SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM N-17f-2

Certificate of Accounting of Securities and Similar
Investments in the Custody of
Management Investment Companies

Pursuant to Rule 17f-2 [17 CFR 270.17f-2]

1.    Investment Company Act File Number:    Date examination completed:

               811-4260                            December 17, 2004

2. State identification Number:

AL       AK       AZ       AR       CA      CO
CT       DE       DC       FL       GA      HI
ID       IL       IN       IA       KS      KY
LA       ME       MD       MA       MI      MN
MS       MO       MT       NE       NV      NH
NJ       NM       NY       NC       ND      OH
OK       OR       PA       RI       SC      SD
TN       TX       UT       VT       VA      WA
WV       WI       WY       PUERTO RICO

Other  (specify):

3. Exact name of investment company as specified in registration statement:

     AXP Government Income Series, Inc.

4. Address of principal executive office (number,street,city,state,zip code):

     200 AXP Financial Center, Minneapolis, MN 55474


          THIS FORM MUST BE GIVEN TO YOUR INDEPENDENT PUBLIC ACCOUNTANT



             Report of Independent Registered Public Accounting Firm


To the Board of Directors of
AXP Government Income Series, Inc.:

We have examined management's assertion, included in the accompanying Management
Statement Regarding Compliance with Certain Provisions of the Investment Company
Act of 1940, that AXP U.S. Government Mortgage Fund of AXP Government Income
Series, Inc. (the Fund) complied with the provisions of subsection (b) and (c)
of Rule 17f-2 under the Investment Company Act of 1940 as of September 30, 2004
and during the period from May 31, 2004 (the date of our last examination)
through September 30, 2004. Management is responsible for the Fund's compliance
with those provisions. Our responsibility is to express an opinion on
management's assertion about the Fund's compliance based on our examination.

Our examination was made in accordance with standards established by the Public
Company Accounting Oversight Board (United States) and, accordingly, included
examining, on a test basis, evidence about the Fund's compliance with those
requirements and performing such other procedures as we considered necessary in
the circumstances. Included among our procedures were the following tests
performed as of September 30, 2004 and during the period May 31, 2004 through
September 30, 2004, with respect to securities transactions:

o    Count and inspection of all securities located in the vault, if any, of
     American Express Trust Company, the Custodian, without prior notice to
     management;

o    Confirmation of all securities,  if any, held by institutions in book entry
     form  (Wells  Fargo Bank  Minnesota,  N.A.,  The Bank of New York,  and The
     Depository Trust Company);

o    Confirmation or examination of underlying  documentation  of all securities
     purchased but not received, hypothecated, pledged, placed in escrow, or out
     for transfer with brokers, pledges and/or transfer agents;

o    Reconciliation  of all such securities to the books and records of the Fund
     and the Custodian; and

o    Test of selected security transactions since the date of our last report.



We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on the Fund's compliance with
the specified requirements.

In our opinion, management's assertion that the Fund was in compliance with the
above mentioned provisions of Rule 17f-2 of the Investment Company Act of 1940
as of September 30, 2004 and during the period May 31, 2004 through September
30, 2004 is fairly stated in all material respects.

This report is intended solely for the information and use of management of the
Fund and the Securities and Exchange Commission and should not be used for any
other purpose and is not intended to be and should not be used by anyone other
than these specified parties.





/s/ KPMG LLP
- --------------
    KPMG LLP
    Minneapolis, MN
    December 17, 2004


             Management Statement Regarding Compliance With Certain
                Provisions of the Investment Company Act of 1940



     We, as members of management of AXP U.S. Government Mortgage Fund of AXP
     Government Income Series, Inc. (the Fund) are responsible for complying
     with the requirements of subsections (b) and (c) of Rule 17f-2, Custody of
     Investments by Registered Management Investment Companies, of the
     Investment Company Act of 1940. We are also responsible for establishing
     and maintaining effective internal controls over compliance with those
     requirements. We have performed an evaluation of the Fund's compliance with
     the requirements of subsections (b) and (c) of Rule 17f-2 as of September
     30, 2004 and during the period May 31, 2004 through September 30, 2004.

     Based on this evaluation, we assert that the Fund was in compliance with
     the requirements of subsections (b) and (c) of Rule 17f-2 of the Investment
     Company Act of 1940 as of September 30, 2004 and during the period May 31,
     2004 through September 30, 2004, with respect to securities reflected in
     the investment account of the Fund.



     AMERICAN EXPRESS FINANCIAL CORPORATION




     By: /s/ Jeffrey P. Fox
         --------------------
             Jeffrey P. Fox, Vice President-Investment Accounting