-----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, J40HbQrOOMGH3W/YFRV0j4+CuVCDQnRMJyq+4cJjlawz52em+lx9bq7zBlbIbQFV CXzHyBy0EmVSu3oyOIAcEw== 0000820027-04-000906.txt : 20041029 0000820027-04-000906.hdr.sgml : 20041029 20041029091547 ACCESSION NUMBER: 0000820027-04-000906 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 GOVERNMENT INCOME SERIES INC CENTRAL INDEX KEY: 0000764802 IRS NUMBER: 412021315 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-04260 FILM NUMBER: 041104347 BUSINESS ADDRESS: STREET 1: 50606 AXP FINANCIAL CENTER STREET 2: H27/52 CITY: MINNEAPOLIS 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: AXP FEDERAL INCOME FUND INC /MN/ DATE OF NAME CHANGE: 20000829 FORMER COMPANY: FORMER CONFORMED NAME: IDS FEDERAL INCOME FUND INC DATE OF NAME CHANGE: 19920703 N-Q 1 govtincome-nq.txt AXP GOVERNMENT 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 811-4260 ------------ AXP GOVERNMENT 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: 8/31/04 -------------- Item 1. Schedule of Investments. AXP(R) SHORT DURATION U.S. GOVERNMENT FUND A FEEDER FUND INVESTING IN GOVERNMENT INCOME PORTFOLIO PORTFOLIO HOLDINGS AS OF AUG. 31, 2004 Investments in Securities Government Income Portfolio Aug. 31, 2004 (Unaudited) (Percentages represent value of investments compared to net assets) Bonds (97.7%) Issuer Coupon Principal Value(a) rate amount U.S. government obligations & agencies (44.8%) Federal Farm Credit Bank 07-17-06 2.13% $15,100,000 $14,981,465 10-02-06 2.38 14,600,000(b) 14,502,384 Federal Home Loan Bank 03-13-06 2.50 64,785,000 64,875,375 05-15-06 3.00 25,570,000 25,780,364 09-15-06 2.88 52,000,000(b) 52,255,840 Federal Home Loan Mtge Corp 01-15-06 5.25 43,500,000 45,227,124 08-15-06 2.75 120,645,000 121,061,709 10-27-06 3.00 15,000,000 14,991,506 02-15-07 2.38 43,625,000(b) 43,184,998 02-23-07 2.85 21,675,000 21,661,323 09-15-07 3.50 24,275,000(b) 24,586,133 Federal Natl Mtge Assn 02-28-06 2.25 6,770,000 6,756,020 04-13-06 2.15 4,500,000 4,479,795 02-15-07 2.38 29,035,000(b) 28,734,226 03-02-07 3.00 16,000,000(g) 16,058,192 05-15-08 6.00 17,850,000 19,518,600 Student Loan Mtge Assn 12-15-32 2.25 16,325,000(d) 16,279,943 03-15-33 2.16 14,800,000(d) 14,768,772 U.S. Treasury 11-15-05 5.75 85,235,000 88,967,355 12-31-05 1.88 115,920,000 115,557,750 01-31-06 1.88 35,570,000 35,436,613 03-31-06 1.50 47,000,000 46,482,248 11-15-06 3.50 87,865,000(m) 89,769,913 08-15-07 3.25 40,250,000(b,m) 40,839,582 08-15-14 4.25 6,000,000(b) 6,060,000 Total 972,817,230 Commercial mortgage-backed/Asset-backed securities (3.1%)(f) AmeriCredit Automobile Receivables Trust Series 2004-CA Cl A3 03-06-09 3.00 12,000,000 12,010,800 Centex Home Equity Series 2001-A Cl A4 07-25-29 6.47 5,753,235 5,896,915 Conseco Finance Series 2000-D Cl A4 12-15-25 8.17 1,908,121 1,933,249 KSL Resorts Series 2003-1A Cl A 05-15-13 2.15 7,400,000(d,e) 7,402,399 LB-UBS Commercial Mtge Trust Series 2002-C2 Cl A2 06-15-26 4.90 9,600,000 10,009,929 Series 2004-C6 Cl A2 08-15-29 4.19 6,165,000 6,230,904 Residential Asset Securities Series 2002-KS1 Cl AI4 11-25-29 5.86 23,400,000 23,684,075 Total 67,168,271 Mortgage-backed securities (49.8%)(f,h) Federal Home Loan Mtge Corp 09-01-09 6.50 439,190 469,891 10-01-10 7.00 1,370,199 1,454,155 03-01-12 7.50 5,359,863 5,739,344 07-01-12 5.50 634,436 662,292 02-01-13 5.00 4,228,468 4,360,278 04-01-13 4.50 2,839,682 2,895,033 04-01-13 5.00 3,684,944 3,799,810 05-01-13 4.50 24,744,350 25,227,079 01-01-14 4.00 12,930,794 12,932,256 05-01-14 4.00 9,763,751 9,720,840 06-01-15 7.50 10,683,647 11,493,859 04-01-17 6.50 31,721,695 33,919,311 07-01-17 6.50 16,467,884 17,507,334 11-01-17 5.50 10,636,848 11,026,383 07-01-24 8.00 728,067 794,884 01-01-25 9.00 980,248 1,101,834 06-01-25 8.00 814,465 889,923 08-01-25 8.00 207,570 226,801 05-01-26 9.00 1,655,815 1,863,183 08-01-34 5.21 6,350,000(l) 6,433,823 Collateralized Mtge Obligation 12-15-08 6.00 10,430,618 10,851,442 03-15-12 5.00 17,190,107 17,580,964 04-15-12 5.00 21,038,451 21,738,699 10-15-15 5.00 29,046,000 30,210,641 01-15-16 5.00 9,125,000 9,473,333 02-15-16 5.00 92,636,488 29,737,847 06-15-16 7.00 14,311,925 15,323,174 08-15-16 4.00 13,116,306 13,083,380 04-15-19 4.50 2,202,513 2,199,286 02-15-20 4.50 15,450,000 15,542,040 03-15-25 5.50 13,005,158 1,275,669 Interest Only 12-15-12 12.70 16,074,604(j) 958,554 02-15-14 7.40 13,224,388(j) 1,096,170 06-15-18 8.78 10,283,181(j) 697,574 01-01-20 0.00 20,546(j) 3,865 Interest Only/Inverse Floater 03-15-32 6.35 4,490,906(i,j) 411,754 Federal Natl Mtge Assn 09-01-07 8.50 188,794 193,662 10-01-07 7.50 628,720 654,657 12-01-08 7.50 1,005,581 1,047,064 01-01-09 5.74 3,240,376 3,472,588 05-01-09 7.50 2,178,737 2,268,618 10-01-09 7.11 4,304,223 4,874,859 01-01-10 5.00 1,209,320 1,239,772 07-01-11 7.50 1,007,592 1,072,996 11-01-12 5.00 876,374 903,693 12-01-12 5.00 1,384,210 1,441,492 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 1 -- GOVERNMENT INCOME PORTFOLIO -- PORTFOLIO HOLDINGS AS OF AUG. 31, 2004 Bonds (continued) Issuer Coupon Principal Value(a) rate amount Mortgage-backed securities (cont.) Federal Natl Mtge Assn (cont.) 04-01-13 5.50% $16,757,596 $17,493,358 05-01-13 5.00 20,705,559 21,350,991 05-01-13 5.50 5,149,612 5,397,565 05-01-13 6.00 1,127,463 1,187,377 06-01-13 5.00 3,624,135 3,737,107 08-01-13 4.50 9,910,207 10,103,379 10-01-13 6.00 3,362,878 3,541,585 12-01-13 5.50 1,687,560 1,756,955 01-01-14 5.50 985,299 1,025,816 01-01-14 6.00 578,724 609,478 03-01-14 6.00 1,225,622 1,290,753 06-01-14 6.50 10,700,153 11,379,350 08-01-14 6.50 578,428 615,053 08-01-15 5.50 22,033,250 22,939,291 06-01-17 6.00 16,795,980 17,711,976 06-01-17 6.50 3,949,550 4,196,565 06-01-17 7.00 967,931 1,027,743 07-01-17 6.00 35,474,938 37,448,168 08-01-17 5.50 24,380,897 25,343,488 08-01-17 6.00 15,015,623 15,802,865 08-01-17 7.00 1,705,630 1,811,028 09-01-17 6.00 516,746 543,169 11-01-17 5.50 24,010,386 24,940,850 11-01-17 6.00 2,347,390 2,488,145 01-01-18 5.50 2,238,255 2,325,892 02-01-18 5.50 15,853,229 16,472,473 03-01-18 5.50 1,657,844 1,719,503 04-01-18 5.50 14,153,430 14,705,384 05-01-18 5.50 4,305,978 4,467,305 06-01-18 5.50 1,007,075 1,045,643 09-01-19 5.00 10,000,000(g) 10,184,380 11-01-21 8.00 293,282 320,771 11-01-23 6.00 2,146,885 2,240,863 06-01-24 9.00 750,444 838,012 02-01-26 6.00 129,903 135,278 05-01-26 7.50 1,217,613 1,312,592 12-01-28 7.00 2,979,203 3,192,572 04-01-31 6.50 5,131,578 5,420,943 09-01-31 7.50 3,553,545 3,821,802 11-01-31 6.50 2,401,922 2,544,645 09-01-32 6.50 2,718,829 2,864,492 11-01-32 7.00 313,615 334,984 01-01-33 4.79 3,399,479(l) 3,431,657 02-01-33 4.85 18,675,943(l) 19,056,538 04-01-33 4.38 14,365,028(l) 14,458,257 04-01-33 4.59 10,836,515(l) 10,979,834 04-01-33 4.88 11,170,323(l) 11,545,578 05-01-33 4.60 8,877,623(l) 8,996,619 07-01-33 4.45 5,450,430(l) 5,537,000 07-01-33 4.46 13,420,948(l) 13,588,530 07-01-33 4.97 7,368,410(l) 7,251,878 08-01-33 3.06 1,210,444(l) 1,205,014 08-01-33 4.12 3,551,382(l) 3,538,588 09-01-33 4.20 3,307,238(l) 3,299,216 08-01-34 4.53 5,269,872(l) 5,246,790 Collateralized Mtge Obligation 03-25-13 4.50 7,846,511 8,019,875 10-25-13 5.00 22,310,870 23,081,578 12-25-13 4.50 21,428,571 21,958,895 05-25-16 4.00 11,160,000 11,209,010 07-25-16 4.00 11,000,000 10,945,270 10-25-19 4.50 14,800,000 14,913,492 07-25-23 5.50 21,000,000 21,924,471 12-25-26 8.00 5,082,917 5,533,826 06-25-33 6.93 6,120,557(l) 6,221,986 11-25-33 2.91 13,202,000 13,214,383 04-25-34 5.50 4,981,314 5,144,873 05-25-34 3.75 10,100,000 10,107,015 06-25-34 5.00 12,750,000 13,186,130 05-25-42 5.30 11,500,000 11,705,484 07-25-42 5.50 18,703,334 18,816,013 10-25-42 7.50 5,758,264 6,262,852 08-25-43 4.61 7,825,000 8,012,409 06-25-44 7.50 6,310,183 6,846,864 Interest Only 05-25-12 0.00 382,672(j) 1,750 12-25-12 13.29 12,677,870(j) 781,969 11-25-13 10.08 10,950,000(j) 1,188,018 08-01-18 0.00 10,681(j) 1,976 01-15-20 0.00 432,196(j) 84,641 07-25-22 0.00 1,448,185(j) 238,452 03-25-23 7.94 3,354,525(j) 602,753 Interest Only/Inverse Floater 02-25-32 0.00 8,321,569(i,j) 720,878 Principal Only 06-25-21 1.79 63,990(k) 59,707 GMAC Mtge Corporation Loan Trust Series 2004-AR2 Cl 3A 08-19-34 4.45 7,998,336 8,033,346 Govt Natl Mtge Assn 08-15-13 6.00 1,926,106 2,032,535 09-15-14 6.00 11,278,257 11,901,438 06-15-33 7.00 4,643,081 4,974,082 Collateralized Mtge Obligation 11-20-13 5.50 7,939,164 8,196,607 07-16-21 3.41 13,500,000 13,378,613 09-16-21 3.23 14,000,000 13,819,434 Interest Only 03-20-29 7.17 6,900,000(j) 722,735 GSR Mtge Loan Trust Series 2004-10F Cl 1A1 08-25-19 4.50 4,000,000 3,978,906 Harborview Mtge Loan Trust Series 2004-4 Cl 3A 06-19-34 2.98 11,500,037 11,416,751 Residential Accredit Loans Series 2003-QS17 Cl CB7 09-25-33 5.50 5,800,081 5,908,312 Structured Asset Securities Series 2004-12H Cl 2A 04-25-34 5.59 9,913,982 10,293,444 Washington Mutual Series 2002-AR15 Cl A5 12-25-32 4.38 10,096,766 10,181,672 Total 1,081,319,639 Total bonds (Cost: $2,120,354,481) $2,121,305,140 Option purchased (--%) Issuer Notional Exercise Expiration Value(a) amount price date Put Dec. U.S. Treasury Note Futures 10-year $53,800,000 $108 Nov. 2004 $168,125 Total option purchased (Cost: $588,966) $168,125 Short-term securities (9.7%)(c,n) Issuer Effective Amount Value(a) yield payable at maturity U.S. government agencies (3.4%) Federal Home Loan Disc Nt 10-26-04 1.57% $30,000,000 $29,927,016 Federal Natl Mtge Assn Disc Nt 10-20-04 1.60 45,000,000 44,899,999 Total 74,827,015 Commercial paper (6.3%) Bear Stearns 09-03-04 1.50 40,000,000 39,995,001 09-21-04 1.53 40,000,000 39,964,300 Deutsche Bank Financial LLC 09-01-04 1.57 39,800,000 39,798,264 Household Finance 09-01-04 1.58 16,900,000 16,899,258 Total 136,656,823 Total short-term securities (Cost: $211,491,333) $211,483,838 Total investments in securities (Cost: $2,332,434,780)(o) $2,332,957,103 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 2 -- GOVERNMENT 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) Security is partially or fully on loan. (c) Cash collateral received from security lending activity is invested in short-term securities and represents 6.7% of this category. 3.0% of the short-term securities is the Fund's cash equivalent position. (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 $38,451,114 or 1.8% of net assets. (e) 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. (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) At Aug. 31, 2004, the cost of securities purchased, including interest purchased, on a when-issued and/or other forward-commitment basis was $26,123,351. (h) Comparable securities are held to satisfy future delivery requirements of the following open forward sale commitment as of Aug. 31, 2004:
Security Principal Settlement Proceeds Value amount date receivable Federal Natl Mtge Assn 09-01-19 6.00% $21,000,000 9-20-04 $21,951,563 $22,043,448
(i) Inverse floaters represent securities that pay interest at a rate that increases (decreases) in the same magnitude as, or in a multiple of, a decline (increase) in the LIBOR (London InterBank Offering Rate) Index. Interest rate disclosed is the rate in effect on Aug. 31, 2004. As of Aug. 31, 2004, the value of inverse floaters represented 0.1% of net assets. (j) 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. (k) 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. (l) Adjustable rate mortgage; interest rate varies to reflect current market conditions; rate shown is the effective rate on Aug. 31, 2004. (m) Partially pledged as initial deposit on the following open interest rate futures contracts: Type of security Notional amount Purchase contracts Eurodollar, March 2005, 90-day $ 18,250,000 Eurodollar, June 2005, 90-day 18,250,000 Eurodollar, Sept. 2004, 90-day 3,000,000 Eurodollar, Sept. 2005, 90-day 12,500,000 Eurodollar, Dec. 2004, 90-day 18,250,000 Eurodollar, Dec. 2005, 90-day 12,500,000 U.S. Long Bond, Dec. 2004, 20-year 24,100,000 U.S. Treasury Note, Dec. 2004, 2-year 31,800,000 Sale contracts U.S. Treasury Note, Sept. 2004, 5-year 153,000,000 U.S. Treasury Note, Sept. 2004, 10-year 8,800,000 U.S. Treasury Note, Dec. 2004, 5-year 99,400,000 U.S. Treasury Note, Dec. 2004, 10-year 7,800,000 (n) At Aug. 31, 2004, cash or short-term securities were designated to cover open put options on futures written as follows:
Issuer Notional Exercise Expiration Value(a) amount price date U.S. Treasury Note Dec. 2004, 10 year $53,800,000 $106 Nov. 2004 $75,659
(o) At Aug. 31, 2004, the cost of securities for federal income tax purposes was approximately $2,332,435,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 12,390,000 Unrealized depreciation (11,868,000) ----------- Net unrealized appreciation $ 522,000 ------------ 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-6042-80 A (10/04) PORTFOLIO HOLDINGS FOR AXP(R) U.S. GOVERNMENT MORTGAGE FUND AS OF AUG. 31, 2004 Investments in Securities AXP U.S. Government Mortgage Fund Aug. 31, 2004 (Unaudited) (Percentages represent value of investments compared to net assets) Bonds (98.4%) Issuer Coupon Principal Value(a) rate amount Commercial mortgage-backed/ Asset-backed securities (1.5%)(f) Commercial Mtge Pass-Through Certificates Series 2004-LB3A Cl A5 07-10-37 5.44% $1000,000 $1,045,640 Greenwich Capital Commercial Funding Series 2004-GG1 Cl A7 06-10-36 5.32 1,000,000 1,041,109 GS Mtge Securities Series 2004-GG2 Cl A6 08-10-38 5.40 700,000 730,394 LB-UBS Commercial Mtge Trust Series 2004-C6 Cl A6 08-15-29 5.02 750,000 758,320 Merrill Lynch Mtge Trust Series 2003-KEY1 Cl A4 11-12-35 5.24 1,000,000 1,036,112 Total 4,611,575 Mortgage-backed securities (96.9%)(f,i) Bank of America Alternative Loan Trust Series 2003-11 Cl 1A1 01-25-34 6.00 1,002,786 1,027,856 Bank of American Mtge Securities Series 2004-F Cl B1 07-25-34 4.17 549,230(d) 536,219 Countrywide Home Loans Series 2004-12 Cl 1M 08-25-34 4.69 374,926(d) 375,635 Series 2004-J6 Cl 3A1 08-25-19 5.00 1,544,038 1,558,272 CS First Boston Mtge Securities Series 2004-AR5 Cl CB1 06-25-34 4.46 374,366(d) 367,815 Federal Home Loan Mtge Corp 01-01-09 7.00 325,140 345,036 03-01-10 8.00 553,468 587,219 06-01-15 7.50 2,115,420 2,275,847 12-01-16 6.50 574,476 614,052 02-01-17 6.50 2,253,469 2,406,503 04-01-17 7.00 1,289,904 1,377,327 10-01-17 8.00 721,271 782,998 01-01-18 5.50 1,657,485 1,718,184 02-01-18 5.50 985,035 1,021,108 05-01-18 5.00 2,538,455 2,597,082 08-01-18 5.00 2,713,473 2,778,394 10-01-18 5.00 3,370,385 3,440,627 09-01-19 4.50 2,900,000(b) 2,897,280 09-01-19 5.00 3,000,000(b) 3,054,375 03-01-22 6.50 807,022 854,274 04-01-22 6.50 1,110,015 1,182,947 03-01-30 7.50 494,118 532,011 12-01-30 5.50 1,924,569 1,966,328 06-01-31 8.00 661,762 718,211 07-01-32 7.00 344,375 367,660 08-01-32 6.50 3,793,727 4,001,852 04-01-33 6.00 3,238,690 3,368,811 06-01-33 5.50 2,614,353 2,663,110 07-01-33 6.00 1,062,788 1,106,760 08-01-33 5.00 1,811,949 1,802,987 09-01-33 4.56 1,385,750(d) 1,391,127 09-01-33 5.00 2,817,222 2,803,289 08-01-34 5.21 500,000(d) 506,600 09-01-34 6.50 1,650,000(b) 1,734,563 Collateralized Mtge Obligation 02-15-27 5.00 3,200,000 3,297,023 11-15-28 4.50 1,634,242 1,654,252 02-15-33 5.50 3,596,346 3,755,426 02-15-34 5.00 676,397 675,861 Interest Only 02-15-14 7.40 1,645,467(g) 136,393 06-15-18 8.78 1,171,502(g) 79,470 10-15-22 14.56 1,678,482(g) 145,457 Interest Only/Inverse Floater 03-15-32 6.35 863,593(c,g) 79,180 Federal Natl Mtge Assn 05-01-08 7.75 395,830 420,523 10-01-09 8.50 178,978 186,703 08-01-10 7.50 829,569 883,102 04-01-11 6.50 242,838 258,531 12-01-13 5.01 546,069 561,539 02-01-14 4.77 1,989,553 2,023,145 03-01-14 4.60 497,356 495,785 04-01-14 4.65 996,788 1,000,665 05-01-14 4.52 698,293 694,396 08-01-16 6.50 364,131 389,190 03-01-17 6.00 1,129,949 1,190,398 03-01-17 6.50 926,592 990,108 03-01-17 7.00 48,661 51,684 04-01-17 7.50 95,072 101,019 05-01-17 6.00 418,178 440,642 07-01-17 6.00 5,786,523 6,108,388 08-01-17 5.50 3,008,741 3,127,530 09-01-17 6.50 2,675,886 2,855,224 10-01-17 5.50 838,797 871,573 11-01-17 5.50 2,958,629 3,074,729 12-01-17 5.50 2,486,597 2,583,811 12-01-17 6.00 2,882,291 3,029,675 02-01-18 5.50 3,248,270 3,375,178 04-01-18 5.50 3,950,735 4,104,924 05-01-18 5.00 1,990,241 2,032,033 05-01-18 6.00 1,623,047 1,707,433 06-01-18 5.00 1,913,429 1,960,179 07-01-18 4.50 428,883 430,112 08-01-18 4.50 7,091,001 7,109,313 10-01-18 5.00 2,775,953 2,834,243 12-01-18 5.00 2,000,725 2,044,711 02-01-19 5.00 1,642,129 1,676,611 09-01-19 5.00 1,900,000(b) 1,935,032 09-01-22 6.50 831,890 879,442 11-01-22 6.00 1,052,804 1,099,834 03-01-23 5.50 2,054,236 2,126,210 07-01-23 5.00 1,089,485 1,099,512 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 1 -- AXP GOVERNMENT MORTGAGE FUND -- PORTFOLIO HOLDINGS AS OF AUGUST 31, 2004 Bonds (continued) Issuer Coupon Principal Value(a) rate amount Mortgage-backed securities (cont.) Federal Natl Mtge Assn (cont.) 08-01-23 5.50% $4,104,342 $4,222,077 09-01-23 5.50 3,416,350 3,517,502 10-01-23 5.50 1,866,477 1,919,782 04-01-25 8.00 1,314,380 1,452,526 07-01-28 5.50 1,794,519 1,834,192 08-01-28 5.50 1,358,431 1,388,463 09-01-28 7.50 1,632,110 1,761,398 12-01-28 7.00 1,612,507 1,744,352 01-01-29 6.00 1,390,785 1,446,069 03-01-29 6.50 3,518,432 3,728,521 04-01-29 5.00 1,984,586 1,972,521 05-01-29 6.00 1,033,323 1,074,398 06-01-29 6.00 4,993,489 5,206,149 06-01-29 7.50 1,218,396 1,309,240 06-01-31 7.00 3,198,731 3,429,036 09-01-31 7.00 2,782,126 3,003,590 09-01-31 7.50 2,758,792 2,967,053 10-01-31 9.50 205,881 229,128 11-01-31 6.50 1,467,907 1,554,264 01-01-32 6.00 1,548,911 1,609,553 01-01-32 6.50 994,922 1,052,543 03-01-32 7.00 1,128,610 1,216,933 04-01-32 6.50 2,892,943 3,064,746 04-01-32 7.00 1,199,230 1,286,613 05-01-32 6.50 4,250,780 4,488,493 05-01-32 7.00 3,564,272 3,823,678 06-01-32 6.50 1,374,490 1,458,226 08-01-32 6.50 1,760,882 1,864,717 09-01-32 6.00 2,384,502 2,473,558 09-01-32 6.50 2,545,738 2,682,128 10-01-32 5.50 911,943 929,219 11-01-32 6.00 4,355,672 4,533,791 12-01-32 6.00 1,928,160 2,000,173 12-01-32 6.50 1,732,190 1,824,994 12-01-32 7.50 483,778 519,118 01-01-33 5.50 1,240,982 1,264,492 01-01-33 6.00 2,717,642 2,819,140 01-01-33 7.00 1,350,885 1,438,246 02-01-33 5.50 2,613,169 2,665,349 03-01-33 5.50 3,643,251 3,719,354 03-01-33 6.50 609,780 643,057 04-01-33 5.50 12,968,336 13,236,297 04-01-33 6.00 948,657 986,415 05-01-33 5.50 9,567,980 9,748,848 05-01-33 6.00 2,219,500 2,305,046 07-01-33 4.85 770,156(d) 765,820 07-01-33 5.00 1,602,034(b,d) 1,594,809 07-01-33 5.50 3,559,658(h) 3,624,499 07-01-33 5.50 961,759 979,278 07-01-33 6.00 1,200,639 1,246,829 08-01-33 5.50 1,378,721 1,403,835 01-01-34 6.50 942,603 996,454 03-01-34 5.00 3,398,883 3,383,554 03-01-34 5.00 1,632,524(b) 1,625,162 04-01-34 5.00 3,344,015 3,331,241 09-01-34 5.50 3,995,000(b) 4,056,171 10-01-34 6.00 4,400,000(b) 4,540,249 Collateralized Mtge Obligation 05-25-16 4.00 2,000,000 2,008,783 12-25-26 8.00 726,131 790,547 02-25-44 7.00 2,495,847 2,662,939 06-25-44 7.50 941,818 1,021,920 Interest Only 10-25-09 0.00 270(e,g) -- 12-25-12 13.29 1,552,392(g) 95,751 Govt Natl Mtge Assn 04-15-29 6.50 468,323 495,217 02-15-30 7.00 465,375 497,861 03-15-30 7.00 548,995 587,318 12-15-31 6.50 758,537 801,868 02-15-32 6.50 949,980 1,003,979 12-15-32 6.00 748,737 779,567 05-15-33 6.00 969,269 1,007,670 03-20-34 6.50 414,455 437,450 GRS Mtge Loan Trust Series 2004-6F Cl 2A2 05-25-34 5.50 589,862 612,545 Series 2004-10F Cl 1A5 08-25-19 4.50 2,000,000 1,974,375 Master Alternative Loans Trust Series 2004-7 Cl 8A1 08-25-19 5.00 611,573 621,218 Series 2004-8 Cl 7A1 09-25-19 5.00 850,000 857,438 Morgan Stanley Mtge Loan Trust Series 2004-3 Cl 4A 04-25-34 5.74 1,536,514 1,567,645 Structured Adjustable Rate Mtge Loan Series 2004-5 Cl B1 05-25-34 4.63 424,662(d) 423,137 Structured Asset Securities Series 2003-33H Cl 1A1 10-25-33 5.50 2,271,312 2,279,150 Washington Mutual Series 2004-CB2 Cl 6A 07-25-19 4.50 990,624 977,251 Total 296,805,066 Total bonds (Cost: $299,247,904) $301,416,641 Short-term securities (6.6%) Issuer Effective Amount Value(a) yield payable at maturity U.S. government agency (3.3%) Federal Natl Mtge Assn Disc Nts 09-08-04 1.49% $5,000,000 $4,998,345 09-27-04 1.51 5,000,000 4,994,337 Total 9,992,682 Commercial paper (3.3%) CAFCO 09-01-04 1.58 5,200,000 5,199,772 Citigroup Global Markets 09-15-04 1.52 5,000,000 4,996,833 Total 10,196,605 Total short-term securities (Cost: $20,190,143) $20,189,287 Total investments in securities (Cost: $319,437,931)(j) $321,605,928 See accompanying notes to investments in securities. - -------------------------------------------------------------------------------- 2 -- AXP GOVERNMENT MORTGAGE FUND -- PORTFOLIO HOLDINGS AS OF AUGUST 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 $21,360,521. (c) Inverse floaters represent securities that pay interest at a rate that increases (decreases) in the same magnitude as, or in a multiple of, a decline (increase) in the LIBOR (London InterBank Offering Rate) Index. Interest rate disclosed is the rate in effect on Aug. 31, 2004. (d) Adjustable rate mortgage; interest rate varies to reflect current market conditions; rate shown is the effective rate on Aug. 31, 2004. (e) Negligible market value. (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) 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. (h) Partially pledged as initial deposit on the following open interest rate futures contracts: Type of security Notional amount Purchase contracts U.S. Long Bond, Dec. 2004, 20-year $12,000,000 Sale contracts U.S. Treasury Note, Sept. 2004, 2-year 20,000,000 U.S. Treasury Note, Sept. 2004, 5-year 3,100,000 U.S. Treasury Note, Dec. 2004, 2-year 3,000,000 U.S. Treasury Note, Dec. 2004, 5-year 4,000,000 (i) Comparable securities are held to satisfy future delivery requirements of the following open forward sale commitment as of Aug. 31, 2004: Security Principal Settlement Proceeds Value amount date receivable Federal Natl Mtge Assn 09-01-34 6.50% $2,300,000 9-15-04 $2,402,063 $2,414,282 (j) At Aug. 31, 2004, the cost of securities for federal income tax purposes was approximately $319,438,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $ 3,840,000 Unrealized depreciation (1,672,000) ---------- Net unrealized appreciation $ 2,168,000 ------------ 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-6245-80 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 GOVERNMENT 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 Government 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 Government 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-----