-----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, Fn/TK1x0IGwx/UGZxSz1dgBtEHMokBRIMV7PBxiAKj5npUkx3SwkadSpYWYE9716 A7L/3J4Y0AUp28OPCoGFPQ== 0000820027-04-000907.txt : 20041029 0000820027-04-000907.hdr.sgml : 20041029 20041029091650 ACCESSION NUMBER: 0000820027-04-000907 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040831 FILED AS OF DATE: 20041029 DATE AS OF CHANGE: 20041029 EFFECTIVENESS DATE: 20041029 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXP INCOME SERIES INC CENTRAL INDEX KEY: 0000052407 IRS NUMBER: 410839316 STATE OF INCORPORATION: MN FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-00499 FILM NUMBER: 041104352 BUSINESS ADDRESS: STREET 1: 50606 AXP FINANCIAL CENTER STREET 2: H27/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 BUSINESS PHONE: 612-671-7981 MAIL ADDRESS: STREET 1: 50606 AXP FINANCIAL CENTER STREET 2: H27/52 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: AXP SELECTIVE FUND INC /MN/ DATE OF NAME CHANGE: 20000829 FORMER COMPANY: FORMER CONFORMED NAME: IDS SELECTIVE FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: INVESTORS SELECTIVE FUND INC DATE OF NAME CHANGE: 19841002 N-Q 1 incomeseries-nq.txt AXP INCOME SERIES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-499 ------------ AXP INCOME SERIES, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 50606 AXP 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: 5/31 -------------- Date of reporting period: 08/31/04 -------------- Item 1. Schedule of Investments. AXP(R) SELECTIVE FUND A FEEDER FUND INVESTING IN QUALITY INCOME PORTFOLIO PORTFOLIO HOLDINGS AS OF AUG. 31, 2004 Investments in Securities Quality Income Portfolio Aug. 31, 2004 (Unaudited) (Percentages represent value of investments compared to net assets) Bonds (95.9%) Issuer Coupon Principal Value(a) rate amount Foreign government (1.9%) Bundesrepublik Deutschland (European Monetary Unit) 07-04-10 5.25% 8,325,000(c) $11,051,369 Pemex Project Funding Master Trust (U.S. Dollar) 12-15-14 7.38 6,725,000(c) 7,397,500 Total 18,448,869 U.S. government obligations & agencies (24.6%) Federal Home Loan Bank 06-14-13 3.88 18,970,000 18,177,187 Federal Home Loan Mtge Corp 08-15-06 2.75 25,350,000 25,437,559 07-15-09 4.25 10,000,000 10,248,200 07-15-13 4.50 8,650,000 8,654,585 Federal Natl Mtge Assn 02-15-05 7.13 8,000,000 8,190,144 05-15-11 6.00 3,520,000 3,892,208 Overseas Private Investment U.S. Govt Guaranty Series 1996A 09-15-08 6.99 5,000,000 5,455,850 U.S. Treasury 10-31-04 2.13 9,100,000 9,109,955 02-15-07 2.25 3,018,000 2,996,071 07-15-09 3.63 7,184,000(l) 7,286,429 08-15-09 3.50 1,395,000 1,406,552 05-15-14 4.75 3,263,000 3,424,492 08-15-14 4.25 6,653,000 6,719,530 08-15-23 6.25 23,735,000 27,570,623 02-15-26 6.00 82,304,000(i) 93,244,672 02-15-31 5.38 2,290,000 2,438,136 Total 234,252,193 Commercial mortgage-backed/ Asset-backed securities (11.5%)(f) Aesop Funding II LLC Series 2003-3A Cl A3 07-20-09 3.72 2,000,000(d) 2,002,520 AmeriCredit Automobile Receivables Trust Series 2004-CA Cl A3 03-06-09 3.00 2,000,000 2,001,800 Bank of America Alternative Loan Trust Series 2003-11 Cl 1A1 01-25-34 6.00 2,917,197 2,990,127 Bear Stearns Commercial Mtge Securities Series 2003-T10 Cl A1 03-13-40 4.00 3,168,987 3,170,730 Series 2004-PWR3 Cl A2 02-11-41 3.87 500,000 496,730 California State Teachers' Retirement System Trust Series 2002-C6 Cl A3 11-20-14 4.46 9,448,947(d) 9,624,904 CS First Boston Mtge Securities Series 2004-C1 Cl A2 01-15-37 3.52 3,100,000 3,071,270 Commercial Mtge Pass-Through Certificates Series 2004-LB3A Cl A2 07-10-37 4.71 1,225,000 1,264,188 Series 2004-LB3A Cl A5 07-10-37 5.44 2,600,000 2,718,664 GE Capital Commercial Mtge Series 2004-C2 Cl A2 03-10-40 4.12 3,250,000 3,254,193 Series 2004-C2 Cl A4 03-10-40 4.89 2,050,000 2,071,131 GMAC Commercial Mtge Securities Series 1999-C1 Cl B 05-15-33 6.30 2,200,000 2,411,611 Greenwich Capital Commercial Funding Series 2004-GG1 Cl A7 06-10-36 5.32 2,800,000 2,915,105 GS Mtge Securities Series 2004-GG2 Cl A6 08-10-38 5.40 3,500,000 3,651,970 J.P. Morgan Chase Commercial Mtge Securities Series 2003-CB6 Cl A2 07-12-37 5.26 1,500,000 1,561,761 Series 2004-PNC1 Cl A4 06-12-41 5.55 2,600,000 2,729,107 KSL Resorts Series 2003-1A Cl C 05-15-13 2.50 1,300,000(d,j) 1,302,076 LB-UBS Commercial Mtge Trust Series 2002-C2 Cl A3 06-15-26 5.39 2,790,000 2,964,519 Series 2002-C2 Cl A4 06-15-31 5.59 1,890,000 2,026,385 Series 2002-C4 Cl A4 09-15-26 4.56 1,800,000 1,827,482 Series 2002-C8 Cl A3 11-15-27 4.83 1,150,000 1,173,495 Series 2003-C3 Cl A2 05-15-27 3.09 5,800,000 5,695,109 Series 2003-C7 Cl A2 09-15-27 4.06 2,573,500 2,593,067 Series 2003-C8 Cl A2 11-15-27 4.21 5,130,000 5,194,278 Series 2003-C8 Cl A4 11-15-32 5.12 2,900,000 2,992,635 Series 2004-C2 Cl A2 03-15-29 3.25 4,935,000 4,817,448 Series 2004-C2 Cl A4 03-15-36 4.37 1,300,000 1,265,212 Series 2004-C4 Cl A4 06-15-29 5.31 2,540,000 2,657,743 Series 2004-C6 Cl A2 08-15-29 4.19 2,250,000 2,274,053 Series 2004-C6 Cl A6 08-15-29 5.02 2,500,000 2,527,734 Merrill Lynch Mtge Trust Series 2003-KEY1 Cl A4 11-12-35 5.24 1,400,000 1,450,557 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 1 -- QUALITY INCOME PORTFOLIO -- PORTFOLIO HOLDINGS AS OF AUG. 31, 2004 Bonds (continued) Issuer Coupon Principal Value(a) rate amount Commercial mortgage-backed/ Asset-backed securities (cont.) Morgan Stanley Auto Loan Trust Series 2004-HB2 Cl A3 03-16-09 2.94% $1,500,000 $1,500,000 Morgan Stanley Capital 1 Series 2003-IQ4 Cl A1 05-15-40 3.27 4,644,262 4,497,412 Series 2004-T13 Cl A2 09-13-45 3.94 2,200,000 2,184,710 Series 2004-IQ7 Cl A4 06-15-38 5.57 2,800,000 2,937,060 Morgan Stanley, Dean Witter Capital 1 Series 2002-TOP7 Cl A2 01-15-39 5.98 2,235,000 2,444,540 Nissan Auto Receivables Owner Trust Series 2003-A Cl A4 07-15-08 2.61 980,000 977,928 Residential Asset Securities Series 2002-KS1 Cl AI4 11-25-29 5.86 2,800,000 2,833,992 WFS Financial Owner Trust Series 2004-3 Cl A3 03-17-09 3.30 5,000,000 5,038,279 Total 109,111,525 Mortgage-backed securities (39.4%)(f,k) Bank of American Mtge Securities Series 2004-F Cl B1 07-25-34 4.17 1,847,409(e) 1,803,644 Countrywide Alternative Loan Trust Series 2003-11T1 Cl A1 07-25-18 4.75 1,945,242 1,941,643 Countrywide Home Loans Series 2004-12 Cl 1M 08-25-34 4.69 1,174,768(e) 1,176,988 Series 2004-J6 Cl 3A1 08-25-19 5.00 5,229,805 5,278,017 CS First Boston Mtge Securities Series 2004-AR5 Cl CB1 06-25-34 4.46 1,197,972(e) 1,177,007 Federal Home Loan Mtge Corp 05-01-13 4.50 2,515,477 2,564,509 11-01-14 7.50 2,207,420 2,361,332 07-01-16 8.00 208 228 01-01-17 8.00 1,228 1,354 03-01-17 8.50 15,261 16,839 06-01-17 8.50 4,299 4,744 07-01-17 7.00 7,365,015 7,813,834 05-01-18 5.50 2,351,931 2,436,777 09-01-18 5.00 4,262,158 4,358,210 10-01-18 5.00 6,379,568 6,519,582 09-01-19 8.50 37,540 41,379 04-01-20 9.00 150,756 169,804 04-01-21 9.00 141,564 158,976 03-01-22 8.50 288,644 318,383 08-01-22 8.50 315,422 347,582 02-01-25 8.00 388,905 424,596 06-01-32 7.00 1,964,944 2,108,374 07-01-32 7.00 6,741,041 7,196,843 04-01-33 6.00 6,477,380 6,737,622 06-01-33 5.50 3,921,530 3,994,664 09-01-33 4.56 3,708,164(e) 3,722,552 12-01-33 5.00 3,306,294 3,289,942 08-01-34 5.21 3,000,000(e) 3,039,602 Collateralized Mtge Obligation 02-15-27 5.00 4,000,000 4,121,279 11-15-28 4.50 2,114,902 2,140,797 02-15-33 5.50 3,776,163 3,943,197 07-25-43 7.00 2,066,505 2,213,097 Interest Only 02-15-14 7.40 1,828,297(h) 151,548 06-15-18 8.78 1,301,669(h) 88,301 Federal Natl Mtge Assn 01-01-13 4.92 1,371,635 1,419,198 02-01-14 4.77 2,785,374 2,832,403 04-01-14 4.65 1,345,664 1,350,898 04-01-14 6.00 3,256,049 3,429,078 03-01-17 6.50 4,039,262 4,291,887 04-01-17 6.50 1,951,868 2,073,943 08-01-17 6.00 7,395,536 7,773,700 09-01-17 6.00 8,112,731 8,527,568 04-01-18 5.00 6,379,803 6,534,230 05-01-18 5.50 5,545,744 5,756,630 05-01-18 6.00 5,065,875 5,329,261 06-01-18 5.00 2,140,268 2,192,561 08-01-18 4.50 6,291,072 6,307,783 10-01-18 4.50 3,458,868 3,464,990 01-01-19 5.50 1,095,020 1,136,960 02-01-19 5.00 2,872,026 2,932,333 09-01-19 4.50 1,800,000(b) 1,798,312 09-01-19 5.50 785,000(b) 812,475 07-01-23 5.00 3,177,666 3,206,909 07-01-23 5.50 3,645,520 3,753,457 09-01-23 5.50 4,270,437 4,396,877 12-01-26 8.00 588,371 643,115 04-01-27 7.50 674,562 725,484 08-01-27 8.00 624,918 681,621 01-01-28 6.50 377,610 399,281 07-01-28 5.50 2,153,422 2,201,031 11-01-28 5.50 3,736,137 3,818,736 04-01-29 5.00 4,961,464 4,931,302 01-01-30 8.00 513,250 558,231 06-01-31 7.00 5,117,970 5,486,457 03-01-32 7.50 761,419 817,653 04-01-32 7.50 763,364 819,232 05-01-32 7.50 767,844 824,890 06-01-32 7.50 1,943,633 2,085,883 07-01-32 6.50 1,288,168 1,361,527 08-01-32 6.50 7,525,177 7,941,394 08-01-32 7.00 876,880 937,043 10-01-32 6.50 1,099,622 1,158,535 11-01-32 6.50 1,835,368 1,940,956 01-01-33 6.00 1,767,003 1,835,017 01-01-33 6.00 3,965,221 4,113,313 02-01-33 6.00 16,722,711 17,359,767 04-01-33 5.50 23,411,081 23,900,002 04-01-33 6.00 11,505,252 11,988,012 05-01-33 5.50 6,312,179 6,430,596 07-01-33 4.85 2,409,843(e) 2,396,276 07-01-33 5.00 4,989,191(b) 4,966,691 07-01-33 5.50 3,883,264 3,953,998 08-01-33 5.50 919,147 935,890 10-01-33 6.50 5,301,879 5,574,636 01-01-34 4.77 2,926,698(e) 3,009,646 01-01-34 6.50 1,885,207 1,992,907 03-01-34 5.00 10,291,062 10,244,650 03-01-34 5.00 5,084,146(b) 5,061,218 10-01-34 6.00 9,225,000(b) 9,519,047 Collateralized Mtge Obligation 05-25-16 4.00 3,000,000 3,013,175 12-25-26 8.00 2,017,030 2,195,963 02-25-44 7.00 5,712,967 6,086,642 06-25-44 7.50 2,072,000 2,248,224 Interest Only 12-25-12 13.29 1,724,880(h) 106,390 Principal Only 09-01-18 3.84 34,016(g) 30,059 Govt Natl Mtge Assn 05-15-26 7.50 995,130 1,076,754 12-15-32 6.00 13,046,279 13,583,481 10-15-33 5.50 4,822,499 4,924,900 03-20-34 6.50 1,823,602 1,924,780 Collateralized Mtge Obligation Interest Only 01-20-32 0.00 1,600,178(h) 195,968 08-20-32 0.00 6,073,324(h) 997,133 GRS Mtge Loan Trust Series 2004-6F Cl 2A2 05-25-34 5.50 1,843,319 1,914,203 Master Adjustable Rate Mtge Trust Series 2004-5 Cl B1 07-25-34 4.46 1,472,543(e) 1,468,037 Master Alternative Loans Trust Series 2004-4 Cl 2A1 05-25-34 6.00 4,623,881 4,739,478 Series 2004-7 Cl 8A1 08-25-19 5.00 1,899,357 1,929,310 Series 2004-8 Cl 7A1 09-25-19 5.00 2,625,000 2,647,969 Morgan Stanley Mtge Loan Trust Series 2004-3 Cl 4A 04-25-34 5.74 4,801,606 4,898,891 Structured Adjustable Rate Mtge Loan Series 2004-5 Cl B1 05-25-34 4.63 1,348,383(e) 1,343,542 Structured Asset Securities Series 2003-33H Cl 1A1 10-25-33 5.50 6,813,937 6,837,450 Washington Mutual Series 2004-CB2 Cl 6A 07-25-19 4.50 1,882,186 1,856,777 Total 375,617,862 Airlines (0.1%) Northwest Airlines Series 1999-1Ae 02-01-20 6.81 561,000 487,924 Automotive & related (0.4%) DaimlerChrysler NA Holding 11-15-13 6.50 1,695,000 1,827,091 Ford Motor 02-01-29 6.38 2,460,000 2,156,896 Total 3,983,987 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 2 -- QUALITY INCOME PORTFOLIO -- PORTFOLIO HOLDINGS AS OF AUG. 31, 2004 Bonds (continued) Issuer Coupon Principal Value(a) rate amount Banks and savings & loans (3.4%) Banknorth Group Sr Nts 05-01-08 3.75% $1,510,000(i) $1,509,230 J.P. Morgan Chase Sub Nts 02-01-11 6.75 1,245,000 1,391,720 03-15-14 4.88 295,000 292,468 US Bank NA Minnesota 08-01-11 6.38 3,085,000 3,447,201 Wachovia Sub Nts 08-01-14 5.25 4,980,000 5,095,556 Washington Mutual Bank FA Sub Nts 06-15-11 6.88 5,505,000 6,217,804 08-15-14 5.65 2,900,000 3,004,284 Wells Fargo Bank NA Sub Nts 02-01-11 6.45 10,239,000 11,514,369 Total 32,472,632 Cable (1.3%) Comcast 03-15-11 5.50 11,625,000 12,094,999 Cellular telecommunications (0.1%) US Cellular Sr Nts 12-15-33 6.70 1,045,000 1,027,230 Energy (0.2%) Devon Financing 09-30-11 6.88 1,565,000 1,765,826 Energy equipment & services (0.6%) Halliburton 10-15-10 5.50 5,805,000 6,028,957 Finance companies (0.6%) GMAC 09-15-11 6.88 5,570,000 5,831,512 Financial services (0.6%) Capital One Bank Sr Nts 02-01-06 6.88 680,000 719,817 HSBC Holdings (U.S. Dollar) Sub Nts 12-12-12 5.25 1,920,000(c) 1,989,345 Pricoa Global Funding I 06-15-08 4.35 2,980,000(d) 3,047,258 Total 5,756,420 Food (0.3%) Kraft Foods 10-01-13 5.25 2,930,000 2,984,946 Health care services (0.2%) Cardinal Health 06-15-15 4.00 2,350,000 2,071,224 Insurance (1.5%) ASIF Global Financing 01-17-13 4.90 13,470,000(d) 13,670,703 Pacific Life 09-15-33 6.60 525,000(d) 568,937 Total 14,239,640 Leisure time & entertainment (1.4%) Time Warner 05-15-29 6.63 6,195,000 6,316,459 Viacom 05-15-11 6.63 6,310,000 7,008,075 Total 13,324,534 Multi-industry (0.8%) Tyco Intl Group (U.S. Dollar) 02-15-11 6.75 7,215,000(c,i) 8,062,820 Paper & packaging (0.2%) Domtar (U.S. Dollar) 12-01-13 5.38 2,140,000(c) 2,127,353 Real estate (0.4%) Archstone-Smith OPR Trust 08-15-14 5.63 4,070,000 4,205,905 Retail -- general (0.4%) May Department Stores 07-15-14 5.75 3,280,000(d) 3,386,669 Telecom equipment & services (1.2%) Sprint Capital 11-15-28 6.88 7,425,000 7,739,010 TELUS (U.S. Dollar) 06-01-07 7.50 1,180,000(c) 1,296,355 06-01-11 8.00 2,242,500(c) 2,607,216 Total 11,642,581 Utilities -- electric (1.9%) Columbus Southern Power Sr Nts Series C 03-01-13 5.50 480,000 498,936 Consolidated Natural Gas 12-01-13 6.63 960,000 1,073,806 Dayton Power & Light 1st Mtge 10-01-13 5.13 1,610,000(d) 1,614,911 Duke Energy 01-15-12 6.25 1,355,000 1,462,015 1st Mtge 03-05-08 3.75 2,140,000 2,152,305 04-01-10 4.50 480,000 485,976 Sr Nts 11-30-12 5.63 2,815,000 2,927,397 Duquesne Light 1st Mtge Series Q 05-15-14 5.70 420,000 441,244 Florida Power 1st Mtge 03-01-13 4.80 1,190,000 1,195,605 Metropolitan Edison 03-15-13 4.95 3,595,000 3,563,874 1st Mtge 04-01-14 4.88 1,060,000(d) 1,036,099 Tampa Electric 06-15-12 6.88 825,000 922,179 08-15-12 6.38 775,000 842,799 Total 18,217,146 Utilities -- natural gas (0.1%) Consolidated Natural Gas Sr Nts 04-15-11 6.85 630,000 710,722 Utilities -- telephone (2.7%) Deutsche Telekom Intl Finance (U.S. Dollar) 07-22-13 5.25 4,200,000(c) 4,264,722 Telecom Italia Capital (U.S. Dollar) 11-15-13 5.25 6,580,000(c,d) 6,682,155 11-15-33 6.38 670,000(c,d) 691,736 Verizon New York Series B 04-01-32 7.38 3,335,000 3,686,519 Verizon Pennsylvania Series A 11-15-11 5.65 9,770,000 10,250,391 Total 25,575,523 Total bonds (Cost: $904,134,319) $913,428,999 Short-term securities (6.7%)(m) Issuer Effective Amount Value(a) yield payable at maturity U.S. government agency (2.7%) Federal Natl Mtge Assn Disc Nts 09-20-04 1.36% $10,000,000 $9,992,459 10-22-04 1.59 15,600,000 15,564,173 Total 25,556,632 Commercial paper (4.0%) Barton Capital 10-07-04 1.58 6,600,000 6,589,282 Caterpillar Financial Services 09-21-04 1.50 10,000,000 9,991,250 Falcon Asset Securitization 09-07-04 1.53 10,000,000 9,997,026 Household Finance 09-01-04 1.58 6,600,000 6,599,710 Merrill Lynch 09-09-04 1.53 5,200,000 5,198,011 Total 38,375,279 Total short-term securities (Cost: $63,934,630) 63,931,911 Total investments in securities (Cost: $968,068,949)(n) $977,360,910 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 3 -- QUALITY INCOME PORTFOLIO -- PORTFOLIO HOLDINGS AS OF AUG. 31, 2004 Notes to investments in securities (a) Securities are valued by procedures described in Note 1 to the financial statements in the most recent Annual Report dated May 31, 2004. (b) At Aug. 31, 2004, the cost of securities purchased, including interest purchased, on a when-issued and/or other forward-commitment basis was $22,078,606. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in the currency indicated. As of Aug. 31, 2004, the value of foreign securities represented 4.8% of net assets. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the board. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. As of Aug. 31, 2004, the value of these securities amounted to $43,627,968 or 4.6% of net assets. (e) Adjustable rate mortgage; interest rate varies to reflect current market conditions; rate shown is the effective rate on Aug. 31, 2004. (f) Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property, and include single- and multi-class pass-through securities and Collateralized Mortgage Obligations. These securities may be issued or guaranteed by U.S. government agencies or instrumentalities, or by private issuers, generally originators and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers and special purpose entities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. Unless otherwise noted, the coupon rates presented are fixed rates. (g) Principal only represents securities that entitle holders to receive only principal payments on the underlying mortgages. The yield to maturity of a principal only is sensitive to the rate of principal payments on the underlying mortgage assets. A slow (rapid) rate of principal repayments may have an adverse (positive) effect on yield to maturity. Interest rate disclosed represents yield based upon the estimated timing of future cash flows as of Aug. 31, 2004. (h) Interest only represents securities that entitle holders to receive only interest payments on the underlying mortgages. The yield to maturity of an interest only is extremely sensitive to the rate of principal payments on the underlying mortgage assets. A rapid (slow) rate of principal repayments may have an adverse (positive) effect on yield to maturity. The principal amount shown is the notional amount of the underlying mortgages. Interest rate disclosed represents yield based upon the estimated timing and amount of future cash flows as of Aug. 31, 2004. (i) Partially pledged as initial deposit on the following open interest rate futures contracts: Type of security Notional amount Sale contracts U.S. Treasury Note, Sept. 2004, 5-year $ 4,800,000 U.S. Treasury Note, Dec. 2004, 5-year 3,200,000 U.S. Treasury Note, Sept. 2004, 10-year 62,200,000 U.S. Treasury Note, Dec. 2004, 10-year 55,300,000 (j) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Aug. 31, 2004. (k) Comparable securities are held to satisfy future delivery requirements of the following open forward sale commitments as of
Aug. 31, 2004: Security Principal Settlement Proceeds Value amount date receivable Purchase contracts Federal Natl Mtge Assn 09-01-19 5.00% $ 2,625,000 9-20-04 $2,656,836 $2,673,400 09-01-34 5.00 10,000,000 9-15-04 9,866,406 9,918,750 09-01-34 5.50 4,900,000 9-15-04 4,944,406 4,975,029 09-01-34 6.00 7,900,000 9-15-04 8,127,125 8,181,438 09-01-34 6.50 6,800,000 9-15-04 7,101,750 7,137,878
(l) Security is partially or fully on loan. (m) Cash collateral received from security lending activity is invested in short-term securities and represents 0.8% of this category. 5.9% of the short-term securities is the Fund's cash equivalent position. (n) At Aug. 31, 2004, the cost of securities for federal income tax purposes was approximately $968,069,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $12,074,000 Unrealized depreciation (2,782,000) ---------- Net unrealized appreciation $ 9,292,000 ----------- How to find information about the Fund's portfolio holdings (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at www.americanexpress.com/funds. S-6376-80 A (10/04) Item 2. Control 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 report, 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 control over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 3. Exhibits. Separate certification for the Registrant's principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. 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 INCOME SERIES, INC. By /s/ Paula R. Meyer ------------------ Paula R. Meyer President and Principal Executive Officer Date October 29, 2004 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 October 29, 2004 By /s/ Jeffrey P. Fox ------------------ Jeffrey P. Fox Treasurer and Principal Financial Officer Date October 29, 2004 EX-99.CERT 2 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-Q of AXP Income 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 schedule of investments included in this report, fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 4. The registrant's other certifying officer 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 in accordance with generally accepted accounting principals; 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 and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter 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 officer 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: October 27, 2004 /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-Q of AXP Income 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 schedule of investments included in this report, fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed; 4. The registrant's other certifying officer 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 in accordance with generally accepted accounting principals; 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 and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter 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 officer 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: October 27, 2004 /s/ Jeffrey P. Fox -------------------------------- Name: Jeffrey P. Fox Title: Treasurer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----