-----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, Dvo2VewnhkzX5iv+EVEpD7CeoRqhoIC2dIu250WZdlVLbhDbeKA992TcGqCC98bW Hf90PuAzlVhm+0Y3o4BHfQ== 0000820027-05-000857.txt : 20051003 0000820027-05-000857.hdr.sgml : 20051003 20051003091854 ACCESSION NUMBER: 0000820027-05-000857 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050731 FILED AS OF DATE: 20051003 DATE AS OF CHANGE: 20051003 EFFECTIVENESS DATE: 20051003 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: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02591 FILM NUMBER: 051115776 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 N-CSR 1 moneymkt-ncsr.txt AXP MONEY MARKET SERIES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-2591 ------------ AXP MONEY MARKET SERIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Leslie L. Ogg - 901 S. Marquette Avenue, Suite 2810, Minneapolis, MN 55402-3268 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (612) 330-9283 ----------------- Date of fiscal year end: 7/31 -------------- Date of reporting period: 7/31 -------------- AXP(R) Cash Management Fund Annual Report for the Period Ended July 31, 2005 AXP Cash Management Fund seeks to provide shareholders with maximum current income consistent with liquidity and stability of principal. (This annual report is intended only for the information of shareholders or those who have received the offering prospectus of the Fund, which contains information about the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money.) Table of Contents Fund Snapshot 3 Performance Summary 4 Questions & Answers with Portfolio Management 5 Investments in Securities 8 Financial Statements 11 Notes to Financial Statements 14 Report of Independent Registered Public Accounting Firm 21 Federal Income Tax Information 22 Fund Expenses Example 25 Board Members and Officers 27 Approval of Investment Management Services Agreement 30 Proxy Voting 31 CORPORATE REORGANIZATION On Feb. 1, 2005, American Express Company (American Express) announced plans to pursue a spin off of Ameriprise Financial, Inc. (Ameriprise Financial) (formerly American Express Financial Corporation) to American Express shareholders. The separation from American Express is expected to be completed on Sept. 30, 2005. After the separation from American Express, Ameriprise Financial will no longer be affiliated with American Express. Ameriprise Financial provides administrative services to the Fund and, through Sept. 30, 2005, investment management services to the Fund. Effective Oct. 1, 2005, RiverSource Investments, LLC, a wholly owned subsidiary of Ameriprise Financial, will provide investment management services to the Fund. In addition, Ameriprise Financial is the parent company of the Fund's distributor, Ameriprise Financial Services, Inc. (formerly American Express Financial Advisors Inc.); the Fund's transfer agent, RiverSource Service Corporation (formerly American Express Client Service Corporation); and the Fund's custodian, Ameriprise Trust Company (formerly American Express Trust Company). Effective Oct. 1, 2005, the Fund will change its name such that it no longer bears the American Express brand and instead will bear the RiverSource(SM) brand. Information regarding the new name of the Fund and other changes will be separately communicated to shareholders. - -------------------------------------------------------------------------------- 2 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Fund Snapshot AT JULY 31, 2005 FUND OBJECTIVE For investors seeking maximum current income consistent with liquidity and stability of principal. Inception dates by class A: 10/6/75 B: 3/20/95 C: 6/26/00 I: 3/4/04 Y: 3/20/95 Ticker symbols by class A: IDSXX B: ACBXX C: -- I: -- Y: IDYXX Total net assets $3.337 billion Number of holdings 129 Weighted average maturity* 40 days * Weighted average maturity measures the amount of time remaining before the expected average principal repayment. STYLE MATRIX Shading within the style matrix indicates areas in which the Fund generally invests. DURATION SHORT INT. LONG X HIGH MEDIUM QUALITY LOW SECTOR COMPOSITION Percentage of portfolio assets Commercial Paper 94.6% Certificates of Deposit 5.4% An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds. Fund holdings are subject to change. - ------------------------------------------------------------------------------- 3 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Performance Summary FUND PERFORMANCE For the year ended July 31, 2005 +1.63% +1.63% = AXP Cash Management Fund Class A The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by calling (800) 862-7919 or visiting www.riversource.com/investments. The Fund is neither insured nor guaranteed by the FDIC (Federal Deposit Insurance Corporation) or any other government agency. Although the Fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the Fund. Yields will fluctuate. The seven-day current yield more closely reflects the current earnings of the Fund than the total return. The performance of other classes may vary from that shown because of differences in expenses.
AVERAGE ANNUAL TOTAL RETURNS Class A Class B Class C Class I Class Y (Inception dates) (10/6/75) (3/20/95) (6/26/00) (3/4/04) (3/20/95) After After NAV(1) NAV(2) CDSC(3) NAV(2) CDSC(4) NAV(1) NAV(1) at July 31, 2005 1 year +1.63% +0.98% -4.02% +0.98% -0.02% +2.04% +1.76% 3 years +0.92% +0.41% -0.93% +0.41% +0.41% N/A +1.03% 5 years +1.98% +1.37% +0.99% +1.40% +1.40% N/A +2.06% 10 years +3.56% +2.87% +2.87% N/A N/A N/A +3.60% Since inception +6.23% +2.96% +2.96% +1.50% +1.50% +1.66% +3.70% at June 30, 2005 1 year +1.46% +0.83% -4.17% +0.83% -0.17% +1.86% +1.59% 3 years +0.89% +0.38% -0.96% +0.38% +0.38% N/A +0.99% 5 years +2.05% +1.43% +1.05% +1.47% +1.47% N/A +2.12% 10 years +3.59% +2.89% +2.89% N/A N/A N/A +3.63% Since inception +6.25% +2.97% +2.97% +1.49% +1.49% +1.58% +3.71%
(1) Sales charge is not applicable to these shares. Class I shares available to eligible investors only, currently limited to AXP Portfolio Builder Funds, six affiliated funds-of-funds. Class Y shares available to institutional investors only. (2) Excluding sales charges. (3) Returns at maximum contingent deferred sales charge (CDSC). CDSC applies as follows: first year 5%; second and third year 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. (4) 1% CDSC applies to redemptions made within the first year of purchase. - -------------------------------------------------------------------------------- 4 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Questions & Answers WITH PORTFOLIO MANAGEMENT Below is the discussion of AXP Cash Management Fund's results and positioning for the fiscal year ended July 31, 2005. Q: How did AXP Cash Management Fund perform for the 12 months ended July 31, 2005? A: AXP Cash Management Fund's Class A shares returned 1.63% for the fiscal year. The Fund's annualized simple yield was 2.81% and the annualized compound yield was 2.85% for the seven-day period ended July 31, 2005. The Fund serves as a conservative, shorter-term investment choice for individuals seeking current income. Q: What factors significantly affected the Fund's performance? A: Market interpretation of economic data and reaction to the Federal Reserve Board (the Fed) statements shifted back and forth several times over the annual period. At times, it was expected that the Fed would continue to raise interest rates at a measured pace. At other times, the market anticipated a pause in the Fed's tightening cycle. Toward the end of the period, the market tended to interpret every microeconomic hiccup as macro evidence that the Fed was almost done raising rates. As changing expectations of Fed actions were priced into the market, we adjusted the Fund's duration accordingly, while maintaining the duration for the Fund fairly short overall. - -------------------------------------------------------------------------------- 5 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Questions & Answers [BEGIN CALLOUT QUOTE] > As the Fed raised rates, money market yields moved higher. [END CALLOUT QUOTE] The Fed raised the targeted federal funds rate eight times during the fiscal year, each time by a measured 25 basis points (0.25%). At the end of the fiscal year, the targeted federal funds rate stood at 3.25%. As the Fed raised rates, money market yields moved higher. We managed the Fund's portfolio using a somewhat bulleted portfolio strategy, whereby a particular segment of the money market yield curve was emphasized. We focused on securities with a three-to-six month maturity and generally avoided purchasing securities with more than a nine-month maturity. In all, we kept the Fund's weighted average maturity in the 35 to 40 day range. As of July 31, 2005, the Fund's weighted average maturity was 40 days. Q: What changes did you make to the Fund during the period? A: We increased the Fund's allocation to floating rate securities. Since these securities reset to higher or lower interest rates as market rates rise or fall, we believed floating rate securities offered good value in a rising interest rate environment versus fixed products and should enable us to continue to take advantage of anticipated rate increases. We also increased the Fund's exposure to asset-backed commercial paper over the fiscal year, as these securities offered attractive relative value and higher yields than most other money market asset classes. As always, we attempt to maximize the Fund's yield without taking unnecessary risks. We continue to invest in high quality securities. - -------------------------------------------------------------------------------- 6 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Questions & Answers Q: How do you plan to manage the Fund in the coming months? A: We expect the Fed to continue to raise the targeted federal funds rate, and, thus, we believe money market yields will continue to move higher in the months ahead. We intend to maintain positions that should benefit the Fund in this environment. We will continue to closely monitor economic data, Fed policy, and any shifts in the money market yield curve, striving to strategically adjust our portfolio positioning accordingly. DISTRIBUTION SUMMARY The table below details the Fund's income and capital gain distributions for the fiscal years shown. More information on the other classes can be found in the Financial Highlights section of this report's Notes to Financial Statements. Class A Short-term Long-term Fiscal year ended Income capital gains capital gains Total July 31, 2005 $0.02 $-- $-- $0.02 July 31, 2004 -- -- -- -- July 31, 2003 0.01 -- -- 0.01 July 31, 2002 0.02 -- -- 0.02 July 31, 2001 0.05 -- -- 0.05 - -------------------------------------------------------------------------------- 7 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Investments in Securities AXP Cash Management Fund July 31, 2005 (Percentages represent value of investments compared to net assets) Certificates of Deposit (5.4%) Issuer Effective Principal Value(a) yield amount Barclays Bank 06-01-06 3.29% $30,000,000(b) $29,997,493 Citibank 09-16-05 3.42 30,000,000 30,000,000 Credit Suisse First Boston NY 02-14-06 3.24 60,000,000(b) 60,000,000 DEPFA Bank 08-23-05 3.22 13,000,000 13,000,000 10-13-05 3.53 27,000,000 27,000,000 SunTrust Banks 05-12-06 3.20 20,000,000(b) 19,999,227 Total Certificates of Deposit (Cost: $179,996,720) $179,996,720 Commercial Paper (94.3%) Issuer Effective Principal Value(a) yield amount Asset-Backed (59.6%) Alpine Securitization 08-17-05 3.04% $19,000,000(c) $18,969,600 10-03-05 3.48 25,000,000(c) 24,841,563 Amstel Funding 08-22-05 3.07 55,000,000(c) 54,887,555 09-19-05 3.30 30,000,000(c) 29,857,625 10-03-05 3.43 26,300,000(c) 26,135,698 12-21-05 3.74 20,000,000(c) 19,703,200 Amsterdam Funding 08-05-05 2.81 42,300,000 42,276,876 08-17-05 3.15 23,000,000(c) 22,961,820 08-19-05 3.17 25,700,000(c) 25,652,598 Beta Finance 09-29-05 3.38 24,100,000 23,960,341 10-20-05 3.51 34,500,000 34,223,387 10-21-05 3.54 30,000,000 29,754,332 Bryant Park Funding LLC 08-11-05 3.06 22,500,000(c) 22,475,175 09-12-05 3.35 26,000,000(c) 25,891,638 10-17-05 3.51 11,800,000(c) 11,708,593 10-25-05 3.56 22,300,000(c) 22,107,607 Commercial Paper (continued) Issuer Effective Principal Value(a) yield amount Asset-Backed (cont.) CAFCO LLC 08-12-05 3.06% $44,500,000(c) $44,447,080 09-02-05 3.31 21,900,000(c) 21,829,677 CC (USA)/Centari 09-12-05 3.26 32,000,000 31,870,151 09-15-05 3.38 28,900,000 28,770,207 Chariot Funding LLC 08-16-05 3.15 17,400,000(c) 17,372,639 CHARTA LLC 08-17-05 3.12 15,000,000(c) 14,975,325 08-23-05 3.12 20,000,000(c) 19,956,800 09-08-05 3.38 30,000,000(c) 29,885,000 10-05-05 3.41 26,300,000(c) 26,131,622 CIESCO LLC 08-18-05 3.16 17,100,000(c) 17,070,037 Citibank Credit Card Dakota Nts 10-19-05 3.54 22,800,000(c) 22,617,372 CRC Funding LLC 08-09-05 2.88 19,700,000 19,682,708 09-21-05 3.40 21,600,000(c) 21,490,290 Dorado Finance 08-01-05 2.09 24,500,000 24,495,726 09-12-05 3.26 15,000,000 14,939,133 09-19-05 3.27 18,500,000 18,412,988 10-24-05 3.59 13,700,000 13,582,180 Emerald Certificates MBNA MCCT 08-18-05 3.14 37,100,000(c) 37,035,384 08-25-05 3.23 27,500,000(c) 27,433,465 08-30-05 3.26 18,200,000(c) 18,147,341 09-01-05 3.29 28,800,000(c) 28,710,768 09-27-05 3.39 15,400,000(c) 15,313,431 Fairway Finance 08-03-05 2.54 22,000,000 21,992,251 09-13-05 3.26 16,500,000(c) 16,431,525 Falcon Asset Securitization 08-05-05 2.72 26,000,000 25,986,263 09-13-05 3.36 32,900,000(c) 32,759,353 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 8 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Commercial Paper (continued) Issuer Effective Principal Value(a) yield amount Asset-Backed (cont.) FCAR Owner Trust I 08-04-05 2.65% $27,000,000 $26,988,075 09-07-05 3.25 23,000,000 22,917,277 10-17-05 3.48 25,000,000 24,807,986 Galaxy Funding 08-01-05 2.09 30,000,000 29,994,783 08-04-05 2.67 21,300,000 21,290,533 09-13-05 3.26 15,000,000(c) 14,937,750 09-16-05 3.30 25,000,000(c) 24,888,333 10-27-05 3.59 20,300,000(c) 20,119,330 Grampian Funding LLC 09-01-05 3.28 25,000,000(c) 24,922,771 10-20-05 3.52 10,200,000(c) 10,117,986 01-17-06 3.80 9,000,000(c) 8,839,688 Greyhawk Funding LLC 08-02-05 2.35 25,000,000 24,993,479 08-03-05 2.50 26,500,000 26,490,784 08-04-05 2.61 26,500,000 26,488,480 08-16-05 3.12 9,550,000(c) 9,535,118 09-12-05 3.26 14,200,000(c) 14,142,380 Harrier Finance Funding (US) LLC 08-25-05 3.11 25,000,000 24,941,861 K2 (USA) LLC 09-16-05 3.27 16,600,000 16,526,517 09-22-05 3.31 45,600,000 45,370,859 09-26-05 3.37 27,700,000 27,547,819 01-17-06 3.34 30,000,000(b) 29,997,301 Nieuw Amsterdam 08-23-05 3.12 14,167,000(c) 14,136,399 08-24-05 3.23 16,900,000(c) 16,860,684 10-21-05 3.54 22,700,000(c) 22,514,207 10-24-05 3.56 19,000,000(c) 18,837,962 Scaldis Capital LLC 08-15-05 3.00 30,000,000(c) 29,957,600 10-31-05 3.60 22,900,000(c) 22,687,030 Sigma Finance 08-02-05 2.39 21,000,000 20,994,435 08-09-05 2.88 12,500,000 12,489,028 08-30-05 3.28 17,000,000 16,950,521 06-16-06 3.32 85,000,000(b) 84,996,251 Variable Funding Capital 08-29-05 3.27 45,400,000(c) 45,272,501 09-06-05 3.31 21,500,000(c) 21,423,293 09-21-05 3.39 18,700,000(c) 18,605,295 Commercial Paper (continued) Issuer Effective Principal Value(a) yield amount Asset-Backed (cont.) White Pine Finance LLC 08-10-05 2.90% $30,325,000 $30,295,720 08-16-05 3.03 29,000,000 28,956,178 02-10-06 3.31 32,000,000(b) 31,996,581 03-15-06 3.34 23,000,000(b) 22,996,086 03-15-06 3.35 5,000,000(b) 4,999,298 Total 1,987,574,503 Banking (21.8%) ABN Amro North America Finance 10-11-05 3.44 24,000,000 23,831,613 Barclays US Funding 08-08-05 2.87 29,000,000 28,976,909 Credit Suisse First Boston NY 08-15-05 3.04 20,000,000 19,971,289 Danske 08-08-05 2.85 26,700,000 26,678,907 DekaBank Deutsche Girozentrale 08-18-06 3.61 24,000,000(b) 24,000,000 DEPFA Bank 08-10-05 2.90 25,000,000 24,975,861 08-24-05 3.11 18,000,000(c) 17,959,625 06-15-06 3.42 50,000,000(b) 50,000,000 ING (US) Funding LLC 09-07-05 3.30 36,900,000 36,765,284 10-28-05 3.56 19,100,000 18,929,533 Norddeutsche Landesbank Girozentrale 08-09-05 2.88 31,600,000 31,572,262 Nordea Bank 09-06-05 3.31 25,000,000 24,910,806 Northern Rock 10-14-05 3.53 25,000,000(c) 24,812,639 10-26-05 3.57 30,000,000(c) 29,737,467 07-07-06 3.41 59,300,000(b) 59,300,000 08-03-06 3.35 15,000,000(b) 15,000,000 Skandinaviska Enskilda Banken 12-31-40 3.38 20,000,000(b) 20,000,000 12-31-40 3.42 30,000,000(b) 30,000,000 Societe Generale North America 08-05-05 2.72 28,900,000 28,884,730 09-06-05 3.20 24,000,000 23,917,160 Wells Fargo Bank 08-03-06 3.30 20,000,000(b) 20,000,000 Westdeutsche Landesbank Girozentrale 08-02-05 2.37 25,000,000 24,993,406 08-11-05 2.97 31,000,000(c) 30,966,830 08-10-06 3.36 25,000,000(b) 25,000,000 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 9 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Commercial Paper (continued) Issuer Effective Principal Value(a) yield amount Banking (cont.) Westpac Banking 07-11-06 3.40% $59,300,000(b) $59,300,000 Westpac Capital 11-14-05 3.64 8,000,000 7,913,687 Total 728,398,008 Brokerage (7.2%) Bear Stearns Companies 09-08-05 3.34 23,500,000 23,410,961 08-15-06 3.40 25,000,000(b) 25,000,000 08-28-06 3.49 30,000,000(b) 30,000,000 Goldman Sachs Group 05-24-06 3.43 20,000,000(b,c) 20,000,000 05-25-06 3.35 30,000,000(b,c) 30,000,000 08-15-06 3.38 25,000,000(b) 25,000,000 Lehman Brothers Holdings 08-22-06 3.53 42,000,000(b) 42,000,000 Morgan Stanley & Co 08-19-05 3.22 23,400,000 23,356,190 08-26-05 3.14 20,800,000 20,749,300 Total 239,516,451 Commercial Paper (continued) Issuer Effective Principal Value(a) yield amount Life Insurance (2.4%) Irish Life & Permanent 10-11-05 3.51% $18,000,000(c) $17,871,155 10-13-05 3.51 8,300,000(c) 8,238,960 10-27-05 3.58 20,000,000(c) 19,822,494 08-21-06 3.43 35,000,000(b) 34,996,259 Total 80,928,868 Non Captive Consumer (2.5%) SLM 03-15-06 3.39 42,500,000(b) 42,500,000 08-18-06 3.43 40,000,000(b) 40,000,000 Total 82,500,000 Other Financial Institutions (0.7%) HSBC Finance 01-11-10 3.45 25,000,000(b) 25,000,000 Total Commercial Paper (Cost: $3,143,917,830) $3,143,917,830 Total Investments in Securities (Cost: $3,323,914,550)(d) $3,323,914,550 Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements. (b) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on July 31, 2005. The maturity date disclosed represents the final maturity. For purposes of Rule 2a-7, maturity is the later of the next put or interest rate reset date. (c) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the Fund's Board of Directors. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At July 31, 2005, the value of these securities amounted to $1,254,007,278 or 37.6% of net assets. (d) Also represents the cost of securities for federal income tax purposes at July 31, 2005. How to find information about the Fund's portfolio holdings (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at www.riversource.com/investments. - -------------------------------------------------------------------------------- 10 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Financial Statements
Statement of assets and liabilities AXP Cash Management Fund July 31, 2005 Assets Investments in securities, at value (Note 1) (identified cost $3,323,914,550) $3,323,914,550 Cash in bank on demand deposit 10,752,708 Capital shares receivable 362,574 Accrued interest receivable 2,570,754 --------- Total assets 3,337,600,586 ------------- Liabilities Dividends payable to shareholders 255,629 Capital shares payable 24,822 Accrued investment management services fee 29,873 Accrued distribution fee 11,065 Accrued transfer agency fee 7,105 Accrued administrative services fee 2,294 Other accrued expenses 620,309 ------- Total liabilities 951,097 ------- Net assets applicable to outstanding capital stock $3,336,649,489 ============== Represented by Capital stock -- $.01 par value (Note 1) $ 33,366,988 Additional paid-in capital 3,303,274,709 Undistributed net investment income 568 Accumulated net realized gain (loss) 7,224 ----- Total -- representing net assets applicable to outstanding capital stock $3,336,649,489 ============== Net assets applicable to outstanding shares: Class A $3,053,596,963 Class B $ 129,253,208 Class C $ 2,169,631 Class I $ 12,099,006 Class Y $ 139,530,681 Net asset value per share of outstanding capital stock: Class A shares 3,053,389,372 $ 1.00 Class B shares 129,443,572 $ 1.00 Class C shares 2,169,977 $ 1.00 Class I shares 12,099,403 $ 1.00 Class Y shares 139,596,472 $ 1.00 ----------- --------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 11 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Statement of operations AXP Cash Management Fund Year ended July 31, 2005 Investment income Income: Interest $88,531,150 ----------- Expenses (Note 2): Investment management services fee 12,052,160 Distribution fee Class A 3,303,424 Class B 1,141,431 Class C 20,261 Transfer agency fee 10,404,829 Incremental transfer agency fee Class A 925,424 Class B 43,521 Class C 804 Administrative services fees and expenses 1,016,703 Compensation of board members 28,570 Custodian fees 450,360 Printing and postage 808,846 Registration fees 313,032 Audit fees 37,000 Other 122,665 ------- Total expenses 30,669,030 Expenses waived/reimbursed by Ameriprise Financial (formerly AEFC) (Note 2) (17,330) ------- 30,651,700 Earnings credits on cash balances (Note 2) (522,471) -------- Total net expenses 30,129,229 ---------- Investment income (loss) -- net 58,401,921 ---------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on security transactions (Note 3) 7,225 ----- Net increase (decrease) in net assets resulting from operations $58,409,146 ===========
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 12 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Statements of changes in net assets AXP Cash Management Fund Year ended July 31, 2005 2004 Operations and distributions Investment income (loss) -- net $ 58,401,921 $ 15,421,079 Net realized gain (loss) on investments 7,225 568 ----- --- Net increase (decrease) in net assets resulting from operations 58,409,146 15,421,647 ---------- ---------- Distributions to shareholders from: Net investment income Class A (52,351,323) (14,160,516) Class B (1,396,268) (125,090) Class C (24,726) (1,867) Class I (178,347) (6,853) Class Y (4,451,257) (1,129,354) ---------- ---------- Total distributions (58,401,921) (15,423,680) ----------- ----------- Capital share transactions at constant $1 net asset value Proceeds from sales Class A shares (Note 2) 4,887,009,614 5,680,515,833 Class B shares 210,343,122 283,348,104 Class C shares 6,916,934 10,376,462 Class I shares 8,702,782 4,495,636 Class Y shares 423,393,174 155,083,714 Reinvestment of distributions at net asset value Class A shares 51,326,424 14,185,892 Class B shares 1,340,779 124,964 Class C shares 23,481 1,819 Class I shares 177,156 6,715 Class Y shares 4,417,983 1,129,058 Payments for redemptions Class A shares (5,564,771,727) (6,663,553,410) Class B shares (Note 2) (262,086,267) (382,008,022) Class C shares (Note 2) (8,234,019) (11,347,919) Class I shares (636,149) (646,737) Class Y shares (497,190,019) (209,572,966) ------------ ------------ Increase (decrease) in net assets from capital share transactions (739,266,732) (1,117,860,857) ------------ -------------- Total increase (decrease) in net assets (739,259,507) (1,117,862,890) Net assets at beginning of year 4,075,908,996 5,193,771,886 ------------- ------------- Net assets at end of year $ 3,336,649,489 $ 4,075,908,996 =============== =============== Undistributed net investment income $ 568 $ -- --------------- ---------------
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- 13 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Notes to Financial Statements AXP Cash Management Fund 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Fund is a series of AXP Money Market Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) (the 1940 Act) as a diversified, open-end management investment company. AXP Money Market Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the board. The Fund invests primarily in money market instruments. The Fund offers Class A, Class B, Class C and Class Y shares. o Class A shares have no sales charge. o Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. o Class C shares may be subject to a CDSC. o Class Y shares have no sales charge and are offered only to qualifying institutional investors. The Fund offers an additional class of shares, Class I, exclusively to certain institutional investors. Class I shares have no sales charge and are made available through a separate prospectus supplement provided to investors eligible to purchase the shares. At July 31, 2005, Ameriprise Financial, Inc. (Ameriprise Financial) (formerly American Express Financial Corporation) and the AXP Portfolio Builder Funds owned 100% of Class I shares, which represents 0.36% of the Fund's net assets. All classes of shares have identical voting, dividend and liquidation rights. The distribution fee and transfer agency fees (class specific expenses) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: Use of estimates Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. Valuation of securities Pursuant to Rule 2a-7 of the 1940 Act, all securities are valued daily at amortized cost, which approximates market value, in order to maintain a constant net asset value of $1 per share. Guarantees and indemnifications Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund's contracts with its service providers contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims. - -------------------------------------------------------------------------------- 14 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Federal taxes The Fund's policy is to comply with all sections of the Internal Revenue Code that apply to regulated investment companies and to distribute substantially all of its taxable income to shareholders. No provision for income or excise taxes is thus required. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. On the statement of assets and liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been increased by $568 and accumulated net realized gain has been decreased by $568. The tax character of distributions paid for the years indicated is as follows: Year ended July 31, 2005 2004 Class A Distributions paid from: Ordinary income $52,351,323 $14,160,516 Long-term capital gain -- -- Class B Distributions paid from: Ordinary income 1,396,268 125,090 Long-term capital gain -- -- Class C Distributions paid from: Ordinary income 24,726 1,867 Long-term capital gain -- -- Class I* Distributions paid from: Ordinary income 178,347 6,853 Long-term capital gain -- -- Class Y Distributions paid from: Ordinary income 4,451,257 1,129,354 Long-term capital gain -- -- * Inception date is March 4, 2004. At July 31, 2005, the components of distributable earnings on a tax basis are as follows: Undistributed ordinary income $263,421 Accumulated long-term gain (loss) $ -- Unrealized appreciation (depreciation) $ -- Dividends to shareholders Dividends from net investment income, declared daily and payable monthly, are reinvested in additional shares of the Fund at net asset value or payable in cash. Other Security transactions are accounted for on the date securities are purchased or sold. Interest income, including amortization of premium and discount, is recognized daily. - -------------------------------------------------------------------------------- 15 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT 2. EXPENSES AND SALES CHARGES Under an Investment Management Services Agreement, RiverSource Investments, LLC (the Investment Manager) determines which securities will be purchased, held or sold. Prior to Oct. 1, 2005, investment management services were provided by Ameriprise Financial. The management fee is a percentage of the Fund's average daily net assets that declines from 0.36% to 0.25% annually as the Fund's assets increase. Under the current Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's average daily net assets that declines from 0.03% to 0.02% annually as the Fund's assets increase. It is expected that the fee schedule to the agreement will be revised effective Oct. 1, 2005. Under the new agreement, the fee percentage of the Fund's average daily net asset will decline from 0.06% to 0.03% annually as the Fund's assets increase. A minor portion of additional administrative service expenses paid by the Fund are consultants' fees and fund office expenses. Under this agreement, the Fund also pays taxes, audit and certain legal fees, registration fees for shares, compensation of board members, corporate filing fees and any other expenses properly payable by the Fund and approved by the board. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other American Express mutual funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Under a separate Transfer Agency Agreement, RiverSource Service Corporation (formerly American Express Client Service Corporation) (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual fee per shareholder account for this service as follows: o Class A $22.00 o Class B $23.00 o Class C $22.50 o Class Y $20.00 The incremental transfer agency fee is the amount charged to the specific classes for the additional expense above the fee for Class Y. Class I pays a transfer agency fee at an annual rate per shareholder account of $1. This amount is included in the transfer agency fee on the statement of operations. Beginning May 20, 2005, the Transfer Agent implemented an annual closed account fee of $5 per inactive account, charged on a pro rata basis for 12 months from the date the account becomes inactive. These fees were insignificant for the year ended July 31, 2005 and are included in the transfer agency fees on the statement of operations. The Fund has agreements with Ameriprise Financial Services, Inc. (formerly American Express Financial Advisors Inc.) (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual - -------------------------------------------------------------------------------- 16 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT rate up to 0.10% of the Fund's average daily net assets attributable to Class A shares, up to 0.85% for Class B shares and up to 0.75% for Class C shares. At July 31, 2005, the Fund paid an annual rate of 0.75% of the Fund's average daily net assets attributable to Class B shares. Sales charges received by the Distributor for distributing Fund shares were $744,112 for Class B and $4,400 for Class C for the year ended July 31, 2005. Ameriprise Financial and its affiliates may limit the expenses of one or more classes for the purpose of increasing its yield. This expense limitation policy may be revised or terminated at any time without notice. At July 31, 2005, Ameriprise Financial and its affiliates waived certain fees and expenses to 1.44% for Class B and 1.44% for Class C. Of these waived fees and expenses, the distribution (12b-1) fees waived for Class B and Class C were $17,001, and $329, respectively. It is expected that a new agreement to waive certain fees and expenses will be effective on Oct. 1, 2005 until July 31, 2006, such that net expenses will not exceed 0.73% for Class A, 1.38% for Class B, 1.39% for Class C, 0.53% for Class I and 0.60% for Class Y of the Fund's average daily net assets. During the year ended July 31, 2005, the Fund's custodian and transfer agency fees were reduced by $522,471 as a result of earnings credits from overnight cash balances. The Fund also pays custodian fees to Ameriprise Trust Company (formerly American Express Trust Company), an affiliate of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities aggregated $16,090,168,089 and $16,825,937,225, respectively, for the year ended July 31, 2005. Realized gains and losses are determined on an identified cost basis. 4. BANK BORROWINGS The Fund has a revolving credit agreement with a syndicate of banks headed by The Bank of New York, whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The agreement went into effect Sept. 21, 2004. The Fund must maintain asset coverage for borrowings of at least 300%. The agreement, which enables the Fund to participate with other American Express mutual funds, permits borrowings up to $500 million, collectively. Interest is charged to each Fund based on its borrowings at a rate equal to either the higher of the Federal Funds Effective Rate plus 0.50% or the Prime Lending Rate. Borrowings are payable within 60 days after such loan is executed. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.09% per annum. Prior to this agreement, the Fund had a revolving credit agreement that permitted borrowings up to $500 million with Deutsche Bank. The Fund had no borrowings outstanding during the year ended July 31, 2005. - -------------------------------------------------------------------------------- 17 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT 5. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results.
Class A Per share income and capital changes(a) Fiscal period ended July 31, 2005 2004 2003 2002 2001 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Income from investment operations: Net investment income (loss) .02 -- .01 .02 .05 ----- ----- ----- ----- ----- Less distributions: Dividends from net investment income (.02) -- (.01) (.02) (.05) ----- ----- ----- ----- ----- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $3,054 $3,680 $4,649 $5,766 $6,149 Ratio of expenses to average daily net assets(b) .80% .78% .69% .59% .59% Ratio of net investment income (loss) to average daily net assets 1.58% .35% .78% 1.89% 5.18% Total return(c) 1.63% .35% .77% 1.93% 5.35%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of a sales charge.
Class B Per share income and capital changes(a) Fiscal period ended July 31, 2005 2004 2003 2002 2001 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Income from investment operations: Net investment income (loss) .01 -- -- .01 .05 ----- ----- ----- ----- ----- Less distributions: Dividends from net investment income (.01) -- -- (.01) (.05) ----- ----- ----- ----- ----- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $129 $180 $278 $380 $273 Ratio of expenses to average daily net assets(b) 1.44%(c) 1.07%(c) 1.26%(c) 1.34% 1.34% Ratio of net investment income (loss) to average daily net assets .91% .05% .21% 1.13% 4.37% Total return(d) .98% .06% .20% 1.13% 4.57%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class B would have been 1.45%, 1.43% and 1.38% for the years ended July 31, 2005, 2004 and 2003, respectively. (d) Total return does not reflect payment of a sales charge. - -------------------------------------------------------------------------------- 18 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Class C Per share income and capital changes(a) Fiscal period ended July 31, 2005 2004 2003 2002 2001 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Income from investment operations: Net investment income (loss) .01 -- -- .01 .05 ----- ----- ----- ----- ----- Less distributions: Dividends from net investment income (.01) -- -- (.01) (.05) ----- ----- ----- ----- ----- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $2 $3 $4 $4 $1 Ratio of expenses to average daily net assets(b) 1.44%(c) 1.07%(c) 1.27%(c) 1.34% 1.34% Ratio of net investment income (loss) to average daily net assets .91% .06% .21% .99% 3.88% Total return(d) .98% .06% .20% 1.14% 4.68%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class C would have been 1.45%, 1.43% and 1.38% for the years ended July 31, 2005, 2004 and 2003, respectively. (d) Total return does not reflect payment of a sales charge.
Class I Per share income and capital changes(a) Fiscal period ended July 31, 2005 2004(b) Net asset value, beginning of period $1.00 $1.00 ----- ----- Income from investment operations: Net investment income (loss) .02 -- ----- ----- Less distributions: Dividends from net investment income (.02) -- ----- ----- Net asset value, end of period $1.00 $1.00 ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $12 $4 Ratio of expenses to average daily net assets(c) .39% .43%(d) Ratio of net investment income (loss) to average daily net assets 2.21% .77%(d) Total return(e) 2.04% .30%(f)
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Inception date is March 4, 2004. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Adjusted to an annual basis. (e) Total return does not reflect payment of a sales charge. (f) Not annualized. - -------------------------------------------------------------------------------- 19 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Class Y Per share income and capital changes(a) Fiscal period ended July 31, 2005 2004 2003 2002 2001 Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Income from investment operations: Net investment income (loss) .02 -- .01 .02 .05 ----- ----- ----- ----- ----- Less distributions: Dividends from net investment income (.02) -- (.01) (.02) (.05) ----- ----- ----- ----- ----- Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 ----- ----- ----- ----- ----- Ratios/supplemental data Net assets, end of period (in millions) $140 $209 $262 $203 $174 Ratio of expenses to average daily net assets(b) .66% .65% .62% .57% .57% Ratio of net investment income (loss) to average daily net assets 1.55% .47% .82% 1.86% 5.18% Total return(c) 1.76% .48% .85% 1.95% 5.37%
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (c) Total return does not reflect payment of a sales charge. - -------------------------------------------------------------------------------- 20 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Report of Independent Registered Public Accounting Firm THE BOARD AND SHAREHOLDERS AXP MONEY MARKET SERIES, INC. We have audited the accompanying statement of assets and liabilities, including the schedule of investments in securities, of AXP Cash Management Fund (a series of AXP Money Market Series, Inc.) as of July 31, 2005, the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period ended July 31, 2005, and the financial highlights for each of the years in the five-year period ended July 31, 2005. These financial statements and the financial highlights are the responsibility of fund management. Our responsibility is to express an opinion on these financial statements and the financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2005, by correspondence with the custodian or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AXP Cash Management Fund as of July 31, 2005, and the results of its operations, changes in its net assets, and the financial highlights for each of the periods stated in the first paragraph above, in conformity with U.S. generally accepted accounting principles. KPMG LLP Minneapolis, Minnesota September 20, 2005 - -------------------------------------------------------------------------------- 21 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Federal Income Tax Information (UNAUDITED) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. AXP Cash Management Fund Fiscal year ended July 31, 2005 Class A Income distributions -- taxable as dividend income: Qualified Dividend Income for individuals 0.00% Dividends Received Deduction for corporations 0.00% Payable date Per share Aug. 30, 2004 $0.00047 Sept. 29, 2004 0.00069 Oct. 28, 2004 0.00078 Nov. 29, 2004 0.00093 Dec. 30, 2004 0.00120 Jan. 27, 2005 0.00128 Feb. 24, 2005 0.00144 March 30, 2005 0.00180 April 28, 2005 0.00161 May 26, 2005 0.00169 June 29, 2005 0.00220 July 28, 2005 0.00204 Total distributions $0.01613 Class B Income distributions -- taxable as dividend income: Qualified Dividend Income for individuals 0.00% Dividends Received Deduction for corporations 0.00% Payable date Per share Aug. 30, 2004 $0.00004 Sept. 29, 2004 0.00012 Oct. 28, 2004 0.00027 Nov. 29, 2004 0.00040 Dec. 30, 2004 0.00061 Jan. 27, 2005 0.00076 Feb. 24, 2005 0.00093 March 30, 2005 0.00121 April 28, 2005 0.00109 May 26, 2005 0.00119 June 29, 2005 0.00159 July 28, 2005 0.00152 Total distributions $0.00973 - -------------------------------------------------------------------------------- 22 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Class C Income distributions -- taxable as dividend income: Qualified Dividend Income for individuals 0.00% Dividends Received Deduction for corporations 0.00% Payable date Per share Aug. 30, 2004 $0.00004 Sept. 29, 2004 0.00012 Oct. 28, 2004 0.00026 Nov. 29, 2004 0.00041 Dec. 30, 2004 0.00060 Jan. 27, 2005 0.00076 Feb. 24, 2005 0.00093 March 30, 2005 0.00121 April 28, 2005 0.00111 May 26, 2005 0.00119 June 29, 2005 0.00159 July 28, 2005 0.00151 Total distributions $0.00973 Class I Income distributions -- taxable as dividend income: Qualified Dividend Income for individuals 0.00% Dividends Received Deduction for corporations 0.00% Payable date Per share Aug. 30, 2004 $0.00079 Sept. 29, 2004 0.00102 Oct. 28, 2004 0.00108 Nov. 29, 2004 0.00125 Dec. 30, 2004 0.00155 Jan. 27, 2005 0.00160 Feb. 24, 2005 0.00176 March 30, 2005 0.00217 April 28, 2005 0.00194 May 26, 2005 0.00201 June 29, 2005 0.00262 July 28, 2005 0.00239 Total distributions $0.02018 - -------------------------------------------------------------------------------- 23 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Class Y Income distributions -- taxable as dividend income: Qualified Dividend Income for individuals 0.00% Dividends Received Deduction for corporations 0.00% Payable date Per share Aug. 30, 2004 $0.00057 Sept. 29, 2004 0.00081 Oct. 28, 2004 0.00088 Nov. 29, 2004 0.00104 Dec. 30, 2004 0.00131 Jan. 27, 2005 0.00138 Feb. 24, 2005 0.00154 March 30, 2005 0.00191 April 28, 2005 0.00171 May 26, 2005 0.00179 June 29, 2005 0.00235 July 28, 2005 0.00216 Total distributions $0.01745 - -------------------------------------------------------------------------------- 24 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Fund Expenses Example (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads); and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended July 31, 2005. Actual Expenses The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. Hypothetical Example for Comparison Purposes The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 25 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Beginning Ending Expenses account value account value paid during Annualized Feb. 1, 2005 July 31, 2005 the period(a) expense ratio Class A Actual(b) $1,000 $1,010.70 $4.04(C) .82% Hypothetical (5% return before expenses) $1,000 $1,020.50 $4.06(C) .82% Class B Actual(b) $1,000 $1,007.50 $7.29(C) 1.48% Hypothetical (5% return before expenses) $1,000 $1,017.26 $7.32(C) 1.48% Class C Actual(b) $1,000 $1,007.50 $7.29(C) 1.48% Hypothetical (5% return before expenses) $1,000 $1,017.26 $7.32(C) 1.48% Class I Actual(b) $1,000 $1,012.80 $1.92(C) .39% Hypothetical (5% return before expenses) $1,000 $1,022.61 $1.93(C) .39% Class Y Actual(b) $1,000 $1,011.40 $3.40(C) .69% Hypothetical (5% return before expenses) $1,000 $1,021.14 $3.42(C) .69%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 179/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended July 31, 2005: +1.07% for Class A, +0.75% for Class B, +0.75% for Class C, +1.28% for Class I and +1.14% for Class Y. (c) Pending final approval from the Fund's Board of Directors (Board), it is expected that, effective Oct. 1, 2005, the fee schedule under the Administrative Services Agreement between Ameriprise Financial and the Fund will be revised. It is also expected that Ameriprise Financial and its affiliates will contractually agree to waive certain fees and to absorb certain expenses until July 31, 2006, unless sooner terminated at the discretion of the Board. Under this expense cap/fee waiver agreement, net expenses will not exceed 0.73% for Class A; 1.38% for Class B; 1.39% for Class C; 0.53% for Class I and 0.60% for Class Y. If the revised fee schedule under the Administrative Services Agreement and the cap/waiver agreement had been in place for the entire six-month period ended July 31, 2005, the actual expenses paid would have been $3.60 for Class A, $6.79 for Class B, $6.84 for Class C, $2.62 for Class I and $2.96 for Class Y; the hypothetical expenses paid would have been $3.62 for Class A, $6.83 for Class B, $6.88 for Class C, $2.63 for Class I and $2.97 for Class Y. - -------------------------------------------------------------------------------- 26 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Board Members and Officers Shareholders elect a board that oversees the Fund's operations. The board appoints officers who are responsible for day-to-day business decisions based on policies set by the board. The following is a list of the Fund's board members. Each member oversees 14 Master Trust portfolios and 90 American Express mutual funds. Board members serve until the next regular shareholders' meeting or until he or she reaches the mandatory retirement age established by the board. Independent Board Members
Name, address, age Position held Principal occupation Other directorships with Fund and during past five length of years service - --------------------------------------- ----------------- ---------------------- -------------------------------- Arne H. Carlson Board member Chair, Board 901 S. Marquette Ave. since 1999 Services Corporation Minneapolis, MN 55402 (provides Age 70 administrative services to boards). Former Governor of Minnesota - --------------------------------------- ----------------- ---------------------- -------------------------------- Philip J. Carroll, Jr. Board member Retired Chairman and Scottish Power PLC, Vulcan 901 S. Marquette Ave. since 2002 CEO, Fluor Corporation Materials Company, Inc. Minneapolis, MN 55402 (engineering and (construction Age 67 construction) since materials/chemicals) 1998 - --------------------------------------- ----------------- ---------------------- -------------------------------- Livio D. DeSimone* Board member Retired Chair of the Cargill, Incorporated 30 Seventh Street East since 2001 Board and (commodity merchants and Suite 3050 St. Paul, MN Chief Executive processors), General Mills, 55101-4901 Officer, Minnesota Inc. (consumer foods), Vulcan Age 71 Mining and Materials Company (construction Manufacturing (3M) materials/chemicals), Milliken & Company (textiles and chemicals), and Nexia Biotechnologies, Inc. - --------------------------------------- ----------------- ---------------------- -------------------------------- Patricia M. Flynn Board member Trustee Professor of BostonFed Bancorp, Inc. 901 S. Marquette Ave. since 2004 Economics and (holding company) and its Minneapolis, MN 55402 Management, Bentley subsidiary Boston Federal Age 54 College since 2002; Savings Bank former Dean, McCallum Graduate School of Business, Bentley College from 1999 to 2002 - --------------------------------------- ----------------- ---------------------- -------------------------------- Anne P. Jones Board member Attorney and 901 S. Marquette Ave. since 1985 Consultant Minneapolis, MN 55402 Age 70 - --------------------------------------- ----------------- ---------------------- -------------------------------- Stephen R. Lewis, Jr. Board member Retired President Valmont Industries, Inc. 901 S. Marquette Ave. since 2002 and Professor of (manufactures irrigation Minneapolis, MN 55402 Economics, Carleton systems) Age 66 College - --------------------------------------- ----------------- ---------------------- --------------------------------
* Livio D. DeSimone retired as a member of the Board, effective Sept. 8, 2005. - -------------------------------------------------------------------------------- 27 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT
Independent Board Members (continued) Name, address, age Position held Principal occupation Other directorships with Fund and during past five length of service years - -------------------------------------- ------------------ ---------------------- -------------------------------- Catherine James Paglia Board member Director, Enterprise Strategic Distribution, Inc. 901 S. Marquette Ave. since 2004 Asset Management, (transportation, distribution Minneapolis, MN 55402 Inc. (private real and logistics consultants) Age 52 estate and asset management company) since 1999 - -------------------------------------- ------------------ ---------------------- -------------------------------- Alan K. Simpson Board member Former three-term 1201 Sunshine Ave. since 1997 United States Cody, WY 82414 Senator for Wyoming Age 73 - -------------------------------------- ------------------ ---------------------- -------------------------------- Alison Taunton-Rigby Board member Founder and Chief Hybridon, Inc. (biotechnology) 901 S. Marquette Ave. since 2002 Executive Officer, Minneapolis, MN 55402 RiboNovix, Inc. Age 61 since 2004; President, Forester Biotech since 2000; prior to that, President and CEO, Aquila Biopharmaceuticals, Inc. - -------------------------------------- ------------------ ---------------------- -------------------------------- Board Member Affiliated with Ameriprise Financial, Inc. (formerly AEFC)** Name, address, age Position held Principal occupation Other directorships with Fund and during past five length of service years - -------------------------------------- ------------------ ---------------------- -------------------------------- William F. Truscott Board member Senior Vice 53600 Ameriprise Financial Center since 2001, President - Chief Minneapolis, MN 55474 Vice President Investment Officer Age 44 since 2002 of Ameriprise Financial, Inc. and RiverSource Investments, LLC since 2001. Former Chief Investment Officer and Managing Director, Zurich Scudder Investments - -------------------------------------- ------------------ ---------------------- --------------------------------
** Interested person by reason of being an officer, director and/or employee of Ameriprise Financial, Inc. (formerly American Express Financial Corporation) or of RiverSource Investments, LLC, its wholly owned subsidiary. - -------------------------------------------------------------------------------- 28 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT The board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the board. In addition to Mr. Truscott, who is vice president, the Fund's other officers are:
Other Officers Name, address, age Position held Principal occupation Other directorships with Fund and during past five length of service years - -------------------------------------- ------------------ ---------------------- -------------------------------- Jeffrey P. Fox Treasurer Vice President - 105 Ameriprise Financial Center since 2002 Investment Minneapolis, MN 55474 Accounting, Age 50 Ameriprise Financial, Inc., since 2002; Vice President - Finance, American Express Company, 2000-2002; Vice President - Corporate Controller, Ameriprise Financial, Inc., 1996-2000 - -------------------------------------- ------------------ ---------------------- -------------------------------- Paula R. Meyer President Senior Vice President 596 Ameriprise Financial Center since 2002 and General Manager - Minneapolis, MN 55474 Mutual Funds, Age 51 Ameriprise Financial, Inc., since 2002 and Senior Vice President, RiverSource Investments, LLC since 2004; Vice President and Managing Director - American Express Funds, Ameriprise Financial, Inc., 2000-2002; Vice President, Ameriprise Financial, Inc., 1998-2000 - -------------------------------------- ------------------ ---------------------- -------------------------------- Leslie L. Ogg Vice President, President of Board 901 S. Marquette Ave. General Counsel, Services Corporation Minneapolis, MN 55402 and Secretary Age 66 since 1978 - -------------------------------------- ------------------ ---------------------- -------------------------------- Beth E. Weimer Chief Compliance Vice President and 172 Ameriprise Financial Center Officer since Chief Compliance Minneapolis, MN 55474 2004 Officer, Ameriprise Age 52 Financial, Inc., since 2001 and Chief Compliance Officer, RiverSource Investments, LLC since 2005; Vice President and Chief Compliance Officer, Ameriprise Financial Services, Inc. (formerly American Express Financial Advisors), 2001-2005; Partner, Arthur Andersen Regulatory Risk Services, 1998-2001 - -------------------------------------- ------------------ ---------------------- --------------------------------
The SAI has additional information about the Fund's directors and is available, without charge, upon request by calling (800) 862-7919. - -------------------------------------------------------------------------------- 29 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT Approval of Investment Management Services Agreement Ameriprise Financial, Inc. (formerly American Express Financial Corporation or AEFC) (the investment manager) is a wholly-owned subsidiary of American Express Company. Under an Investment Management Services Agreement (the Agreement), the investment manager provides investment advice and other services to the Fund. Throughout the year, the Funds' Board of Directors and the Board's Investment Review Committee monitor these services. Each year the Board determines whether to continue the Agreement by evaluating the quality and level of service received and the costs associated with those services. The investment manager prepares detailed reports for the Board and its Contracts Committee in March and April and provides data prepared by independent organizations to assist the Board in making this determination. The Board gives considerable weight to the work, deliberations and conclusions of the Contracts and Investment Review Committees in determining whether to continue the Agreement. On February 1, 2005, American Express Company announced its intention to pursue a spin-off of AEFC by distributing shares of the common stock of AEFC to shareholders of American Express Company. At a meeting held in person on April 14, 2005, the Board, including a majority of the independent members, approved the continuation of the Agreement for an interim period, not to exceed one year, ending on the later of (i) the effective date of the spin-off or (ii) the approval by the Fund's shareholders of a new investment management services agreement with the investment manager (the Interim Period). The spin-off will not result in an "assignment" of the Agreement under the Investment Company Act of 1940 and, therefore, will not cause the termination of the Agreement according to its terms. In connection with the spin-off the investment manager has proposed that going forward, services under the Agreement be provided by an affiliate, RiverSource Investments, LLC (RiverSource). Independent counsel advised the Board that it would be prudent, in connection with the spin-off, to consider a new agreement with RiverSource and to seek shareholder approval of that agreement as soon as practical thereafter. Investment performance is a major factor in the evaluation process, and the Board reviewed the Fund's performance over a range of different periods by comparing its performance to relevant Lipper and broader market indices. The Board considered that over time the Fund's investment performance should approximate the median for a peer group of funds with similar investment goals and noted that the Fund's investment performance was consistent with its peer group in 2004. The Board noted that, in addition to portfolio management and investment research, the investment manager provides portfolio trading, daily net asset value calculation, management of cash flow, product development, administration of its compliance and legal departments, access to distribution, accounting and recordkeeping, and reporting to the Board and shareholders. To evaluate these services, the Board referred to surveys and benchmarks established by commercial providers, trade associations and the investment manager's internal processes. The Board concluded that the services provided were consistent with services provided by investment managers to comparable mutual funds. - -------------------------------------------------------------------------------- 30 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT The Board also evaluated the price paid for the services provided by the investment manager, noting the existence of a pricing philosophy, established by the Board and the investment manager, that seeks to maintain total Fund expenses within a range of the median expenses charged to comparable funds sold through financial advisors. The Board considered detailed information set forth in an annual report on fees and expenses, including, among other things, data showing a comparison of the Fund's expenses with median expenses paid by funds in its comparison group and data showing the Fund's contribution to the investment manager's profitability. The Board determined that while the Fund's expenses are above median and its yield has been competitive with other money market funds within its comparison group, a fee waiver has been added to reduce further the expenses the Fund will pay. The Board considered the economies of scale that might be realized by the investment manager as the Fund grew and took note of the extent to which Fund shareholders also might benefit from such growth. The Board considered that the Agreement provided for lower fees as assets increase at pre-established breakpoints and concluded that the Agreement satisfactorily provided for sharing these economies of scale. The Board took into account the Contracts Committee's discussion comparing the fees the investment manager charges to the Fund with those it charges to institutional clients, noting that the relatively higher fees paid by the Fund were principally attributable to the additional services required to manage a regulated mutual fund, like the Fund, and the operation of a large mutual fund family. The Board also considered the profitability realized by the investment manager and its affiliates from its relationship with the Fund. The Board took into account the services acquired by the investment manager through the use of commission dollars paid by the Fund on portfolio transactions. The Board concluded that the investment manager's overall costs and profitability were appropriate, although profitability may be too low on an ongoing basis. The Board noted that the fees paid by the Fund should permit the investment manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. Based on the foregoing, the Board concluded that the fees paid to the investment manager under the Agreement were fair and reasonable and determined to approve renewal of the Agreement for the Interim Period. Proxy Voting The policy of the Board is to vote all proxies of the companies in which the Fund holds investments. The procedures are stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling (800) 862-7919; by looking at the website www.riversource.com/investments; or by searching the website of the Securities and Exchange Commission (SEC) at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge by calling the Fund's administrator, Board Services Corporation, collect at (612) 330-9283; through the investment manager's website, www.riversource.com/investments; or by searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- 31 -- AXP CASH MANAGEMENT FUND -- 2005 ANNUAL REPORT American Express Funds 70100 Ameriprise Financial Center Minneapolis, MN 55474 This report must be accompanied or preceded by the Fund's current prospectus. Distributed by Ameriprise Financial Services, Inc. (formerly known as American Express Financial Advisors Inc.). Member NASD. Item 2. (a) The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer and principal financial officer. A copy of the code of ethics is filed as an exhibit to this form N-CSR. (b) During the period covered by this report, there were not any amendments to the provisions of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, there were not any implicit or explicit waivers to the provisions of the code of ethics adopted in 2(a). Item 3. The Registrant's board of directors has determined that independent directors Livio D. DeSimone and Anne P. Jones, each qualify as audit committee financial experts. Item 4. Principal Accountant Fees and Services Fund - Related Fees* (a) Audit Fees. The fees paid for the years ended July 31, to KPMG LLP for professional services rendered for the audits of the annual financial statements for AXP Money Market Series, Inc. were as follows: 2005 - $36,500; 2004 - $37,027 (b) Audit - Related Fees. The fees paid for the years ended July 31, to KPMG LLP for additional professional services rendered in connection with the registrant's security count pursuant to Rule 17f-2 for AXP Money Market Series, Inc. were as follows: 2005 - $806; 2004 - $879 (c) Tax Fees. The fees paid for the years ended July 31, to KPMG LLP for tax compliance related services for AXP Money Market Series, Inc. were as follows: 2005 - $2,639; 2004 - $2,275 (d) All Other Fees. The fees paid for the years ended July 31, to KPMG LLP for additional professional services rendered in connection to proxy filing for AXP Money Market Series, Inc. were as follows: 2005 - $958; 2004 - None (e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley pre-approval requirements, all services to be performed by KPMG LLP for the registrant and to the registrant's investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant must be pre-approved by the audit committee. (e) (2) 100% of the services performed for items (b) through (d) above during 2005 and 2004 were pre-approved by the audit committee. (f) Not applicable. (g) Non-Audit Fees. The fees paid for the years ended July 31, by the registrant for non-audit services to KPMG LLP were as follows: 2005 - None; 2004 - None The fees paid for the years ended July 31, to KPMG LLP by the registrant's investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant were as follows: 2005 - $38,450; 2004 - $88,450 (h) 100% of the services performed in item (g) above during 2005 and 2004 were pre-approved by the audit committee. *2004 represents bills paid 8/1/03 - 7/31/04 2005 represents bills paid 8/1/04 - 7/31/05 Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. The complete schedule of investments is included in Item 1 of this Form N-CSR. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of matters to a vote of security holders. Not applicable. Item 11. Controls and Procedures. (a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's Principal Financial Officer and Principal Executive Officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal controls over financial reporting that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a)(1) Code of ethics as applies to the Registrant's principal executive officer and principal financial officer, as required to be disclosed under Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH. (a)(2) Separate certification for the Registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached as EX.99.CERT. (a)(3) Not applicable. (b) A certification by the Registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment Company Act of 1940, is attached as EX.99.906 CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) AXP Money Market Series, Inc. By /s/ Paula R. Meyer ------------------ Paula R. Meyer President and Principal Executive Officer Date Oct. 3, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Paula R. Meyer ------------------ Paula R. Meyer President and Principal Executive Officer Date Oct. 3, 2005 By /s/ Jeffrey P. Fox ------------------ Jeffrey P. Fox Treasurer and Principal Financial Officer Date Oct. 3, 2005 EX-99.CODE ETH 2 code-ethics.txt CODE OF ETHICS AMERICAN EXPRESS FUNDS PREFERRED MASTER TRUST GROUP (THE AXP FUNDS) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Purpose of the Code; Covered Officers This code of ethics ("Code") for the AXP Funds (collectively, "Funds," and each, "Fund") applies to the Funds' Principal Executive Officer and Principal Financial Officer (the "Covered Officers," each of whom is identified in Exhibit A) for the purpose of promoting, in connection with his or her duties: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely, and understandable disclosure in reports and documents that a Fund files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Funds; o compliance with laws and governmental rules and regulations applicable to the conduct of the Funds' business and their financial reporting; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his or her service to, the Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with the Funds. Certain conflicts of interest arise out of the relationships between Covered Officers and the Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions, such as the purchase or sale of securities or other property, with the Funds because of their status as "affiliated persons" of the Funds. The compliance programs and -1- procedures of the Funds and of American Express Financial Corporation ("AEFC"), the investment adviser to the Funds, are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Funds and AEFC, of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties, whether formally for the Funds or for AEFC, or for both, be involved in establishing policies and implementing decisions that will have different effects on AEFC and the Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and AEFC and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Funds. Each Covered Officer must: o not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Funds whereby the Covered Officer would benefit personally to the detriment of the Funds; o not cause the Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Funds; o not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; III. Disclosure and Compliance o Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Funds; o Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Funds' directors and auditors, and to governmental regulators and self-regulatory organizations; o Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and AEFC with the goal of promoting full, fair, accurate, timely, and understandable disclosure in the reports -2- and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules, and regulations. IV. Reporting and Accountability Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he or she has received, read, and understands the Code; o annually thereafter affirm to the Board that he or she has complied with the requirements of the Code; o not retaliate against any other Covered Officer or any employee of AEFC or its affiliated persons for reports of potential violations that are made in good faith; and o notify the general counsel of the Funds ("Funds General Counsel") promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code. The Funds General Counsel is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers sought by a Covered Officers will be considered by the Board Effectiveness Committees (the "Committees"). The Funds will follow these procedures in investigating and enforcing this Code: o The Funds General Counsel will take all appropriate action to investigate any potential violations reported to him; o If, after such investigation, the Funds General Counsel believes that no violation has occurred, he or she is not required to take any further action; o Any matter that the Funds General Counsel believes is a violation will be reported to the Committees; o If the Committees concur that a violation has occurred, they will inform the Board, and the Board will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; o The Committees will be responsible for granting waivers, as appropriate; and o Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, AEFC, or any -3- affiliate of AEFC govern or purport to govern the activities of the Covered Officers, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. AEFC's code of ethics under Rule 17j-1 under the Investment Company Act is a separate requirement applying to the Covered Officers and others, and is not part of this Code. VI. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of each Fund's Board, including a majority of its independent directors. Date: July, 2003 -4- Exhibit A Persons Covered by this Code of Ethics Paula R. Meyer President Jeffrey P. Fox Treasurer -5- EX-99.CERT 3 ex99-cert.txt CERTIFICATION PURSUANT TO 270.30A-2 OF THE INVESTMENT COMPANY ACT OF 1940 Certification Pursuant to 270.30a-2 of the Investment Company Act of 1940 I, Paula Meyer, certify that: 1. I have reviewed this report on Form N-CSR of AXP Money Market Series, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 22, 2005 /s/ Paula R. Meyer ------------------------- Name: Paula R. Meyer Title: President and Chief Executive Officer Certification Pursuant to 270.30a-2 of the Investment Company Act of 1940 I, Jeffrey Fox, certify that: 1. I have reviewed this report on Form N-CSR of AXP Money Market Series, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 22, 2005 /s/ Jeffrey P. Fox -------------------------------- Name: Jeffrey P. Fox Title: Treasurer and Chief Financial Officer EX-99.906 CERT 4 ex99-906cert.txt CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 CERTIFICATION AXP Money Market Series, Inc. (the Registrant) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Each of the undersigned below certifies that 1. This report on Form N-CSR of the Registrant (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: September 22, 2005 /s/ Paula R. Meyer ------------------- Paula R. Meyer President and Chief Executive Officer Date: September 22, 2005 /s/ Jeffrey P. Fox -------------------- Jeffrey P. Fox Treasurer and Chief Financial Officer A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR filed with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----