Selected Series, Inc. and created a series, AXP(R) Precious Metals Fund, AXP(R) Selective Fund, Inc. changed its name to AXP(R) Income Series, Inc. and created a series, AXP(R) Selective Fund, AXP(R) Stock Fund, Inc. changed its name to AXP(R) Stock Series, Inc. and created a series, AXP(R) Stock Fund, AXP(R) Tax-Free Money Fund, Inc. changed its name to AXP(R) Tax-Free Money Series, Inc. and created a series, AXP(R) Tax-Free Money Fund, and AXP(R) Utilities Income Fund, Inc. changed its name to AXP(R) Sector Series, Inc. (5) Effective June 27, 2003, AXP(R) Bond Fund changed its name to AXP(R) Diversified Bond Fund, AXP(R) Federal Income Fund changed its name to AXP(R) Short Duration U.S. Government Fund and AXP(R) Extra Income Fund changed its name to AXP(R) High Yield Bond Fund. (6) Effective Oct. 20, 2003, AXP(R) Global Growth Fund changed its name to AXP(R) Global Equity Fund. (7) Effective Feb. 18, 2004, AXP(R) Utilities Fund changed its name to AXP(R) Dividend Opportunity Fund. (8) Effective July 9, 2004, AXP(R) Emerging Markets Fund changed its name to AXP(R) Threadneedle Emerging Markets Fund, AXP(R) European Equity Fund changed its name to AXP(R) Threadneedle European Equity Fund, AXP(R) Global Balanced Fund changed its name to AXP(R) Threadneedle Global Balanced Fund, AXP(R) Global Equity Fund changed its name to AXP(R) Threadneedle Global Equity Fund and AXP(R) International Fund changed its name to AXP(R) Threadneedle International Fund. - -------------------------------------------------------------------------------- 23 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Board Members and Officers Shareholders elect a board that oversees the Fund's operations. The board appoints officers who are responsible for day-to-day business decisions based on policies set by the board. The following is a list of the Fund's board members. Each member oversees 14 Master Trust portfolios and 87 American Express mutual funds. Board members serve until the next regular shareholders' meeting or until he or she reaches the mandatory retirement age established by the board.
Independent Board Members Name, address, age Position held with Principal occupation Other directorships Committee Fund and length of during past five years memberships service - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Arne H. Carlson Board member Chair, Board Services Joint Audit, 901 S. Marquette Ave. since 1999 Corporation (provides Contracts, Minneapolis, MN 55402 administrative services to Executive, Age 69 boards). Former Governor Investment of Minnesota Review, Board Effectiveness - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Philip J. Carroll, Jr. Board member Retired Chairman and CEO, Scottish Power PLC, Joint Audit, 901 S. Marquette Ave. since 2002 Fluor Corporation Vulcan Materials Executive, Minneapolis, MN 55402 (engineering and Company, Inc. Investment Review Age 66 construction) since 1998 (construction materials/chemicals) - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Livio D. DeSimone Board member Retired Chair of the Board Cargill, Incorporated Joint Audit, 30 Seventh Street East since 2001 and Chief Executive (commodity merchants Contracts, Suite 3050 Officer, Minnesota Mining and processors), Executive St. Paul, MN 55101-4901 and Manufacturing (3M) General Mills, Inc. Age 70 (consumer foods), Vulcan Materials Company (construction materials/chemicals), Milliken & Company (textiles and chemicals), and Nexia Biotechnologies, Inc. - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Anne P. Jones Board member Attorney and Consultant Joint Audit, 901 S. Marquette Ave. since 1985 Board Minneapolis, MN 55402 Effectiveness, Age 69 Executive - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Stephen R. Lewis, Jr.* Board member Retired President and Valmont Industries, Contracts, 901 S. Marquette Ave. since 2002 Professor of Economics, Inc. (manufactures Investment Review, Minneapolis, MN 55402 Carleton College irrigation systems) Executive, Board Age 65 Effectiveness - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Alan K. Simpson Board member Former three-term United Investment 1201 Sunshine Ave. since 1997 States Senator for Wyoming Review, Board Cody, WY 82414 Effectiveness Age 72 - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Alison Taunton-Rigby Board member since Founder and Chief Investment 901 S. Marquette Ave. 2002 Executive Officer, Review, Contracts Minneapolis, MN 55402 RiboNovix, Inc. since Age 60 2004; President, Forester Biotech since 2000; prior to that, President and CEO, Aquila Biopharmaceuticals, Inc. - ---------------------------------- -------------------- ---------------------------- ----------------------- --------------------
* Interested person of AXP Partners International Aggressive Growth Fund by reason of being a security holder of FleetBoston Financial Corporation, parent company of Columbia Wanger Asset Management, L.P., one of the fund's subadvisers. - -------------------------------------------------------------------------------- 24 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND
Board Member Affiliated with AEFC** Name, address, age Position held with Principal occupation Other directorships Committee Fund and length of during past five years memberships service - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- William F. Truscott Board member Senior Vice President - 53600 AXP Financial Center since 2001, Chief Investment Officer Minneapolis, MN 55474 Vice President of AEFC since 2001. Former Age 43 since 2002 Chief Investment Officer and Managing Director, Zurich Scudder Investments - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- ** Interested person by reason of being an officer, director and/or employee of AEFC. The board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the board. In addition to Mr. Truscott, who is vice president, the Fund's other officers are: Other Officers Name, address, age Position held with Principal occupation Other directorships Committee Fund and length of during past five years memberships service - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Jeffrey P. Fox Treasurer since Vice President - 50005 AXP Financial Center 2002 Investment Accounting, Minneapolis, MN 55474 AEFC, since 2002; Vice Age 49 President - Finance, American Express Company, 2000-2002; Vice President - Corporate Controller, AEFC, 1996-2000 - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Paula R. Meyer President since Senior Vice President and 596 AXP Financial Center 2002 General Manager - Mutual Minneapolis, MN 55474 Funds, AEFC, since 2002; Age 50 Vice President and Managing Director - American Express Funds, AEFC, 2000-2002; Vice President, AEFC, 1998-2000 - ---------------------------------- -------------------- ---------------------------- ----------------------- -------------------- Leslie L. Ogg Vice President, President of Board 901 S. Marquette Ave. General Counsel, Services Corporation Minneapolis, MN 55402 and Secretary Age 65 since 1978 - ---------------------------------- -------------------- ---------------------------- ----------------------- --------------------
- -------------------------------------------------------------------------------- 25 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Responsibilities of board with respect to Fund's management The board initially approves an Investment Management Services Agreement and other contracts with American Express Financial Corporation (AEFC), its subsidiaries, and other service providers. Once the contracts are approved, the board monitors the level and quality of services including commitments of service providers to achieve expected levels of investment performance and shareholder services. In addition, the board oversees that processes are in place to assure compliance with applicable rules, regulations and investment policies and addresses possible conflicts of interest. Annually, the board evaluates the services received under the contracts by receiving reports covering investment performance, shareholder services, marketing, and AEFC's profitability in order to determine whether to continue existing contracts or negotiate new contracts. Several committees facilitate its work Executive Committee -- Acts for the board between meetings of the board. The committee held one meeting during the last fiscal year. Joint Audit Committee -- Meets with the independent public accountant, internal auditors and corporate officers to review financial statements, reports, and compliance matters. Reports significant issues to the board and makes recommendations to the independent directors regarding the selection of the independent public accountant. The committee held four meetings during the last fiscal year. Investment Review Committee -- Considers investment management policies and strategies; investment performance; risk management techniques; and securities trading practices and reports areas of concern to the board. The committee held four meetings during the last fiscal year. Board Effectiveness Committee -- Recommends to the board the size, structure and composition for the board; the compensation to be paid to members of the board; and a process for evaluating the board's performance. The committee also reviews candidates for board membership including candidates recommended by shareholders. To be considered, recommendations must include a curriculum vita and be mailed to the Chairman of the Board, American Express Funds, 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268. The committee held three meetings during the last fiscal year. Contracts Committee -- Receives and analyzes reports covering the level and quality of services provided under contracts with the Fund and advises the board regarding actions taken on these contracts during the annual review process. The committee held seven meetings during the last fiscal year. BOARD MEMBERS' HOLDINGS The following table shows the Fund Board Members' ownership of American Express Funds. Dollar range of equity securities beneficially owned on Dec. 31, 2003 Based on net asset values as of Dec. 31, 2003 Aggregate dollar range of Dollar range of equity securities of all equity securities American Express Funds in the Fund overseen by Board Member Range Range Arne H. Carlson none over $100,000 Philip J. Carroll, Jr.* none none Livio D. DeSimone* none over $100,000 Anne P. Jones none over $100,000 Stephen R. Lewis, Jr.* none $1-$10,000 Alan K. Simpson $1-$10,000 $50,001-$100,000 Alison Taunton-Rigby none none William F. Truscott over $100,000 over $100,000 * Three independent directors have deferred compensation and invested in share equivalents. As of Dec. 31, 2003, each owned: Philip J. Carroll, Jr. AXP Global Technology Fund $10,001-$50,000 Livio D. DeSimone AXP High Yield Bond Fund $1-$10,000 AXP Partners Small Cap Value Fund $ -$10,000 AXP Small Cap Advantage Fund $ -$10,000 Stephen R. Lewis, Jr. AXP Equity Select Fund $1-$10,000 AXP Diversified Equity Income Fund $1-$10,000 - -------------------------------------------------------------------------------- 26 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND COMPENSATION FOR BOARD MEMBERS During the most recent fiscal year, the independent members of the Fund board, for attending up to 30 meetings, received the following compensation: Compensation Table Total cash compensation from American Express Funds and Board member* Aggregate Preferred Master Trust Group compensation from the Fund paid to Board member Philip J. Carroll, Jr. $2,792** $ 0 Livio D. DeSimone 4,312*** 4,442 Anne P. Jones 4,262 150,383 Stephen R. Lewis, Jr. 4,462**** 97,605 Alan K. Simpson 4,058 131,633 Alison Taunton-Rigby 4,308 154,283 * Arne H. Carlson, Chair of the Board, is compensated by Board Services Corporation. ** Includes the deferred compensation in the amount of $2,792 from the Fund. *** Includes the deferred compensation in the amount of $3,995 from the Fund. **** Includes the deferred compensation in the amount of $1,825 from the Fund. As of 30 days prior to the date of this SAI, the Fund's board members and officers as a group owned less than 1% of the outstanding shares of any class. Principal Holders of Securities As of 30 days prior to the date of this SAI, clients of American Enterprise Investment Services, Inc., a brokerage firm, held 6.48% of Class C shares, Jerry J. Meyer, Williamsburg IN held 6.61% of Class C shares, AXP Portfolio Builder Conservative Fund held 58.55% of Class Ishares and American Express Trust Company for the benefit of American Express Trust Retirement Service Plans, Minneapolis, MN held 91.95% of Class Y shares. Independent Registered Public Accounting Firm The financial statements contained in the Annual Report were audited by the independent registered public accounting firm, KPMG LLP, 4200 Wells Fargo Center, 90 S. Seventh St., Minneapolis, MN 55402-3900. The independent registered public accounting firm also provides other accounting and tax-related services as requested by the Fund. - -------------------------------------------------------------------------------- 27 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Appendix DESCRIPTION OF MONEY MARKET SECURITIES The types of instruments that form the major part of the Fund's investments are described below. Certificates of Deposit -- A certificate of deposit is a negotiable receipt issued by a bank or savings and loan association in exchange for the deposit of funds. The issuer agrees to pay the amount deposited, plus interest, on the date specified on the certificate. Time Deposit -- A time deposit is a non-negotiable deposit in a bank for a fixed period of time. Bankers' Acceptances -- A bankers' acceptance arises from a short-term credit arrangement designed to enable businesses to obtain funds to finance commercial transactions. It is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then "accepted" by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. Commercial Paper -- Commercial paper is generally defined as unsecured short-term notes issued in bearer form by large well-known corporations and finance companies. Maturities on commercial paper range from one day to nine months. Letters of Credit -- A letter of credit is a short-term note issued in bearer form with a bank letter of credit which provides that the bank pay to the bearer the amount of the note upon presentation. U.S. Treasury Bills -- Treasury bills are issued with maturities of any period up to one year. Three-month and six-month bills are currently offered by the Treasury on 13-week and 26-week cycles respectively and are auctioned each week by the Treasury. Treasury bills are issued in book entry form and are sold only on a discount basis, i.e., the difference between the purchase price and the maturity value constitutes interest income for the investor. If they are sold before maturity, a portion of the income received may be a short-term capital gain. U.S. Government Agency Securities -- Federal agency securities are debt obligations which principally result from lending programs of the U.S. government. Housing and agriculture have traditionally been the principal beneficiaries of Federal credit programs, and agencies involved in providing credit to agriculture and housing account for the bulk of the outstanding agency securities. Repurchase Agreements -- A repurchase agreement involves the acquisition of securities by the Fund, with the concurrent agreement by a bank (or securities dealer if permitted by law or regulation), to reacquire the securities at the Fund's cost, plus interest, within a specified time. The Fund thereby receives a fixed rate of return on this investment, one that is insulated from market and rate fluctuations during the holding period. In these transactions, the securities acquired by the Fund have a total value equal to or in excess of the value of the repurchase agreement and are held by the Fund's custodian until required. Floating rate instruments -- These instruments pay interest at a rate tied to an external interest rate. The rate changes whenever there is a change in the external interest rate. If AEFC becomes aware that a security owned by the Fund is downgraded below the second highest rating, AEFC will either sell the security or recommend to the Fund's board why it should not be sold. SHORT-TERM RATINGS Standard & Poor's Commercial Paper Ratings A Standard & Poor's commercial paper rating is a current assessment of the likelihood of timely payment of debt considered short-term in the relevant market. Ratings are graded into several categories, ranging from A-1 for the highest quality obligations to D for the lowest. These categories are as follows: A-1 This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation. A-2 Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1. A-3 Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations. B Issues are regarded as having only speculative capacity for timely payment. C This rating is assigned to short-term debt obligations with doubtful capacity for payment. D Debt rated D is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. - -------------------------------------------------------------------------------- 28 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Standard & Poor's Muni Bond and Note Ratings An S&P municipal bond or note rating reflects the liquidity factors and market-access risks unique to these instruments. Notes maturing in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. Note rating symbols and definitions are as follows: SP-1 Strong capacity to pay principal and interest. Issues determined to possess very strong characteristics are given a plus (+) designation. SP-2 Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes. SP-3 Speculative capacity to pay principal and interest. Municipal bond rating symbols and definitions are as follows: Standard & Poor's rating SP-1 indicates very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. Standard & Poor's rating SP-2 indicates satisfactory capacity to pay principal and interest. Standard & Poor's rating SP-3 indicates speculative capacity to pay principal and interest. Moody's Commercial Paper Ratings Moody's short-term debt ratings are opinions of the ability of issuers to repay punctually senior debt obligations. These obligations have an original maturity not exceeding one year, unless explicitly noted. Moody's employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers: Issuers rated Prime-l (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-l repayment ability will often be evidenced by many of the following characteristics: (i) leading market positions in well-established industries, (ii) high rates of return on funds employed, (iii) conservative capitalization structure with moderate reliance on debt and ample asset protection, (iv) broad margins in earnings coverage of fixed financial charges and high internal cash generation, and (v) well established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above, but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. Issuers rated Prime-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. Issuers rated Not Prime do not fall within any of the Prime rating categories. Moody's Short-Term Muni Bonds and Notes Ratings Short-term municipal bonds and notes are ratings that reflect the liquidity concerns and market access risks unique to notes. Moody's MIG 1/VMIG 1 indicates the best quality. There is present strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. Moody's MIG 2/VMIG 2 indicates high quality. Margins of protection are ample although not so large as in the preceding group. Moody's MIG 3/VMIG 3 indicates favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established. Moody's MIG 4/VMIG 4 indicates adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk. - -------------------------------------------------------------------------------- 29 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND Fitch's Short-Term Ratings Fitch's short-term ratings apply to debt obligations that are payable on demand or have original maturities of generally up to three years, including commercial paper, certificates of deposit, medium-term notes, and municipal and investment notes. The short-term rating places greater emphasis than a long-term rating on the existence of liquidity necessary to meet the issuer's obligations in a timely manner. Fitch short-term ratings are as follows: F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment. F-1: Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated F-1+. F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as for issues assigned F-1+ and F-1 ratings. F-3: Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, however, near-term adverse changes could cause these securities to be rated below investment grade. F-S: Weak Credit Quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions. D: Default. Issues assigned this rating are in actual or imminent payment default. - -------------------------------------------------------------------------------- 30 -- AXP MONEY MARKET SERIES, INC. -- AXP CASH MANAGEMENT FUND S-6320-20 AA (9/04) Investments in Securities AXP Cash Management Fund July 31, 2004 (Percentages represent value of investments compared to net assets) Bank notes (3.0%) Issuer Effective Amount Value(a) yield payable at maturity La Salle Bank 09-16-04 1.15% $35,100,000 $35,100,000 10-13-04 1.15 42,500,000 42,500,000 Natl City Bank of Indiana 01-10-05 1.32 43,000,000(c) 42,998,078 Total bank notes (Cost: $120,598,078) $120,598,078 Certificates of deposit (21.6%) Issuer Effective Amount Value(a) yield payable at maturity AmSouth Bank 05-06-05 1.30% $33,000,000(c) $32,994,885 Bayerische Landesbank Girozentrale 10-22-04 1.53 23,000,000 22,983,159 Bayerische Landesbank Girozentrale NY Yankee 08-26-04 1.12 50,000,000 50,000,000 BNP Paribas NY Yankee 09-04-04 1.39 27,000,000 27,000,000 11-16-04 1.43 42,000,000 42,000,000 11-19-04 1.49 42,000,000 41,998,089 Calyon NY Yankee 10-19-04 1.54 25,000,000 25,000,000 Canadian Imperial Bank of Commerce Yankee 05-31-05 1.41 42,000,000(c) 41,990,490 Credit Agricole Indosuez NY Yankee 08-23-04 1.12 18,000,000 18,000,000 09-13-04 1.13 34,700,000 34,700,000 10-29-04 1.17 37,700,000 37,700,000 Credit Suisse First Boston NY 09-14-04 1.42 24,000,000 24,000,000 Deutsche Bank NY Yankee 11-02-04 1.24 28,500,000 28,500,000 Fortis Bank NY Yankee 09-16-04 1.15 34,600,000 34,600,000 HBOS Treasury Services 10-26-04 1.58 40,000,000 40,000,000 HBOS Treasury Services NY Yankee 08-05-04 1.10 34,000,000 34,000,000 Landesbank Baden-Wuerttemberg Girozentrale NY Yankee 08-20-04 1.19 33,000,000 33,000,091 Natexis Banques Populair NY Yankee 09-03-04 1.10 28,000,000 28,000,000 09-17-04 1.11 43,000,000 43,000,000 10-18-04 1.20 38,000,000 38,000,000 Standard Chartered NY Yankee 10-15-04 1.54 33,000,000 33,000,000 Toronto Dominion NY Yankee 09-15-04 1.43 33,600,000 33,600,000 Wells Fargo Bank 08-11-04 1.30 34,100,000 34,100,000 08-13-04 1.31 24,000,000 24,000,000 Westdeutsche Landesbank Girozentrale 09-15-04 1.16 35,000,000 35,000,000 Westdeutsche Landesbank NY Yankee 08-02-04 1.14 21,500,000 21,500,000 09-23-04 1.38 21,000,000(c) 20,999,376 Total certificates of deposit (Cost: $879,666,090) $879,666,090 Commercial paper (75.1%) Issuer Effective Amount Value(a) yield payable at maturity Asset-backed (46.4%) Alpine Securitization 08-04-04 0.95% $19,800,000(b) $19,797,382 08-23-04 1.25 4,000,000(b) 3,996,678 Amsterdam Funding 08-10-04 1.20 30,000,000(b) 29,989,000 09-14-04 1.40 42,400,000 42,324,210 09-21-04 1.44 31,100,000 31,034,414 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 8 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT Commercial paper (continued) Issuer Effective Amount Value(a) yield payable at maturity Asset-backed (cont.) Beta Finance 08-16-04 1.17% $ 8,000,000(b) $ 7,995,591 09-03-04 1.41 14,700,000(b) 14,679,869 09-08-04 1.43 28,000,000 27,955,713 09-20-04 1.42 15,000,000 14,969,400 CAFCO LLC 09-09-04 1.39 29,000,000 28,954,244 CC (USA)/Centari 08-03-04 0.84 52,400,000(b) 52,395,108 08-12-04 1.09 13,000,000(b) 12,994,887 08-31-04 1.07 10,000,000(b) 9,990,528 10-12-04 1.51 30,000,000 29,906,925 CHARTA LLC 08-02-04 0.81 42,000,000(b) 41,997,177 08-09-04 1.12 26,600,000(b) 26,591,754 09-24-04 1.48 28,500,000 28,434,688 CIESCO LLC 08-25-04 1.32 8,200,000 8,192,199 CRC Funding LLC 08-04-04 0.94 30,900,000(b) 30,895,949 08-06-04 1.11 24,500,000(b) 24,494,692 08-09-04 1.16 16,400,000 16,394,711 CXC LLP 08-06-04 1.00 23,700,000(b) 23,695,379 08-19-04 1.25 7,500,000 7,494,775 09-09-04 1.43 23,900,000 23,861,229 11-15-04 1.47 18,000,000(b) 17,920,820 Dorado Finance 08-13-04 1.09 9,500,000(b) 9,495,986 08-16-04 1.18 15,000,000(b) 14,991,667 09-10-04 1.37 30,000,000(b) 29,952,167 09-13-04 1.40 24,400,000 24,357,354 Edison Asset Securitization 08-10-04 1.06 48,700,000(b) 48,684,172 09-08-04 1.09 10,600,000(b) 10,587,139 10-01-04 1.12 18,000,000(b) 17,964,660 Fairway Finance 08-18-04 1.28 5,900,000 5,896,018 08-24-04 1.37 20,000,000 19,980,933 08-27-04 1.35 22,000,000 21,976,983 09-24-04 1.44 35,000,000 34,921,701 09-27-04 1.47 16,277,000 16,237,926 Falcon Asset Securitization 08-05-04 1.08 17,700,000 17,696,804 FCAR Owner Trust I 08-16-04 1.05 31,600,000 31,584,270 08-19-04 1.09 17,000,000 16,989,682 09-16-04 1.43 21,900,000 21,858,256 10-05-04 1.51 10,000,000 9,971,950 Galaxy Funding 08-11-04 1.06 45,600,000(b) 45,583,836 08-13-04 1.08 16,700,000(b) 16,693,005 09-02-04 1.41 23,500,000 23,468,765 10-15-04 1.53 28,000,000 27,908,378 10-19-04 1.54 10,000,000 9,965,556 Grampian Funding LLC 08-18-04 1.00 26,000,000(b) 25,986,220 08-30-04 1.04 32,300,000(b) 32,271,199 09-22-04 1.07 13,600,000(b) 13,578,176 09-27-04 1.07 9,600,000(b) 9,583,141 10-05-04 1.18 25,000,000(b) 24,945,000 Greyhawk Funding LLC 09-20-04 1.52 20,000,000(b) 19,956,083 09-22-04 1.45 30,000,000 29,935,075 10-20-04 1.54 22,000,000 21,923,275 Jupiter Securitization 08-03-04 1.00 14,300,000 14,298,415 08-17-04 1.27 21,000,000 20,986,712 K2 (USA) LLC 08-02-04 0.83 6,000,000(b) 5,999,583 08-09-04 0.98 27,200,000(b) 27,192,588 09-28-04 1.47 8,300,000 8,279,732 10-04-04 1.25 35,500,000(b) 35,418,705 10-15-04 1.54 10,000,000 9,967,067 Kitty Hawk Funding 08-12-04 1.20 21,400,000 21,390,727 08-18-04 1.28 21,000,000 20,985,825 08-23-04 1.32 30,000,000 29,973,550 Old Line Funding 09-01-04 1.36 10,000,000 9,987,556 09-07-04 1.41 22,900,000 22,865,192 Park Avenue Receivables 08-06-04 1.04 22,800,000(b) 22,795,402 09-17-04 1.41 21,000,000 20,959,680 09-20-04 1.42 20,800,000 20,757,568 Preferred Receivables Funding 08-24-04 1.35 4,900,000 4,895,427 Receivables Capital 08-23-04 1.31 4,500,000 4,496,061 10-15-04 1.52 17,000,000 16,944,731 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 9 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT Commercial paper (continued) Issuer Effective Amount Value(a) yield payable at maturity Asset-backed (cont.) Scaldis Capital LLC 08-12-04 1.08% $ 8,000,000(b) $ 7,996,880 08-26-04 1.03 18,896,000(b) 18,881,398 10-26-04 1.60 21,000,000 20,918,293 Sheffield Receivables 08-16-04 1.16 7,000,000(b) 6,996,173 09-02-04 1.25 14,700,000(b) 14,682,617 Sigma Finance 06-10-05 1.41 85,000,000(c) 85,059,108 White Pine Finance LLC 08-25-04 1.26 30,000,000(b,c) 29,999,479 09-15-04 1.33 16,700,000(b,c) 16,699,361 10-27-04 1.61 8,064,000 8,032,067 10-28-04 1.61 11,554,000 11,507,726 12-15-04 1.34 15,000,000(b,c) 14,998,865 Windmill Funding 08-31-04 1.35 33,000,000 32,960,501 09-01-04 1.35 28,000,000 27,965,404 09-23-04 1.46 17,500,000 17,461,150 10-05-04 1.49 15,000,000 14,958,475 10-06-04 1.50 10,000,000 9,971,711 Total 1,889,186,428 Banks and savings & loans (20.0%) Abbey National North America LLC 08-30-04 1.35 27,000,000 26,968,725 09-28-04 1.48 30,000,000 29,926,250 09-29-04 1.50 29,100,000 29,026,280 Bank of Ireland 08-02-04 0.78 17,900,000(b) 17,898,837 08-20-04 1.08 38,000,000(b) 37,976,144 09-08-04 1.20 17,000,000(b) 16,977,347 09-14-04 1.39 23,000,000 22,959,175 Barclays U.S. Funding 09-20-04 1.42 31,000,000 30,936,760 Danske 09-30-04 1.11 30,000,000 29,942,558 DEPFA Bank 08-18-04 1.27 10,000,000(b) 9,993,300 10-04-04 1.49 41,600,000 41,486,582 10-07-04 1.49 20,000,000 19,942,956 06-15-05 1.27 50,000,000(b,c) 49,997,946 Deutsche Bank Financial LLC 08-24-04 1.08 34,000,000 33,974,613 Dexia Delaware LLC 10-04-04 1.51 10,000,000 9,972,375 HBOS Treasury Services 09-21-04 1.09 18,000,000 17,971,140 ING (US) Funding LLC 08-12-04 1.01 12,000,000 11,995,640 09-02-04 1.25 27,500,000 27,467,481 10-08-04 1.50 29,200,000 29,114,931 Northern Rock 08-27-04 1.21 42,500,000(b) 42,460,156 07-08-05 1.42 59,300,000(c) 59,300,001 Societe Generale North America 09-17-04 1.39 31,000,000 30,941,513 Spintab 08-12-04 1.02 25,000,000 24,990,750 Svenska Handelsbaken 08-03-04 0.90 5,368,000 5,367,463 Swedbank 11-22-04 1.18 35,000,000 34,868,108 UBS Finance (Delaware) LLC 09-07-04 1.27 1,900,000 1,897,393 Westpac Banking 07-11-05 1.41 59,300,000(c) 59,300,001 Westpac Capital 08-17-04 1.00 19,400,000 19,390,289 10-01-04 1.13 43,400,000 43,314,044 Total 816,358,758 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 10 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT Commercial paper (continued) Issuer Effective Amount Value(a) yield payable at maturity Broker dealers (5.3%) Goldman Sachs Group 01-18-05 1.39% $42,500,000(b,c) $42,500,000 Lehman Brothers Holdings 05-16-05 1.38 42,500,000(c) 42,500,000 08-22-05 1.50 42,000,000(c) 42,000,000 Merrill Lynch 02-23-05 1.32 60,000,000(c) 60,000,000 Morgan Stanley 08-25-04 1.33 28,300,000 28,272,879 Total 215,272,879 Finance companies (1.4%) Household Finance 10-06-04 1.49 56,900,000 56,740,095 Financial services (2.0%) American Honda Finance 05-06-05 1.13 55,000,000(b,c) 55,000,000 General Electric Capital 09-03-04 1.24 12,100,000 12,085,372 09-20-04 1.46 14,800,000 14,768,760 Total 81,854,132 Total commercial paper (Cost: $3,059,412,292) $3,059,412,292 Total investments in securities (Cost: $4,059,676,460)(d) $4,059,676,460 Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the board. As of July 31, 2004, the value of these securities amounted to $1,112,172,046 or 27.3% of net assets. (c) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on July 31, 2004. (d) Also represents the cost of securities for federal income tax purposes at July 31, 2004. How to find information about the Fund's portfolio holdings (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at www.americanexpress.com/funds. - -------------------------------------------------------------------------------- 11 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT Financial Statements
Statement of assets and liabilities AXP Cash Management Fund July 31, 2004 Assets Investments in securities, at value (Note 1) (identified cost $4,059,676,460) $4,059,676,460 Cash in bank on demand deposit 12,679,546 Capital shares receivable 193,665 Accrued interest receivable 4,184,942 --------- Total assets 4,076,734,613 ------------- Liabilities Dividends payable to shareholders 103,073 Capital shares payable 289,138 Accrued investment management services fee 35,378 Accrued distribution fee 13,823 Accrued transfer agency fee 15,532 Accrued administrative services fee 2,694 Other accrued expenses 365,979 ------- Total liabilities 825,617 ------- Net assets applicable to outstanding capital stock $4,075,908,996 ============== Represented by Capital stock -- $.01 par value (Note 1) $ 40,759,751 Additional paid-in capital 4,035,148,678 Accumulated net realized gain (loss) 567 --- Total -- representing net assets applicable to outstanding capital stock $4,075,908,996 ============== Net assets applicable to outstanding shares: Class A $3,680,034,168 Class B $ 179,662,934 Class C $ 3,463,379 Class I $ 3,855,589 Class Y $ 208,892,926 Net asset value per share of outstanding capital stock: Class A shares 3,679,836,403 $ 1.00 Class B shares 179,844,168 $ 1.00 Class C shares 3,463,583 $ 1.00 Class I shares 3,855,614 $ 1.00 Class Y shares 208,975,333 $ 1.00 ----------- --------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 12 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Statement of operations AXP Cash Management Fund Year ended July 31, 2004 Investment income Income: Interest $50,918,032 ----------- Expenses (Note 2): Investment management services fee 14,155,568 Distribution fee Class A 4,057,483 Class B 1,720,400 Class C 24,969 Transfer agency fee 11,085,816 Incremental transfer agency fee Class A 978,880 Class B 57,733 Class C 785 Administrative services fees and expenses 1,171,667 Compensation of board members 31,596 Custodian fees 563,200 Printing and postage 2,115,775 Registration fees 460,545 Audit fees 36,500 Other 74,898 ------ Total expenses 36,535,815 Expenses waived/reimbursed by AEFC (Note 2) (830,974) -------- 35,704,841 Earnings credits on cash balances (Note 2) (207,888) -------- Total net expenses 35,496,953 ---------- Investment income (loss) -- net 15,421,079 ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on security transactions (Note 3) 568 --- Net increase (decrease) in net assets resulting from operations $15,421,647 ===========
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 13 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Statements of changes in net assets AXP Cash Management Fund Year ended July 31, 2004 2003 Operations and distributions Investment income (loss) -- net $ 15,421,079 $ 43,432,989 Net realized gain (loss) on investments 568 -- ---------- ---------- Net increase (decrease) in net assets resulting from operations 15,421,647 43,432,989 ---------- ---------- Distributions to shareholders from: Net investment income Class A (14,160,516) (40,755,461) Class B (125,090) (747,377) Class C (1,867) (9,174) Class I (6,853) -- Class Y (1,129,354) (1,920,977) ---------- ---------- Total distributions (15,423,680) (43,432,989) ----------- ----------- Capital share transactions at constant $1 net asset value Proceeds from sales Class A shares (Note 2) 5,680,515,833 7,310,087,893 Class B shares 283,348,104 399,414,994 Class C shares 10,376,462 19,021,332 Class I shares 4,495,636 -- Class Y shares 155,083,714 263,665,221 Reinvestment of distributions at net asset value Class A shares 14,185,892 40,976,910 Class B shares 124,964 754,160 Class C shares 1,819 8,811 Class I shares 6,715 -- Class Y shares 1,129,058 1,907,585 Payments for redemptions Class A shares (6,663,553,410) (8,468,383,146) Class B shares (Note 2) (382,008,022) (501,593,543) Class C shares (Note 2) (11,347,919) (18,156,196) Class I shares (646,737) -- Class Y shares (209,572,966) (205,942,507) ------------ ------------ Increase (decrease) in net assets from capital share transactions (1,117,860,857) (1,158,238,486) -------------- -------------- Total increase (decrease) in net assets (1,117,862,890) (1,158,238,486) Net assets at beginning of year 5,193,771,886 6,352,010,372 ------------- ------------- Net assets at end of year $ 4,075,908,996 $ 5,193,771,886 =============== =============== Undistributed net investment income $ -- $ 2,601 --------------- ---------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 14 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT Notes to Financial Statements AXP Cash Management Fund 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of AXP Money Market Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) (the 1940 Act) as a diversified, open-end management investment company. AXP Money Market Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. The Fund invests primarily in money market instruments. The Fund offers Class A, Class B, Class C and Class Y shares. o Class A shares have no sales charge. o Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth calendar year of ownership. o Class C shares may be subject to a CDSC. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. Effective March 4, 2004, the Fund offers an additional class of shares, Class I, exclusively to certain institutional investors. Class I shares have no sales charge and are made available through a separate prospectus supplement provided to investors eligible to purchase the shares. As of July 31, 2004, American Express Financial Corporation (AEFC) and the AXP Portfolio Builder Series funds owned 100% of Class I shares, which represents 0.09% of the Fund's net assets. All classes of shares have identical voting, dividend and liquidation rights. The distribution fee and incremental transfer agency fee (class specific expenses) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to accounting principles generally accepted in the United States of America requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. Valuation of securities Pursuant to Rule 2a-7 of the 1940 Act, all securities are valued daily at amortized cost, which approximates market value, in order to maintain a constant net asset value of $1 per share. - -------------------------------------------------------------------------------- 15 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute substantially all of its taxable income to shareholders. No provision for income or excise taxes is thus required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. The tax character of distributions paid for the years indicated is as follows: Year ended July 31, 2004 2003 Class A Distributions paid from: Ordinary income $14,160,516 $40,755,461 Long-term capital gain -- -- Class B Distributions paid from: Ordinary income 125,090 747,377 Long-term capital gain -- -- Class C Distributions paid from: Ordinary income 1,867 9,174 Long-term capital gain -- -- Class I* Distributions paid from: Ordinary income 6,853 N/A Long-term capital gain -- N/A Class Y Distributions paid from: Ordinary income 1,129,354 1,920,977 Long-term capital gain -- -- * Inception date was March 4, 2004. As of July 31, 2004, the components of distributable earnings on a tax basis are as follows: Undistributed ordinary income $103,640 Accumulated long-term gain (loss) $ -- Unrealized appreciation (depreciation) $ -- - -------------------------------------------------------------------------------- 16 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT Dividends to shareholders Dividends from net investment income, declared daily and payable monthly, are reinvested in additional shares of the Fund at net asset value or payable in cash. Other Security transactions are accounted for on the date securities are purchased or sold. Interest income, including amortization of premium and discount, is recognized daily. 2. EXPENSES AND SALES CHARGES The Fund has agreements with AEFC to manage its portfolio and provide administrative services. Under an Investment Management Services Agreement, AEFC determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets in reducing percentages from 0.36% to 0.25% annually. Under an Administrative Services Agreement, the Fund pays AEFC a fee for administration and accounting services at a percentage of the Fund's average daily net assets in reducing percentages from 0.03% to 0.02% annually. A minor portion of additional administrative service expenses paid by the Fund are consultants' fees and fund office expenses. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other American Express mutual funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Under a separate Transfer Agency Agreement, American Express Client Service Corporation (AECSC) maintains shareholder accounts and records. The Fund pays AECSC an annual fee per shareholder account for this service as follows: o Class A $22.00 o Class B $23.00 o Class C $22.50 o Class Y $20.00 The incremental transfer agency fee is the amount charged to the specific classes for the additional expense above the fee for Class Y. Class I pays a transfer agency fee at an annual rate per shareholder account of $1. This amount is included in the transfer agency fee on the statement of operations. - -------------------------------------------------------------------------------- 17 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT In addition, AECSC is entitled to charge an annual closed account fee of $5 per inactive account, charged on a pro rata basis from the date the account becomes inactive until the date the account is purged from the transfer agent system generally within one year. However, the closed account fee is currently not effective. The Fund has agreements with American Express Financial Advisors Inc. (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund pays a fee at an annual rate up to 0.10% of the Fund's average daily net assets attributable to Class A shares, up to 0.85% for Class B shares and up to 0.75% for Class C shares. As of July 31, 2004, the Fund paid an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B shares. Sales charges received by the Distributor for distributing Fund shares were $1,549,521 for Class B and $6,724 for Class C for the year ended July 31, 2004. AEFC and its affiliates may limit the expenses of one or more classes for the purpose of increasing its yield. This expense limitation policy may be revised or terminated at any time without notice. As of July 31, 2004, AEFC and its affiliates waived certain fees and expenses to 1.07% for Class B and 1.07% for Class C. During the year ended July 31, 2004, the Fund's custodian and transfer agency fees were reduced by $207,888 as a result of earnings credits from overnight cash balances. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities aggregated $17,406,799,461 and $18,557,270,202, respectively, for the year ended July 31, 2004. Realized gains and losses are determined on an identified cost basis. 4. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by Deutsche Bank, whereby the Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the LIBOR plus 0.50%, the IBOR plus 0.50% or the higher of the Federal Funds Rate plus 0.25% and the Prime Lending Rate. Borrowings are payable within 60 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.09% per annum. The Fund had no borrowings outstanding during the year ended July 31, 2004. - -------------------------------------------------------------------------------- 18 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT 5. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results.
Class A Per share income and capital changes(a) Fiscal period ended July 31, 2004 2003 2002 2001 2000 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) -- .01 .02 .05 .05 Less distributions: Dividends from net investment income -- (.01) (.02) (.05) (.05) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $3,680 $4,649 $5,766 $6,149 $5,438 Ratio of expenses to average daily net assets(b) .78% .69% .59% .59% .58% Ratio of net investment income (loss) to average daily net assets .35% .78% 1.89% 5.18% 5.37% Total return(c) .35% .77% 1.93% 5.35% 5.55%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of a sales charge.
Class B Per share income and capital changes(a) Fiscal period ended July 31, 2004 2003 2002 2001 2000 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) -- -- .01 .05 .05 Less distributions: Dividends from net investment income -- -- (.01) (.05) (.05) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $180 $278 $380 $273 $232 Ratio of expenses to average daily net assets(b) 1.07%(c) 1.26%(c) 1.34% 1.34% 1.33% Ratio of net investment income (loss) to average daily net assets .05% .21% 1.13% 4.37% 4.64% Total return(d) .06% .20% 1.13% 4.57% 4.76%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class B would have been 1.43% and 1.38% for the years ended July 31, 2004 and 2003, respectively. (d) Total return does not reflect payment of a sales charge. - -------------------------------------------------------------------------------- 19 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2004 2003 2002 2001 2000(b) Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) -- -- .01 .05 -- Less distributions: Dividends from net investment income -- -- (.01) (.05) -- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $3 $4 $4 $1 $-- Ratio of expenses to average daily net assets(c) 1.07%(e) 1.27%(e) 1.34% 1.34% 1.33%(d) Ratio of net investment income (loss) to average daily net assets .06% .21% .99% 3.88% 6.10%(d) Total return(f) .06% .20% 1.14% 4.68% .63%(g)
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was June 26, 2000. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) AEFC waived/reimbursed the Fund for certain expenses. Had AEFC not done so, the annual ratios of expenses for Class C would have been 1.43% and 1.38% for the years ended July 31, 2004 and 2003, respectively. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. Class I Per share income and capital changes(a) Fiscal period ended July 31, 2004(b) Net asset value, beginning of period $1.00 Income from investment operations: Net investment income (loss) -- Less distributions: Dividends from net investment income -- Net asset value, end of period $1.00 Ratios/supplemental data Net assets, end of period (in millions) $4 Ratio of expenses to average daily net assets(c) .43%(d) Ratio of net investment income (loss) to average daily net assets .77%(d) Total return(e) .30%(f) (a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date was March 4, 2004. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. (f) Not annualized. - -------------------------------------------------------------------------------- 20 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT
Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2004 2003 2002 2001 2000 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 Income from investment operations: Net investment income (loss) -- .01 .02 .05 .05 Less distributions: Dividends from net investment income -- (.01) (.02) (.05) (.05) Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 Ratios/supplemental data Net assets, end of period (in millions) $209 $262 $203 $174 $142 Ratio of expenses to average daily net assets(b) .65% .62% .57% .57% .57% Ratio of net investment income (loss) to average daily net assets .47% .82% 1.86% 5.18% 5.42% Total return(c) .48% .85% 1.95% 5.37% 5.56%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of a sales charge. - -------------------------------------------------------------------------------- 21 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT Report of Independent Registered Public Accounting Firm THE BOARD AND SHAREHOLDERS AXP MONEY MARKET SERIES, INC. We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of AXP Cash Management Fund (a series of AXP Money Market Series, Inc.) as of July 31, 2004, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period ended July 31, 2004, and the financial highlights for each of the years in the five-year period ended July 31, 2004. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2004, by correspondence with the custodian or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AXP Cash Management Fund as of July 31, 2004, and the results of its operations, changes in its net assets, and the financial highlights for each of the periods stated in the first paragraph above, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Minneapolis, Minnesota September 20, 2004 - -------------------------------------------------------------------------------- 22 -- AXP CASH MANAGEMENT FUND -- 2004 ANNUAL REPORT PART C. OTHER INFORMATION Item 22. Exhibits (a)(1) Articles of Incorporation, as amended Nov. 14, 1991, filed as Exhibit No. 1 to Registrant's Post-Effective Amendment No. 34 to Registration Statement No. 2-54516, are incorporated by reference. (a)(2) Articles of Amendment, dated June 16, 1999, filed as Exhibit (a)(2) to Registrant's Post-Effective Amendment No. 53 to Registration Statement No. 2-54516, are incorporated by reference. (a)(3) Articles of Amendment, dated Nov. 14, 2002, filed electronically as Exhibit (a)(3) to Registrant's Post-Effective Amendment No. 55 to Registration Statement No. 2-54516, are incorporated by reference. (b) By-laws, as amended January 11, 2001, filed electronically as Exhibit (b) to Registrant's Post-Effective Amendment No. 54 to Registration Statement No. 2-54516, are incorporated by reference. (c) Stock certificate, filed as Exhibit 4 to Registrant's Amendment No. 12 to Registration Statement No. 2-54516 dated September 18, 1982, is incorporated by reference. (d)(1) Investment Management Services Agreement, dated July 1, 1999, between Registrant and American Express Financial Corporation filed as Exhibit (d) to Registrant's Post-Effective Amendment No. 49 to Registration Statement No. 2-54516, is incorporated by reference. (d)(2) Amendment to Investment Management Services Agreement between AXP Growth Series, Inc. and American Express Financial Corporation, dated June 3, 2002, filed electronically on or about June 12, 2002 as Exhibit (d)(7) to AXP Growth Series, Inc. Post-Effective Amendment No. 71 to Registration Statement No. 2-38355, is incorporated by reference. Registrant's Amendment to Investment Management Services Agreement differs from the one incorporated by reference only by the fact that Registrant is one executing party. (e) Distribution Agreement, dated July 8, 1999, between AXP Utilities Income Fund, Inc. and American Express Financial Advisors Inc. is incorporated by reference to Exhibit (e) to AXP Utilities Income Fund, Inc. Post-Effective Amendment No. 22 to Registration Statement No. 33-20872 filed on or about August 27, 1999. Registrant's Distribution Agreement differs from the one incorporated by reference only by the fact that Registrant is one executing party. (f) All employees are eligible to participate in a profit sharing plan. Entry into the plan is Jan. 1 or July 1. The Registrant contributes each year an amount up to 15 percent of their annual salaries, the maximum deductible amount permitted under Section 404(a) of the Internal Revenue Code. (g)(1) Custodian Agreement between Registrant and American Express Trust Company, dated March 20, 1995, filed electronically as Exhibit 8(a) to Registrant's Post-Effective Amendment No. 47 to Registration Statement No. 2-54516 is incorporated by reference. (g)(2) Custodian Agreement Amendment between Registrant and American Express Trust Company, dated Oct. 9, 1997 is incorporated by reference to Exhibit 8(c) to Registrant's Post-Effective Amendment No. 48 to Registration Statement No. 2-54516 filed on or about Sept. 30, 1998. (g)(3) Custodian Agreement between American Express Trust Company and The Bank of New York dated May 13, 1999, filed electronically as Exhibit (g)(3) to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 33 to Registration Statement No. 2-93745, filed on or about May 28, 1999 is incorporated by reference. (g)(4) Custodian Agreement First Amendment between American Express Trust Company and The Bank of New York, dated December 1, 2000, filed electronically as Exhibit (g)(4) to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 37 to Registration Statement No. 2-93745, filed on or about May 28, 2002, is incorporated by reference. (g)(5) Custodian Agreement Second Amendment between American Express Trust Company and The Bank of New York, dated June 7, 2001, filed electronically as Exhibit (g)(5) to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 37 to Registration Statement No. 2-93745, filed on or about May 28, 2002, is incorporated by reference. (g)(6) Custodian Agreement Amendment between American Express Trust Company and The Bank of New York, dated January 31, 2002, filed electronically as Exhibit (g)(6) to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 37 to Registration Statement No. 2-93745, filed on or about May 28, 2002, is incorporated by reference. (g)(7) Custodian Agreement Amendment between American Express Trust Company and The Bank of New York, dated April 29, 2003, filed electronically as Exhibit (g)(8) to AXP Partners Series, Inc. Post-Effective Amendment No. 7 to Registration Statement No. 333-57852, filed on or about May 22, 2003, is incorporated by reference. (h)(1) Administrative Services Agreement between Registrant and American Express Financial Corporation, dated March 20, 1995, filed electronically as Exhibit 9(e) to Registrant's Post-Effective Amendment No. 47 to Registration Statement No. 2-54516 is incorporated by reference. (h)(2) Amendment to Administrative Services Agreement between AXP Growth Series, Inc. and American Express Financial Corporation, dated June 3, 2002, filed electronically on or about June 12, 2002 as Exhibit (h)(7) to AXP Growth Series, Inc. Post-Effective Amendment No. 71 to Registration Statement No. 2-38355, is incorporated by reference. Registrant's Amendment to Administrative Services Agreement differs from the one incorporated by reference only by the fact that Registrant is one executing party. (h)(3) Plan and Agreement of Merger dated April 10, 1986, filed as Exhibit 9 to Registrant's Post-Effective Amendment No. 19 to Registration Statement No. 2-54516, is incorporated by reference. (h)(4) Agreement and Plan of Reorganization, dated Sept. 8, 1994, between IDS Cash Management Fund, a series of IDS Money Market Series, Inc. and IDS Planned Investment Account, also a series of IDS Money Market Series, Inc., filed electronically as Exhibit 4 to Registrant's Pre-Effective Amendment No. 1 on Form N-14, is incorporated by reference. (h)(5) Transfer Agency Agreement, dated May 1, 2003, between Registrant and American Express Client Service Corporation filed electronically as Exhibit (h)(7) to Registrant's Post-Effective Amendment No. 55 to Registration Statement No. 2-54516, is incorporated by reference. (h)(6) Amended Class I Shares Transfer Agency Agreement between the American Express Funds and American Express Client Service Corporation, dated Nov. 13, 2003 (amended June 1, 2004), filed electronically on or about Sept. 27 , 2004 as Exhibit (h)(10) to AXP Dimensions Series, Inc. Post-Effective Amendment No. 70 to Registration Statement No. 2-28529 is incorporated by reference. (h)(7) License Agreement, dated June 17, 1999, between American Express Funds and American Express Company filed electronically on or about Sept. 23, 1999 as Exhibit (h)(4) to AXP Stock Fund, Inc.'s Post-Effective Amendment No. 98 to Registration Statement No. 2-11358, is incorporated by reference. (h)(8) Addendum to Schedule A and Schedule B of the License Agreement between the American Express Funds and American Express Company, dated June 23, 2004, filed electronically on or about June 28, 2004 as Exhibit (h)(2) to AXP Variable Portfolio - Select Series, Inc. Pre-Effective Amendment No. 1 to Registration Statement No. 333-113780 is incorporated by reference. (i) Opinion and consent of counsel as to the legality of the securities being registered is filed electronically herewith. (j) Consent of Independent Registered Public Accounting Firm is filed electronically herewith. (k) Omitted Financial Statements: Not Applicable (l) Initial Capital Agreements: Not Applicable. (m)(1) Plan and Agreement of Distribution for Class A and Class B Shares between Registrant and American Express Financial Advisors Inc., dated January 1, 2003, filed electronically as Exhibit (m)(1) to Registrant's Post-Effective Amendment No. 55 to Registration Statement No. 2-54516, is incorporated by reference. (m)(2) Plan and Agreement of Distribution for Class C shares dated March 9, 2000 between Registrant and American Express Financial Advisors Inc. filed as Exhibit (m)(2) to Registrant's Post-Effective Amendment No. 53 to Registration Statement No. 2-54516, is incorporated by reference. (n) Amended 18f-3 Plan, dated as of May 26, 2004, filed electronically on or about July 29, 2004 as Exhibit (n) to AXP Discovery Series, Inc. Post-Effective Amendment No. 49 to Registration Statement No. 2-72174 is incorporated by reference. (o) Reserved. (p)(1) Code of Ethics adopted under Rule 17j-1 for Registrant filed electronically on or about March 30, 2000 as Exhibit (p)(1) to AXP Market Advantage Series, Inc.'s Post-Effective Amendment No. 24 to Registration Statement No. 33-30770 is incorporated by reference. (p)(2) Code of Ethics adopted under Rule 17j-1 for Registrant's investment adviser and principal underwriter, dated January 2, 2004, filed electronically on or about January 12, 2004 as Exhibit (p)(2) to AXP Discovery Series, Inc. Post-Effective Amendment No. 47 to Registration Statement No. 2-72174 is incorporated by reference. (q)(1) Directors' Power of Attorney to sign Amendments to this Registration Statement, dated July 7, 2004, is filed electronically herewith as Exhibit (q)(1). (q)(2) Officers' Power of Attorney to sign Amendments to this Registration Statement, dated Jan. 9, 2002, filed electronically as Exhibit (q)(2) to Registrant's Post-Effective Amendment No. 54 to Registration Statement No. 2-54516, is incorporated by reference. (q)(3) Officers' Power of Attorney to sign Amendments to this Registration Statement, dated Sept. 17, 2002, filed electronically as Exhibit (q)(3) to Registrant's Post-Effective Amendment No. 54 to Registration Statement No. 2-54516, is incorporated by reference. Item 23. Persons Controlled by or Under Common Control with Registrant: None. Item 24. Indemnification The Articles of Incorporation of the registrant provide that the Fund shall indemnify any person who was or is a party or is threatened to be made a party, by reason of the fact that she or he is or was a director, officer, employee or agent of the Fund, or is or was serving at the request of the Fund as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, to any threatened, pending or completed action, suit or proceeding, wherever brought, and the Fund may purchase liability insurance and advance legal expenses, all to the fullest extent permitted by the laws of the State of Minnesota, as now existing or hereafter amended. The By-laws of the registrant provide that present or former directors or officers of the Fund made or threatened to be made a party to or involved (including as a witness) in an actual or threatened action, suit or proceeding shall be indemnified by the Fund to the full extent authorized by the Minnesota Business Corporation Act, all as more fully set forth in the By-laws filed as an exhibit to this registration statement. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Any indemnification hereunder shall not be exclusive of any other rights of indemnification to which the directors, officers, employees or agents might otherwise be entitled. No indemnification shall be made in violation of the Investment Company Act of 1940.
Item 25. Business and Other Connections of Investment Adviser (American Express Financial Corporation) Directors and officers of American Express Financial Corporation who are directors and/or officers of one or more other companies: Name and Title Other company(s) Address* Title within other company(s) - ------------------------- ----------------------- ------------------------- ----------------------- Gumer C. Alvero American Centurion Life 20 Madison Ave. Extension Director and Vice President - Annuities Vice President - General Assurance Company P.O. Box 5555 Manager Annuities Albany, NY 12205-0555 American Enterprise Life Director and Executive Insurance Company Vice President - Annuities American Express Financial Vice President - General Manager Advisors Inc. Annuities American Express Insurance Director and Vice President Agency of Alabama Inc. American Express Insurance Director and Vice President Agency of Arizona Inc. American Express Insurance Director and Vice President Agency of Idaho Inc. American Express Insurance Director and Vice President Agency of Maryland Inc. American Express Insurance Director and Vice President Agency of Massachusetts Inc. American Express Insurance Director and Vice President Agency of Nevada Inc. American Express Insurance Director and Vice President Agency of New Mexico Inc. American Express Insurance Director and Vice President Agency of Oklahoma Inc. American Express Insurance Director and Vice President Agency of Wyoming Inc. American Partners Life 1751 AXP Financial Center Director and President Insurance Company Minneapolis MN 55474 IDS Life Insurance Company Director and Executive Vice President - Annuities IDS Life Insurance Company P.O. Box 5144 Director and Vice President - Annuities of New York Albany, NY 12205 IDS Life Series Fund, Inc. Director and Chairman of the Board IDS Life Variable Annuity Manager and Chairman of the Board Funds A & B Ward D. Armstrong American Express Financial Senior Vice President - Senior Vice President - Advisors Inc. Retirement Services and Asset Retirement Services Management Group and Asset Management Group American Express Asset Director and President Management Group Inc. American Express Trust Director and Chairman of Company the Board Kenwood Capital Management LLC Manager Northwinds Marketing Manager Group LLC John M. Baker American Express Financial Vice President - Chief Client Vice President - Plan Sponsor Advisors Inc. Service Officer Services American Express Asset Vice President Management Group Inc. American Express Trust Director and Senior Vice President Company Dudley Barksdale American Express Financial Vice President - Service Vice President - Service Advisors Inc. Development Development Timothy V. Bechtold American Centurion Life 20 Madison Ave. Extension Director, President and Chief Vice President - Assurance Company P.O. Box 5555 Executive Officer Insurance Products Albany, NY 12205-0555 American Enterprise Life Director Insurance Company American Express Financial Vice President - Insurance Advisors Inc. Products American Express Insurance Director, President and Chief Agency of Alabama Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Arizona Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Idaho Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Maryland Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Massachusetts Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Nevada Inc. Executive Officer American Express Insurance Director, President and Chief Agency of New Mexico Inc. Executive Officer American Express Insurance Director and President and Chief Agency of Oklahoma Inc. Executive Officer American Express Insurance Director, President and Chief Agency of Wyoming Inc. Executive Officer American Partners Life Director and Vice President-Insurance Insurance Company Products IDS Life Insurance Company Director and President IDS Life Insurance Company P.O. Box 5144 Director, President and Chief of New York Albany, NY 12205 Executive Officer IDS Life Series Fund, Inc. Director, President and Chief Executive Officer IDS Life Variable Annuity Manager, President and Chief Funds A & B Executive Officer IDS REO 1, LLC President IDS REO 2, LLC President Arthur H. Berman American Enterprise Life Director, Vice President - Finance Senior Vice President and Insurance Company Chief Financial Officer American Express Senior Vice President and Financial Advisors Inc. Chief Financial Officer American Express Director Trust Company American Partners Life Director, Vice President - Finance Insurance Company IDS Life Insurance Director, Executive Vice Company President - Finance Walter S. Berman Advisory Capital Partners LLC Treasurer Director, Senior Vice President and Treasurer Advisory Capital Strategies Treasurer Group Inc. Advisory Convertible Arbitrage LLC Treasurer Advisory Quantitative Treasurer Equity (General Partner) LLC Advisory Select LLC Treasurer American Centurion Life Vice President and Treasurer Assurance Company American Enterprise Life Vice President and Treasurer Insurance Company American Enterprise REO 1, LLC Treasurer American Express Asset Management Treasurer Group, Inc. American Express Asset Management Treasurer International, Inc. American Express Director and Treasurer Certificate Company American Express Client Treasurer Service Corporation American Express Corporation Treasurer American Express Financial Director, Senior Vice President Advisors Inc. American Express Financial Vice President and Treasurer Advisors Japan Inc. American Express Insurance Treasurer Agency of Alabama Inc. American Express Insurance Treasurer Agency of Arizona Inc. American Express Insurance Treasurer Agency of Idaho Inc. American Express Insurance Treasurer Agency of Maryland Inc. American Express Insurance Treasurer Agency of Massachusetts Inc. American Express Insurance Treasurer Agency of Nevada Inc. American Express Insurance Treasurer Agency of New Mexico Inc. American Express Insurance Treasurer Agency of Oklahoma Inc. American Express Insurance Treasurer Agency of Wyoming Inc. American Express Property Treasurer Casualty Insurance Agency American Express Property Treasurer Casualty Insurance Agency of Kentucky, Inc. American Express Property Treasurer Casualty Insurance Agency of Maryland, Inc. American Express Property Treasurer Casualty Insurance Agency of Pennsylvania, Inc. American Partners Life Vice President and Treasurer Insurance Company AMEX Assurance Company Treasurer Boston Equity General Treasurer Partner LLC IDS Cable Corporation Treasurer IDS Cable II Corporation Treasurer IDS Capital Holdings Inc. Treasurer IDS Life Insurance Company Vice President and Treasurer IDS Life Insurance Company Vice President and Treasurer of New York IDS Management Corporation Treasurer IDS Partnership Services Treasurer Corporation IDS Property Casualty Treasurer Insurance Company IDS Realty Corporation Treasurer IDS REO 1, LLC Treasurer IDS REO 2, LLC Treasurer Investors Syndicate Vice President and Treasurer Development Corp. Kenwood Capital Treasurer Management LLC Threadneedle Asset Management Director Holdings LTD Robert C. Bloomer American Express Vice President - Technologies III Vice President - Financial Advisors Inc. Technologies III American Express Financial Vice President - Technologies III Corporation Leslie H. Bodell American Express Vice President - Technologies I Vice President - Financial Advisors Inc. Technologies I Kenneth I. Chenault Director Kenneth J. Ciak AMEX Assurance Company Director, President and Chief Vice President and General Executive Officer Manager - IDS Property Casualty American Express Financial Vice President and General Advisors Inc. Manager - IDS Property Casualty American Express Property Director, President and Chief Casualty Insurance Agency Executive Officer of Kentucky Inc. American Express Property Director, President and Chief Casualty Insurance Agency Executive Officer of Maryland Inc. American Express Property Director, President and Chief Casualty Insurance Agency Executive Officer of Pennsylvania Inc. IDS Property Casualty 1 WEG Blvd. Director, President and Chief Insurance Company DePere, WI 54115 Executive Officer Paul A. Connolly American Express Financial Vice President - RL HR/US Retail Vice President - Retail Advisors Inc. Distribution Services James M. Cracchiolo American Express Financial Director, Chairman of the Board, Director, Chairman of Advisors Inc. President and Chief Executive Officer the Board, President and Chief Executive Officer Threadneedle Asset Chairman of the Board Management Holdings LTD Colleen Curran American Express Financial Vice President and Vice President and Assistant Advisors Inc. Assistant General Counsel General Counsel Luz Maria Davis American Express Financial Vice President - Employee Vice President - Employee Advisors Inc. Communications Communications Paul Jame Dolan American Express Financial Vice President - CAO Product Sales Vice President - Advisors Inc. CAO Product Sales William V. Elliott American Express Financial Vice President - Financial Vice President - Financial Advisors Inc. Planning and Advice Planning and Advice Benjamin R. Field American Express Vice President - Finance Education & Vice President - Finance Financial Advisors Inc. Planning Services Education & Planning Services Gordon M. Fines American Express Asset Senior Vice President - Vice President - Senior Management Group Inc. Growth Spectrum Portfolio Manager I American Express Financial Vice President - Senior Advisors Inc. Portfolio Manager I Giunero Floro American Express Vice President - Creative Services Vice President - Creative Financial Advisors Inc. Services Terrence J. Flynn American Express Vice President - Brokerage Clearing Vice President - Brokerage Financial Advisors Inc. Operations Clearing Operations American Enterprise Senior Vice President Investment Services Inc. American Express Client Director and Senior Vice President - Service Corporation Clearing Operations Jeffery P. Fox American Express Vice President - Investment Accounting Vice President - Financial Advisors Inc. Investment Accounting IDS Life Series, Inc. Chief Financial Officer IDS Life Variable Annuity Chief Financial Officer Funds A & B Barbara H. Fraser American Express Financial Executive Vice President - AEFA Products Executive Vice Advisors Inc. and Corporate Marketing President - Chief Marketing Officer Peter A. Gallus Advisory Capital Strategies Director Vice President - Investment Group Inc. Administration American Express Financial Vice President - CAO - AEFA Advisors Inc. Investment Management American Express Asset Assistant Treasurer Management Group, Inc. American Express Asset Assistant Treasurer Management International, Inc. Kenwood Capital Management LLC Manager IDS Capital Holdings Inc. Vice President and Controller Steve Guida American Enterprise Vice President Vice President - New Investment Services Inc. Business and Service American Express Client Director Service Corporation American Express Financial Vice President - New Advisors Inc. Business and Service Teresa A. Hanratty American Express Financial Senior Vice Senior Vice President - Advisors Inc. President - Field Management Field Management Lorraine R. Hart AMEX Assurance Company Vice President - Vice President - Fixed Income Investments Investment Administration Officer American Centurion Life 20 Madison Ave. Extension Vice President - Investments Assurance Company P.O. Box 5555 Albany, NY 12205-0555 American Enterprise Life 829 AXP Financial Center Vice President - Investments Insurance Company Minneapolis, MN 55474 American Enterprise 829 AXP Financial Center Vice President REO 1, LLC Minneapolis, MN 55474 American Express Vice President - Investments Certificate Company American Express Director, President and Chief Corporation Executive Officer American Express International Vice President - Investments Deposit Company American Express Financial Vice President - Fixed Income Advisors Inc. Investment Administration Officer American Partners Life 1751 AXP Financial Center Vice President - Investments Insurance Company Minneapolis, MN 55474 IDS Life Insurance Company Vice President - Investments IDS Life Insurance Company P.O. Box 5144 Vice President - Investments of New York Albany, NY 12205 IDS Life Series Fund, Inc. Vice President - Investments IDS Life Variable Annuity Vice President - Investments Funds A and B IDS Property Casualty 1 WEG Blvd. Vice President - Investments Insurance Company DePere, WI 54115 IDS REO 1, LLC Vice President IDS REO 2, LLC Vice President Investors Syndicate Director and Vice Development Corp. President - Investments Janis K. Heaney American Express Financial Vice President - Incentive Vice President - Incentive Advisors Inc. Management Management Brian M. Heath American Express Financial Senior Vice President - U.S. Senior Vice President - Advisors Inc. Advisor Group U.S. Advisor Group Henry Heitman Vice President - Brokerage Product Development Carol A. Holton American Centurion Life 20 Madison Ave. Extension Director, Vice President - Third Vice President - Third Party Assurance Company Albany, NY 12205-0555 Party Distribution Distribution American Enterprise Life 829 AXP Financial Center Director and President Insurance Company Minneapolis, MN 55474 American Enterprise 829 AXP Financial Center President REO 1, LLC Minneapolis, MN 55474 American Express Financial Vice President - Third Advisors Inc. Party Distribution IDS Life Insurance Company 20 Madison Ave. Extension Director and Vice President - of New York P.O. Box 5555 Third Party Distribution Albany, NY 12205-0555 Debra A. Hutchinson American Express Financial Vice President - Technologies I Vice President - Advisors Inc. Technologies I James M. Jensen American Express Financial Vice President - Compensation Vice President - Advice and Advisors Inc. and Licensing Services Retail Distribution Group, Product, Compensation and American Express Insurance Director, Vice President Field Administration Agency of Alabama Inc. American Express Insurance Director, Vice President Agency of Arizona Inc. American Express Insurance Director, Vice President Agency of Idaho Inc. American Express Insurance Director, Vice President Agency of Maryland Inc. American Express Insurance Director, Vice President Agency of Massachusetts Inc. American Express Insurance Director, Vice President Agency of Nevada Inc. American Express Insurance Director, Vice President Agency of New Mexico Inc. American Express Insurance Director, Vice President Agency of Oklahoma Inc. American Express Insurance Director, Vice President Agency of Wyoming Inc. Nancy E. Jones American Express Financial Vice President - Advisor Vice President - Advisor Advisors Inc. Marketing Marketing William A. Jones American Express Vice President - Technologies III Vice President - Financial Advisors Inc. Technologies III John C. Junek American Express Financial Senior Vice President and Senior Vice President Advisors Inc. General Counsel and General Counsel Ora J. Kaine American Express Financial Vice President - Retail Vice President - Retail Advisors Inc. Distribution Services Distribution Services Michelle M. Keeley AMEX Assurance Company Vice President-Investments Senior Vice President - Fixed Income American Centurion Life Vice President-Investments Assurance Company American Enterprise Life Vice President-Investments Insurance Company American Express Director and Senior Vice President - Asset Management Fixed Income Group, Inc. American Express Vice President-Investments Certificate Company American Express Financial Senior Vice President-Fixed Income Advisors Inc. American Partners Life Vice President-Investments Insurance Company IDS Life Insurance Company Vice President-Investments IDS Life Insurance Company Vice President-Investments of New York IDS Life Series Fund Inc. Vice President-Investments IDS Life Variable Annuity Vice President-Investments Funds A and B Claire Kolmodin American Express Financial Vice President - Strategic Vice President - Strategic Advisors Inc. Initiatives Initiatives Christopher J. Kopka Advisory Capital Partners LLC Money Laundering Money Laundering Prevention Officer Prevention Officer Advisory Capital Strategies Money Laundering Group Inc. Prevention Officer Advisory Convertible Arbitrage LLC Money Laundering Prevention Officer Advisory Quantitative Money Laundering Equity (General Partner) LLC Prevention Officer Advisory Select LLC Money Laundering Prevention Officer American Enterprise Money Laundering Investment Services, Inc. Prevention Officer American Enterprise Life Money Laundering Insurance Company Prevention Officer American Express Asset Management Money Laundering Group, Inc. Prevention Officer American Express Asset Management Money Laundering International, Inc. Prevention Officer American Express Money Laundering Certificate Company Prevention Officer American Express Client Money Laundering Service Corporation Prevention Officer American Express Corporation Money Laundering Prevention Officer American Express Financial Money Laundering Advisors Inc. Prevention Officer American Express Financial Money Laundering Advisors Japan Inc. Prevention Officer American Express Insurance Money Laundering Agency of Alabama Inc. Prevention Officer American Express Insurance Money Laundering Agency of Arizona Inc. Prevention Officer American Express Insurance Money Laundering Agency of Idaho Inc. Prevention Officer American Express Insurance Money Laundering Agency of Maryland Inc. Prevention Officer American Express Insurance Money Laundering Agency of Massachusetts Inc. Prevention Officer American Express Insurance Money Laundering Agency of Nevada Inc. Prevention Officer American Express Insurance Money Laundering Agency of New Mexico Inc. Prevention Officer American Express Insurance Money Laundering Agency of Oklahoma Inc. Prevention Officer American Express Insurance Money Laundering Agency of Texas Inc. Prevention Officer American Express Insurance Money Laundering Agency of Wyoming Inc. Prevention Officer American Express Property Money Laundering Casualty Insurance Agency Prevention Officer American Express Property Money Laundering Casualty Insurance Agency Prevention Officer of Kentucky, Inc. American Express Property Money Laundering Casualty Insurance Agency Prevention Officer of Maryland, Inc. American Express Property Money Laundering Casualty Insurance Agency Prevention Officer of Mississippi, Inc. American Express Property Money Laundering Casualty Insurance Agency Prevention Officer of Pennsylvania, Inc. American Express Trust Company Money Laundering Prevention Officer American Partners Life Money Laundering Insurance Company Prevention Officer AMEX Assurance Company Money Laundering Prevention Officer Boston Equity General Money Laundering Partner LLC Prevention Officer IDS Cable Corporation Money Laundering Prevention Officer IDS Cable II Corporation Money Laundering Prevention Officer IDS Capital Holdings Inc. Money Laundering Prevention Officer IDS Insurance Agency of Utah Inc. Money Laundering Prevention Officer IDS Life Insurance Company Money Laundering Prevention Officer IDS Life Series Fund, Inc. Money Laundering Prevention Officer IDS Life Variable Annuity Money Laundering Funds A & B Prevention Officer IDS Management Corporation Money Laundering Prevention Officer IDS Partnership Services Money Laundering Corporation Prevention Officer IDS Property Casualty Money Laundering Insurance Company Prevention Officer IDS Realty Corporation Money Laundering Prevention Officer Investors Syndicate Money Laundering Development Corporation Prevention Officer Lori J. Larson American Express Financial Vice President - Advisor Vice President - Advisor Advisors Inc. Field Force Growth Active & Field Force Growth Active & Retention Retention Daniel E. Laufenberg American Express Financial Vice President and Chief Vice President and Chief Advisors Inc. U.S. Economist U.S. Economist Jane W. Lee American Express Financial Vice President and General Vice President and General Advisors Inc. Manager Platinum Active Manager Platinum Financial Financial Services Services Catherine M. Libbe American Express Vice President - Marketing & Product Vice President - Financial Advisors Inc. Retirement Services Marketing & Product Retirement Services Diane D. Lyngstad American Express Financial Vice President - Comp Vice President - Comp Advisors Inc. and Licensing Services and Licensing Services American Express Client Director, Vice President and Chief Service Corporation Financial Officer Thomas A. Mahowald American Express Financial Vice President - Equity Research Vice President - Equity Advisors Inc. Research Timothy J. Masek American Express Financial Vice President - Fixed Income Research Vice President - Fixed Advisors Inc. Income Research Mark T. McGannon American Express Financial Vice President and Vice President and Advisors Inc. General Manager - Products Sales General Manager - Products Sales Brian J. McGrane American Express Vice President - Lead Financial Vice President - Financial Advisors Inc. Officer Finance Lead Financial Officer Finance Advisory Capital Partners LLC Vice President and Chief Financial Officer Advisory Capital Vice President and Chief Financial Strategies Group Inc. Officer Advisory Convertible Vice President and Chief Financial Arbitrage LLC Officer Advisory Quantitative Equity Vice President and Chief Financial (General Partner) LLC Officer Advisory Select LLC Vice President and Chief Financial Officer American Express Asset Vice President and Chief Financial Management Group Inc. Officer American Express Vice President and Chief Financial Certificate Company Officer Boston Equity General Vice President and Chief Financial Partner LLC Officer Sarah M. McKenzie American Express Financial Vice President - Vice President - Advisors Inc. Managed and Brokerage Products Managed and Brokerage Products Penny J. Meier American Express Vice President - Business Vice President - Business Financial Advisors Inc. Transformation/Six Sigma Transformation/Six Sigma Paula R. Meyer American Express Financial Senior Vice President and General Senior Vice President Advisors Inc. Manager - Mutual Funds and General Manager - Mutual Funds American Express Certificate Director, President Chairman of the Company Board and Chief Executive Officer American Express Director and President International Deposit Company American Express Director Trust Company Investors Syndicate Director, President and Chief Development Corp. Executive Officer Holly Morris American Express Senior Vice President - Senior Vice President - Financial Advisors Inc. Technologies Technologies Rebecca A. Nash American Express Financial Vice President - Vice President - Advisors Inc. Service Operations Service Operations AMEX Assurance Company Vice President - Insurance IDS Property Casualty Vice President - Insurance Company Insurance Roger Natarajan American Enterprise Life Director Vice President - Finance Insurance Company American Express Financial Vice President - Finance Advisors Inc. American Partners Life Director Insurance Company IDS Life Insurance Company Director Francois B. Odouard American Express Financial Vice President - Brokerage Vice President - Advisors Inc. Brokerage Michael J. O'Keefe American Express Financial Vice President - Advisory Vice President - Advisory Advisors Inc. Business Systems Business Systems Paul Pearson Vice President - SPS and External Products Kristi L. Petersen American Express Asset Vice President and Assistant Secretary Vice President - SPS and Management Group Inc. External Products American Express Financial Vice President - One Account Advisors Inc. and Cash IDS Cable Corporation Director, President and Chief Executive Officer IDS Cable II Corporation Director, President and Chief Executive Officer IDS Futures Corporation Director, President and Chief Executive Officer IDS Management Corporation Director, President and Chief Executive Officer IDS Partnership Services Director, President and Chief Executive Corporation Officer IDS Realty Corporation Director, President and Chief Executive Officer Teresa J. Rasmussen American Express Financial Vice President and Vice President and Assistant Advisors Inc. Assistant General Counsel General Counsel American Centurion Life Counsel and Assistant Secretary Assurance Company American Express Corporation Vice President IDS Life Insurance Company Vice President, General Counsel and Assistant Secretary IDS Life Insurance Company 20 Madison Ave. Extension Assistant General Counsel and of New York Albany, NY 12205-0555 Assistant Secretary American Partners Vice President and General Counsel Life Insurance Company Lisa Reitsma Vice President - Finance Emerging Technologies Mark A. Riordan American Express Vice President - Finance Vice President - Finance Financial Advisors Inc. Emerging Technologies Emerging Technologies ReBecca K. Roloff American Express Financial Senior Vice President - GFS Senior Vice President - Advisors Inc. GFS Andrew C. Schell American Express Financial Vice President - Strategy Vice President - Strategy Advisors Inc. and Planning and Planning Gary A. Scott American Express Vice President - Client Acquisition Vice President - Financial Advisors Inc. Marketing and Services Client Acquisition Marketing and Services Jacqueline M. Sinjem American Express Financial Vice President - Plan Sponsor Vice President - Plan Advisors Inc. Services Sponsor Services American Express Trust Vice President Company Peter L. Slattery Advisory Select LLC President and Chief Operating Vice President - Marketing Officer Officer Development American Express Asset Senior Vice President Management Group Inc. IDS Futures Brokerage General Manager and Director Group IDS Futures Corporation Vice President and Treasurer Bridget Sperl American Enterprise Director, President and Chief Senior Vice President - Investment Services Inc. Executive Officer Client Service Organization American Express Client Director, Chairman of the Board; Service Corporation President and Chief Executive Officer American Express Financial Senior Vice President - Advisors Inc. Client Service Organization IDS Life Insurance Company Executive Vice President - Client Service IDS Property Casualty Director Insurance Company Lisa A. Steffes American Express Financial Vice President - Marketing Vice President - Marketing Advisors Inc. Officer Development Officer Development AMEX Assurance Company Director IDS Property Casualty 1 WEG Blvd. Director Insurance Company DePere, WI 54115 David K. Stewart American Centurion Life Vice President and Controller Vice President - Assurance Company AEFA Controller and Treasurer American Enterprise Treasurer Investment Services Inc. American Enterprise Life Vice President, Controller and Insurance Company Treasurer American Express Vice President - AEFA Controller Financial Advisors Inc. and Treasurer American Partners Life Vice President and Controller Insurance Company IDS Life Insurance Vice President and Controller Company IDS Life Insurance Vice President and Controller Company of New York Caroline Stockdale-Boon American Express Senior Vice President - Senior Vice President - Financial Advisors Inc. Human Resources Human Resources Jeffrey J. Stremcha American Express Financial Vice President - Technologies I Vice President - Advisors Inc. Technologies I John T. Sweeney American Express Financial Vice President - Lead Vice President - Lead Advisors Inc. Financial Officer, Products Group Financial Officer - Products Group AMEX Assurance Company Director IDS Cable Corporation Director IDS Cable II Corporation Director IDS Partnership Director Services Corporation IDS Property Casualty Director Insurance Company IDS Realty Corporation Director William F. "Ted" Truscott Advisory Capital Strategies Director Senior Vice President and Group Inc. Chief Investment Officer American Express Asset Director and Chairman of the Board, Management Group Inc. Chief Investment Officer American Express Asset Director Management International Inc. American Express Financial Senior Vice President and Advisors Inc. Chief Investment Officer IDS Capital Holdings Inc. Director and President Kenwood Capital Management LLC Manager Northwinds Marketing Group LLC Manager George F. Tsafaridis American Express Vice President - Quality & Service Vice President - Financial Advisors Inc. Support Quality & Service Support Ramanathan Venkataramana American Express Financial Vice President - Technologies III Vice President - Advisors Inc. Technologies III Peter S. Velardi American Express Senior Vice President - Field Management Senior Vice President - Financial Advisors Inc. Field Management Andrew O. Washburn American Express Vice President - Mutual Fund Marketing Vice President - Financial Advisors Inc. Mutual Fund Marketing Beth E. Weimer American Express Financial Vice President and Chief Vice President and Advisors Inc. Compliance Officer Chief Compliance Officer American Enterprise Chief Compliance Officer Investment Services Inc. American Express Asset Chief Compliance Officer Management Group Inc. American Express Asset Chief Compliance Officer Management International Inc. American Express Client Chief Compliance Officer Service Corporation IDS Life Insurance Company Chief Compliance Officer Jeffery A. Williams American Express Financial Senior Vice President - Senior Vice President - Advisors Inc. Cross-Sell/Strategic Cross-Sell/Strategic Management Management William J. Williams American Express Senior Vice President - Field Management Senior Vice President - Financial Advisors Inc. Field Management Dianne L. Wilson American Express Vice President - Insurance Operations Vice President - Financial Advisors Inc. Insurance Operations Amex Assurance Company Director and Senior Vice President American Express Property Vice President Casualty Insurance Agency of Kentucky Inc. American Express Property Vice President Casualty Insurance Agency of Maryland Inc. American Express Property Vice President Casualty Insurance Agency of Pennsylvania Inc. AMEX Assurance Company Director and Senior Vice President IDS Property Casualty Company Director and Senior Vice President Michael D. Wolf American Express Asset Executive Vice President Vice President and Senior Management Group Inc. Portfolio Manager American Express Financial Vice President and Equity Advisors Inc. Senior Portfolio Manager Michael R. Woodward American Express Financial Senior Vice President - Senior Vice President - Advisors Inc. Field Management Field Management American Centurion Life 20 Madison Ave. Extension Director Assurance Company Albany, NY 12205-0555 IDS Life Insurance Company P.O. Box 5144 Director of New York Albany, NY 12205 * Unless otherwise noted, address is 70100 AXP Financial Center, Minneapolis, MN 55474.
Item 26. Principal Underwriters. (a) American Express Financial Advisors acts as principal underwriter for the following investment companies: AXP California Tax-Exempt Trust; AXP Dimensions Series, Inc.; AXP Discovery Series, Inc.; AXP Equity Series, Inc.; AXP Fixed Income Series, Inc.; AXP Global Series, Inc.; AXP Government Income Series, Inc.; AXP Growth Series, Inc.; AXP High Yield Income Series, Inc.; AXP High Yield Tax-Exempt Series, Inc.; AXP Income Series, Inc.; AXP International Series, Inc.; AXP Investment Series, Inc.; AXP Managed Series, Inc.; AXP Market Advantage Series, Inc.; AXP Money Market Series, Inc.; AXP Partners Series, Inc.; AXP Partners International Series, Inc.; AXP Progressive Series, Inc.; AXP Sector Series, Inc.; AXP Selected Series, Inc.; AXP Special Tax-Exempt Series Trust; AXP Stock Series, Inc.; AXP Strategy Series, Inc.; AXP Tax-Exempt Series, Inc.; AXP Tax-Free Money Series, Inc.; Growth Trust; Growth and Income Trust; Income Trust; Tax-Free Income Trust; World Trust; American Express Certificate Company. (b) As to each director, officer or partner of the principal underwriter: Name and Principal Position and Offices with Offices with Registrant Business Address* Underwriter Gumer C. Alvero Vice President - General None Manager Annuities Ward D. Armstrong Senior Vice President - None Retirement Services and Asset Management Group John M. Baker Vice President - Chief None Client Service Officer Dudley Barksdale Vice President - Service None Development Timothy V. Bechtold Vice President - None Insurance Products Arthur H. Berman Senior Vice President and Chief None Financial Officer Walter S. Berman Director and Senior Vice President None Robert C. Bloomer Vice President - Technologies III None Leslie H. Bodell Vice President - Technologies I None Rob Bohli Group Vice President - None 10375 Richmond Avenue #600 South Texas Houston, TX 77042 Walter K. Booker Group Vice President - None 61 South Paramus Road New Jersey Mack-Cali Office Center IV, 3rd Floor Paramus, NJ 07652 Bruce J. Bordelon Group Vice President - None 1333 N. California Blvd., Northern California Suite 200 Walnut Creek, CA 94596 Randy L. Boser Vice President - Mutual Fund None Business Development Kenneth J. Ciak Vice President and None IDS Property Casualty General Manager - IDS 1400 Lombardi Avenue Property Casualty Green Bay, WI 54304 Martin T. Cole Group Vice President - Southwest None Paul A. Connolly Vice President - RL HR/US Retail None James M. Cracchiolo Director, Chairman of the Board None and Chief Executive Officer Colleen Curran Vice President and None Assistant General Counsel Luz Maria Davis Vice President - Employee None Communications Arthur E. DeLorenzo Group Vice President - None 4 Atrium Drive, #100 Upstate New York/Vermont Albany, NY 12205 Scott M. DiGiammarino Group Vice President - None Suite 500, 8045 Leesburg Washington D.C./Baltimore Pike Vienna, VA 22182 Paul James Dolan Vice President - CAO Product Sales Kenneth Dykman Group Vice President - None 6000 28th Street South East Greater Michigan Suite 200 Grand Rapids, MI 49546 William V. Elliot Vice President - Financial None Planning and Advice Benjamin R. Field Vice President - Finanace None Education and Planning Services Gordon M. Fines Vice President - Senior None Portfolio Manager I Giunero Floro Vice President - Creative None Services Terrence J. Flynn Vice President - Brokerage None Clearing Operations Jeffrey P. Fox Vice President - Investment Treasurer Accounting Barbara H. Fraser Executive Vice President - None AEFA Products and Corporate Marketing Peter A. Gallus Vice President - CAO - AEFA None Investment Management Gary W. Gassmann Group Vice President - None 2677 Central Park Boulevard Detroit Metro Suite 350 Southfield, MN 48076 John C. Greiber Group Vice President - None Minnesota/Iowa Steven Guida Vice President - None New Business and Service Teresa A. Hanratty Senior Vice President - None Suites 6&7 Field Management 169 South River Road Bedford, NH 03110 Lorraine R. Hart Vice President - Fixed Income None Investments Administration Officer Janis K. Heaney Vice President - None Incentive Management Brian M. Heath Senior Vice President - None Suite 150 Advisor Group 801 E. Campbell Road Richardson, TX 75081 Jon E. Hjelm Group Vice President - None 655 Metro Place South Ohio Valley Suite 570 Dublin, OH 43017 David X. Hockenberry Group Vice President - None 830 Crescent Centre Drive Mid South Suite 490 Franklin, TN 37067-7217 Carol A. Holton Vice President - Third None Party Distribution Debra A. Hutchinson Vice President - Technologies I None Diana R. Iannarone Group Vice President - None 3030 N.W. Expressway Great Plains Suite 900 Oklahoma City, OK 73112 Theodore M. Jenkin Group Vice President - None 6000 Freedom Square Drive Steel Cities Suite 300 Cleveland, OH 44131 James M. Jensen Vice President - None Compensation and Licensing Services Jody M. Johnson Group Vice President - None Twin Cities Metro Paul R. Johnston Secretary Nancy Jones Vice President - Advisor None Marketing William A. Jones Vice President - Technologies III None John C. Junek Senior Vice President and None General Counsel Ora J. Kaine Vice President - None Retail Distribution Services Michelle M. Keeley Senior Vice President - None Fixed Income Raymond G. Kelly Group Vice President - None Suite 250 Northern Texas 801 East Campbell Road Richardson, TX 75081 Claire Kolmodin Vice President - Strategic None Initiatives Christopher J. Kopka Money Laundering Prevention Non Officer Mitre Kutanovski Group Vice President - None 125 South Wacker Drive Chicago Metro Suite 1550 Chicago, IL 60606 Lori J. Larson Vice President - Advisor None Field Force Growth and Retention Daniel E. Laufenberg Vice President and Chief None U.S. Economist Jane W. Lee Vice President - General None Manager Platinum Financial Services Catherine M. Libbe Vice President - Marketing None & Product Services Diane D. Lyngstad Vice President - Comp and None Licensing Services Thomas A. Mahowald Vice President - Equity Research None Timothy J. Masek Vice President - None Fixed Income Research Mark T. McGannon Vice President and General None Manager - Products Sales Brian J. McGrane Vice President - LFO Finance None Dean O. McGill Group Vice President - None 11835 W. Olympic Blvd Los Angeles Metro Suite 900 East Los Angeles, CA 90064 Sarah M. McKenzie Vice President - Managed and None Brokerage Products Penny Meier Vice President - Business None Transformation/Six Sigma Paula R. Meyer Senior Vice President and President General Manager - Mutual Funds Holly Morris Senior Vice President - None Technologies Rebecca Nash Vice President - Service Non Operations Roger Natarajan Vice President - Finance None Thomas V. Nicolosi Group Vice President - None Suite 220 New York Metro Area 500 Mamaroneck Ave. Harrison, NY 10528 Patrick H. O'Connell Group Vice President - None Commerce Center One Southern New England 333 East River Hartford, CT 06108-4200 Francois B. Odouard Vice President - Brokerage None Michael J. O'Keefe Vice President - None Advisory Business Systems Kristi L. Petersen Vice President - ONE Account None and Cash John G. Poole Group Vice President - None 14755 North Outer Forty Road Gateway/Springfield Suite 500 Chesterfield, MO 63017 Larry M. Post Group Vice President - None 2 Constitution Plaza New England Charlestown, MA 02129 Teresa J. Rasmussen Vice President and None Assistant General Counsel Michael J. Rearden Group Vice President - None Southern Florida Ralph D. Richardson III Group Vice President - None Suite 800 Carolinas Arboretum Plaza One 9442 Capital of Texas Hyw. N. Austin, TX 78759 ReBecca K. Roloff Senior Vice President - None GFS Maximillian G. Roth Group Vice President - None 1400 Lombardi Avenue Wisconsin/Upper Michigan Suite 202 Green Bay, WI 54304 Russell L. Scalfano Group Vice President - None Suite 201 Illinois/Indiana/Kentucky 101 Plaza East Blvd. Evansville, IN 47715 Andrew C. Schell Vice President - Strategy None and Planning Mark E. Schwarzmann Senior Vice President - None Insurance and Annuities Gary A. Scott Vice President - Client None Acquisition Marketing and Services Jacqueline M. Sinjem Vice President - Plan None Sponsor Services Albert L. Soule Group Vice President - None 6925 Union Park Center Western Frontier Suite 200 Midvale, UT 84047 Bridget Sperl Senior Vice President - None Client Service Organization Paul J. Stanislaw Group Vice President - None Suite 1100 Southern California/Hawaii Two Park Plaza Irvine, CA 92614 Lisa A. Steffes Vice President - None Marketing Officer Development David K. Stewart Vice President - AEFA Controller None and Treasurer Caroline Stockdale-Boon Senior Vice President - None Human Resources Jeffrey J. Stremcha Vice President - Technologies I None John T. Sweeney Vice President - Lead Financial None Officer, Products Group Joe Sweeney Senior Vice President, None General Manager - U.S. Brokerage and Membership Banking Craig P. Taucher Group Vice President - None Suite 150 Georgia/North Florida 4190 Belfort Rd. Jackonville, FL 32216 Neil G. Taylor Group Vice President - None 188 106th Avenue NE Pacific Northwest Suite 640 Bellevue, WA 98004-5902 William F. "Ted" Truscott Senior Vice President - Board member and Chief Investment Officer Vice President George F. Tsafaridis Vice President - Quality & None Service Support Janet M. Vandenbark Group Vice President - None 3951 Westerre Parkway, Suite 250 Virginia Richmond, VA 23233 Ramanathan Venkataramanan Vice President - Technologies III None Peter S. Velardi Senior Vice President - None Field Management Andrew O. Washburn Vice President - None Mutual Fund Marketing Donald F. Weaver Group Vice President - None 3500 Market Street, Eastern Pennsylvania/ Suite 200 Delaware Camp Hill, PA 17011 Beth E. Weimer Vice President and None Chief Compliance Officer Phil Wentzel Vice President - Finance None Jeffrey A. Williams Senior Vice President - None Cross-Sell/Strategic Management William J. Williams Senior Vice President - None Field Management Dianne L. Wilson Vice President - Insurance None Operations Gayle W. Winfree Group Vice President - None Delta States Michael D. Wolf Vice President - Equity Senior None Portfolio Manager Abraham L. Wons Vice President - Investments Risk None Management Michael R. Woodward Senior Vice President - None 32 Ellicott St Field Management Suite 100 Batavia, NY 14020
* Business address is: 70100 AXP Financial Center, Minneapolis, MN 55474 unless otherwise noted. Item 26 (c). Not Applicable. Item 27. Location of Accounts and Records American Express Financial Corporation 70100 AXP Financial Center Minneapolis, MN 55474 Item 28. Management Services Not Applicable. Item 29. Undertakings Not Applicable. SIGNATURES Pursuant to the requirements of the Securities Act and the Investment Company Act, the Registrant, AXP Money Market Series, Inc., certifies that it meets all of the requirements for effectiveness of this Amendment to its Registration Statement under Rule 485(b) under the Securities Act and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Minneapolis, and the State of Minnesota on the 27th day of September, 2004. AXP MONEY MARKET SERIES, INC. By /s/ Paula R. Meyer ---------------------- Paula R. Meyer, President By /s/ Jeffrey P. Fox ---------------------- Jeffrey P. Fox, Treasurer Pursuant to the requirements of the Securities Act, this Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated on the 27th day of September, 2004. Signature Capacity /s/ Arne H. Carlson* Chair of the Board - --------------------- Arne H. Carlson /s/ Philip J. Carroll, Jr.* Director - --------------------------- Philip J. Carroll, Jr. /s/ Livio D. DeSimone* Director - ----------------------- Livio D. DeSimone /s/ Anne P. Jones* Director - ------------------- Anne P. Jones /s/ Stephen R. Lewis, Jr.* Director - ----------------------------- Stephen R. Lewis, Jr. /s/ Alan K. Simpson* Director - --------------------- Alan K. Simpson /s/ Alison Taunton-Rigby* Director - --------------------------- Alison Taunton-Rigby /s/ William F. Truscott* Director - ------------------------- William F. Truscott * Signed pursuant to Directors' Power of Attorney, dated July 7, 2004, filed electronically herewith as Exhibit (q)(1), by: /s/ Leslie L. Ogg - --------------------- Leslie L. Ogg CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 58 TO REGISTRATION STATEMENT NO. 2-54516 This Post-Effective Amendment contains the following papers and documents: The facing sheet. Part A The prospectus for AXP Cash Management Fund. Class I prospectus supplement for AXP Cash Management Fund. Part B. Statement of Additional Information for AXP Cash Management Fund. Financial Statements. Part C. Other information. The signatures. EX-99 2 exindex.txt EXHIBIT INDEX EXHIBIT INDEX (i) Opinion and consent of counsel as to the legality of the securities being registered. (j) Consent of Independent Registered Public Accounting Firm. (q)(1) Directors' Power of Attorney to sign Amendments to this Registration Statement, dated July 7, 2004. EX-99.I OPIN COUNSEL 3 i-opinion.txt OPINION AND CONSENT OF COUNSEL September 27, 2004 AXP Money Market Series, Inc. 50606 AXP Financial Center Minneapolis, Minnesota 55474 Gentlemen: I have examined the Articles of Incorporation and the By-Laws of AXP Money Market Series, Inc. (the Company) and all necessary certificates, permits, minute books, documents and records of the Company, and the applicable statutes of the State of Minnesota, and it is my opinion that the shares sold in accordance with applicable federal and state securities laws will be legally issued, fully paid, and nonassessable. This opinion may be used in connection with the Post-Effective Amendment. Sincerely, /s/ Leslie L. Ogg - ----------------- Leslie L. Ogg Attorney at Law 901 S. Marquette Ave., Suite 2810 Minneapolis, Minnesota 55402-3268 EX-99.J AUD CONSENT 4 j-audcon.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Consent of Independent Registered Public Accounting Firm - ------------------------------------------------------------------ The board and shareholders AXP Money Market Series, Inc.: AXP Cash Management Fund We consent to the use of our report incorporated herein by reference and to the references to our Firm under the headings "Financial Highlights" in Part A and "Independent Registered Public Accounting Firm" in Part B of the Registration Statement. /s/ KPMG LLP - ------------ KPMG LLP Minneapolis, Minnesota September 27, 2004 EX-99.Q1 PWR OF ATTY 5 q1-poa.txt DIRECTORS' POWER OF ATTORNEY DIRECTORS/TRUSTEES POWER OF ATTORNEY City of Minneapolis State of Minnesota Each of the undersigned, as directors and trustees of the below listed open-end, diversified investment companies that previously have filed registration statements and amendments thereto pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940 with the Securities and Exchange Commission:
1933 Act 1940 Act Reg. Number Reg. Number AXP Fixed Income Series, Inc. 2-51586 811-2503 AXP California Tax-Exempt Trust 33-5103 811-4646 AXP Discovery Series, Inc. 2-72174 811-3178 AXP Equity Series, Inc. 2-13188 811-772 AXP High Yield Income Series, Inc. 2-86637 811-3848 AXP Government Income Series, Inc. 2-96512 811-4260 AXP Global Series, Inc. 33-25824 811-5696 AXP Growth Series, Inc. 2-38355 811-2111 AXP High Yield Tax-Exempt Series, Inc. 2-63552 811-2901 AXP International Series, Inc. 2-92309 811-4075 AXP Investment Series, Inc. 2-11328 811-54 AXP Managed Series, Inc. 2-93801 811-4133 AXP Market Advantage Series, Inc. 33-30770 811-5897 AXP Money Market Series, Inc. 2-54516 811-2591 AXP Dimensions Series, Inc. 2-28529 811-1629 AXP Selected Series, Inc. 2-93745 811-4132 AXP Progressive Series, Inc. 2-30059 811-1714 AXP Income Series, Inc. 2-10700 811-499 AXP Special Tax-Exempt Series Trust 33-5102 811-4647 AXP Stock Series, Inc. 2-11358 811-498 AXP Strategy Series, Inc. 2-89288 811-3956 AXP Tax-Exempt Series, Inc. 2-57328 811-2686 AXP Tax-Free Money Series, Inc. 2-66868 811-3003 AXP Sector Series, Inc. 33-20872 811-5522 AXP Partners Series, Inc. 333-57852 811-10321 AXP Partners International Series, Inc. 333-64010 811-10427 AXP Variable Portfolio-Partners Series, Inc 333-61346 811-10383 AXP Variable Portfolio-Investment Series, Inc. 2-73115 811-3218 AXP Variable Portfolio-Managed Series, Inc. 2-96367 811-4252 AXP Variable Portfolio-Money Market Series, Inc. 2-72584 811-3190 AXP Variable Portfolio-Income Series, Inc. 2-73113 811-3219 AXP Variable Portfolio-Select Series, Inc. 333-113780 811-21534
hereby constitutes and appoints Arne H. Carlson, any other member of the Boards who is not an interested person of the investment manager, and Leslie L. Ogg or any one of these persons individually as her or his attorney-in-fact and agent to file and sign for her or him in her or his name, place and stead any and all further amendments to said registration statements with all exhibits and other documents thereto pursuant to said Acts and any rules and regulations thereunder and grants them the full power and authority to do and perform each and every act required and necessary to be done in connection therewith. Dated the 7th day of July, 2004. /s/ Arne H. Carlson /s/ Stephen R. Lewis, Jr. - ---------------------------- ---------------------------- Arne H. Carlson Stephen R. Lewis, Jr. /s/ Philip J. Carroll, Jr. /s/ Alan K. Simpson - ---------------------------- ---------------------------- Philip J. Carroll, Jr. Alan K. Simpson /s/ Livio D. DeSimone /s/ Alison Taunton-Rigby - ---------------------------- ---------------------------- Livio D. DeSimone Alison Taunton-Rigby /s/ Anne P. Jones /s/ William F. Truscott - ---------------------------- ---------------------------- Anne P. Jones William F. Truscott -----END PRIVACY-ENHANCED MESSAGE-----