SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.[ ]
[ ] Post-Effective Amendment No. [ ]
(Check Appropriate Box or Boxes)
AXP Growth Series, Inc.
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(Exact Name of Registrant as Specified in Charter)
(612) 330-9283
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(Area Code and Telephone Number)
901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268
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(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Leslie L. Ogg - 901 Marquette Avenue South,
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(Name and Address of Agent For Service)
Suite 2810, Minneapolis MN 55402-3268
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(Number and Street) (City) (State) (Zip Code)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
Title of Securities Being Registered: Common Stock
No filing fee is due because of reliance on Section 24(f) of the Investment
Company Act of 1940.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine. It is proposed that this filing will become effective on Nov. 14,
2005.
RiverSource Funds
(formerly known as American Express Funds)
Principal Executive Office
901 Marquette Avenue South, Suite 2810
Minneapolis, MN 55402-3268
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NOTICE OF A REGULAR MEETING OF SHAREHOLDERS
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To be held Feb. 15, 2006
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AXP(R) Dimensions Series, Inc.
RiverSource New Dimensions Fund
(formerly AXP New Dimensions Fund)
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RiverSource New Dimensions Fund ("New Dimensions" or the "Selling Fund") will
hold a regular shareholders' meeting at 10:00 a.m. on Feb. 15, 2006, at the IDS
Center, 80 S. Eighth Street, Minneapolis, MN on the 50th floor. At the meeting,
shareholders will consider the following proposals:
o To approve an Agreement and Plan of Reorganization (the "Agreement") between
the Selling Fund and RiverSource Large Cap Equity Fund ("Large Cap Equity" or
the "Buying Fund"). Under this Agreement, the Selling Fund will transfer all
of its assets attributable to Classes A, B, C, I and Y to the Buying Fund in
exchange for corresponding Class A, B, C, I and Y shares of the Buying Fund.
These shares will be distributed proportionately to you and the other
shareholders of the Selling Fund. The Buying Fund will assume the Selling
Fund's liabilities.
o To elect Board members.
o To amend the Articles of Incorporation.
o To approve an Investment Management Services Agreement with RiverSource
Investments, LLC.
o Other business as may properly come before the meeting, or any adjournment of
the meeting.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 1
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Please take some time to read the proxy statement. It discusses the proposals
in more detail. If you were a shareholder on Dec. 16, 2005, you may vote at the
meeting or any adjournment of the meeting. We hope you can attend the meeting.
For those of you who cannot attend, please vote by mail, telephone or internet.
Just follow the instructions on the enclosed proxy card. If you have questions,
please call your advisor or call client services toll free at (877) 256-6085.
It is important that you vote. The Board of Directors (the "Board") recommends
that you vote FOR the proposal. This proxy statement was first mailed to
shareholders on or about Dec. 16, 2005.
By order of the Board of Directors
Leslie L. Ogg, Secretary
Dec. 16, 2005
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2 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
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COMBINED PROXY STATEMENT/PROSPECTUS
Dated Dec. 16, 2005
This document is a proxy statement for New Dimensions and a prospectus for
Large Cap Equity (each individually a "Fund" and collectively the "Funds"). It
contains the information you should know before voting on the proposal. Please
read it carefully and keep it for future reference. The address of each of the
Funds is 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268.
The phone number for each of the Funds is (612) 330-9283.
The following information describes the proposed reorganization of the Selling
Fund into the Buying Fund (the "Reorganization").
How the Reorganization Will Work
o The Selling Fund will transfer all of its assets to the Buying Fund. The
Buying Fund will assume the Selling Fund's liabilities.
o The Buying Fund will issue shares of Classes A, B, C, I and Y to the Selling
Fund in an amount equal to the value of the assets of Classes A, B, C, I and Y
that it receives from the Selling Fund, less the liabilities it assumes. These
shares will be distributed to the Selling Fund's shareholders in proportion to
their holdings in the Selling Fund. You will not pay any sales charge in
connection with this distribution of shares.
Fund Investment Objectives
The investment objective for each of the Funds is as follows:
Selling Fund: The Fund seeks to provide shareholders with
long-term growth of capital.
Buying Fund: The Fund seeks to provide shareholders with long-term
growth of capital.
Please note that the Fund is not a bank deposit, is not federally insured, is
not endorsed by any bank or government agency and is not guaranteed to achieve
its goal.
As with all mutual funds, the Securities and Exchange Commission (the "SEC")
has not approved or disapproved these securities or passed on the adequacy of
this prospectus. Any representation to the contrary is a criminal offense.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 3
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Where to Get More Information
The Buying Fund
Most recent prospectus, dated Accompanying, and incorporated by reference
Oct. 3, 2005. into, this proxy statement/prospectus.
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Most recent annual report, for Incorporated by reference into this proxy
the period ended July 31, 2005. statement/prospectus. For a copy at no charge,
call toll-free (800) 862-7919 or write to the
address at the bottom of this table.
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The Selling Fund
Most recent prospectus, dated Incorporated by reference into this proxy
Oct. 17, 2005. statement/prospectus. For a copy at no charge,
call toll-free (800) 862-7919 or write to the
address at the bottom of this table.
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Most recent annual report, for Incorporated by reference into this proxy
the period ended July 31, 2005. statement/prospectus. For a copy at no charge,
call toll-free (800) 862-7919 or write to the
address at the bottom of this table.
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This Proxy Statement/Prospectus
Statement of Additional Incorporated by reference into this proxy
Information dated the same statement/prospectus. For a copy at no charge,
date as this proxy statement/ call toll-free (877) 256-6085 or write to the
prospectus. This document address at the bottom of this table.
contains information about
both the Selling Fund and
the Buying Fund.
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To ask questions about this Call toll-free (877) 256-6085 or write to:
proxy statement/prospectus. RiverSource Service Corporation,
70100 Ameriprise Financial Center,
Minneapolis, MN 55474.
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4 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
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Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act")
and files reports, proxy materials and other information with the SEC. These
reports, proxy materials and other information can be inspected and copied at
the Public Reference Room maintained by the SEC. Copies may be obtained, after
paying a duplicating fee, by electronic request at
http://www.publicinfo@sec.gov, or by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102. In addition, copies of these documents
may be viewed on-line or downloaded from the SEC's Web site at
http://www.sec.gov.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 5
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TABLE OF CONTENTS
Page
Section A -- Fund Proposals
Proposal 1. Approve or Reject the Agreement and Plan of Reorganization ...... 7
Summary .................................................................. 7
How the Reorganization Will Work ....................................... 7
Comparison of the Selling Fund and the Buying Fund ..................... 7
Risk Factors ........................................................... 12
Tax Consequences ....................................................... 14
Fees and Expenses ........................................................ 15
The Reorganization ....................................................... 18
Terms of the Reorganization ............................................ 18
Conditions to Closing the Reorganization ............................... 19
Termination of the Agreement ........................................... 19
Tax Status of the Reorganization ....................................... 19
Reasons for the Proposed Reorganization and Board Deliberations ........ 22
Boards' Determinations ................................................. 23
Recommendation and Vote Required ....................................... 24
Proposal 2. Elect Board Members ............................................. 25
Proposal 3. Approve or Reject an Amendment to the Articles
of Incorporation ............................................................ 32
Proposal 4. Approve or Reject an Investment Management Services
Agreement with RiverSource Investments, LLC ................................. 33
Section B -- Proxy Voting and Shareholder Meeting Information
Section C -- Capitalization, Ownership of Fund Shares and Other
Fund Information
Exhibits
A. Form of Agreement and Plan of Reorganization .......................... A.1
B. Matters Subject to Approval at Regular Meeting of Buying Fund ......... B.1
C. Minnesota Business Corporation Act Sections 302A.471 and 302A.473 ..... C.1
D. Most Recent Buying Fund Prospectus .................................... D.1
E. Board Effectiveness Committee Charter ................................. E.1
F. Joint Audit Committee Charter ......................................... F.1
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6 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
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SECTION A -- FUND PROPOSALS
PROPOSAL 1. APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Board of the Selling Fund
to solicit proxies to vote at a meeting of shareholders. Shareholders will
consider a proposal to approve the Agreement providing for the Reorganization
of the Selling Fund into the Buying Fund. A form of the Agreement is included
in Exhibit A.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy statement/
prospectus and the exhibits because they contain details that are not in the
summary.
How the Reorganization Will Work
o The Selling Fund will transfer all of its assets to the Buying Fund. The
Buying Fund will assume the Selling Fund's stated liabilities.
o The Buying Fund will issue shares of Classes A, B, C, I and Y to the Selling
Fund in an amount equal to the value of the assets of Classes A, B, C, I and Y
that it receives from the Selling Fund, less the liabilities it assumes. These
shares will be distributed to the Selling Fund's shareholders in proportion to
their holdings in the Selling Fund.
o Neither the Selling Fund nor the shareholders of the Selling Fund will pay any
sales charge in connection with the Reorganization.
o After the Reorganization is completed, current Selling Fund shareholders will
be shareholders of the Buying Fund. The Selling Fund will be terminated.
Comparison of the Selling Fund and the Buying Fund
Both the Selling Fund and the Buying Fund:
o Are structured as a series of capital stock of an open-end management
investment company organized as a Minnesota corporation.
o Have RiverSource Investments, LLC (the "investment manager" or "RiverSource
Investments") as an investment adviser.
o Have the same policies for buying and selling shares and the same exchange
rights.
o Have the same distribution policies.
o Have different classes of shares: Classes A, B, C, I and Y.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 7
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Comparison of Investment Objectives
The investment objectives for the Funds are as follows:
Selling Fund: The Fund seeks to provide shareholders with long-term growth of
capital.
Buying Fund: The Fund seeks to provide shareholders with long-term growth of
capital.
Comparison of Investment Strategies
New Dimensions:
Until October 2005, the Fund was managed as follows:
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The Fund primarily invests in common stocks showing potential for significant
growth. These companies often operate in areas where dynamic economic and
technological changes are occurring. The Fund may invest up to 30% of its total
assets in foreign investments.
In pursuit of the Fund's goal, the investment manager chooses investments by:
o Identifying companies that the investment manager believes have above-average
long-term growth potential based on:
o Effective management,
o Financial strength, and
o Competitive market position; as well as
o Considering opportunities and risks by reviewing interest rate and economic
forecasts both domestically and abroad.
In evaluating whether to sell a security, the investment manager considers,
among other factors, whether:
o The security is overvalued relative to alternative investments.
o The company has met the investment manager's earnings and/or growth
expectations.
o Political, economic, or other events could affect the company's performance.
o The investment manager wishes to minimize potential losses.
o The investment manager identifies a more attractive opportunity.
Beginning in October 2005, the Fund is managed as follows:
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Under normal market conditions, at least 80% of the Fund's net assets are
invested in equity securities of companies with a market capitalization greater
than $5 billion at the time of purchase. The Fund may invest in
income-producing equity securities, such as dividend-paying stocks, convertible
securities and preferred stocks. The Fund will provide shareholders with at
least 60 days' notice of any change in the 80% policy.
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8 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
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In pursuit of the Fund's objective, the investment manager (RiverSource
Investments, LLC) will hold both growth and value companies and at times may
favor one more than the other based on available opportunities.
When optimizing for growth, the investment manager invests in companies it
believes to have above-average long-term growth potential, or technological
superiority, and it selects investments based, among other factors, on:
o Effective management.
o Financial strength.
o Competitive market or product position.
o Technological advantage relative to other companies.
When optimizing for value, the investment manager invests in companies that
appear to be undervalued by various measures or that may be temporarily out of
favor, but have good prospects for capital appreciation, and it selects
investments based, among other factors, on:
o Identifying a variety of large, well-established companies whose underlying
fundamentals are stable, or are anticipated to become stable, or whose
fundamentals are improving.
o Identifying stocks that are undervalued:
o because they have one or more ratios, such as price-to-earnings or
price-to-cash flow, that are low relative to the general market, or have a
yield that exceeds the market,
o because one or more of their valuation ratios are low relative to
historical levels for the stock,
o because one or more of their valuation ratios or other financial measures
make that stock attractive relative to its peers, or
o because they are undervalued relative to their intrinsic value, as
identified by the investment manager.
In evaluating whether to sell a security, the investment manager considers
factors including, among others whether:
o The security is overvalued relative to other potential investments.
o The security has reached the investment manager's price objective.
o The company has met the investment manager's earnings and/or growth
expectations.
o Potential losses, due to factors such as a market down-turn, can be
minimized.
o A more attractive opportunity has been identified.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 9
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Large Cap Equity:
Under normal market conditions, at least 80% of the Fund's net assets are
invested in equity securities of companies with a market capitalization greater
than $5 billion at the time of purchase. The Fund may invest in
income-producing equity securities, such as dividend-paying stocks, convertible
securities and preferred stocks. The Fund will provide shareholders with at
least 60 days' notice of any change in the 80% policy.
In pursuit of the Fund's objective, the investment manager (RiverSource
Investments, LLC) will hold both growth and value companies and at times may
favor one more than the other based on available opportunities.
When optimizing for growth, the investment manager invests in companies it
believes to have above-average long-term growth potential, or technological
superiority, and it selects investments based, among other factors, on:
o Effective management.
o Financial strength.
o Competitive market or product position.
o Technological advantage relative to other companies.
When optimizing for value, the investment manager invests in companies that
appear to be undervalued by various measures or that may be temporarily out of
favor, but have good prospects for capital appreciation, and it selects
investments based, among other factors, on:
o Identifying a variety of large, well-established companies whose underlying
fundamentals are stable, or are anticipated to become stable, or whose
fundamentals are improving.
o Identifying stocks that are undervalued:
o because they have one or more ratios, such as price-to-earnings or
price-to-cash flow, that are low relative to the general market, or have a
yield that exceeds the market,
o because one or more of their valuation ratios are low relative to
historical levels for the stock,
o because one or more of their valuation ratios or other financial measures
make that stock attractive relative to its peers, or
o because they are undervalued relative to their intrinsic value, as
identified by the investment manager.
In evaluating whether to sell a security, the investment manager considers
factors including, among others whether:
o The security is overvalued relative to other potential investments.
o The security has reached the investment manager's price objective.
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10 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
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o The company has met the investment manager's earnings and/or growth
expectations.
o Potential losses, due to factors such as a market down-turn, can be
minimized.
o A more attractive opportunity has been identified.
Both Funds:
o Unusual Market Conditions. During unusual market conditions, each of the Funds
may invest more of its assets in money market securities than during normal
market conditions. Although investing in these securities would serve
primarily to avoid losses, this type of investing could prevent the Fund from
achieving its investment objective. During these times, the investment manager
may make frequent securities trades that could result in increased fees,
expenses and taxes, and decreased performance.
o Other Investment Strategies. In addition to the principal investment
strategies previously described, the Fund may invest in other securities and
may use other investment strategies that are not principal investment
strategies. Additionally, the Fund may use derivatives (financial instruments
where the value depends upon, or is derived from, the value of something else)
such as futures, options and forward contracts, to produce incremental
earnings, to hedge existing positions or to increase flexibility. Just as with
securities in which the Fund invests directly, derivatives are subject to a
number of risks, including market, liquidity, interest rate and credit risk.
In addition, a relatively small price movement in the underlying security,
currency or index may result in a substantial gain or loss for the Fund using
derivatives. Even though the Fund's policies permit the use of derivatives in
this manner, the investment manager is not required to use derivatives.
Comparison of Fundamental Policies
The Buying Fund shareholders will vote on changes to the fundamental policies
for the Buying Fund at a meeting scheduled to be held on the same day as the
Selling Fund shareholder meeting. The proposed changes are shown in Exhibit B.
If all of the proposed changes to the Buying Fund's fundamental policies are
approved, the differences in investment policies will be as follows:
Each Fund has substantially similar fundamental investment policies. The Buying
Fund has a policy permitting borrowing money for temporary purposes in an
amount not exceeding one-third of the market value of its total assets. The
Selling Fund has a similar policy that applies to money or property and permits
borrowing only for extraordinary or emergency purposes. The Buying Fund has a
policy prohibiting the issuing of senior securities, except as permitted under
the 1940 Act. Even though this is not
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 11
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stated as a fundamental policy of the Selling Fund, the Fund is nonetheless
subject to that restriction under the provisions of the 1940 Act.
The Buying Fund has a policy permitting the Fund to lend fund securities and
participate in an interfund lending program up to 331/3% of the value of the
Fund's total assets. This policy does not prohibit the Buying Fund from
purchasing money market, loan participation or other debt securities, or from
entering into repurchase agreements. The Selling Fund has a policy permitting
the Selling Fund to lend fund securities up to 30% of its net assets. In
addition, the Selling Fund has a policy that it may make cash loans up to 5% of
its total assets. The Selling Fund has a policy prohibiting loans to the
investment manager, its board members and officers and to the board members and
officers of the Selling Fund.
The Buying Fund has a policy that it will not purchase more than 10% of the
outstanding voting securities of an issuer, except up to 25% of its total
assets may be invested without regard to this 10% limitation. The Selling Fund
has a similar policy, but does not have the 25% exception. The Buying Fund has
a policy that it will not invest more than 5% of its total assets in securities
of any one company, government, or political subdivision thereof, except the
limitation will not apply to investments in securities issued by the U.S.
government, its agencies, or instrumentalities, or other investment companies,
and except that up to 25% of its total assets may be invested without regard to
this 5% limitation. The Selling Fund has a similar policy, but does not include
other investment companies in the exception.
If shareholders of the Selling Fund approve the Reorganization, they will be
subject to the fundamental investment policies of the Buying Fund. The
investment manager does not believe that the differences between the
fundamental investment policies will result in any material difference in the
way the Funds are managed.
Risk Factors
The principal risks associated with an investment in the Fund are shown below.
New Dimensions New Dimensions
Risk Until Oct. 2005 Since Oct. 2005 Large Cap Equity
Active Management Risk x x x
Foreign Risk x
Issuer Risk x x x
Market Risk x x x
o Active Management Risk. The Fund is actively managed and its performance
therefore will reflect in part the investment manager's ability to make
investment decisions that are suited to achieving the Fund's
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12 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
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investment objective. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives.
o Foreign Risk. The following are all components of foreign risk:
Country risk includes the political, economic, and other conditions of the
country. These conditions include lack of publicly available information,
less government oversight (including lack of accounting, auditing, and
financial reporting standards), the possibility of government-imposed
restrictions, and even the nationalization of assets. The liquidity of
foreign investments may be more limited than for most U.S. investments,
which means that, at times it may be difficult to sell foreign securities at
desirable prices.
Currency risk results from changing exchange rate between local currency and
the U.S. dollar. Whenever the Fund holds securities valued in a foreign
currency or holds the currency, changes in the exchange rate add or subtract
from the value of the investment.
Custody risk refers to the process of clearing and settling trades. It also
covers holding securities with local agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of
the local market. Governments or trade groups may compel local agents to
hold securities in designated depositories that are not subject to
independent evaluation. The less developed a country's securities market is,
the greater the likelihood of problems occurring. The liquidity of foreign
investments may be more limited than for most U.S. investments, which means
that, at times it may be difficult to sell foreign securities at desirable
prices.
o Issuer Risk. An issuer may perform poorly and therefore, the value of its
stocks and bonds may decline. Poor performance may be caused by poor
management decisions, competitive pressures, breakthroughs in technology,
reliance on suppliers, labor problems or shortages, corporate restructurings,
fraudulent disclosures, or other factors.
o Market Risk. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of all securities may fluctuate, sometimes
rapidly and unpredictably. This risk is generally greater for small and
mid-sized companies, which tend to be more vulnerable to adverse developments.
In addition, focus on a particular style, for example, investment in growth or
value securities, may cause the Fund to underperformance other mutual funds if
that style falls out of favor with the market.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 13
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Performance
Performance information for Class A shares of the Funds is shown below.
Table A-1
Average Annual Total Returns as of Sept. 30, 2005(a)
Since Inception
Fund 1 year 5 years 10 years inception date
New Dimensions 0.85% -6.17% 7.21% 11.02% 8/1/1968
Large Cap Equity 7.27% NA NA 1.13% 3/28/2002
(a) Returns include the 5.75% Class A sales charge.
Tax Consequences
The Reorganization is expected to be tax-free for federal income tax purposes
and will not take place unless the Selling Fund and the Buying Fund receive a
satisfactory opinion of tax counsel, substantially to that effect. Accordingly,
no gain or loss is expected to be recognized by the Selling Fund or its
shareholders as a direct result of the Reorganization. However, the
Reorganization will end the tax year of the Selling Fund, and so it may
accelerate distributions from the Selling Fund for its short tax year ending on
the date of the Reorganization to you as a shareholder. At any time prior to
the consummation of the Reorganization a shareholder may redeem shares. This
would likely result in recognition of gain or loss to the shareholder for
federal income tax purposes.
The tax basis and holding period of the shareholders' Selling Fund shares is
expected to carry over to the shareholders' new shares in the Buying Fund.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
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14 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
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FEES AND EXPENSES
The following table describes the fees and expenses adjusted to reflect current
fees that you pay if you buy and hold shares of the Selling Fund or shares of
the Buying Fund. The table also shows pro forma expenses of the Buying Fund
assuming the proposed Reorganization had been effective during the most recent
fiscal year adjusted to reflect current fees.
Table A-2
Actual and Pro Forma Fund Expenses for the Most Recent Fiscal Year
Shareholder Fees (fees paid directly from your investment)
Class A Class B Class C Class I Class Y
Maximum sales charge (load) imposed on
purchases(a) as a percentage of offering price 5.75% none none none none
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Maximum deferred sales charge (load)
imposed on sales (as a percentage of
offering price at time of purchase) none(b) 5% 1% none none
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Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
As a percentage of average daily net assets:
Class A Class B Class C Class I Class Y
New Dimensions(g)
Management fees(c) 0.45% 0.45% 0.45% 0.45% 0.45%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00%
Other expenses(d) 0.26% 0.29% 0.29% 0.08% 0.34%
Total 0.96% 1.74% 1.74% 0.53% 0.79%
Large Cap Equity
Management fees(e) 0.57% 0.57% 0.57% 0.57% 0.57%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00%
Other expenses(d) 0.36% 0.38% 0.38% 0.15% 0.40%
Total 1.18% 1.95% 1.95% 0.72% 0.97%
Large Cap Equity - Pro Forma with New Dimensions
Management fees(f) 0.49% 0.49% 0.49% 0.49% 0.49%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00%
Other expenses(d) 0.27% 0.29% 0.29% 0.08% 0.35%
Total 1.01% 1.78% 1.78% 0.57% 0.84%
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 15
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Notes to annual fund operating expenses.
(a) This charge may be reduced depending on the value of your total investments
in RiverSource mutual funds.
(b) For Class A purchases over $1,000,000 on which no sales charge is assessed,
a 1% sales charge may apply if you sell your shares within one year after
purchase.
(c) The management fee rate is the actual fee rate charged as of fiscal year
ended July 31, 2005. It includes the impact of a performance incentive
adjustment that decreased the management fee by 0.07%. Prior to November
2005 the index which New Dimensions performance was measured for purposes of
determining the performance incentive adjustment was the Lipper Large-Cap
Growth Funds Index. Since November 2005, the index against which New
Dimensions performance is measured for purposes of determining the
performance incentive adjustment is the Lipper Large Cap Core Funds Index.
Should this merger not be approved, there is a separate proposal to modify
the management fee schedule. Under the new fee schedule, the projected
management fee ratio based on average net assets as of July 31, 2005, net of
the 0.07% PIA decrease, is 0.44%.
(d) Other expenses include an administrative services fee, a custody fee, a
transfer agency fee, other nonadvisory expenses and, for Class Y shares, a
shareholder service fee. The other expense ratios shown in this chart have
been adjusted to reflect the new administrative fee that went into effect
October 2005.
(e) The management fee ratio shown reflects what the ratio would be based on the
fund's average net assets as of July 31, 2005 under the proposed management
fee schedule. The ratio includes the impact of a performance incentive
adjustment that decreased the management fee by 0.02%. The index against
which the Fund's performance is measured for purposes of determining the
performance incentive adjustment is the Lipper Large-Cap Core Funds Index.
(f) The management fee ratio shown reflects what the ratio would be under the
proposed management fee schedule based on the combined average net assets of
the two funds as of July 31, 2005. It includes the impact of a performance
incentive adjustment that decreased the management fee by 0.02%. The index
against which the Fund's performance is measured for purposes of determining
the performance incentive adjustment is the Lipper Large-Cap Core Funds
Index.
(g) New Dimensions is a feeder fund that is part of a master/feeder structure.
For New Dimensions, both in this table and the following example, fund
operating expenses include expenses charged by both the Fund and its Master
Portfolio.
Example: These examples are intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. These examples
assume that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods indicated under the
current arrangements and if the proposed Reorganization had been in effect.
These examples also assume that your investment has a 5% return each year and
that the Fund's operating expenses remain the same. Although your actual costs
may be higher or lower, based on these assumptions your costs would be:
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16 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
Fund 1 year 3 years 5 years 10 years
New Dimensions
Class A(a) $667 $ 863 $1,076 $1,690
Class B $677(b) $ 948(b) $1,145(b) $1,850(c)
Class C $277(b) $ 548 $ 945 $2,057
Class I $ 54 $ 170 $ 297 $ 668
Class Y $ 81 $ 253 $ 440 $ 982
Large Cap Equity
Class A(a) $688 $ 928 $1,188 $1,929
Class B $698(b) $1,013(b) $1,253(b) $2,079(c)
Class C $298(b) $ 613 $1,053 $2,280
Class I $ 74 $ 230 $ 401 $ 898
Class Y $ 99 $ 309 $ 537 $1,194
Large Cap Equity - Pro Forma with New Dimensions
Class A(a) $672 $ 878 $1,102 $1,744
Class B $681(b) $ 961(b) $1,165(b) $1,896(c)
Class C $281(b) $ 561 $ 965 $2,100
Class I $ 58 $ 183 $ 319 $ 717
Class Y $ 86 $ 268 $ 467 $1,041
(a) Includes a 5.75% sales charge.
(b) Includes the applicable contingent deferred sales charge.
(c) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
You would pay the following expenses if you did not redeem your shares.
Fund 1 year 3 years 5 years 10 years
New Dimensions
Class A(a) $667 $863 $1,076 $1,690
Class B $177 $548 $ 945 $1,850(b)
Class C $177 $548 $ 945 $2,057
Class I $ 54 $170 $ 297 $ 668
Class Y $ 81 $253 $ 440 $ 982
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 17
- --------------------------------------------------------------------------------
Fund 1 year 3 years 5 years 10 years
Large Cap Equity
Class A(a) $688 $928 $1,188 $1,929
Class B $198 $613 $1,053 $2,079(b)
Class C $198 $613 $1,053 $2,280
Class I $ 74 $230 $ 401 $ 898
Class Y $ 99 $309 $ 537 $1,194
Large Cap Equity - Pro Forma with New Dimensions
Class A(a) $672 $878 $1,102 $1,744
Class B $181 $561 $ 965 $1,896(b)
Class C $181 $561 $ 965 $2,100
Class I $ 58 $183 $ 319 $ 717
Class Y $ 86 $268 $ 467 $1,041
(a) Includes a 5.75% sales charge.
(b) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
THE REORGANIZATION
Terms of the Reorganization
The Board has approved the Agreement, a copy of which is attached as Exhibit A.
The Agreement provides for Reorganization on the following terms:
o The Reorganization is scheduled to occur on the first day that the New York
Stock Exchange is open for business following shareholder approval and receipt
of any necessary regulatory approvals, but may occur on any later date agreed
to by the Selling Fund and the Buying Fund.
o The Selling Fund will transfer all of its assets to the Buying Fund and, in
exchange, the Buying Fund will assume the Selling Fund's stated liabilities.
o The Buying Fund will issue Class A, B, C, I and Y shares to the Selling Fund
in an amount equal to the value of the assets of Classes A, B, C, I and Y that
it receives from the Selling Fund, less the liabilities assumed by the Buying
Fund in the transaction. These shares will immediately be distributed by the
Selling Fund to its shareholders in proportion to their holdings in the
Selling Fund. As a result, shareholders of the Selling Fund will become Class
A, B, C, I or Y shareholders of the Buying Fund.
o Neither the Selling Fund nor the shareholders of the Selling Fund will pay any
sales charge in connection with the Reorganization.
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18 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
o The net asset value of the Selling Fund and the Buying Fund will be computed
as of 3:00 p.m. Central time, on the closing date.
o After the Reorganization, the Selling Fund will be terminated.
Conditions to Closing the Reorganization
The completion of the Reorganization is subject to certain conditions described
in the Agreement, including:
o The Selling Fund will have declared and paid a dividend that will distribute
all of the Fund's taxable income, if any, to the shareholders of the Fund
for the taxable years ending at or prior to the closing.
o The Funds will have received any approvals, consents or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
o A registration statement on Form N-14 will have been filed with the SEC and
declared effective.
o The shareholders of the Selling Fund will have approved the Agreement.
o The Selling Fund will have received an opinion of tax counsel that the
proposed Reorganization will result in no gain or loss being recognized by
any shareholder.
Termination of the Agreement
The Agreement and the transactions contemplated by it may be terminated and
abandoned by resolutions of the Board of the Selling Fund or the Buying Fund at
any time prior to closing. In the event of a termination, there will be no
liability for damages on the part of either the Selling Fund or the Buying Fund
or the directors, officers or shareholders of the Selling Corporation or of the
Buying Corporation.
Tax Status of the Reorganization
The Reorganization is expected to be tax-free for federal income tax purposes
and will not take place unless the Selling Fund and the Buying Fund receive a
satisfactory opinion of tax counsel (which opinion will be based on certain
factual representations and certain customary assumptions), to the effect that,
although not entirely free from doubt, on the basis of existing provisions of
the Internal Revenue Code of 1986, as amended (the "Code"):
o The transfer of the Selling Fund's assets to the Buying Fund in exchange for
Class A, B, C, I and Y shares of the Buying Fund and the assumption of the
Selling Fund's liabilities, followed by the distribution of those Class A, B,
C, I and Y shares to the Selling Fund's shareholders and the termination of
the Selling Fund will be a "reorganization" within the meaning of Section
368(a)(1) of the Code, and the Selling Fund and the Buying Fund will each be a
"party to the reorganization" within the meaning of Section 368(b) of the
Code.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 19
- --------------------------------------------------------------------------------
o Under Section 361 of the Code, no gain or loss will be recognized by the
Selling Fund upon the transfer of all of its assets to the Buying Fund or on
the distribution by the Selling Fund of Class A, B, C, I and Y shares of the
Buying Fund to Selling Fund shareholders in liquidation.
o Under Section 354 of the Code, the shareholders of the Selling Fund will not
recognize gain or loss upon the exchange of their Class A, B, C, I or Y shares
of the Selling Fund solely for Buying Fund Class A, B, C, I or Y shares as
part of the Reorganization.
o Under Section 358 of the Code, the aggregate basis of the Class A, B, C, I or
Y shares of the Buying Fund that a Selling Fund shareholder receives in the
Reorganization will be the same as the aggregate basis of the Class A, B, C, I
or Y shares of the Selling Fund exchanged therefor.
o Under Section 1223(1) of the Code, the tax holding period for the Class A, B,
C, I or Y shares of the Buying Fund that a Selling Fund shareholder receives
in the Reorganization will include the period for which he or she held the
Class A, B, C, I or Y shares of the Selling Fund exchanged therefor, provided
that on the date of the exchange he or she held such Selling Fund shares as
capital assets.
o Under Section 1032 of the Code, no gain or loss will be recognized by the
Buying Fund upon the receipt of the Selling Fund's assets solely in exchange
for the issuance of Buying Fund's Class A, B, C, I and Y shares to the Selling
Fund and the assumption of all of the Selling Fund's liabilities by the Buying
Fund.
o Under Section 362(b) of the Code, the Buying Fund's tax basis in the assets
that the Buying Fund received from the Selling Fund will be the same as the
Selling Fund's tax basis in those assets immediately prior to the transfer.
o Under Section 1223(2) of the Code, the Buying Fund's holding periods in the
assets received from the Selling Fund will include the Selling Fund's holding
periods in such assets.
o Under Section 381 of the Code, the Buying Fund will succeed to and take into
account the items of the Selling Fund described in Section 381(c) of the Code,
subject to the conditions and limitations specified in Sections 381, 382, 383
and 384 of the Code and Regulations thereunder.
Tax counsel will express no view with respect to the effect of the
Reorganization on any transferred assets as to which any unrealized gain or
loss is required to be recognized at the end of a taxable year (or on the
termination or transfer thereof) under federal income tax principles.
Prior to the closing of the Reorganization, the Selling Fund will, and the
Buying Fund may, declare a distribution to shareholders, which together with
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20 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
all previous distributions, will have the effect of distributing to
shareholders all of its investment company taxable income (computed without
regard to the deduction for dividends paid) and net realized capital gains
(after reduction by any available capital loss carryforwards), if any, through
the closing of the Reorganization. These distributions will be taxable to
shareholders.
A fund's ability to carry forward capital losses and use them to offset future
gains may be limited. First, one fund's "pre-acquisition losses" (including
capital loss carryforwards, net current-year capital losses, and unrealized
losses that exceed certain thresholds) cannot be used to offset unrealized
gains in another fund that are "built in" at the time of the reorganization and
that exceed certain thresholds ("non-de minimis built-in gains") for five tax
years. Second, a portion of a fund's pre-acquisition losses may become
unavailable to offset any gains at all. Third, any remaining pre-acquisition
losses will offset capital gains realized after a reorganization and thus will
reduce subsequent capital gain distributions to a broader group of shareholders
than would have been the case absent such reorganization. Therefore, in certain
circumstances, former shareholders of a fund may pay taxes sooner, or pay more
taxes, than they would have had a reorganization not occurred.
The impact of the rules described above will depend on the relative sizes of,
and the losses and gains in, each fund at the time of the Reorganization. As
stated above, for five years beginning after the closing date, the combined
fund will not be allowed to offset gains "built in" to either fund at the time
of the Reorganization against capital losses (including capital loss
carryforwards) built in to the other fund.
However, as of August 31, 2005, the other two rules mentioned in the
immediately preceding paragraph would not have affected the Selling Fund
directly because the Selling Fund's net realized and unrealized gains exceeded
its capital loss carryforwards and thus the Selling Fund had no pre-acquisition
"net losses" (i.e., capital loss carryforwards as of its last fiscal year end
as adjusted by year-to-date realized gains or losses and all net unrealized
gains) that would have become unavailable to offset gains or been spread over a
broader group of shareholders. However, a portion of the Buying Fund's losses
would have been lost.
The realized and unrealized gains and losses of each Fund at the time of the
Reorganization will determine the extent to which the combining Funds'
respective losses, both realized and unrealized, will be available to reduce
gains realized by the combined Fund following the Reorganization, and
consequently the extent to which the combined Fund may be required to
distribute gains to its shareholders earlier than would have been the case
absent the Reorganization.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 21
- --------------------------------------------------------------------------------
This description of the federal income tax consequences of the Reorganization
does not take into account your particular facts and circumstances. Consult
your own tax adviser about the effect of state, local, foreign, and other tax
laws.
Reasons for the Proposed Reorganization and Board Deliberations
The Board believes that the proposed Reorganization will be advantageous to
Selling Fund shareholders for several reasons. The Board considered the
following matters, among others, in approving the Reorganization.
o Terms and Conditions of the Reorganization. The Board considered the terms and
conditions of the Reorganization as described in the previous paragraphs.
o Tax Consequences. The Board considered the tax-free nature of the
Reorganization.
o Continuity of Investment. The Board took into account the fact that, following
the Reorganization, shareholders of the Selling Fund will be invested in a
fund holding a similar investment securities portfolio, with similar
investment objectives, policies, and restrictions.
o Expense Ratios. The Board considered the relative expenses of the Funds. As of
the end of each Fund's most recent fiscal year, the expense ratios for the
Buying Fund, were higher than the expense ratios for the Selling Fund. For
example, the Selling Fund's expense ratio for Class A shares as of July 31,
2005, its most recent fiscal year end, was 0.96%. The Buying Fund's expense
ratio for Class A shares as of July 31, 2005, its most recent fiscal year end
adjusted to reflect current fees, was 1.18%. The Board considered these
different expense ratios in light of the fact that the Funds have the same
management and administrative fee schedules with the same breakpoints, and
that the Selling Fund has realized additional breakpoints in its fee schedules
because of its larger asset size. In addition, the disparity in expense ratios
is a function of the performance incentive adjustment to the management fee
for the Funds which, for the Buying Fund, decreased the expense ratio by
0.02%, and for the Selling Fund, decreased the expense ratio by 0.07%. The
Buying Fund is attracting assets such that, combined with the Selling Fund's
assets, prior to giving effect to any performance incentive adjustment, the
expense ratio is projected to fall in the future. The Board considered that
higher aggregate net assets resulting from the Reorganization and the
opportunity for net cash inflows may reduce the risk that, if net assets of
the Selling Fund fail to grow, or diminish, its total expense ratio could rise
as fixed expenses become a larger percentage of net assets.
o Economies of Scale. The Board considered the advantage of combining Funds that
share similar investment objectives, styles and holdings. The
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22 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
Board believes that by combining the Funds, the shareholders continue to
have available to them a Fund with a similar investment objective, but can
at the same time take advantage of the economies of scale associated with a
larger fund. A larger fund should have an enhanced ability to effect
portfolio transactions on more favorable terms and should have greater
investment flexibility. Expenses such as audit expenses and accounting
expenses that are charged on a per fund basis will be reduced.
o Costs. The Board considered the fact that the investment manager has agreed to
bear all solicitation expenses in order to achieve shareholder approval of the
Reorganization and to bear any other costs of effecting the Reorganization.
o Dilution. The Board considered the fact that the Reorganization will not
dilute the interests of the current shareholders.
o Performance. The Board considered the relative performance records of the
Funds.
o Potential Benefits to the Investment Manager and its Affiliates. The Board
also considered the potential benefits from the Reorganization that could be
realized by the investment manager and its affiliates. The Board recognized
that the potential benefits to the investment manager consist principally of
the elimination of expenses incurred in duplicative efforts to administer
separate funds. The Board also noted, however, that shareholders of the
Selling Fund will benefit over time from any decrease in overall operating
expense ratios resulting from the proposed Reorganization.
Boards' Determinations
After considering the factors described above and other relevant information,
at a meeting held on ______, 2005, the Selling Fund Board members, including a
majority of the independent Board members, found that participation in the
Reorganization is in the best interests of the Selling Fund and that the
interests of existing shareholders of the Fund will not be diluted as a result
of the Reorganization.
The Board of Directors of the Buying Fund approved the Agreement at a meeting
held on ______, 2005. The Board members considered the terms of the Agreement,
the provisions intended to avoid the dilution of shareholder interests and the
anticipated tax consequences of the Reorganization. The Board found that
participation in the Reorganization is in the best interests of the Buying Fund
and that the interests of existing shareholders of the Buying Fund will not be
diluted as a result of the Reorganization.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 23
- --------------------------------------------------------------------------------
Recommendation and Vote Required
The Board recommends that shareholders approve the proposed Agreement. The
Agreement must be approved by a majority of the voting power of all shares
entitled to vote. If the Agreement is not approved, the Board will consider
what further action should be taken.
If shareholders approve the merger, it will take place shortly after the
shareholder meeting. In the interim, however, it will be important for the Fund
to have a properly elected Board and an IMS Agreement that has been approved by
shareholders.
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24 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
PROPOSAL 2. ELECT BOARD MEMBERS
Nominees for the Board. Nominees are listed in the following table. Each person
is a nominee for each of the 90 RiverSource Funds. Each nominee was elected a
member of the Board at the last regular shareholders' meeting except for Ms.
Flynn, Ms. Paglia, Mr. Laikind, Ms. Blatz and Ms. Pryor. These nominees were
recommended for the position of Board member by the independent Board members.
Ms. Flynn and Ms. Paglia began serving the fund in 2004. Mr. Laikind and Ms.
Blatz began serving the fund in 2005.
Each Board member will serve until the next regular shareholders' meeting or
until he or she reaches the mandatory retirement age established by the Board.
Under the current Board policy, members may serve until the end of the meeting
following their 75th birthday, or the fifteenth anniversary of the first Board
meeting they attend as members of the Board, whichever occurs first.
All nominees have agreed to serve. If an unforeseen event prevents a nominee
from serving, your votes will be cast for the election of a substitute selected
by the Board. Information on each nominee follows. Election requires a vote by
a majority of the fund's shares voted at the meeting.
Table A-3. Independent Nominees
Name, Position held with
address, fund and length of Principal occupation
age service during past five years Other directorships Committee memberships
- ------------------------------------------------------------------------------------------------------------------
Kathleen Blatz
901 Marquette Ave.
Minneapolis, MN 55402
Age 51
- ------------------------------------------------------------------------------------------------------------------
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 25
- --------------------------------------------------------------------------------
Independent Nominees (continued)
Name, Position held with
address, fund and length of Principal occupation
age service during past five years Other directorships Committee memberships
- ------------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, Board Services Contracts, Executive,
901 S. Marquette Ave. 1999 Corporation (provides Investment Review, Board
Minneapolis, MN 55402 administrative services to Effectiveness
Age 71 boards). Former Governor
of Minnesota
- ------------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics Investment Review, Joint Audit
901 S. Marquette Ave. 2004 and Management, Bentley
Minneapolis, MN 55402 College, former Dean,
Age 54 McCallum Graduate School
of Business, Bentley College
- ------------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member Attorney and consultant Joint Audit, Board
901 S. Marquette Ave. since 1985 Effectiveness, Executive,
Minneapolis, MN 55402 Investment Review
Age 70
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind Board member Former Managing Director, American Progressive
901 S. Marquette Ave. since 2005 Shikiar Asset Management Insurance
Minneapolis, MN 55402
Age 70
- ------------------------------------------------------------------------------------------------------------------------------------
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26 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
Independent Nominees (continued)
Name, Position held with
address, fund and length of Principal occupation
age service during past five years Other directorships Committee memberships
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Board member President Emeritus and Valmont Industries, Inc. Contracts, Investment
901 S. Marquette Ave. since 2002 professor of economics, (manufactures irrigation Review, Executive, Board
Minneapolis, MN 55402 Carleton College systems) Effectiveness
Age 66
- ------------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member Director, Enterprise Asset Strategic Distribution, Inc. Contracts, Investment
901 S. Marquette Ave. since 2004 Management, Inc. (private (transportation, distribution Review
Minneapolis, MN 55402 real estate and asset and logistics consultants)
Age 53 management company)
- ------------------------------------------------------------------------------------------------------------------------------------
Vikki L. Pryor
901 Marquette Ave.
Minneapolis, MN 55402
- ------------------------------------------------------------------------------------------------------------------------------------
Alan K. Simpson Board member Former three-term United Investment Review, Board
1201 Sunshine Ave. since 1997 States Senator for Wyoming Effectiveness
Cody, Wyoming 82414
Age 74
- ------------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member Chief Executive Officer, Hybridon, Inc. Investment Review,
901 S. Marquette Ave. since 2002 RiboNovix, Inc. since 2003 (biotechnology) Contracts
Minneapolis, MN 55402 (biotechnology); President,
Age 61 Forester Biotech
- ------------------------------------------------------------------------------------------------------------------------------------
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 27
- --------------------------------------------------------------------------------
Table A-4. Nominees Affiliated with RiverSource Investments
Name, Position held with
address, fund and length of Principal occupation
age service during past five years Other directorships Committee memberships
- -----------------------------------------------------------------------------------------------------------------------------
William F. Truscott* Board member President, U.S. Asset
53600 AXP Financial Center since 2001, Vice Management -- Chief
Minneapolis, MN 55474 President since 2002 Investment Officer of
Age 44 Ameriprise Financial, Inc.
and President, Chairman
of the Board and Chief
Investment Officer of
RiverSource Investments
since 2001. Former chief
investment officer and
managing director, Zurich
Scudder Investments.
- -----------------------------------------------------------------------------------------------------------------------------
* Interested person by reason of being an officer, director, securityholder
and/or employee of RiverSource Investments.
- --------------------------------------------------------------------------------
28 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
Board Committees. The Board has several committees that facilitate the work of
the Board. The Executive Committee has authority to act for the full Board
between meetings. The Contracts Committee receives and analyzes reports
covering the level and quality of services provided under contracts with the
fund and advises the Board regarding actions taken on these contracts during
the annual review process. The Investment Review Committee considers investment
management policies and strategies; investment performance; risk management
techniques; and securities trading practices and reports areas of concern to
the Board.
The Board Effectiveness Committee's charter, Exhibit E, requires it to make
recommendations regarding nominees based on criteria approved by the Board. All
members of the Committee are independent. Nominee recommendations are based on
a matrix of skill sets, experience, and geographical location and each nominee
must have a background that demonstrates the ability to furthering the interest
of all shareholders. The Committee will consider recommendations from
shareholders who write to the Boards and provide detailed information about a
candidate. All candidates are processed in the same fashion; first by
evaluating a candidate's detailed information against the criteria; then
interviewing those candidates who best fill vacancies identified by the matrix.
You may write the Board by addressing a letter to Arne H. Carlson, the
independent Chairman of the Board or any other independent member of the Board,
at Board Services Corporation, 901 Marquette Avenue South, Suite 2810,
Minneapolis, MN 55402-3268. However, do not address letters to this address if
you are requesting some action regarding your investments. In order to avoid
any delay in processing a request regarding an investment, please address these
requests to 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
The Joint Audit Committee, made up entirely of independent Board members,
operates under a written charter, Exhibit F. The Joint Audit Committee meets
with the independent auditors, internal auditors and corporate officers to
review and discuss audited financial statements, reports, issues, and
compliance matters. This Committee reports significant issues to the Board and
makes recommendations to the independent Board members regarding the selection
of the independent public accountant. More information regarding this Committee
and the fund's independent auditor is found in Section C.
During the twelve month period ended Sept. 30, 2005, the Board met 8 times,
Executive 2 times, Contracts 7 times, Investment Review 5 times, Board
Effectiveness 6 times and Joint Audit 4 times. All Board members
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 29
- --------------------------------------------------------------------------------
had 100% attendance except for Mr. Simpson who had 82% attendance due to
serious illness in January 2005.
Shareholder Communications with the Board. Shareholders may communicate
directly with the Board by sending correspondence to Arne H. Carlson, Chair of
the Board, RiverSource Funds, 901 Marquette Avenue South, Suite 2810,
Minneapolis, MN 55402-3268. Correspondence to specific individual Board members
also may be directed to the same address. Account-specific correspondence
should be directed to RiverSource Funds, 70100 Ameriprise Financial Center,
Minneapolis, MN 55474.
Board Member Compensation. The following table shows the total compensation
received by each Board member from all of the RiverSource Funds. The funds do
not pay retirement benefits to Board members. Under a Deferred Compensation
Plan, independent Board members may defer receipt of their compensation.
Deferred amounts are treated as though equivalent dollar amounts had been
invested in shares of one or more designated RiverSource funds.
Table A-3. Board Member Compensation(a)
Aggregate Compensation from all Compensation from the
RiverSource funds for the Selling Fund during
Nominee year ended Sept. 30, 2005 the last fiscal year
Flynn 143,675(b) 2,958(c)
Jones 185,892 4,579
Lewis 204,700 4,730(d)
Paglia 157,708(e) 3,317
Simpson 138,842 4,075
Taunton-Rigby 166,842 4,375
(a) Board members affiliated with RiverSource Investments or Board Services
Corporation, a company providing administrative services to the funds, are
not paid by the funds. Mr. Carlson's total compensation was $373,750.
Board member compensation is a combination of a base fee and meeting fees.
Because the spin-off of Ameriprise Financial from American Express Company
necessitated 5 additional meetings, Ameriprise Financial reimbursed the
funds $23,500 for each member to cover those additional meetings. Mr.
Laikind, Ms. Blatz and Ms. Pryor were not Board members prior to Sept. 30,
2005 and therefore are not included in the table.
(b) Includes the portion of compensation deferred in the amount of $60,371 from
the Funds.
(c) Includes the portion of compensation deferred in the amount of $1,225 from
the Fund.
(d) Includes the portion of compensation deferred in the amount of $1,716 from
the Fund.
(e) Includes the portion of compensation deferred in the amount of $54,839 from
the Funds.
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30 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
The following table shows the dollar range of shares of all the funds owned by
the Board members and the dollar range of shares owned in the Selling Fund.
Table A-5. Board Member Holdings*
Dollar range of equity securities beneficially owned as of Aug. 31, 2005
Aggregate dollar range of equity Dollar range of equity
securities of all RiverSource funds securities in the
Nominee overseen by Board Member Selling Fund**
Carlson over $100,000 None
Flynn $10,001 - $50,000 None
Jones over $100,000 $50,001 - $100,000
Lewis over $100,000 None
Paglia $50,001 - $100,000 None
Simpson $50,001 - $100,000 None
Taunton-Rigby over $100,000 None
Truscott over $100,000 None
* Mr. Laikind, Ms. Blatz and Ms. Pryor were not Board members prior to Sept.
30, 2005 and therefore are not included in the table.
** The percentage of shares beneficially owned by all Board members and
officers as a group does not exceed 1% of any class of shares of the fund.
Fund Officers. In addition to Mr. Truscott, the fund's other executive officers
are:
Leslie L. Ogg, age 67. Vice president, general counsel and secretary since
1978. President of Board Services Corporation.
Jeffrey P. Fox, age 50. Treasurer since 2002. Vice President -- Investment
Accounting of Ameriprise Financial.
Paula R. Meyer, age 51. President since 2002. Senior Vice President and General
Manager -- Mutual Funds, RiverSource Investments.
Officers serve at the pleasure of the Board. Officers are paid by Ameriprise
Financial, Inc., RiverSource Investments or Board Services Corporation. During
the last fiscal year, no officer earned more than $60,000 from any fund.
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RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 31
- --------------------------------------------------------------------------------
PROPOSAL 3. APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES OF INCORPORATION
The fund is a Minnesota corporation and operates under an organizational
document called the articles of incorporation. The articles of incorporation
set forth various provisions relating to the authority of the fund to conduct
business and the governance of the fund.
The Board has approved, and recommends that shareholders approve, a proposal to
amend the fund's articles of incorporation (the "Articles"). The fund's
investments and investment policies will not change by virtue of the adoption
of the amendment to the Articles.
A. Minimum Account Value.
Generally, shareholders must invest at least $2,000 to open a fund account.
Section 7 of the Articles currently provides that the fund may redeem shares if
an account falls below a value of $1,000. Small accounts can be costly to
maintain and this provision allows the Board to close accounts that no longer
meet the fund's minimum standards. However, the current provision does not
allow the Board to redeem accounts if the value is higher than $1,000. In the
future, there may be circumstances in which a minimum account value higher than
$1,000 is in the best interest of the fund and its shareholders. As a
consequence, the Board recommends that the Articles be amended to eliminate the
reference to a specific dollar amount. As proposed, the amended Articles will
permit the Board to establish a minimum account value that will be disclosed in
the fund prospectus. The Board will be able to change the minimum account value
without further action by shareholders.
If the change is approved, the Articles will be amended as follows (additions
are underlined, deletions are lined through):
Article III, Section 7 will be amended to read:
Section 7. The Fund may redeem the shares of a shareholder if the amount
invested is less than $1,000 an amount determined by the Board of Directors and
set forth in the current Fund prospectus.
B. Name Change.
Historically the name of the fund has reflected the name of the investment
manager. Since 1999, the name of the fund has included the letters AXP, which
is an abbreviated form of the name American Express. In August 2005, American
Express Financial Corporation ("AEFC"), the fund's investment manager changed
its name to Ameriprise Financial, Inc. ("Ameriprise Financial") in anticipation
of its spin off from American Express Company, its parent company. On October
1, 2005, Ameriprise
- --------------------------------------------------------------------------------
32 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
Financial transferred responsibility for the fund's investment advisory
services to its wholly-owned subsidiary, RiverSource Investments. The Board
made a corresponding change to the name of the fund by substituting the name
RiverSource for AXP. The name of the corporate entity can be changed only with
approval of the shareholders of all the underlying funds that make up the
corporation. The Board recommends that the name of the corporate entity also be
changed to include the name RiverSource instead of AXP. The changes are shown
in the table below.
This is the first shareholder meeting since the spin off of the investment
manager and the first opportunity for shareholders to consider a name change
for the corporation. Shareholders of each corporation will vote to change the
name of the legal entity.
Table A-5. Proposed Name of Corporation
Current Name of Corporation Proposed Name of Corporation
- -----------------------------------------------------------------------
AXP Dimensions Series, Inc. RiverSource Dimensions Series, Inc
Board Recommendation and Vote Required. The Board recommends that you vote to
approve the amendments to the Articles. The changes require the approval by a
majority of the shares voted at the meeting. The changes will be effective when
the amendments are filed with the Secretary of State's office. This filing is
expected to occur shortly after the shareholder meeting.
PROPOSAL 4. APPROVE OR REJECT AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH
RIVERSOURCE INVESTMENTS, LLC
The fund pays fees to RiverSource Investments under an Investment Management
Services Agreement (the "IMS Agreement") for investment management services.
The services include providing the personnel, equipment and office facilities
necessary for the management of the fund's assets. Subject to the direction of
the Board and consistent with the fund's investment policies, the investment
manager decides what securities to buy, hold or sell. The investment manager
also executes buy and sell orders and provides research and statistical data to
support investment management activities.
Investment manager. On Sep. 30, 2005, Ameriprise Financial became a publicly
traded company and on Oct. 1, 2005 transferred the investment management
functions to RiverSource Investments, a wholly-owned subsidiary. While this
change did not cause a termination of the IMS Agreement, the Board determined
that it would be prudent to give shareholders an opportunity to vote on the
arrangement.
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 33
- --------------------------------------------------------------------------------
Terms of the Current IMS Agreement. The fee the fund pays to RiverSource
Investments for its services under the current IMS Agreement is based on the
net assets of the fund and decreases as the size of the fund increases. The
complete fee schedule for the fund and other funds managed by RiverSource
Investments is found in Section C. The fund also pays its taxes, brokerage
commission and nonadvisory expenses, which include custodian fees; audit and
certain legal fees; fidelity bond premiums; registration fees for shares;
consultant fees; Board compensation; corporate filing fees; organizational
expenses; expenses incurred in connection with lending portfolio securities;
and other expenses properly payable by the fund, approved by the Board. Section
C includes information on the date of the current IMS Agreement, the date it
was last approved by shareholders and the reason why it was submitted to
shareholders at that time.
Performance Incentive Adjustment ("PIA") Calculation. The management fee
includes a PIA as part of the fee. The adjustment is based on the performance
of the fund compared to the performance of a group of similar funds, as
measured by a Lipper Index. The proposed modification clarifies the
circumstances where the Board may change the index for purposes of this
calculation. The provision in the current IMS Agreement will be modified to
read as follows (additions are underlined, deletions are lined through):
If an Index ceases to be published for a period of more than 90 days,
changes in any material respect, otherwise becomes impracticable or, in
the discretion of the Board, is no longer appropriate to use for purposes
of a performance incentive adjustment, for example, if Lipper reclassifies
the Fund from one peer group to another, the Board may take action it
deems appropriate and in the best interests of shareholders, including:
(1) discontinuance of the performance incentive adjustment until such time
as it approves a substitute index, or (2) adoption of a methodology to
transition to a substitute index it has approved. no adjustment will be
made until such time as the Board approves a substitute index.
Basis for Recommendation of the Board
Following announcement of the spin-off of Ameriprise Financial from American
Express Company, the Board and Ameriprise Financial agreed to review and
revise, where appropriate, the terms of all contracts, including the IMS
Agreement, pursuant to which Ameriprise Financial or its affiliates provides
services to the funds. Each year, the Board determines whether to continue the
IMS Agreement for each fund and, in doing so, evaluates the quality and level
of service received under the IMS Agreement and the costs associated with those
services. Accordingly, in March and April of each
- --------------------------------------------------------------------------------
34 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
year, Ameriprise (formerly American Express Financial Corporation) prepares
detailed reports for the Board, which include data prepared by independent
organizations, to assist the Board in making this determination. The Board
accords considerable weight to the deliberations and conclusions of its
committees in determining whether to continue the IMS Agreement.
After thorough review of the reports and data provided at a meeting held in
person on April 14, 2005, the Board, including a majority of its independent
members, determined that the quality and level of advisory services provided
pursuant to the IMS Agreement for each fund were satisfactory and that fees
were fair and reasonable. However, in light of the announced plans of the
spin-off, the Board approved continuation of the IMS Agreement for only an
interim period ending on the earlier of (i) the effective date of the spin-off;
or (ii) the approval of a new investment management services agreement with
Ameriprise Financial by the shareholders of each fund, but in no event for a
period longer than one year. While it was expected that the spin-off would not
result in an "assignment" of an IMS Agreement under the Investment Company Act
of 1940 and, therefore, would not cause the termination of the IMS Agreement
according to its terms, Schulte Roth & Zabel LLP, was retained as independent
counsel to the Board, advised the Board that the legal question of whether the
spin-off would result in an assignment turns on a highly fact-sensitive
analysis. Therefore, the Board determined, as a matter of prudence, to proceed
as if each IMS Agreement would terminate as a result of the spin-off.
Accordingly, the Board determined to renew each IMS Agreement for the interim
period only and to consider a new IMS Agreement for each fund prior to the
spin-off.
For the six months following the April 2005 meeting, the Board and its
committees have been evaluating whether to approve a proposed IMS Agreement for
each fund with post-spin Ameriprise Financial. Schulte Roth & Zabel LLP, has
assisted the Board in fulfilling its statutory and other responsibilities
associated with the spin-off and the resulting consideration of new contracts,
including the proposed IMS Agreements. As a key step in this process,
independent counsel sent, on behalf of the independent members of the Board, a
detailed and expansive request for information to American Express Company and
Ameriprise Financial, seeking specified information thought to be relevant to
the Board's consideration of the proposed contracts with post-spin Ameriprise
Financial. The Board and its committees were provided with a wealth of written
and oral information intended to assist them in considering the proposed
contracts, including the proposed IMS Agreements. Furthermore, in connection
with the Board's considerations as to whether post-spin Ameriprise Financial, as
an independent entity, would be capable of continuing to provide a
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 35
- --------------------------------------------------------------------------------
high quality of services to the funds, the Board's independent members retained
their own financial adviser, Credit Suisse First Boston LLC ("CSFB"). At the
Board's requests, CSFB provided various written materials and oral presentations
analyzing the capital adequacy of Ameriprise Financial. The costs of independent
counsel and CSFB and of additional meetings of the Board were borne by
Ameriprise Financial as part of the commitment of American Express Company to
ensure a complete and thorough review of the proposed spin-off and its effect on
the services provided by Ameriprise Financial and its subsidiaries.
During the course of the six-month period following the April 2005 meeting, the
Board and its committees met at five in-person meetings to consider the
information provided by American Express Company, Ameriprise Financial,
independent counsel and CSFB. At an in-person meeting held on September 8,
2005, based on all of the information provided as well as the deliberations
occurring at that meeting and the previous meetings held since the announcement
of the spin-off, the Board, including all of its independent members, approved
the new contracts, including each proposed IMS Agreement.
On October 1, 2005, pursuant to an agreement between the Fund and Ameriprise
Financial, the IMS Agreement was transferred to RiverSource Investments LLC, a
wholly-owned subsidiary of Ameriprise Financial.
For these reasons, the Board, including all of its independent members,
recommends that you approve the proposed IMS Agreement for your fund(s).
The Board's Specific Considerations Relating to the Proposed IMS Agreements
In carrying out its legal responsibilities associated with the consideration of
the proposed IMS Agreements, the Board evaluated the following four factors:
(i) the nature, extent and quality of services to be provided by; RiverSource
Investments; (ii) the investment performance of the fund; (iii) the costs
of the services to be provided and the profits to be realized by Ameriprise
Financial; and (iv) the extent to which economies of scale would be realized as
the fund grows and whether the fee level reflects these economies of scale for
the benefit of fund investors.
Nature, Extent and Quality of Services to be Provided by Post-Spin Ameriprise
Financial (and Its Subsidiaries)
The Board recognized that only a few months had passed since its April 2005
determination to renew the IMS Agreement for each fund and that in April 2005,
it had concluded that the nature, extent and quality of services provided by
Ameriprise Financial were satisfactory and consistent with those that would be
expected for a fund family of the size of the funds. However, the Board also
- --------------------------------------------------------------------------------
36 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
recognized that this assessment must be supplemented with an evaluation of
whether the spin-off or other factors would result in any changes to the
advisory services currently provided to the funds. In this regard, the Board
focused its evaluation on the following factors potentially impacting the
nature, extent and quality of advisory services to be provided by: RiverSource
Investments (i) Ameriprise Financial's projected capital structure and capital
adequacy as a stand-alone entity; (ii) its legal and regulatory risks; (iii) its
ability to retain and attract personnel; and (iv) its ability to successfully
rebrand its products and services. Based on extensive presentations and reports
by Ameriprise Financial, CSFB and independent counsel, the Board concluded that
the proposed capital structure (which includes certain indemnification
commitments made by American Express) should enable RiverSource Investments to
continue to provide a high quality and level of advisory services to the funds.
In making this determination, the Board took into account representations by
management of Ameriprise Financial that projected capital levels would allow
Ameriprise Financial to continue to meet its legal and compliance
responsibilities, build its distribution network, pursue technological upgrades,
make capital commitments necessary to retain and attract key personnel devoted
to legal and compliance responsibilities, portfolio management and distribution,
and pursue smaller asset management acquisitions to help grow its business. The
Board accorded significant weight to CSFB's confirmation as to the
reasonableness of the foregoing representations. The Board also considered the
fact that there were no expected departures of key personnel involved in the
portfolio management, operations and marketing of the funds as a result of the
announcement of the spin-off.
The Board concluded that, based on all of the materials and information
provided (and with the assistance of independent counsel), post-spin Ameriprise
Financial would be in a position to continue to provide a high quality and
level of investment management services to the funds.
Investment Performance
The Board next focused on investment performance. The Board reviewed reports
documenting the fund's performance over one-, three- and/or five-year periods,
as well as the entire period during which its current portfolio manager has
managed the fund, and compared to relevant Lipper and market indices. The Board
took into account its determination in April 2005 that investment performance
either met expectations or, if not, that appropriate action (such as changes to
portfolio management) had been (or was being) pursued in order to help the fund
achieve its longer-term performance objective.
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 37
- --------------------------------------------------------------------------------
The Board also considered that it has received monthly performance reports for
the funds. The Board and its committees concluded in September 2005 that there
have been no significant deviations from April's overall performance data.
Cost of Services Provided
The Board evaluated comparative fees and the costs of services to be provided
under the current and proposed IMS Agreements, including fees charged by
RiverSource Investments to its institutional clients and paid to sub-advisers.
The Board studied RiverSource Investments' effort (i.e., its "pricing
philosophy") to set substantially all funds' total expense ratios at or below
the median expense ratio of a group of comparable mutual funds compiled by
Lipper, Inc. The Board observed that the proposed advisory fee changes are
designed to work in tandem with proposed changes to the administrative services
fees. It also noted that RiverSource Investments agreed to voluntarily imposed
expense caps or waivers to achieve this pricing objective whenever the expense
ratio exceeded the median expense ratio by more than three basis points unless
the higher ratio was due to the impact of the performance fee adjustment or was
due to the added costs associated with having subadvisers manage a fund. The
Board considered that, with respect to all funds, other than [Mid Cap Growth,
Small Cap Advantage, Strategic Allocation, Variable Portfolio Diversified
Equity Income and Variable Portfolio Mid Cap Growth], advisory fees under the
proposed IMS Agreements would stay the same or decrease (as indicated in Table
B-5, below) and that, with respect to [Diversified Equity Income, Mid Cap
Growth, Small Cap Advantage, VP Diversified Equity Income and VP Mid Cap
Growth], would increase under each applicable proposed IMS Agreement. The Board
accorded significant weight to the fact that the proposed changes in fee
schedules were intended primarily to achieve a rational pricing model applied
consistently across the various product lines in the fund family, while
assuring that overall fees for each fund are in line with the "pricing
philosophy." With respect to the equity and balanced funds, the Board also took
into account the effect of the proposed performance incentive adjustment on the
advisory fee. In this regard, the Board took into account its past
determinations regarding the appropriateness of (i) the use of the relevant
index for each fund for the comparison of performance; (ii) the methodology for
determining when the Board may change an index used to calculate the
performance incentive adjustment; (iii) the periods used for averaging the
funds' assets and computing investment performance; and (iv) the length of the
period over which performance is computed. Furthermore, the Board considered
that with respect to the relevant sub-advised funds, there was limited
opportunity
- --------------------------------------------------------------------------------
38 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
for these funds to achieve large scale growth and thus provide RiverSource
Investments with potential economies of scale.
The Board next considered the expected profitability to RiverSource Investments
and its affiliates derived from its relationship with the fund, recalling the
April 2005 determination that the profitability level was appropriate. The
Board noted that projected profitability of RiverSource Investments would allow
it to operate effectively and, at the same time, reinvest in its businesses.
The Board also considered that the proposed changes in advisory fees and the
mergers of certain funds would result in revenue gains, while taking into
account that these increases would not materially alter profit margins due to
expected increases in costs associated with the spin-off, particularly
rebranding and separation. CSFB also reported that Ameriprise Financial's
projected level of return on equity was generally reasonable in light of the
returns on equity of its industry competitors. In evaluating profitability, the
Board also considered the benefits Ameriprise Financial obtains through the use
of commission dollars paid on portfolio transactions for the funds and from
other business relationships that result from managing the funds. The Board
also considered the fees charged by Ameriprise Financial to its institutional
clients and paid to sub-advisers, noting the differences in services provided
in each case. In light of these considerations, the Board concluded that
projected profitability levels were appropriate.
Economies of Scale
The Board also considered the "breakpoints" in fees that would be triggered as
fund net asset levels grew and the extent to which shareholders would benefit
from such growth. The Board observed that the revised fee schedules under the
proposed IMS Agreement would continue to provide breakpoints similar to those
in place pursuant to the current IMS Agreement. Accordingly, the Board
concluded that the proposed IMS Agreement provides adequate opportunity for
shareholders to realize benefits as fund assets grew.
Other Considerations
In addition, the Board accorded weight to the fact that, under the proposed IMS
Agreement, RiverSource Investments is held to a higher standard of care than
under the current IMS Agreements. The Board also noted Ameriprise Financial's
commitment to a culture that adheres to ethical business practice, assigns
accountability to senior management and seeks to identify conflicts and propose
appropriate action to minimize the risks posed by the conflicts. Furthermore,
the Board recognized that it was not limited to considering management's
proposed contracts. In this regard, the Board evaluated the circumstances under
which it would consider the retention of
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 39
- --------------------------------------------------------------------------------
an investment adviser different from RiverSource Investments (or its
subsidiaries). The Board concluded, based on its consultation with independent
counsel, that pursuing the retention of a different adviser was not necessary,
primarily because, in its best judgment, RiverSource Investments continues to
be basically the same organization (from a functional and managerial
standpoint), as it was prior to the spin-off. The Board reasoned that
shareholders purchased shares of the funds with an expectation that the current
investment advisory organization would be servicing the funds.
As a result of all of the foregoing, the Board determined that the fees to be
paid under each proposed IMS Agreement were fair and reasonable in light of
services proposed to be provided.
Board Recommendation and Vote Required. For the foregoing reasons, the Board
recommends that shareholders of each fund approve the applicable proposed IMS
Agreement. The proposed IMS Agreement must be approved by the lesser of (a) a
majority of the fund's outstanding shares or (b) 67% of the shares voted at the
meeting, so long as more than 50% of the shares actually vote. If shareholders
approve the proposed IMS Agreement, it will take effect shortly after the
shareholder meeting. If the proposed IMS Agreement is not approved, the Board
will consider appropriate steps to take.
- --------------------------------------------------------------------------------
40 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
SECTION B -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
Voting. You are entitled to vote based on your total dollar interest in the
Fund. Each dollar is entitled to one vote. For those of you who cannot come to
the meeting, the Board is asking permission to vote for you. The shares will be
voted as you instruct either by mail, telephone or internet. Signed proxy cards
returned without instructions will be voted in favor of all proposals.
The corporation of which the Fund is part issues several series of common
stock. Each series is a separate fund. On the election of directors and the
amendment of the Articles of Incorporation, you vote together with the owners
of shares of all the other funds that are part of the corporation. On the
Reorganization and the IMS Agreement you vote together with the owners of the
other shares in your Fund.
In voting for Board members, you may vote all of your shares cumulatively. This
means that you have the right to give each nominee an equal number of votes or
divide the votes among the nominees as you wish. You have as many votes as the
number of dollars you own on the record date, multiplied by the number of Board
members to be elected. If you elect to withhold authority for any individual
nominee or nominees, you may do so by marking the box labeled "For All Except,"
and by striking the name of any excepted nominee, as is further explained on
the card itself. If you do withhold authority, the proxies will not vote shares
equivalent to the proportionate number applicable to the names for which
authority is withheld.
All votes count toward a quorum, regardless of how they are voted (For, Against
or Abstain). Broker non-votes will be counted toward a quorum but not toward
the approval of any proposals. (Broker non-votes are shares for which the
underlying owner has not voted and the broker holding the shares does not have
authority to vote.)
If your shares are held in an IRA account with Ameriprise Trust Company as
custodian, you have the right to instruct the IRA Custodian how to vote those
shares. The IRA Custodian will vote any shares for which it has not received
voting instructions in proportionately the same manner -- either For, Against,
or Abstain -- as other fund shareholders have voted.
Master/Feeder Funds. New Dimensions currently is part of a master/
feeder structure. The feeder fund seeks its investment objective by investing
its assets in a master fund with the same policies. The master fund invests in
and manages the securities. Immediately prior to the Reorganization, the Board
intends to withdraw the Fund's assets from the master fund.
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 41
- --------------------------------------------------------------------------------
Revoking Your Proxy. If you change your mind after you vote and you can attend
the meeting, simply inform the Secretary at the meeting that you will be voting
your shares in person. Also, if you change your mind after you vote, but cannot
attend the meeting, you may change your vote or revoke it by mail, telephone or
internet.
Simultaneous Meetings. The meeting will be held simultaneously with meetings of
other RiverSource mutual funds. Each proposal will be voted on separately by
shareholders of a corporation or by shareholders of a fund or by a class of
shares of the fund where appropriate. If any shareholder objects to the holding
of simultaneous meetings, the shareholder may move for an adjournment of his or
her fund's meeting to a time immediately after the simultaneous meetings so
that a meeting of that fund may be held separately. If a shareholder makes this
motion, the persons named as proxies will take into consideration the reasons
for the objection in deciding whether to vote in favor of the adjournment.
Solicitation of Proxies. The Board is asking for your vote and for you to vote
as promptly as possible. The investment manager will pay the expenses of the
solicitation. Supplementary solicitations may be made by mail, telephone,
electronic means or personal contact.
Shareholder Proposals. No proposals were received from shareholders. The Funds
are not required to hold regular meetings of shareholders each year. However,
meetings of shareholders are held from time to time and proposals of
shareholders that are intended to be presented at future shareholder meetings
must be submitted in writing to the Funds in reasonable time prior to the
solicitation of proxies for the meeting.
Dissenters' Right of Appraisal. Under Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act, Selling Fund shareholders are entitled to
assert dissenters' rights in connection with the Reorganization and obtain
payment of the "fair value" of their shares, provided that they comply with the
requirements of Minnesota law. A copy of the relevant provisions is attached as
Exhibit C.
Notwithstanding the provisions of Minnesota law, the SEC has taken the position
that use of state appraisal procedures by a mutual fund would be a violation of
Rule 22c-1, the forward pricing rule, under the 1940 Act. This rule states that
no mutual fund may redeem its shares other than at net asset value next
computed after receipt of a request for redemption. It is the SEC's position
that Rule 22c-1 supersedes appraisal provisions in state statutes.
In the interest of ensuring equal valuation for all shareholders, dissenters'
rights will be determined in accordance with the SEC's interpretation.
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42 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
As a result, if any shareholder elects to exercise dissenters' rights under
Minnesota law, the Selling Fund intends to submit this question to a court of
competent jurisdiction. In that event, a dissenting shareholder would not
receive any payment until the end of the court proceeding.
Other Business. The Board does not know at this time of any other business to
come before the meetings. If something does come up, the proxies will use their
best judgment to vote for you on the matter.
Adjournment. In the event that not enough votes in favor of the proposals are
received by the time scheduled for the meeting, the persons named as proxies
may move for one or more adjournments of the meeting for a period of not more
than 120 days in the aggregate to allow further solicitation of shareholders on
the proposals. Any adjournment requires the affirmative vote of a majority of
the voting power of the shares present at the meeting. The persons named as
proxies will vote in favor of adjournment those shares they are entitled to
vote that have voted in favor of the proposal. They will vote against any
adjournment those shares that have voted against the proposal. The investment
manager will pay the costs of any additional solicitation and of any adjourned
meeting. A shareholder vote may be taken on one or more of the items in this
proxy statement prior to adjournment if sufficient votes have been received.
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 43
- --------------------------------------------------------------------------------
SECTION C -- CAPITALIZATION, OWNERSHIP OF
FUND SHARES AND OTHER FUND INFORMATION
This section contains the following information about your fund, its investment
manager and the independent auditors:
Content
Table (all information is shown for the last fiscal year unless noted otherwise)
- ------------------------------------------------------------------------------------
C-1 Actual and pro forma capitalization of the Selling Fund and the Buying Fund
- ------------------------------------------------------------------------------------
C-2 Actual and pro forma ownership of fund shares
- ------------------------------------------------------------------------------------
C-3 Current management fee schedule for the Fund and other RiverSource funds
with similar investment objectives
- ------------------------------------------------------------------------------------
C-4 Fund payments made to the investment manager and its affiliates
- ------------------------------------------------------------------------------------
C-5 Brokerage commissions paid to a broker-dealer affiliate
- ------------------------------------------------------------------------------------
C-6 Shareholder approval of current management agreement
- ------------------------------------------------------------------------------------
C-7A Audit fees during the Fund's last two fiscal years
- ------------------------------------------------------------------------------------
C-7B Audit-related, tax and other fees during the Fund's last two fiscal years
- ------------------------------------------------------------------------------------
The Fund's Investment Manager and Distributor. RiverSource Investments is the
investment manager for the fund. Ameriprise Financial Services, Inc., a wholly
owned subsidiary of Ameriprise Financial, is the distributor for the fund. The
address for RiverSource Investments and Ameriprise Financial Services, Inc. is
200 Ameriprise Financial Center, Minneapolis, MN 55474.
President and Board of Directors of RiverSource Investments. William F.
Truscott is President of RiverSource Investments. The following individuals are
directors of RiverSource Investments. Except as otherwise noted, each director
is an officer of RiverSource Investments, 200 Ameriprise Financial Center,
Minneapolis, MN 55474. Directors: William F. Truscott, Ward D. Armstrong and
Michelle M. Keeley.
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44 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
Capitalization
The following table shows the capitalization of the Funds as of Sept. 30, 2005
and on a pro forma basis, assuming the proposed Reorganization had taken place.
Table C-1. Actual and Pro Forma Capitalization of the Selling Fund and the
Buying Fund
Net asset value Shares
Fund Net assets per share outstanding
New Dimensions
- -------------------------------------------------------------------------------
Class A $ 6,543,192,746 24.23 269,996,693
- -------------------------------------------------------------------------------
Class B 1,639,556,390 22.84 71,781,236
- -------------------------------------------------------------------------------
Class C 41,776,416 22.81 1,831,277
- -------------------------------------------------------------------------------
Class I 76,291,847 24.40 3,126,628
- -------------------------------------------------------------------------------
Class Y 2,351,528,369 24.38 96,470,277
- -------------------------------------------------------------------------------
Large Cap Equity
- -------------------------------------------------------------------------------
Class A 1,044,944,281 5.24 199,514,923
- -------------------------------------------------------------------------------
Class B 372,956,613 5.12 72,818,404
- -------------------------------------------------------------------------------
Class C 8,898,385 5.13 1,734,333
- -------------------------------------------------------------------------------
Class I 46,831,631 5.29 8,852,605
- -------------------------------------------------------------------------------
Class Y 253,870 5.27 48,212
- -------------------------------------------------------------------------------
Large Cap Equity - Pro Forma with New Dimensions
- -------------------------------------------------------------------------------
Class A 7,588,137,027 5.24 1,448,215,829
- -------------------------------------------------------------------------------
Class B 2,012,513,003 5.12 393,044,261
- -------------------------------------------------------------------------------
Class C 50,674,801 5.13 9,877,884
- -------------------------------------------------------------------------------
Class I 123,123,478 5.29 23,274,504
- -------------------------------------------------------------------------------
Class Y 2,351,782,239 5.27 446,258,529
- -------------------------------------------------------------------------------
Ownership of Fund Shares
The following table provides information on shareholders who owned more than 5%
of each Fund's outstanding shares as of Sept. 30, 2005. As of Sept. 30, 2005,
officers and directors of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 45
- --------------------------------------------------------------------------------
Table C-2. Actual and Pro Forma Ownership of Fund Shares
Percent of
Percent shares held
of shares following the
Fund 5% owners held reorganization
New Dimensions
- --------------------------------------------------------------------------
Class A (1) 5% 4%
- --------------------------------------------------------------------------
Class B None -- --
- --------------------------------------------------------------------------
Class C None -- --
- --------------------------------------------------------------------------
Class I (2) 98% 61%
- --------------------------------------------------------------------------
Class Y (3) 85% 85%
- --------------------------------------------------------------------------
Large Cap Equity
- --------------------------------------------------------------------------
Class A (4) 5% *
- --------------------------------------------------------------------------
Class B None -- --
- --------------------------------------------------------------------------
Class C None -- --
- --------------------------------------------------------------------------
Class I (5) 98% 37%
- --------------------------------------------------------------------------
Class Y (6) 95% *
- --------------------------------------------------------------------------
(1) Charles Schwab & Co. Inc., a brokerage firm, owns of record 5.16%.
(2) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.05%.
RiverSource Portfolio Builder Moderate Fund owns 20.54%. RiverSource
Portfolio Builder Aggressive Fund owns 19.59%. RiverSource Portfolio Builder
Total Equity Fund owns 19.20%. RiverSource Portfolio Builder Moderate
Conservative Fund owns 5.89%.
(3) Ameriprise Trust Company, Minneapolis, MN owns of record 85.28%.
(4) Charles Schwab & Co. Inc., a brokerage firm, owns of record 5.47%.
(5) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.40%.
RiverSource Portfolio Builder Moderate Fund owns 20.69%. RiverSource
Portfolio Builder Aggressive Fund owns 19.45%. RiverSource Portfolio Builder
Total Equity Fund owns 19.16%. RiverSource Portfolio Builder Moderate
Conservative Fund owns 5.65%.
(6) Charles Schwab & Co. Inc., a brokerage firm, owns of record 80.07%. Wells
Fargo Bank as Trustee of the Holland American Line, Minneapolis, MN owns
15.18%.
* Less than 1%.
- --------------------------------------------------------------------------------
46 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
The following table shows the management fee schedule for the fund and other
domestic equity funds managed by the investment manager.
Table C-3. Current Management Fee Schedule for the Fund and Other RiverSource
Funds with Similar Investment Objectives
- ------------------------------------------------------------------------------------------------------
Retail Funds Management Fee Fee Cap or Waivers(1)
(annual rate; in billions) (if applicable)
Aggressive Growth(2,4) First $.5 - .89%; next $.5 - .865%; next $1 - .84%; 1.53% until 5/31/06
next $1 - .815%; next $3 - .79%; over $6 - .765%
- ------------------------------------------------------------------------------------------------------
Disciplined Equity(2) First $1 - .60%; next $1 - .575%; next $1 - .55%; Disciplined Equity:
Growth(2,3) next $3 - .525%; next $6 - .50%; next $12 - .49%; 1.25% until 7/31/06
Large Cap Equity(2) over $24 - .48%
Large Cap Value(2) Large Cap Value:
Mid Cap Growth(2) 1.35% until 7/31/06
New Dimensions(2,3)
- ------------------------------------------------------------------------------------------------------
New Dimensions(2,5) First $.25 - .64%; next $.25 - .615%; 1.49% until 7/31/06
next $.25 - .59%; next $.25 - .565%;
next $1 - .54%; over $2 - .515%
- ------------------------------------------------------------------------------------------------------
Diversified Equity First $.5 - .53%; next $.5 - .505%;
Income(2,3) next $1 - .48%; next $1 - .455%;
Equity Value(2) next $3 - .43%; over $6 - .40%
Stock(2,3)
Strategic Allocation(2,3)
- ------------------------------------------------------------------------------------------------------
Dividend Opportunity(2) First $.5 - .61%; next $.5 - .585%; next $1 - .56%;
next $1 - .535%; next $3 - .51%; over $6 - .48%
- ------------------------------------------------------------------------------------------------------
Fundamental Growth(2,6) First $.5 - .78%; next $.5 - .78%; next $1 - .755%; 1.50% until 5/31/06
next $1 - .73%; next $3 - .705%; over $6 - .68%
Fundamental Value(2,7) First $.5 - .73%; next $.5 - .705%; next $1 - .68%;
Value(2,8) next $1 - .655%; next $3 - .63%; over $6 - .60%
- ------------------------------------------------------------------------------------------------------
Mid Cap Value(2) First $1 - .70%; next $1 - .675%; next $1 - .65%;
next $3 - .625%; next $6 - .60%; next $12 - .59%;
over $24 - .58%
- ------------------------------------------------------------------------------------------------------
Select Value(2,9) First $.5 - .78%; next $.5 - .755%; next $1 - .73%;
next $1 - .705%; next $3 - .68%; over $6 - .65%
- ------------------------------------------------------------------------------------------------------
Small Cap First $.25 - .74%; next $.25 - .715%;
Advantage(2,10) next $.25 - .69%; next $.25 - .665%;
next $1 - .64%; over $2 - .615%
- ------------------------------------------------------------------------------------------------------
Large Cap Equity(2,5) First $.25 - .97%; next $.25 - .945%; 1.55% until 5/31/06
- ------------------------------------------------------------------------------------------------------
Small Cap Value(2,11) next $.25 - .92%; next $.25 - .895%; over $1 - .87% 1.59% until 5/31/06
- ------------------------------------------------------------------------------------------------------
Small Cap Growth(2,12) First $.25 - .92%; next $.25 - .895%; 1.70% until 3/31/07
next $.25 - .87%; next $.25 - .845%;
next $1 - .82%; over $2 - .795%
- ------------------------------------------------------------------------------------------------------
Strategy Aggressive(2,4) First $1 - .60%; next $1 - .575%; next $1 - .55%;
next $3 - .525%; over $6 - .50%
- ------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 47
- --------------------------------------------------------------------------------
(1) The information is shown for Class A shares. Fees and expenses in excess of
the percentage shown will be waived. Fee caps for other classes of shares
will vary slightly based on the expenses of those classes.
(2) The fund has a PIA based on its performance compared to a Lipper index of
comparable funds over a rolling 12-month period.
(3) The fund is part of a master/feeder structure. Management fees are paid by
the portfolio on behalf of the fund.
(4) The fund has a subadvisory agreement with American Century Investment
Management, Inc. and Turner Investment Partners, Inc.
(5) The fund has subadvisory agreements with American Century Investment
Management, Inc., Lord, Abbett & Co. and Wellington Management Company,
LLP.
(6) The fund has subadvisory agreements with Wellington Management Company, LLP
and Goldman Sachs Asset Management L.P.
(7) The fund has a subadvisory agreement with Davis Advisors.
(8) The fund has a subadvisory agreement with Lord, Abbett & Co.
(9) The fund has a subadvisory agreement with Gabelli Asset Management Company.
(10) The fund has a subadvisory agreement with Kenwood Capital Management LLC.
(11) The fund has subadvisory agreements with Royce & Associates, Inc.; Goldman
Sachs Asset Management L.P.; Barrow, Hanley, Mewhinney & Strauss, Inc.;
Donald Smith & Co., Inc.; and Franklin Portfolio Associates.
(12) The fund has subadvisory agreements with RS Investment Management, L.P.,
Turner Investment Partners, Inc.; Bjurman, Barry & Associates and UBS
Global Asset Management (Americas) Inc.
Table C-4. Fund Payments to the Investment Manager and its Affiliates*
Gross
Fund Admin Dist IMS Service TA Custody
- ------------------------------------------------------------------------------------------------------------
New Dimensions 4,756,123 45,964,652 60,896,353 2,800,648 24,739,313 1,042,579
- ------------------------------------------------------------------------------------------------------------
* The Administrative Services Agreement ("Admin") is between the fund and
Ameriprise Financial. The Agreement of Distribution ("Dist") and
Shareholder Service Agreement ("Service") are between the fund and
Ameriprise Financial Services, Inc. The Investment Management Services
Agreement ("IMS") is between the fund and RiverSource Investments. The
Transfer Agent ("TA") Agreement is between the fund and RiverSource Service
Corporation. The Custodian Agreement ("Custody") is between the fund and
Ameriprise Trust Company. Services under these agreements will continue to
be provided after the IMS Agreement is approved.
Table C-5. Brokerage Commissions Paid to Broker-Dealer Affiliates
Broker/ Amount of % of All
Fund Dealer Commissions Commissions
- ------------------------------------------------------------------
New Dimensions AEIS(1) 108,435 0.37
- ------------------------------------------------------------------
(1) Wholly-owned subsidiary of Ameriprise Financial. The amount shown
represents brokerage clearing fees.
Table C-6. Dates Relating to Approval of Management Agreement
Date Last Reason
Date of Approved by Submitted to
Fund Contract Shareholders Shareholders
- --------------------------------------------------------------------
New Dimensions 12/1/02 11/13/2002 1
- --------------------------------------------------------------------
(1) Shareholders approved modifications to the performance incentive
adjustment.
- --------------------------------------------------------------------------------
48 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
The Fund's Independent Registered Public Accountant. The 1940 Act provides that
every registered investment company must be audited at least once each year by
independent registered public accountants selected by a majority of the
independent Board members. The Selling Fund's Board has selected KPMG LLP to be
the Fund's independent registered public accountant for the current fiscal
year. KPMG LLP, in accordance with Independence Standards Board Standard No. 1
(ISB No. 1), has confirmed in writing to the Board's Joint Audit Committee that
they are independent accountants with respect to the Fund.
The independent accountants examine the financial statements for the Fund that
are set forth in the annual report to shareholders and provide other requested
non-audit and tax-related services to the Fund. The Joint Audit Committee
reviewed and discussed the audited financial statements with RiverSource
Investments and reviewed with KPMG LLP the matters required to be discussed by
SAS 61 (for example, methods used to account for significant unusual
transactions).
The Joint Audit Committee does not consider other non-audit services provided
by KPMG LLP to be incompatible with maintaining the independence of KPMG LLP in
its audits of the Fund, taking into account representations from KPMG LLP, in
accordance with ISB No. 1, regarding its independence from the Fund and its
related entities.
Representatives of KPMG LLP are expected to be present at the meeting. They
will be given the opportunity to make a statement to shareholders and are
expected to be available to respond to any questions that may be raised at the
meeting.
Joint Audit Committee Pre-approval Policies and Procedures. Pursuant to the
pre-approval requirements of the Sarbanes-Oxley Act of 2002, all services to be
performed by KPMG LLP for the Fund; the Fund's investment adviser; and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the Fund, must be pre-approved by the
Joint Audit Committee.
Audit Fees. During the last two fiscal years, the aggregate fees paid to KPMG
LLP for professional services rendered for the audit of the annual financial
statements or services that are normally provided in connection with statutory
and regulatory filings for the fund were as follows:
Table C-7A. Audit Fees
During the Fund's last two fiscal years
Fund Last Fiscal Year Previous Fiscal Year
- --------------------------------------------------------------
New Dimensions 50,000 48,000
- --------------------------------------------------------------
- --------------------------------------------------------------------------------
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 49
- --------------------------------------------------------------------------------
The following table shows aggregate fees paid by the Fund to KPMG LLP in each
of the last two fiscal years for services that are not included in Table C-7A.
All of the services performed were pre-approved by the Joint Audit Committee.
o Audit-Related Fees. Assurance and related services that are reasonably
related to the performance of the audit or review
o Tax Fees. Tax compliance, tax consulting services related to Class I shares
and tax work related to fund mergers and liquidations.
o All Other Fees. All other services rendered by KMPG LLP.
Table C-7B. Audit-Related, Tax and Other Fees
During the Fund's last two fiscal years
Aggregate Audit- Aggregate Aggregate
Related Fees Tax Fees Other Fees
- -----------------------------------------------------------------------------------------------
Last Previous Last Previous Last Previous
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Fund Year Year Year Year Year Year
- -----------------------------------------------------------------------------------------------
New Dimensions $ 2,781 $ 3,484 $ 7,100 $ 6,650 $ 3,803 $ 0
- -----------------------------------------------------------------------------------------------
Aggregate Non-Audit Fees to New Dimensions, RiverSource Investments and its
Affiliates
For the year ended Sept. 30, 2005, the aggregate non-audit fees billed for
services rendered to the Fund, to the investment manager and to any entity
controlling, controlled by or under common control with the investment manager
that provides ongoing services to the funds was $100,684. For the year ended
Sept. 30, 2004, the aggregate amount was $137,034.
- --------------------------------------------------------------------------------
50 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT
- --------------------------------------------------------------------------------
Exhibit A
Form of Agreement and Plan of Reorganization
This Agreement and Plan of Reorganization dated as of ______, 2005 (the
"Agreement") is between AXP Dimensions Series, Inc. (the "Selling Corporation"),
a Minnesota corporation, on behalf of its series, RiverSource New Dimensions
Fund (the "Selling Fund"), and AXP Growth Series, Inc. (the "Buying
Corporation), a Minnesota corporation, on behalf of its series, RiverSource
Large Cap Equity Fund (the "Buying Fund), and RiverSource Investments, LLC
(solely for the purposes of Section 3c and 10 of the Agreement).
In consideration of their mutual promises, the parties agree as follows:
1. Shareholder Approval. The Selling Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the
transactions it contemplates (the "Reorganization"). The Buying Fund
agrees to furnish data and information, as reasonably requested, for the
proxy statement to be furnished to shareholders of the Selling Fund.
2. Reorganization.
a. Plan of Reorganization. The Reorganization will be a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code"). At the Closing, the Selling Corporation will
convey all of the assets of the Selling Fund to the Buying Fund. The
Buying Fund will assume all liabilities of the Selling Fund. At the
Closing, the Buying Corporation will deliver shares of the Buying Fund,
including fractional shares, to the Selling Corporation. The number of
shares will be determined by dividing the value of the net assets of
shares of the Selling Fund, computed as described in paragraph 3(a), by
the net asset value of one share of the Buying Fund, computed as
described in paragraph 3(b). The Selling Fund will not pay a sales
charge on the receipt of Buying Fund shares in exchange for the assets
of the Selling Fund. In addition, the shareholders of the Selling Fund
will not pay a sales charge on distribution to them of shares of the
Buying Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization
and all related acts necessary to complete the Reorganization (the
"Closing") will occur on the first day on which the New York Stock
Exchange (the "NYSE") is open for business following approval of
shareholders of the Selling Fund and receipt of all necessary regulatory
approvals, or such later date as the parties may agree.
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT A.1
- --------------------------------------------------------------------------------
3. Valuation of Net Assets.
a. The net asset value of shares of the Selling Fund will be computed as
of the close of regular trading on the NYSE on the day of Closing (the
"Valuation Date") using the valuation procedures in the Buying Fund's
prospectus.
b. The net asset value per share of shares of the Buying Fund will be
determined as of the close of regular trading on the NYSE on the
Valuation Date, using the valuation procedures in the Buying Fund's
prospectus.
c. At the Closing, the Selling Fund will provide the Buying Fund with a
copy of the computation showing the valuation of the net asset value per
share of shares of the Selling Fund on the Valuation Date. The Buying
Fund will provide the Selling Fund with a copy of the computation
showing the determination of the net asset value per share of shares of
the Buying Fund on the Valuation Date. Both computations will be
certified by an officer of RiverSource Investments, LLC, the investment
manager.
4. Liquidation and Dissolution of the Selling Fund.
a. As soon as practicable after the Valuation Date, the Selling
Corporation will liquidate the Selling Fund and distribute shares of the
Buying Fund to the Selling Fund's shareholders of record. The Buying
Fund will establish shareholder accounts in the names of each Selling
Fund shareholder, representing the respective pro rata number of full
and fractional shares of the Buying Fund due to each shareholder. All
issued and outstanding shares of the Selling Fund will simultaneously be
cancelled on the books of the Selling Corporation. The Buying Fund or
its transfer agent will establish shareholder accounts in accordance
with instructions from the Selling Corporation.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Corporation relating to the Selling Fund will be closed and no
further transfer of shares will be made.
c. Promptly after the distribution, the Buying Fund or its transfer agent
will notify each shareholder of the Selling Fund of the number of shares
distributed to the shareholder and confirm the registration in the
shareholder's name.
d. As promptly as practicable after the liquidation of the Selling Fund,
and in no event later than twelve months from the date of the Closing,
the Selling Fund will be dissolved.
- --------------------------------------------------------------------------------
A.2 RIVERSOURCE FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
5. Representations, Warranties and Covenants of the Buying Corporation. The
Buying Corporation represents and warrants to the Selling Fund as follows:
a. Organization, Existence, etc. The Buying Corporation is a corporation
duly organized, validly existing and in good standing under the laws of
the state of Minnesota and has the power to carry on its business as it
is now being conducted.
b. Registration as Investment Company. The Buying Fund is a series of the
Buying Corporation, registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end, management investment company.
c. Capitalization. The Buying Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share. All of
the outstanding shares have been duly authorized and are validly issued,
fully paid and non-assessable. Since the Buying Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the end of
the last fiscal year, and the subsequent unaudited semi-annual financial
statements, if any (the "Buying Fund Financial Statements"), fairly
present the financial position of the Buying Fund, and the results of
its operations and changes in its net assets for the periods shown.
e. Shares to be Issued Upon Reorganization. The shares to be issued in
connection with the Reorganization will be duly authorized and, at the
time of the Closing, will be validly issued, fully paid and
non-assessable.
f. Authority Relative to the Agreement. The Buying Corporation has the
power to enter into and carry out the obligations described in this
Agreement. The Agreement and the transactions contemplated by it have
been duly authorized by the Board of Directors of the Buying Corporation
and no other proceedings by the Buying Corporation or the Buying Fund
are necessary.
g. No Violation. The Buying Corporation is not in violation of its
Articles of Incorporation or By-Laws (the "Articles") or in default in
the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of,
any material contract or other instrument to which the Buying Fund is
subject. The transactions will not result in any violation of the
provisions of the Articles or any law, administrative regulation or
administrative or court decree applicable to the Buying Fund.
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT A.3
- --------------------------------------------------------------------------------
h. Liabilities. There are no liabilities of the Buying Fund other than:
o liabilities disclosed in the Buying Fund Financial Statements,
o liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
o liabilities previously disclosed to the Selling Fund, none of which
has been materially adverse to the business, assets or results of
operation of the Buying Fund.
i. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending
or, to the knowledge of the Buying Fund, threatened, that would
materially and adversely affect the Buying Fund, its financial condition
or the conduct of its business, or that would prevent or hinder
completion of the transactions contemplated by this Agreement. The
Buying Fund knows of no facts that might form the basis for the
institution of any such litigation, proceeding or investigation and the
Buying Fund is not a party to or subject to the provisions of any order,
decree or judgment.
j. Contracts. Except for contracts and agreements previously disclosed to
the Selling Corporation, the Buying Fund is not a party to or subject to
any material contract, debt instrument, plan, lease, franchise, license
or permit.
k. Taxes. The Buying Fund has qualified as a regulated investment company
under the Internal Revenue Code with respect to each taxable year since
commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the Closing,
the Buying Fund will (i) have filed all federal and other tax returns
and reports that have been required to be filed, (ii) have paid or
provided for payment of all federal and other taxes shown to be due on
such returns or on any assessments received, (iii) have adequately
provided for all tax liabilities on its books, (iv) except as disclosed
to the Selling Fund, not have had any tax deficiency or liability
asserted against it or question with respect thereto raised, and (v)
except as disclosed to the Selling Fund, not be under audit by the
Internal Revenue Service or by any state or local tax authority for
taxes in excess of those already paid.
l. Registration Statement. The Buying Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933 (the
"1933 Act") relating to the shares to be issued in the Reorganization.
At the time the Registration Statement becomes effective, at the time of
the shareholders' meeting and at the Closing,
- --------------------------------------------------------------------------------
A.4 RIVERSOURCE FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein not misleading. However, none of the representations
and warranties in this subsection apply to statements in, or omissions
from, the Registration Statement made in reliance on information
furnished by the Selling Fund for use in the Registration Statement.
6. Representations, Warranties and Covenants of the Selling Corporation. The
Selling Corporation represents and warrants to the Buying Fund as follows:
a. Organization, Existence, etc. The Selling Corporation is a corporation
duly organized, validly existing and in good standing under the laws of
the state of Minnesota and has the power to carry on its business as it
is now being conducted.
b. Registration as Investment Company. The Selling Fund is a series of the
Selling Corporation, registered under the 1940 Act as an open-end,
management investment company.
c. Capitalization. The Selling Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share. All of
the outstanding shares have been duly authorized and are validly issued,
fully paid and non-assessable. Since the Selling Fund is engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the end of
the last fiscal year, and the subsequent unaudited semi-annual financial
statements, if any (the "Selling Fund Financial Statements"), fairly
present the financial position of the Selling Fund, and the results of
its operations and changes in its net assets for the periods shown.
e. Authority Relative to the Agreement. The Selling Corporation has the
power to enter into and to carry out its obligations under this
Agreement. The Agreement and the transactions contemplated by it have
been duly authorized by the Board of Directors of the Selling
Corporation and no other proceedings by the Selling Corporation or the
Selling Fund are necessary.
f. No Violation. The Selling Corporation is not in violation of its
Articles or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the completion
of the transactions contemplated by it will not conflict with or
constitute a breach of, any material contract to which the Selling Fund
is subject. The transactions will not result in any violation of the
provisions of
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT A.5
- --------------------------------------------------------------------------------
the Articles or any law, administrative regulation or administrative or
court decree applicable to the Selling Fund.
g. Liabilities. There are no liabilities of the Selling Fund other than:
o liabilities disclosed in the Selling Fund Financial Statements,
o liabilities incurred in the ordinary course of business subsequent to
the date of the latest annual or semi-annual financial statements, or
o liabilities previously disclosed to the Buying Fund, none of which has
been materially adverse to the business, assets or results of
operation of the Selling Fund.
h. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending
or, to the knowledge of the Selling Fund, threatened, that would
materially and adversely affect the Selling Fund, its financial
condition or the conduct of its business, or that would prevent or
hinder completion of the transactions contemplated by this Agreement.
The Selling Fund knows of no facts that might form the basis for the
institution of any such litigation, proceeding or investigation and is
not a party to or subject to the provisions of any order, decree or
judgment.
i. Contracts. Except for contracts and agreements previously disclosed to
the Buying Corporation, the Selling Fund is not a party to or subject to
any material contract, debt instrument, plan, lease, franchise, license
or permit.
j. Taxes. The Selling Fund has qualified as a regulated investment company
under the Internal Revenue Code with respect to each taxable year since
commencement of its operations and will qualify as regulated investment
company at all times through the Closing. As of the Closing, the Selling
Fund will (i) have filed all federal and other tax returns and reports
that have been required to be filed, (ii) have paid or provided for
payment of all federal and other taxes shown to be due on such returns
or on any assessments received, (iii) have adequately provided for all
tax liabilities on its books, (iv) except as disclosed to the Buying
Fund, not have had any tax deficiency or liability asserted against it
or question with respect thereto raised, and (v) except as disclosed to
the Buying Fund, not be under audit by the Internal Revenue Service or
by any state or local tax authority for taxes in excess of those already
paid.
k. Fund Securities. All securities listed in the schedule of investments
of the Selling Fund as of the Closing will be owned by the Selling Fund
free and clear of any encumbrances, except as indicated in the schedule.
- --------------------------------------------------------------------------------
A.6 RIVERSOURCE FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
l. Registration Statement. The Selling Fund will cooperate with the
Acquiring Fund and will furnish information relating to the Selling
Corporation and the Selling Fund required in the Registration Statement.
At the time the Registration Statement becomes effective, at the time of
the shareholders' meeting and at the Closing, the Registration
Statement, as it relates to the Selling Corporation or the Selling Fund,
will not contain an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein not misleading.
However, the representations and warranties in this subsection apply
only to statements in or omissions from the Registration Statement made
in reliance upon information furnished by the Selling Corporation or the
Selling Fund for use in the Registration Statement.
7. Conditions to Obligations of the Buying Corporation. The obligations of the
Buying Corporation with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of
all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Selling Corporation and
the Selling Fund will have complied with this Agreement and each of the
representations and warranties in this Agreement will be true in all
material respects as of the Closing. An officer of the Selling
Corporation will provide a certificate to the Buying Fund confirming
that, as of the Closing, the representations and warranties set forth in
Section 6 are true and correct and that there have been no material
adverse changes in the financial condition, results of operations,
business, properties or assets of the Selling Fund since the date of its
last financial statement, except as otherwise indicated in any financial
statements, certified by an officer of the Selling Corporation, and
delivered to the Buying Fund on or prior to the last business day before
the Closing.
c. Regulatory Approvals.
o The Registration Statement referred to in Section 5(l) will be
effective and no stop orders under the 1933 Act will have been issued.
o All necessary approvals, consents and exemptions from federal and
state regulatory authorities will have been obtained.
d. Tax Opinion. The Buying Corporation will have received the opinion of
Ropes & Gray LLP dated as of the Closing, as to the federal
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT A.7
- --------------------------------------------------------------------------------
income tax consequences of the Reorganization to the Buying Fund and its
shareholders. For purposes of rendering their opinion, Ropes & Gray LLP
may rely, as to factual matters, upon the statements made in this
Agreement, the proxy statement which will be distributed to the
shareholders of the Selling Fund, and other written representations as
an officer of the Selling Corporation will have verified as of Closing.
The opinion of Ropes & Gray LLP will be to the effect that: (i) neither
the Selling Fund nor the Buying Fund will recognize any gain or loss
upon the transfer of the assets of the Selling Fund to, and assumption
of its liabilities by, the Buying Fund in exchange for shares of the
Buying Fund and upon the distribution of the shares to the Selling Fund
shareholders in exchange for their shares of the Selling Fund; (ii) the
shareholders of the Selling Fund who receive shares of the Buying Fund
in the Reorganization will not recognize any gain or loss on the
exchange of their shares of the Selling Fund for the shares of the
Buying Fund; (iii) the holding period and the basis of the shares
received by the Selling Fund shareholders will be the same as the
holding period and the basis of the shares of the Selling Fund
surrendered in the exchange; (iv) the holding period and the basis of
the assets acquired by the Buying Fund will be the same as the holding
period and the basis of the assets to the Selling Fund immediately prior
to the Reorganization.
e. Opinion of Counsel. The Buying Corporation will have received an
opinion of counsel for the Selling Corporation, dated as of the Closing,
to the effect that: (i) the Selling Corporation is a corporation duly
organized and validly existing under the laws of the state of Minnesota;
(ii) the Selling Fund is a series of the Selling Corporation, an
open-end investment company registered under the 1940 Act; (iii) this
Agreement and the Reorganization have been duly authorized and approved
by all requisite action of the Selling Corporation and the Selling Fund
and this Agreement has been duly executed by, and is a valid and binding
obligation of, the Selling Corporation.
f. Declaration of Dividend. The Selling Fund, prior to the Closing, has
declared a dividend or dividends, which, together with all previous such
dividends, shall have the effect of distributing to the Selling Fund
shareholders (i) all of the excess of (x) the Selling Fund's investment
income excludable from gross income under Section 103 of the Code over
(y) the Selling Fund's deductions disallowed under Sections 265 and 171
of the Code, (ii) all of the Selling Fund's investment company taxable
income as defined in Section 852 of the Code (in each case computed
without regard to any deduction for dividends paid) and (iii) all of the
Selling Fund's net capital gain
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A.8 RIVERSOURCE FUNDS -- PROXY STATEMENT
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realized (after reduction for any capital loss carryover), in each case
for the current taxable year (which will end on the Closing date) and
any preceding taxable years for which such a dividend is eligible to be
made under Section 855 of the Code.
8. Conditions to Obligations of the Selling Corporation. The obligations of
the Selling Corporation with respect to the Reorganization are subject to
the satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of
all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Buying Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as of
the Closing. An officer of the Buying Corporation will provide a
certificate to the Selling Fund confirming that, as of the Closing, the
representations and warranties set forth in Section 5 are true and
correct and that there have been no material adverse changes in the
financial condition, results of operations, business, properties or
assets of the Buying Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Buying Corporation, and delivered to the
Selling Fund on or prior to the last business day before the Closing.
c. Regulatory Approvals.
o The Registration Statement referred to in Section 5(l) will be
effective and no stop orders under the 1933 Act will have been issued.
o All necessary approvals, consents and exemptions from federal and
state regulatory authorities will have been obtained.
d. Tax Opinion. The Selling Corporation will have received the opinion of
Ropes & Gray LLP dated as of the Closing, as to the federal income tax
consequences of the Reorganization to the Selling Fund and its
shareholders. For purposes of rendering their opinion, Ropes & Gray LLP
may rely, as to factual matters, upon the statements made in this
Agreement, the proxy statement which will be distributed to the
shareholders of the Selling Fund, and other written representations as
an officer of the Buying Corporation will have verified as of Closing.
The opinion of Ropes & Gray LLP will be to the effect that: (i) neither
the Selling Fund nor the Buying Fund will recognize any gain or loss
upon the transfer of the assets of the Selling Fund to, and assumption
of its liabilities by, the Buying Fund
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RIVERSOURCE FUNDS -- PROXY STATEMENT A.9
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in exchange for shares of the Buying Fund and upon the distribution of
the shares to the Selling Fund shareholders in exchange for their shares
of the Selling Fund; (ii) the shareholders of the Selling Fund who
receive shares of the Buying Fund in the Reorganization will not
recognize any gain or loss on the exchange of their shares of the
Selling Fund for the shares of the Buying Fund; (iii) the holding period
and the basis of the shares received by the Selling Fund shareholders
will be the same as the holding period and the basis of the shares of
the Selling Fund surrendered in the exchange; (iv) the holding period
and the basis of the assets acquired by the Buying Fund will be the same
as the holding period and the basis of the assets to the Selling Fund
immediately prior to the Reorganization; and (v) the Buying Fund will
succeed to and take into account the items of the Selling Fund described
in Section 381(c) of the Code, subject to the conditions and limitations
specified in Sections 381, 382, 383, and 384 of the Code and the
regulations thereunder.
e. Opinion of Counsel. The Selling Corporation will have received the
opinion of counsel for the Buying Corporation, dated as of the Closing,
to the effect that: (i) the Buying Corporation is a corporation duly
organized and validly existing under the laws of the state of Minnesota;
(ii) the Buying Fund is a series of the Buying Corporation, an open-end
investment company registered under the 1940 Act; (iii) this Agreement
and the Reorganization have been authorized and approved by all
requisite action of the Buying Corporation and the Buying Fund and this
Agreement has been duly executed by, and is a valid and binding
obligation of, the Buying Corporation; and (iv) the shares to be issued
in the Reorganization are duly authorized and upon issuance in
accordance with this Agreement will be validly issued, fully paid and
non-assessable shares of the Buying Fund.
9. Amendment; Termination; Non-Survival of Covenants, Warranties and
Representations.
a. This Agreement may be amended in writing if authorized by the
respective Boards of Directors. The Agreement may be amended at any time
before or after approval by the shareholders of the Selling Fund, but
after shareholder approval, no amendment shall be made that
substantially changes the terms of paragraphs 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in
writing (i) any inaccuracies in the representations and warranties made
to it and (ii) compliance with any of the covenants or conditions made
for its benefit. However, neither party may waive
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A.10 RIVERSOURCE FUNDS -- PROXY STATEMENT
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the requirement to obtain shareholder approval or the requirement to
obtain a tax opinion.
c. The Selling Corporation may terminate this Agreement at any time prior
to the Closing by notice to the Buying Corporation if a material
condition to its performance or a material covenant of the Buying
Corporation on behalf of the Buying Fund is not fulfilled on or before
the date specified for its fulfillment or a material breach of this
Agreement is made by the Buying Corporation on behalf of the Buying Fund
and is not cured.
d. The Buying Corporation may terminate this Agreement at any time prior
to the Closing by notice to the Selling Corporation if a material
condition to its performance or a material covenant of the Selling
Corporation on behalf of the Selling Fund is not fulfilled on or before
the date specified for its fulfillment or a material breach of this
Agreement is made by the Selling Corporation on behalf of the Selling
Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Selling Fund, without any liability on the part of either party or its
respective directors, officers, or shareholders, on written notice to
the other party, and shall be terminated without liability as of the
close of business on Dec. 31, 2006, or a later date agreed upon by the
parties, if the Closing is not on or prior to that date.
f. The representations, warranties and covenants contained in this
Agreement, or in any document delivered in connection with this
Agreement, will survive the Reorganization.
10. Expenses. RiverSource Investments, LLC will pay the costs of carrying out
the provisions of this Agreement whether or not the Reorganization is
completed.
11. General.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of this
Agreement. Nothing in this Agreement is intended to confer upon any
other person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the state
of Minnesota.
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RIVERSOURCE FUNDS -- PROXY STATEMENT A.11
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12. Indemnification.
Each party will indemnify and hold the other and its officers and
directors (each an "Indemnitee") harmless from and against any liability
or other cost and expense, in connection with the defense or disposition
of any action, suit, or other proceeding, before any court or
administrative or investigative body in which the Indemnitee may be
involved as a party, with respect to actions taken under this Agreement.
However, no Indemnitee will be indemnified against any liability or
expense arising by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
the Indemnitee's position.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
signed.
AXP Dimensions Series, Inc.
on behalf of RiverSource New Dimensions Fund
By _____________________________________
Leslie L. Ogg
Vice President
AXP Growth Series, Inc.
on behalf of RiverSource Large Cap Equity Fund
By _____________________________________
Leslie L. Ogg
Vice President
The undersigned is a party to this Agreement for purposes of Section 3c
and 10 only.
RiverSource Investments, LLC
By _____________________________________
Paula R. Meyer
Senior Vice President and General Manager -- Mutual Funds
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A.12 RIVERSOURCE FUNDS -- PROXY STATEMENT
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Exhibit B
Matters Subject to Approval at Regular Meeting of Buying Fund
In addition to voting on proposals to elect Board members, to amend the
Articles of Incorporation and to approve the IMS Agreement, Buying Fund
shareholders will consider the following:
Approve or reject changes in fundamental investment policies.
The fund has some investment policies that are fundamental. This means the
policies can be changed only with the approval of shareholders. RiverSource
Investments recommended to the Board that certain of those policies be modified
in order to standardize the policies for all funds and to eliminate unnecessary
limitations.
RiverSource Investments believes that increased standardization will help to
promote operational efficiencies and facilitate monitoring of compliance with
fundamental investment policies. Adoption of a new or revised policy is not
intended to change current investment techniques employed for the fund. The
Board recommends the following changes to the fund's fundamental investment
policies:
A. Diversification
The Board recommends that the fund's fundamental policy with respect to
diversification be revised to give the fund the maximum flexibility permitted
by the 1940 Act. The Board recommends that shareholders vote to replace the
fund's current fundamental investment policy with the following policy
(additional or revised language is underlined):
The fund will not invest more than 5% of its total assets in securities of
any company, government, or political subdivision thereof, except the
limitation will not apply to investments in securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities or
other investment companies, and except that up to 25% of the fund's total
assets may be invested without regard to this 5% limitation.
The percentage limits in the proposed policy are required under the 1940 Act.
The amended policy makes one change from the current policy: subject to
applicable 1940 Act requirements, it would permit the fund to invest without
limit in the securities of other investment companies. Pursuant to an exemptive
order granted by the Securities and Exchange Commission (the "SEC"), the fund
may invest up to 25% of its total assets in a non-publicly offered money market
fund managed by RiverSource Investments (the "cash pool fund"). The cash pool
fund is not expected to
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RIVERSOURCE FUNDS -- PROXY STATEMENT B.1
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pay investment advisory, management, or transfer agent fees, although it may do
so subject to the conditions of the SEC order and Board approval. The cash pool
fund will incur minimal costs for services, such as custodian and auditor fees.
The investment manager anticipates that making use of the cash pool fund will
benefit the fund by enhancing the efficiency of cash management and by
providing increased short-term investment opportunities. If the proposal is
approved, the cash pool fund is expected to serve as a principal option for
managing the cash positions of the fund. Future amendments to the fund's
fundamental diversification policy would continue to require shareholder
approval.
B. Lending
The Board recommends that the fund's fundamental policies with respect to
lending be replaced with the following policy:
The Fund will not lend securities or participate in an interfund lending
program if the total of all such loans would exceed 33 1/3% of the Fund's
total assets except this fundamental investment policy shall not prohibit
the Fund from purchasing money market, loan participation or other debt
securities, or from entering into repurchases agreements.
Currently each of the funds has two policies with respect to lending. One
policy limits lending of portfolio securities to 30% of net assets and the
other policy limits cash loans to 5% of total assets. In addition, certain
funds have a policy prohibiting loans to the investment manager, or to board
members and officers of the investment manager or the fund. This third policy
simply states a prohibition of the 1940 Act and the fund is not required to
declare this policy as a fundamental policy. It is proposed that all three of
these policies be superseded by the policy stated above.
The proposal is not expected to materially affect the operation of the fund.
However, the proposed policy would clarify that the fund can participate in an
interfund borrowing and lending program with other RiverSource Funds, subject
to the requirements of an SEC exemptive order. A fund may only borrow money for
temporary purposes and not make investments. Appropriate safeguards will be
implemented to assure that the fund will not be disadvantaged by making loans
to affiliated funds. The proposed policy also would confirm the fund's ability
to invest in direct debt instruments such as loans and loan participations,
which are interests in amounts owed to another party by a company, government
or other borrower. These types of securities may have additional risks beyond
conventional debt securities because they may provide less legal protection for
the fund, or there may be a requirement that the fund supply additional cash to
a borrower on demand. Finally, the adoption of the proposed investment policy
will advance the goal of standardizing investment policies.
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B.2 RIVERSOURCE FUNDS -- PROXY STATEMENT
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C. Borrowing
The Board recommends that the fund's fundamental policy with respect to
Borrowing be replaced with the following policy:
The fund may not borrow money, except for temporary purposes (not for
leveraging or investment) in an amount not exceeding 331/3% of its total
assets (including the amount borrowed) less liabilities (other than
borrowings) immediately after the borrowings.
Funds typically borrow money to meet redemptions in order to avoid forced,
unplanned sales of portfolio securities. This technique allows RiverSource
Investments greater flexibility in managing the fund's cash flow. The current
policy limits borrowing to "emergency or extraordinary purposes". In order to
avoid debate over what constitutes emergency or extraordinary purposes, it is
proposed to revise the policy to reflect that the purposes, whatever the
circumstances, must be temporary. The fund may not use borrowing for leverage
or for investment purposes. In addition, the policy for certain funds includes
a prohibition on borrowing "property". The Board recommends the term be deleted
in order to standardize investment policies.
Board Recommendation and Vote Required. The Board recommends that shareholders
approve the proposed changes. Changes in fundamental policies must be approved
by the lesser of (a) a majority of the fund's outstanding shares or (b) 67% of
the shares voted at the meeting, so long as more than 50% of the shares
actually vote. If the any of the proposed changes is not approved, the fund
will continue to operate under its current policy.
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RIVERSOURCE FUNDS -- PROXY STATEMENT B.3
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Exhibit C
Minnesota Business Corporation Act Sections 302A.471 and 302A.473
Minnesota law requires that we provide you with a copy of the state law on
dissenters' rights. Notwithstanding the provisions of the law set out below,
the SEC has taken the position that use of state appraisal procedures by a
registered mutual fund such as the Fund would be a violation of Rule 22c-1, the
forward pricing rule, under the 1940 Act. As a result, if any shareholder
elects to exercise dissenters' rights under Minnesota law, the Fund intends to
submit this question to a court of competent jurisdiction. In that event, a
dissenting shareholder would not receive any payment until the end of the court
proceeding.
302A.471. Rights of dissenting shareholders
Subdivision 1. Actions creating rights. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that
it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption of
the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to
acquire shares, securities other than shares, or rights to purchase
shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter, or
to cumulate votes, except as the right may be excluded or limited
through the authorization or issuance of securities of an existing or
new class or series with similar or different voting rights; except
that an amendment to the articles of an issuing public corporation
that provides that section 302A.671 does not apply to a control share
acquisition does not give rise to the right to obtain payment under
this section;
(b) A sale, lease, transfer, or other disposition of all or substantially all
of the property and assets of the corporation, but not including a
transaction permitted without shareholder approval in section 302A.661,
subdivision 1, or a disposition in dissolution described in section
302A.725, subdivision 2, or a disposition pursuant to an order of a court,
or a
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RIVERSOURCE FUNDS -- PROXY STATEMENT C.1
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disposition for cash on terms requiring that all or substantially all of
the net proceeds of disposition be distributed to the shareholders in
accordance with their respective interests within one year after the date
of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a party, except as provided in subdivision 3, and
except for a plan of merger adopted under section 302A.626;
(d) A plan of exchange, whether under this chapter or under chapter 322B, to
which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, except as provided in subdivision
3; or
(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the
board directs that dissenting shareholders may obtain payment for their
shares.
Subdivision 2. Beneficial owners.
(a) A shareholder shall not assert dissenters' rights as to less than all of
the shares registered in the name of the shareholder, unless the
shareholder dissents with respect to all the shares that are beneficially
owned by another person but registered in the name of the shareholder and
discloses the name and address of each beneficial owner on whose behalf
the shareholder dissents. In that event, the rights of the dissenter shall
be determined as if the shares as to which the shareholder has dissented
and the other shares were registered in the names of different
shareholders.
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of
this section and section 302A.473, if the beneficial owner submits to the
corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
Subdivision 3. Rights not to apply.
(a) Unless the articles, the bylaws, or a resolution approved by the board
otherwise provide, the right to obtain payment under this section does not
apply to a shareholder of (1) the surviving corporation in a merger with
respect to shares of the shareholder that are not entitled to be voted on
the merger or (2) the corporation whose shares will be acquired by the
acquiring corporation in a plan of exchange with respect to shares of the
shareholder that are not entitled to be voted on the plan of exchange and
are not exchanged in the plan of exchange.
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C.2 RIVERSOURCE FUNDS -- PROXY STATEMENT
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(b) If a date is fixed according to section 302A.445, subdivision 1, for the
determination of shareholders entitled to receive notice of and to vote on
an action described in subdivision 1, only shareholders as of the date
fixed, and beneficial owners as of the date fixed who hold through
shareholders, as provided in subdivision 2, may exercise dissenters'
rights.
Subdivision 4. Other rights. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at
law or in equity to have a corporate action described in subdivision 1 set
aside or rescinded, except when the corporate action is fraudulent with regard
to the complaining shareholder or the corporation.
302A.473. Procedures for asserting dissenters' rights
Subdivision 1. Definitions.
(a) For purposes of this section, the terms defined in this subdivision have
the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action referred to in section 302A.471, subdivision 1 or the
successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a corporation
immediately before the effective date of the corporate action referred to
in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective date of
the corporate action referred to in section 302A.471, subdivision 1, up to
and including the date of payment, calculated at the rate provided in
section 549.09 for interest on verdicts and judgments.
Subdivision 2. Notice of action. If a corporation calls a shareholder meeting
at which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
Subdivision 3. Notice of dissent. If the proposed action must be approved by
the shareholders, a shareholder who is entitled to dissent under section
302A.471 and who wishes to exercise dissenters' rights must file with the
corporation before the vote on the proposed action a written notice of intent
to demand the fair value of the shares owned by the shareholder and must not
vote the shares in favor of the proposed action.
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RIVERSOURCE FUNDS -- PROXY STATEMENT C.3
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Subdivision 4. Notice of procedure; deposit of shares.
(a) After the proposed action has been approved by the board and, if necessary,
the shareholders, the corporation shall send to all shareholders who have
complied with subdivision 3 and to all shareholders entitled to dissent if
no shareholder vote was required, a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the
date by which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or the
beneficial owner on whose behalf the shareholder dissents, acquired
the shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief description of
the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting shareholder
must demand payment and deposit certificated shares or comply with any
restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all
other rights of a shareholder until the proposed action takes effect.
Subdivision 5. Payment; return of shares.
(a) After the corporate action takes effect, or after the corporation receives
a valid demand for payment, whichever is later, the corporation shall
remit to each dissenting shareholder who has complied with subdivisions 3
and 4 the amount the corporation estimates to be the fair value of the
shares, plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of income for a
fiscal year ending not more than 16 months before the effective date
of the corporate action, together with the latest available interim
financial statements;
(2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) A copy of section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a) from
a person who was not a shareholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a
person who was not a beneficial owner on that date. If the dissenter has
complied with subdivisions 3 and 4, the corporation shall forward to the
dissenter the materials described in paragraph (a),
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C.4 RIVERSOURCE FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
a statement of the reason for withholding the remittance, and an offer to
pay to the dissenter the amount listed in the materials if the dissenter
agrees to accept that amount in full satisfaction. The dissenter may
decline the offer and demand payment under subdivision 6. Failure to do so
entitles the dissenter only to the amount offered. If the dissenter makes
demand, subdivision 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit of
certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under
subdivision 4 and require deposit or restrict transfer at a later time.
Subdivision 6. Supplemental payment; demand. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to
the amount remitted by the corporation.
Subdivision 7. Petition; determination. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand,
either pay to the dissenter the amount demanded or agreed to by the dissenter
after discussion with the corporation or file in a court a petition requesting
that the court determine the fair value of the shares, plus interest. The
petition shall be filed in the county in which the registered office of the
corporation is located, except that a surviving foreign corporation that
receives a demand relating to the shares of a constituent domestic corporation
shall file the petition in the county in this state in which the last
registered office of the constituent corporation was located. The petition
shall name as parties all dissenters who have demanded payment under
subdivision 6 and who have not reached agreement with the corporation. The
corporation shall, after filing the petition, serve all parties with a summons
and copy of the petition under the rules of civil procedure. Nonresidents of
this state may be served by registered or certified mail or by publication as
provided by law. Except as otherwise provided, the rules of civil procedures
apply to this proceeding. The jurisdiction of the court is plenary and
exclusive. The court may appoint appraisers, with powers and authorities the
court deems proper, to receive evidence on and recommend the amount of the fair
value of the shares. The court shall determine whether the shareholder or
shareholders in question have fully complied with the requirements of this
section, and shall determine the fair value of the shares, taking into account
any and all factors the court finds relevant, computed by any method or
combination of methods that the court,
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RIVERSOURCE FUNDS -- PROXY STATEMENT C.5
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in its discretion, sees fit to use, whether or not used by the corporation or
by a dissenter. The fair value of the shares as determined by the court is
binding on all shareholders, wherever located. A dissenter is entitled to
judgment in cash for the amount by which the fair value of the shares as
determined by the court, plus interest, exceeds the amount, if any, remitted
under subdivision 5, but shall not be liable to the corporation for the amount,
if any, by which the amount, if any, remitted to the dissenter under
subdivision 5 exceeds the fair value of the shares as determined by the court,
plus interest.
Subdivision 8. Costs; fees; expenses.
(a) The court shall determine the costs and expenses of a proceeding under
subdivision 7, including the reasonable expenses and compensation of any
appraisers appointed by the court, and shall assess those costs and
expenses against the corporation, except that the court may assess part or
all of those costs and expenses against a dissenter whose action in
demanding payment under subdivision 6 is found to be arbitrary, vexatious,
or not in good faith.
(b) If the court finds that the corporation has failed to comply substantially
with this section, the court may assess all fees and expenses of any
experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily,
vexatiously, or not in good faith in bringing the proceeding, and may be
awarded to a party injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any.
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C.6 RIVERSOURCE FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
Exhibit D
Prospectus [RiverSource Investments Logo]
RiverSource(SM)
Large Cap Equity Fund
Prospectus Oct. 3, 2005
> RiverSource Large Cap Equity Fund (formerly AXP(R)Large Cap Equity Fund)
seeks to provide shareholders with long-term growth of capital.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
You may qualify for sales charge discounts on purchases of Class A shares.
Please notify your financial advisor or investment professional if you have
other accounts holding shares of RiverSource funds to determine whether you
qualify for a sales charge discount. See "Buying and Selling Shares" for more
information.
Not FDIC Insured o May Lose Value o No Bank Guarantee
Table of Contents
The Fund 3p
Objective 3p
Principal Investment Strategies 3p
Principal Risks 4p
Past Performance 5p
Fees and Expenses 8p
Other Investment Strategies and Risks 9p
Fund Management and Compensation 10p
Buying and Selling Shares 15p
Transactions through Unaffiliated
Financial Intermediaries 15p
Valuing Fund Shares 16p
Investment Options 16p
Purchasing Shares 18p
Sales Charges 20p
Exchanging/Selling Shares 25p
Distributions and Taxes 30p
Dividends and Capital
Gain Distributions 30p
Reinvestments 30p
Taxes 30p
Financial Highlights 32p
CORPORATE REORGANIZATION
On Sept. 30, 2005, Ameriprise Financial, Inc. (Ameriprise Financial)
(formerly American Express Financial Corporation) was spun off to
shareholders of its parent corporation, American Express Company
(American Express), and is now a separate public company, trading under
the ticker symbol AMP. Ameriprise Financial provides administrative
services to the Fund and is the parent company of the Fund's investment
manager, RiverSource Investments, LLC; 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). On Oct. 1, 2005, the Fund changed its name, such that it no
longer is branded AXP(R). The Fund now bears the RiverSource(SM) brand.
Ameriprise Financial and its subsidiaries are no longer affiliated with
American Express.
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2p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
The Fund
OBJECTIVE
RiverSource Large Cap Equity Fund (the Fund) seeks to provide shareholders with
long-term growth of capital. Because any investment involves risk, achieving
this objective cannot be guaranteed.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, at least 80% of the Fund's net assets are
invested in equity securities of companies with a market capitalization greater
than $5 billion at the time of purchase. The Fund may invest in income-producing
equity securities, such as dividend paying stocks, convertible securities and
preferred stocks. The Fund will provide shareholders with at least 60 days'
notice of any change in the 80% policy.
In pursuit of the Fund's objective, the investment manager (RiverSource
Investments, LLC) will hold both growth and value companies and at times may
favor one more than the other based on available opportunities.
When optimizing for growth, the investment manager invests in companies it
believes to have above-average long-term growth potential, or technological
superiority, and it selects investments based, among other factors, on:
o Effective management.
o Financial strength.
o Competitive market or product position.
o Technological advantage relative to other companies.
When optimizing for value, the investment manager invests in companies that
appear to be undervalued by various measures or that may be temporarily out of
favor, but have good prospects for capital appreciation, and it selects
investments based, among other factors, on:
o Identifying a variety of large, well-established companies whose underlying
fundamentals are stable, or are anticipated to become stable, or whose
fundamentals are improving.
o Identifying stocks that are undervalued:
o because they have one or more ratios, such as price-to-earnings or
price-to-cash flow, that are low relative to the general market, or have a
yield that exceeds the market,
o because one or more of their valuation ratios are low relative to
historical levels for the stock,
o because one or more of their valuation ratios or other financial measures
make that stock attractive relative to its peers, or
o because they are undervalued relative to their intrinsic value, as
identified by the investment manager.
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3p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
In evaluating whether to sell a security, the investment manager considers
factors including, among others whether:
o The security is overvalued relative to other potential investments.
o The security has reached the investment manager's price objective.
o The company has met the investment manager's earnings and/or growth
expectations.
o Potential losses, due to factors such as a market down-turn, can be
minimized.
o A more attractive opportunity has been identified.
PRINCIPAL RISKS
Please remember that with any mutual fund investment you may lose money.
Principal risks associated with an investment in the Fund include:
Active Management Risk. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to make
investment decisions that are suited to achieving the Fund's investment
objective. Due to its active management, the Fund could underperform other
mutual funds with similar investment objectives.
Issuer Risk. An issuer may perform poorly, and therefore, the value of its
stocks and bonds may decline. Poor performance may be caused by poor management
decisions, competitive pressures, breakthroughs in technology, reliance on
suppliers, labor problems or shortages, corporate restructurings, fraudulent
disclosures, or other factors.
Market Risk. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the market
as a whole. The market value of securities may fluctuate, sometimes rapidly and
unpredictably. This risk is generally greater for small and mid-sized companies,
which tend to be more vulnerable to adverse developments. In addition, focus on
a particular style, for example, investment in growth or value securities, may
cause the Fund to underperform other mutual funds if that style falls out of
favor with the market.
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4p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
PAST PERFORMANCE
The following bar chart and table provide some illustration of the risks of
investing in the Fund by showing, respectively:
o how the Fund's performance has varied for each full calendar year shown on
the bar chart, and
o how the Fund's average annual total returns compare to recognized indexes
shown on the table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How the Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower. See "Fees and Expenses" for any current fee
waivers/expense caps.
Bar Chart. Class A share information is shown in the bar chart; the sales charge
for Class A shares is not reflected in the bar chart.
Table. The table shows total returns from hypothetical investments in Class A,
Class B, Class C and Class Y shares of the Fund. These returns are compared to
the indexes shown for the same periods. For purposes of the performance
calculation in the table we assumed:
o the maximum sales charge for Class A shares,
o sales at the end of the period and deduction of the applicable contingent
deferred sales charge (CDSC) for Class B and Class C shares,
o no sales charge for Class Y shares, and
o no adjustments for taxes paid by an investor on the reinvested income
and capital gains.
After-Tax Returns
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
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5p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
[BAR CHART]
CLASS A SHARE PERFORMANCE
(based on calendar years)
+27.57 +5.52
2003 2004
During the periods shown in the bar chart, the highest return for a calendar
quarter was +16.15% (quarter ended June 30, 2003) and the lowest return for a
calendar quarter was -4.93% (quarter ended Sept. 30, 2004).
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart; if reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The Fund's Class A year-to-date return at June 30, 2005 was +1.59%.
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6p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Average Annual Total Returns (for periods ended Dec. 31, 2004)
Since
1 year inception
RiverSource Large Cap Equity:
Class A
Return before taxes -0.55% +0.02%(a)
Return after taxes on distributions -1.55% -0.55%(a)
Return after taxes on distributions
and sale of fund shares -0.29% -0.29%(a)
Class B
Return before taxes -0.27% -0.09%(a)
Class C
Return before taxes +3.72% +1.40%(a)
Class Y
Return before taxes +5.63% +2.32%(a)
Russell 1000(R) Index
(reflects no deduction for fees, expenses or taxes) +11.40% +4.39%(b)
Lipper Large-Cap Core Funds Index +8.29% +2.27%(b)
(a) Inception date is March 28, 2002.
(b) Measurement period started April 1, 2002.
The Russell 1000(R) Index, an unmanaged index, measures the performance of the
1,000 largest companies in the Russell 3000 Index, and represents approximately
92% of the total market capitalization of the Russell 3000 Index.
The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap core
funds tracked by Lipper Inc. The index's returns include net reinvested
dividends. The Fund's performance is currently measured against this index for
purposes of determining the performance incentive adjustment. See "Fund
Management and Compensation" for more information.
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7p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
FEES AND EXPENSES
Fund investors pay various expenses. The table below describes the fees and
expenses that you may pay if you buy and hold shares of the Fund. Expenses are
based on the Fund's most recent fiscal year, adjusted to reflect current fees.
Shareholder Fees (fees paid directly from your investment)
Class A Class B Class C Class Y
Maximum sales charge (load) imposed on purchases(a)
(as a percentage of offering price) 5.75% none none none
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) none(b) 5% 1% none
Annual Fund Operating Expenses (expenses that are deducted from Fund
assets)
As a percentage of average daily net assets: Class A Class B Class C Class Y
Management fees(c) 0.57% 0.57% 0.57% 0.57%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(d) 0.36% 0.38% 0.38% 0.40%
Total 1.18% 1.95% 1.95% 0.97%
(a) This charge may be reduced depending on the value of your total investments
in RiverSource funds. See "Sales Charges."
(b) For Class A purchases over $1,000,000 on which no sales charge is assessed,
a 1% sales charge may apply if you sell your shares within one year after
purchase.
(c) Includes the impact of a performance incentive adjustment fee that
decreased the management fee by 0.02% for the most recent fiscal year. The
index against which the Fund's performance is measured for purposes of
determining the performance incentive adjustment is the Lipper Large-Cap
Core Funds Index. See "Fund Management and Compensation" for more
information.
(d) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee and other nonadvisory expenses and, for Class Y shares,
a shareholder service fee.
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8p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Examples
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
These examples assume that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. These
examples also assume that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
Class A(a) $688 $ 928 $1,188 $1,929
Class B $698(b) $1,013(b) $1,253(b) $2,079(c)
Class C $298(b) $ 613 $1,053 $2,280
Class Y $ 99 $ 309 $ 537 $1,194
(a) Includes a 5.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
You would pay the following expenses if you did not redeem your shares:
1 year 3 years 5 years 10 years
Class A(a) $688 $928 $1,188 $1,929
Class B $198 $613 $1,053 $2,079(b)
Class C $198 $613 $1,053 $2,280
Class Y $ 99 $309 $ 537 $1,194
(a) Includes a 5.75% sales charge.
(b) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
OTHER INVESTMENT STRATEGIES AND RISKS
Other Investment Strategies. In addition to the principal investment strategies
previously described, the Fund may invest in other securities and may use other
investment strategies that are not principal investment strategies.
Additionally, the Fund may use derivatives (financial instruments where the
value depends upon, or is derived from, the value of something else) such as
futures, options and forward contracts, to produce incremental earnings, to
hedge existing positions or to increase flexibility. Just as with securities in
which the Fund invests directly, derivatives are subject to a number of risks,
including market, liquidity, interest rate and credit risk. In addition, a
relatively small price movement in the underlying security, currency or index
may result in a substantial gain or loss for the Fund using derivatives. Even
though the Fund's policies permit the use of derivatives in this manner, the
portfolio managers are not required to use derivatives. For more information on
strategies and holdings, and the risks of such strategies, including other
derivative instruments that the Fund may use, see the Fund's Statement of
Additional Information (SAI) and its annual and semiannual reports.
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9p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Unusual Market Conditions. During unusual market conditions, the Fund may
temporarily invest more of its assets in money market securities than during
normal market conditions. Although investing in these securities would serve
primarily to avoid losses, this type of investing also could prevent the Fund
from achieving its investment objective. During these times, the portfolio
managers may make frequent securities trades that could result in increased
fees, expenses and taxes, and decreased performance.
Portfolio Turnover. Trading of securities may produce capital gains, which are
taxable to shareholders when distributed. Active trading may also increase the
amount of commissions or mark-ups paid to broker-dealers that the Fund pays when
it buys and sells securities. The Fund's historical portfolio turnover rate,
which measures how frequently the Fund buys and sells investments, is shown in
the "Financial Highlights."
Securities Transaction Commissions. Securities transactions involve the payment
by the Fund of brokerage commissions to broker-dealers, on occasion as
compensation for research or brokerage services (commonly referred to as "soft
dollars"), as the portfolio managers buy and sell securities for the Fund in
pursuit of its objective. A description of the policies governing the Fund's
securities transactions and the dollar value of brokerage commissions paid by
the Fund are set forth in the SAI. The brokerage commissions set forth in the
SAI do not include implied commissions or mark-ups (implied commissions) paid by
the Fund for principal transactions (transactions made directly with a dealer or
other counterparty), including most fixed income securities and certain
derivatives. In addition, brokerage commissions do not reflect other elements of
transaction costs, including the extent to which the Fund's purchase and sale
transactions may cause the market to move and change the market price for an
investment.
Although brokerage commissions and implied commissions are not reflected in the
expense table under "Fees and Expenses," they are reflected in the total return
of the Fund.
Directed Brokerage. The Fund's Board of Directors (Board) has adopted a policy
prohibiting the investment manager, or any subadviser, from considering sales of
shares of the Fund as a factor in the selection of broker-dealers through which
to execute securities transactions.
Additional information regarding securities transactions can be found in the
SAI.
FUND MANAGEMENT AND COMPENSATION
Investment Manager
RiverSource Investments, LLC (the investment manager or RiverSource
Investments), 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, is
the investment manager to the RiverSource funds, and is a wholly owned
subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Ameriprise
Financial is a financial planning and financial services company that has been
offering solutions for clients' asset accumulation, income management and
protection needs for more than 110 years. In addition to managing investments
for all of the RiverSource funds, RiverSource Investments manages investments
for itself and its affiliates. For institutional clients, RiverSource
Investments and its affiliates provide investment management and related
services, such as separate account asset management, institutional trust and
custody, and employee benefit plan administration, as well as other investment
products. For all of its clients, RiverSource Investments seeks to allocate
investment opportunities in an equitable manner over time. See the SAI for more
information.
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10p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
The Fund pays RiverSource Investments a fee for managing its assets. Under the
Investment Management Services Agreement (Agreement), the fee for the most
recent fiscal year was 0.57% of the Fund's average daily net assets, including
an adjustment under the terms of a performance incentive arrangement. The
adjustment is computed by comparing the Fund's performance to the performance of
an index of comparable funds published by Lipper Inc. The index against which
the Fund's performance is currently measured for purposes of the performance
incentive adjustment is the Lipper Large-Cap Core Funds Index. In certain
circumstances, the Fund's Board may approve a change in the index. The maximum
adjustment (increase or decrease) is 0.12% of the Fund's average net assets on
an annual basis. Under the Agreement, the Fund also pays taxes, brokerage
commissions, and nonadvisory expenses. A discussion regarding the basis for the
Board approving the Agreement is available in the Fund's most recent shareholder
report.
Portfolio Manager(s). The portfolio managers responsible for the day-to-day
management of the Fund are:
Robert Ewing, CFA, Portfolio Manager
o Managed the Fund since 2004.
o Joined RiverSource Investments (previously American Express Financial
Corporation (AEFC)) in 2002.
o Prior to that, Analyst and Portfolio Manager at Fidelity Investments from
1990 to 2002.
o Began investment career in 1988.
o BS, Boston College Carroll School of Management.
Nick Thakore, Portfolio Manager
o Managed the Fund since 2004.
o Joined RiverSource Investments (previously AEFC) in 2002.
o Prior to that, Analyst and Portfolio Manager at Fidelity Investments from
1993 to 2002.
o Began investment career in 1993.
o MBA, Wharton School at University of Pennsylvania.
Mr. Thakore provides direct day-to-day management for approximately one-third of
the portfolio optimizing for growth. Mr. Ewing provides direct day-to-day
management for approximately one-third of the portfolio optimizing for value.
Messrs. Ewing and Thakore coordinate day-to-day management of the remainder of
the portfolio, allocating approximately one-third of the portfolio among a team
of research analysts who select investments in their allocations based on the
sectors that they cover. These allocations are generally consistent with the
sector weightings of the S&P 500 Index, an unmanaged index of common stocks, but
allocations may vary.
The SAI provides additional information about portfolio manager compensation,
management of other accounts and ownership of shares in the Fund.
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11p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Additional Services and Compensation
As described above, RiverSource Investments receives compensation for acting as
the Fund's investment manager. RiverSource Investments and its affiliates also
receive compensation for providing other services to the Fund.
Administration Services. Ameriprise Financial, 200 Ameriprise Financial Center,
Minneapolis, Minnesota 55474, provides or compensates others to provide
administrative services to the RiverSource funds. These services include
administrative, accounting, treasury, and other services. Fees paid by the Fund
for these services are included under "Other expenses" in the expense table
under "Fees and Expenses."
Custody Services. Ameriprise Trust Company, 200 Ameriprise Financial Center,
Minneapolis, Minnesota 55474 (the custodian or Ameriprise Trust Company),
provides custody services to all but a limited number of the RiverSource funds,
for which U.S. Bank National Association provides custody services. In addition,
Ameriprise Trust Company is paid for certain transaction fees and out-of-pocket
expenses incurred while providing services to the funds. Fees paid by the Fund
for these services are included under "Other expenses" in the expense table
under "Fees and Expenses."
Distribution Services. Ameriprise Financial Services, Inc., 70100 Ameriprise
Financial Center, Minneapolis, Minnesota 55474 (the distributor or Ameriprise
Financial Services), provides underwriting and distribution services to the
RiverSource funds. Under the Distribution Agreement and related distribution and
shareholder servicing plan(s), the distributor receives distribution and
shareholder servicing fees. The distributor pays a portion of these fees to
financial advisors and retains a portion of these fees to support its
distribution and shareholder servicing activity. For third party sales, the
distributor re-allows a portion of these fees to the financial intermediaries
that sell Fund shares and provide services to shareholders, and retains a
portion of these fees to support its distribution and shareholder servicing
activity. Fees paid by the Fund for these services are set forth under
"Distribution (12b-1) fees" in the expense table under "Fees and Expenses." More
information on how these fees are used is set forth under "Investment Options"
and in the SAI. The distributor also administers any sales charges paid by an
investor at the time of purchase or at the time of sale (deferred sales charge).
See "Shareholder Fees (fees paid directly from your investment)" under "Fees and
Expenses" for the scheduled sales charge of each share class. See "Buying and
Selling Shares" for variations in the scheduled sales charges, and for how these
sales charges are used by the distributor. See "Other Investment Strategies and
Risks" for Fund policy regarding directed brokerage.
Transfer Agency Services. RiverSource Service Corporation, 70100 Ameriprise
Financial Center, Minneapolis, Minnesota 55474 (the transfer agent or
RiverSource Service Corporation), provides or compensates others to provide
transfer agency services to the RiverSource funds. The RiverSource funds pay the
transfer agent a fee, which varies by share class, as set forth in the SAI and
reimburses the transfer agent for its out-of-pocket expenses incurred while
providing these transfer agency services to the funds. Fees paid by the Fund for
these services are included under "Other expenses" in the expense table under
"Fees and Expenses." RiverSource funds are primarily sold through Ameriprise
Financial Services which is allocated a portion of these fees for providing
services to Fund shareholders. RiverSource Service Corporation may also pay a
portion of these fees to other financial intermediaries that provide
sub-recordkeeping and other services to Fund shareholders.
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12p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
The SAI provides additional information about the services provided and the fee
schedules for the agreements set forth above.
Payments to Financial Intermediaries
RiverSource Investments and its affiliates may make additional cash payments out
of their own resources to financial intermediaries, such as broker-dealers,
banks, qualified plan administrators and recordkeepers, or other institutions,
including inter-company allocation of resources to affiliated broker-dealers
such as Ameriprise Financial Services (financial intermediaries) in connection
with the sale of shares of the Fund and/or the provision of services to the Fund
or its shareholders. These payments may create an incentive for the financial
intermediary, its employees or registered representatives to recommend or sell
shares of the Fund to its customers. These payments and inter-company
allocations are in addition to any 12b-1 distribution and/or shareholder service
fees or other amounts paid by the Fund under distribution or shareholder
servicing plans, or paid by the Fund for shareholder account maintenance,
sub-accounting or recordkeeping services provided directly by the financial
intermediary providing such services. In exchange for these cash payments and
inter-company allocations, RiverSource Investments and its affiliates may
receive preferred access to registered representatives of a financial
intermediary (for example, the ability to make presentations in branch offices
or at conferences) or preferred access to customers of the financial
intermediary (for example, the ability to advertise or directly interact with
the financial intermediary's customers in order to sell the Fund). These
arrangements are sometimes referred to as "revenue sharing payments." In some
cases, these arrangements may create an incentive for a financial intermediary
or its representatives to recommend or sell shares of a fund and may create a
conflict of interest between a financial intermediary's financial interest and
its duties to its customers. Please contact the financial intermediary through
which you are purchasing shares of the Fund for details about any payments it
may receive in connection with the sale of Fund shares or the provision of
services to the Fund.
These payments and inter-company allocations are usually calculated based on a
percentage of fund sales, and/or as a percentage of fund assets attributable to
a particular financial intermediary. These payments may also be negotiated based
on other criteria or factors including, but not limited to, the financial
intermediary's affiliation with the investment manager, its reputation in the
industry, its ability to attract and retain assets, its access to target
markets, its customer relationships and the scope and quality of services it
provides. The amount of payment or inter-company allocation may vary by
financial intermediary and by type of sale (e.g. purchases of different share
classes or purchases of the Fund through a qualified plan or through a wrap
program) and may be significant.
From time to time, RiverSource Investments and its affiliates may make other
payments, including non-cash compensation, to financial intermediaries to the
extent permitted by law, including providing non-cash compensation to financial
intermediaries or their representatives in the form of gifts of nominal value,
occasional meals, tickets, or other entertainment, support for due diligence
trips, training and educational meetings, or conference sponsorships, support
for recognition programs, and other forms of non-cash compensation permissible
under regulations to which these financial intermediaries and their
representatives are subject.
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13p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Additional Management Information
Manager of Manager Exemption. The Fund operates under an order from the
Securities and Exchange Commission that permits RiverSource Investments, subject
to the approval of the Board, to appoint a subadviser or change the terms of a
subadvisory agreement for the Fund without first obtaining shareholder approval.
The order permits the Fund to add or change unaffiliated subadvisers or the fees
paid to subadvisers from time to time without the expense and delays associated
with obtaining shareholder approval of the change.
Affiliated Funds-of-Funds. RiverSource Investments also serves as investment
manager to the RiverSource Portfolio Builder Funds (Portfolio Builder Funds), a
group of six funds-of-funds that provide asset-allocation services to
shareholders by investing in shares of other RiverSource funds, including the
Fund. The Fund may experience relatively large purchases or redemptions from the
Portfolio Builder Funds. Although RiverSource Investments seeks to minimize the
impact of these transactions by structuring them over a reasonable period of
time, the Fund may experience increased expenses as it buys and sells securities
to manage transactions for the Portfolio Builder Funds. In addition, because the
Portfolio Builder Funds may own a substantial portion of the Fund, a redemption
by the Portfolio Builder Funds could cause the Fund's expense ratio to increase
as the Fund's fixed costs would be spread over a smaller asset base. RiverSource
Investments monitors expense levels and is committed to offering funds that are
competitively priced. RiverSource Investments will report to the Fund's Board on
the steps it has taken to manage any potential conflicts.
Fund Holdings Disclosure. The Fund's Board has adopted policies and procedures
that govern the timing and circumstances of disclosure to shareholders and third
parties of information regarding the securities owned by the Fund. A description
of these policies and procedures is included in the Fund's SAI.
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14p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Buying and Selling Shares
TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES
Where authorized by the distributor, shares of the Fund may be available through
certain 401(k) or other qualified plans, banks, broker-dealers or other
institutions (financial intermediaries). These financial intermediaries may
charge you additional fees for the services they provide and they may have
different policies not described in this prospectus. Some policy differences may
include different minimum investment amounts, exchange privileges, fund choices
and cutoff times for investments. Additionally, recordkeeping, transaction
processing and payments of distributions relating to your account may be
performed by the financial intermediaries or their representatives through whom
shares are held. Since the Fund may not have a record of your transactions, you
should always contact the financial intermediary through whom you purchased the
Fund to make changes to or give instructions concerning your account or to
obtain information about your account. The Fund and the distributor are not
responsible for the failure of one of these financial intermediaries to carry
out its obligations to its customers.
Availability and Transferability of Fund Shares. Please consult your investment
professional or financial intermediary to determine availability of the Fund.
Currently, RiverSource funds may be purchased or sold through affiliated
broker-dealers of RiverSource Investments, including Ameriprise Financial
Services and Securities America, Inc. (Securities America), and through a
limited number of unaffiliated institutions. If you set up an account at another
financial intermediary, you will not be able to transfer RiverSource fund
holdings to that account unless that institution has obtained a selling
agreement with the distributor of the RiverSource funds. If you set up an
account with an unaffiliated financial intermediary that does not have, and is
unable to obtain, such a selling agreement, you must either maintain your
position with Ameriprise Financial Services or Securities America, find another
financial intermediary with such a selling agreement, or sell your shares,
paying any applicable deferred sales charge. Please be aware that transactions
in taxable accounts would generate a taxable event and may result in an
increased income tax liability.
For more information, please call RiverSource Service Corporation at (888)
791-3380.
The public offering price for Class A shares of the Fund is the net asset value
(NAV) plus a sales charge, and for Class B, C, and Y shares, the NAV. Orders in
good form are priced at the NAV next determined after you place your order. Good
form or good order means that your instructions have been received in the form
required by the distributor. This may include, for example, providing the fund
name and account number, the amount of the transaction and all required
signatures. For more information, refer to the sections on "Purchasing Shares"
and "Exchanging/Selling Shares," or contact your financial advisor or investment
professional. If you buy or sell shares through an authorized financial
intermediary, consult that firm to determine its procedures for accepting and
processing orders. The financial intermediary may charge a fee for its services.
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15p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
VALUING FUND SHARES
The NAV is the value of a single share of the Fund. The NAV is determined by
dividing the value of the Fund's assets, minus any liabilities, by the number of
shares outstanding. The NAV is calculated as of the close of business on the New
York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day that
the NYSE is open. The Fund's securities are valued primarily on the basis of
market quotations obtained from outside pricing services approved and monitored
under procedures adopted by the Board. Certain short-term securities with
maturities of 60 days or less are valued at amortized cost.
When reliable market quotations are not readily available, securities are priced
at fair value based on procedures adopted by the Board. These procedures are
also used when the value of a security held by the Fund is materially affected
by events that occur after the close of the primary market on which the security
is traded but prior to the time as of which the Fund's NAV is determined.
Valuing securities at fair value involves reliance on judgment. The fair value
of a security is likely to differ from any available quoted or published price.
Foreign investments are valued in U.S. dollars. Some of the Fund's securities
may be listed on foreign exchanges that trade on weekends or other days when the
Fund does not price its shares. In that event, the NAV of the Fund's shares may
change on days when shareholders will not be able to purchase or sell the Fund's
shares.
INVESTMENT OPTIONS
1. Class A shares are sold to the public with a sales charge at the time of
purchase and an annual distribution and shareholder servicing (12b-1) fee of
0.25%.
2. Class B shares are sold to the public with a contingent deferred sales charge
(CDSC) and an annual distribution and shareholder servicing (12b-1) fee of
1.00%.
3. Class C shares are sold to the public without a sales charge at the time of
purchase and with an annual distribution and shareholder servicing (12b-1)
fee of 1.00%. Class C shares redeemed within than one year after purchase may
be subject to a CDSC.
4. Class Y shares are sold to qualifying institutional investors without a sales
charge or distribution fee, but with a separate shareholder servicing fee of
0.10%. Please see the SAI for information on eligibility requirements to
purchase Class Y shares.
The distribution and shareholder servicing fees for Class A, Class B and Class C
shares are subject to the requirements of Rule 12b-1 under the Investment
Company Act of 1940, as amended, and are used to reimburse the distributor for
certain expenses it incurs in connection with distributing the Fund's shares and
providing services to Fund shareholders. These expenses include payment of
distribution and shareholder servicing fees to financial intermediaries that
sell shares of the Fund. Financial intermediaries receive shareholder servicing
fees equal to 0.25% of the average daily net assets of Class A, Class B and
Class C shares sold and held through them. For Class A and Class B shares, the
distributor begins to pay these fees immediately after purchase. For Class C
shares, the distributor begins to pay these fees one year after purchase.
Financial intermediaries also receive distribution fees equal to 0.75% of the
average daily net assets of Class C shares sold and held through them, which the
distributor begins to pay one year after purchase. For Class B shares, the
Fund's distributor retains the 0.75% distribution fee in order to finance the
payment of sales commissions to financial
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16p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
intermediaries that sell Class B shares, and to pay for other distribution
related expenses. Financial intermediaries may compensate their financial
advisors and investment professionals with the shareholder servicing and
distribution fees paid to them by the distributor.
The shareholder servicing fees for Class Y shares are used to reimburse the
distributor for providing services and assistance to shareholders regarding
ownership of their shares or their accounts.
The Fund also offers an additional class of shares, Class I, exclusively to
certain institutional investors. Class I shares are made available through a
separate prospectus supplement provided to investors eligible to purchase the
shares.
Investment options summary
The Fund offers different classes of shares. There are differences among the
fees and expenses for each class. Not everyone is eligible to buy every class.
After determining which classes you are eligible to buy, decide which class best
suits your needs. Your financial advisor or investment professional can help you
with this decision.
The following table shows the key features of each class:
Class A Class B Class C Class Y
- ---------------- -------------- --------------- ------------- ---------------
Availability Available to Available to Available Limited to
all all investors. to all qualifying
investors. investors. institutional
investors.
- ---------------- -------------- --------------- ------------- ---------------
Initial Sales Yes. Payable No. Entire No. Entire No. Entire
Charge at time of purchase purchase purchase
purchase. price is price is price is
Lower sales invested in invested in invested in
charge for shares of the shares of shares of the
larger Fund. the Fund. Fund.
investments.
- ---------------- -------------- --------------- ------------- ---------------
Deferred Sales On purchases Maximum 5% 1% CDSC may None.
Charge over CDSC during apply if
$1,000,000, the first you sell
1% CDSC may year your shares
apply if you decreasing to within one
sell your 0% after six year after
shares years. purchase.
within one
year after
purchase.
- ---------------- -------------- --------------- ------------- ---------------
12b-1 Yes. 0.25% Yes. 1.00% Yes. 1.00% Yes. 0.10%
Distribution
Fee and/or
Shareholder
Service Fee*
- ---------------- -------------- --------------- ------------- ---------------
Conversion to N/A Yes, No. No.
Class A automatically
in ninth year
of ownership.
- ---------------- -------------- --------------- ------------- ---------------
* The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940, as amended, that allows it to pay distribution and shareholder
servicing-related expenses for the sale of Class A, Class B and Class C
shares. The Fund has also adopted a separate shareholder servicing plan to
pay for servicing-related expenses related to Class Y shares. Because these
fees are paid out of the Fund's assets on an on-going basis, over time, these
fees will increase the cost of your investment and may cost you more than
paying other types of distribution (sales) or servicing charges.
Should you purchase Class A, Class B or Class C shares?
If your investments in RiverSource funds total $100,000 or more, Class A shares
may be the better option because the sales charge is reduced for larger
purchases. If you qualify for a waiver of the sales charge, Class A shares will
be the best option.
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17p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
If you invest less than $100,000, consider how long you plan to hold your
shares. Class B shares have a higher annual distribution fee than Class A shares
and a CDSC for six years. Class B shares convert to Class A shares in the ninth
year of ownership. Class B shares purchased through reinvested dividends and
distributions also will convert to Class A shares in the same proportion as the
other Class B shares.
Class C shares also have a higher annual distribution fee than Class A shares.
Class C shares have no sales charge if you hold the shares for longer than one
year. Unlike Class B shares, Class C shares do not convert to Class A. As a
result, you will pay a 1% distribution fee for as long as you hold Class C
shares. If you choose a deferred sales charge option (Class B or Class C), you
should consider the length of time you intend to hold your shares. To help you
determine which investment is best for you, consult your financial advisor or
investment professional.
For more information, see the SAI.
PURCHASING SHARES
Financial intermediaries are required by law to obtain certain personal
information from each person who opens an account in order to verify the
identity of the person. As a result, when you open an account you will be asked
to provide your name, permanent street address, date of birth, and Social
Security or Employer Identification number. You may also be asked for other
identifying documents or information. If you do not provide this information,
the Fund, or the financial intermediary through which you are investing in the
Fund, may not be able to open an account for you. If the Fund or if the
financial intermediary through which you are investing in the Fund is unable to
verify your identity, your account may be closed, or other steps may be taken,
as deemed appropriate.
To purchase shares with a financial intermediary other than Ameriprise Financial
Services, please consult your financial intermediary. See "Transactions Through
Unaffiliated Financial Intermediaries" for more information. The following
section explains policies of the RiverSource funds and how you can purchase Fund
shares from Ameriprise Financial Services.
If you do not have an existing RiverSource fund account, with Ameriprise
Financial Services, you will need to establish a brokerage account. Your
financial advisor or investment professional will help you fill out and submit
an application. Once your account is set up, you can choose among several
convenient ways to invest.
When you purchase, your order will be priced at the next NAV calculated after
your order is accepted by the Fund. If your application does not specify which
class of shares you are purchasing, we will assume you are investing in Class A
shares.
Important: When you open an account, you must provide your correct Taxpayer
Identification Number (TIN), which is either your Social Security or Employer
Identification number.
If you do not provide and certify the correct TIN, you could be subject to
backup withholding of 28% of taxable distributions and proceeds from certain
sales and exchanges. You also could be subject to further penalties, such as:
o a $50 penalty for each failure to supply your correct TIN,
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18p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
o a civil penalty of $500 if you make a false statement that results in
no backup withholding, and
o criminal penalties for falsifying information.
You also could be subject to backup withholding, if the IRS notifies us to do
so, because you failed to report required interest or dividends on your tax
return.
How to determine the correct TIN
For this type of account: Use the Social Security or Employer
Identification number of:
- ---------------------------------- --------------------------------------------
Individual or joint account The individual or one of the owners listed
on the joint account
- ---------------------------------- --------------------------------------------
Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)
- ---------------------------------- --------------------------------------------
A revocable living trust The grantor-trustee (the person who puts
the money into the trust)
- ---------------------------------- --------------------------------------------
An irrevocable trust, pension The legal entity (not the personal
trust or estate representative or trustee, unless no legal
entity is designated in the account title)
- ---------------------------------- --------------------------------------------
Sole proprietorship or The owner
single-owner LLC
- ---------------------------------- --------------------------------------------
Partnership or multi-member LLC The partnership
- ---------------------------------- --------------------------------------------
Corporate or LLC electing The corporation
corporate status on Form 8832
- ---------------------------------- --------------------------------------------
Association, club or tax-exempt The organization
organization
- ---------------------------------- --------------------------------------------
For details on TIN requirements, contact your financial advisor or investment
professional to obtain a copy of Form W-9, "Request for Taxpayer Identification
Number and Certification." You also may obtain the form on the Internet at
www.irs.gov.
Methods of purchasing shares
By mail
Once your account has been established, send your check to:
Ameriprise Financial Services
70200 Ameriprise Financial Center
Minneapolis, MN 55474
Minimum amounts
Initial investment: $2,000*
Additional investments: $500**
Account balances: $300
Qualified account balances: none
If your Fund account balance falls below $300 for any reason, including a market
decline, you will be asked to increase it to $300 or establish a scheduled
investment plan. If you do not do so within 30 days, your shares may be
automatically redeemed and the proceeds mailed to you.
* $1,000 for tax qualified accounts.
** $100 minimum add-on for existing mutual fund accounts outside of a
brokerage account.
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19p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
By scheduled investment plan
Minimum amounts
Initial investment: $2,000*
Additional investments: $100**
Account balances: none (on a scheduled investment
plan with monthly payments)
If your Fund account balance is below $2,000, you must make payments at least
monthly.
* $100 for accounts outside of a brokerage account.
** $50 minimum per payment for qualified accounts outside of a
brokerage account.
By wire or electronic funds transfer
Please contact your financial advisor or investment professional for specific
instructions.
Minimum wire purchase amount: $1,000 or new account minimum, as applicable.
By telephone
If you have a brokerage account, you may use the money in your account to make
initial and subsequent purchases.
To place your order, call:
(800) 297-7378 for brokerage accounts
(800) 967-4377 for wrap accounts
SALES CHARGES
Class A -- initial sales charge alternative
Your purchase price for Class A shares is generally the NAV plus a front-end
sales charge. Sales charges vary depending on the amount of your purchase. The
distributor receives the sales charge and re-allows a portion of the sales
charge to the financial intermediary through which you purchased the shares. The
distributor retains the balance of the sales charge. Sales charge* for Class A
shares:
Maximum re-allowance
Total market value As a % of purchase price ** As a % of net amount Invested as a % of purchase price
Up to $49,999 5.75% 6.10% 5.00%
$50,000-$99,999 4.75 4.99 4.00
$100,000-$249,999 3.50 3.63 3.00
$250,000-$499,999 2.50 2.56 2.15
$500,000-$999,999 2.00 2.04 1.75
$1,000,000 or more*** 0.00 0.00 0.00
* Because of rounding in the calculation of the offering price, the portion
of the sales charge retained by the distributor may vary and the actual
sales charge you pay may be more or less than the sales charge calculated
using these percentages.
** Offering price includes the sales charge.
*** Although there is no sales charge for purchases with a total market value
over $1,000,000, and therefore no re-allowance, the distributor may pay a
sales commission to a financial intermediary making a sale with a total
market value of $1,000,000 to $3,000,000, a sales commission up to 1.00%;
$3,000,000 to $10,000,000, a sales commission up to 0.50%; and $10,000,000
or more, a sales commission up to 0.25%.
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20p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Rights of Accumulation
You may be able to reduce the sales charge on Class A shares, based on the
combined market value of your accounts.
The current market values of the following investments are eligible to be added
together for purposes of determining the sales charge on your purchase:
o Your current investment in this Fund, and
o Previous investments you and members of your primary household group have
made in Class A, Class B or Class C shares in this and other RiverSource
funds, provided your investment was subject to a sales charge.
o Your primary household group consists of you, your spouse or domestic
partner, and your unmarried children under age 21 sharing a mailing
address. For purposes of this policy a domestic partner is an individual
who shares your primary residence and with whom you own joint property. If
you or any member of your primary household group elects to separate from
the primary household group (for example, by asking that account statements
be sent to separate addresses), your assets will no longer be combined for
purposes of reducing your sales charge.
The following accounts are eligible to be included in determining the sales
charge on your purchase:
o Individual or joint accounts held outside of a brokerage account;
o Individual or joint accounts held through a brokerage account;
o Roth and traditional IRAs, SEPs, SIMPLEs and TSCAs, provided they are
invested in Class A, Class B or Class C shares that are subject to a sales
charge;
o UGMA/UTMA accounts for which you, your spouse, or your domestic partner is
parent or guardian of the minor child;
o Revocable trust accounts for which you or a member of your primary household
group, individually, is the beneficiary;
o Accounts held in the name of your, your spouse's, or your domestic partner's
sole proprietorship or single owner limited liability company or S
corporation; and
o Qualified retirement plan assets, provided that you are the sole owner of the
business sponsoring the plan, are the sole participant (other than a spouse)
in the plan, and have no intention of adding participants to the plan.
The following accounts are not eligible to be included in determining the sales
charge on your purchase:
o Accounts of pension and retirement plans with multiple participants, such as
401(k) plans (which are combined to reduce the sales charge for the entire
pension or retirement plan and therefore are not used to reduce the sales
charge for your individual accounts);
o Investments in Class A shares where the sales charge is waived, for example,
purchases through wrap accounts, including Ameriprise Strategic Portfolio
Service Advantage (SPS);
o Investments in Class D, Class E, or Class Y shares;
o Investments in 529 plans, donor advised funds, variable annuities, variable
life insurance products, wrap accounts or managed separate accounts; and
o Charitable and irrevocable trust accounts.
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21p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
If you purchase RiverSource fund shares through different channels or different
financial intermediaries, and you want to include those assets toward a reduced
sales charge, you must inform Ameriprise Financial Services, your financial
advisor or investment professional in writing about the other accounts when
placing your purchase order. When placing your purchase order, you must provide
your most recent account statement and contact information regarding the other
accounts. A financial intermediary other than Ameriprise Financial Services may
require additional information.
Unless you provide Ameriprise Financial Services, your financial advisor or your
investment professional in writing with information about all of the accounts
that may count toward a sales charge reduction, there can be no assurance that
you will receive all of the reductions for which you may be eligible.
For more information on rights of accumulation, please see the SAI.
Letter of Intent (LOI)
Generally, if you intend to invest $50,000 or more over a period of 13 months,
you may be able to reduce the front-end sales charges for investments in Class A
shares by completing and filing a LOI form. The LOI becomes effective only after
the form is processed in good order by the distributor. An LOI can be backdated
up to a maximum of 90 days. If the LOI is backdated, you may include prior
investments in Class A shares that were charged a front-end sales load toward
the LOI commitment amount. If the LOI is backdated, the 13 month period begins
on the date of the earliest purchase included in the LOI.
Holdings More than 90 Days Old. Purchases made more than 90 days before your LOI
is processed by the distributor will not be counted towards the commitment
amount of the LOI and cannot be used as the starting point for the LOI. While
these purchases cannot be included in an LOI, they may help you obtain a reduced
sales charge on future purchases as described in "Rights of Accumulation."
Notification Obligation. If purchasing shares in a brokerage account or through
a financial intermediary, you must request the reduced sales charge when you buy
shares. If you do not complete and file the LOI form, or do not request the
reduced sales charge at the time of purchase, you will not be eligible for the
reduced sales charge.
For more details on LOIs, please contact your financial advisor, investment
professional or see the SAI.
Waivers of the sales charge for Class A shares
Sales charges do not apply to:
o current or retired Board members, officers or employees of the Fund or
Ameriprise Financial or its subsidiaries, their spouses or domestic partners,
children and parents.
o current or retired Ameriprise Financial Services financial advisors,
employees of financial advisors, their spouses or domestic partners, children
and parents.
o portfolio managers employed by subadvisers of the RiverSource funds,
including their spouses or domestic partners, children and parents.
o registered representatives and other employees of financial intermediaries
having a sub-distribution agreement with the distributor, including their
spouses, domestic partners, children and parents.
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22p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
o qualified employee benefit plans offering participants daily access to
RiverSource funds. Eligibility must be determined in advance. For assistance,
please contact your financial advisor or investment professional.
Participants in certain qualified plans where the initial sales charge is
waived may be subject to a deferred sales charge of up to 4%.
o shareholders who have at least $1 million in RiverSource funds. If the
investment is sold within one year after purchase, a CDSC of 1% may be
charged.
o direct rollovers from Ameriprise Retirement Services, provided that the
rollover involves a transfer of Class Y shares in this Fund to Class A shares
in this Fund.
o purchases made:
o with dividend or capital gain distributions from this Fund or from the same
class of another RiverSource fund,
o through or under a wrap fee product or other investment product sponsored
by the distributor or another authorized broker-dealer, investment advisor,
bank or investment professional,
o within a segregated separate account offered by Nationwide Life Insurance
Company or Nationwide Life and Annuity Insurance Company,
o through American Express Personal Trust Services' Asset-Based pricing
alternative, provided by American Express Bank, FSB.
o shareholders whose original purchase was in a Strategist fund merged into a
RiverSource fund in 2000.
Policies related to reducing or waiving the sales charge may be modified or
withdrawn at any time.
Unless you provide Ameriprise Financial Services, your financial advisor or
investment professional with information in writing about all of the factors
that may count toward a waiver of the sales charge, there can be no assurance
that you will receive all of the waivers for which you may be eligible.
You also may view this information about sales charges and breakpoints free of
charge on the Fund's website. Go to www.riversource.com/investments and click on
the hyperlink "Sales Charge Discount Information."
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23p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Class B and Class C -- contingent deferred sales charge (CDSC) alternative
For Class B, the CDSC is based on the sale amount and the number of years --
including the year of purchase -- between purchase and sale. The following table
shows how CDSC percentages on sales decline:
If the sale is made during the: The CDSC percentage rate is:*
First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%
* Because of rounding in the calculation, the portion of the CDSC retained by
the distributor may vary and the actual CDSC you pay may be more or less than
the CDSC calculated using these percentages.
Although there is no front-end sales charge when you buy Class B shares, the
distributor pays a sales commission of 4% to financial intermediaries that sell
Class B shares. A portion of this commission may, in turn, be paid to your
financial advisor. The distributor receives any CDSC imposed when you sell your
Class B shares.
Purchases made prior to May 21, 2005 age on a calendar year basis. Purchases
made beginning May 21, 2005 age on a daily basis. For example, a purchase made
on Nov. 12, 2004 will complete its first year on Dec. 31, 2004 under calendar
year aging. However, a purchase made on Nov. 12, 2005 will complete its first
year on Nov. 11, 2006 under daily aging.
For Class B shares purchased prior to May 21, 2005, those shares will convert to
Class A shares in the ninth calendar year of ownership. For Class B shares
purchased beginning May 21, 2005, those shares will convert to Class A shares
one month after the completion of the eighth year of ownership.
For Class C, a 1% CDSC may be charged if you sell your shares within one year
after purchase. Although there is no front-end sales charge when you buy Class C
shares, the distributor pays a sales commission of 1% to financial
intermediaries that sell Class C shares. A portion of this commission may, in
turn, be paid to your financial advisor. The distributor receives any CDSC
imposed when you sell your Class C shares.
For both Class B and Class C, if the amount you sell causes the value of your
investment to fall below the cost of the shares you have purchased, the CDSC
will be based on the lower of the cost of those shares purchased or market
value. Because the CDSC is imposed only on sales that reduce your total purchase
payments, you do not have to pay a CDSC on any amount that represents
appreciation in the value of your shares, income earned by your shares, or
capital gains.
In addition, the CDSC on your sale, if any, will be based on your oldest
purchase payment. The CDSC on the next amount sold will be based on the next
oldest purchase payment.
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24p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Example
Assume you had invested $10,000 in Class B shares and that your investment had
appreciated in value to $12,000 after 3 1/2 years, including reinvested
dividends and capital gain distributions. You could sell up to $2,000 worth of
shares without paying a CDSC ($12,000 current value less $10,000 purchase
amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500
representing part of your original purchase price. The CDSC rate would be 3%
because the sale was made during the fourth year after the purchase.
Waivers of the CDSC for Class B shares
The CDSC will be waived on sales of shares:
o in the event of the shareholder's death,
o held in trust for an employee benefit plan, or
o held in IRAs or certain qualified plans if Ameriprise Trust Company is the
custodian, such as Keogh plans, tax-sheltered custodial accounts or corporate
pension plans, provided that the shareholder is:
o at least 59 1/2 years old AND
o taking a retirement distribution (if the sale is part of a transfer to an
IRA or qualified plan, or a custodian-to-custodian transfer, the CDSC will
not be waived) OR
o selling under an approved substantially equal periodic payment arrangement.
Waivers of the CDSC for Class C shares
The CDSC will be waived on sales of shares in the event of the shareholder's
death.
EXCHANGING/SELLING SHARES
To sell or exchange shares held with financial intermediaries other than
Ameriprise Financial Services, please consult your financial intermediary. See
"Transactions Through Unaffiliated Financial Intermediaries" for more
information. The following section explains policies of the RiverSource funds on
how you can exchange or sell shares held with Ameriprise Financial Services.
Exchanges
You may exchange your Fund shares at no charge for shares of the same class of
any other publicly offered RiverSource fund. Exchanges into RiverSource
Tax-Exempt Money Market Fund may only be made from Class A shares. For complete
information on the other fund, including fees and expenses, read that fund's
prospectus carefully. Your exchange will be priced at the next NAV calculated
after your transaction request is received in good order.
Market timing is frequent or short-term trading by certain shareholders intended
to profit at the expense of other shareholders by selling shares of a fund
shortly after purchase. Market timing may adversely impact a fund's performance
by preventing the investment manager from fully investing the assets of the
fund, diluting the value of shares held by long-term shareholders, or increasing
the fund's transaction costs. See "Valuing Fund Shares" for a discussion of the
Fund's policy on fair value pricing, which is intended, in part, to reduce the
frequency and effect of market timing.
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25p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
The Fund's Board has adopted a policy that is designed to detect and deter
market timing. The Fund seeks to enforce this policy as follows:
o The Fund tries to distinguish market timing from trading that it believes is
not harmful, such as periodic rebalancing for purposes of asset allocation or
dollar cost averaging. Under the Fund's procedures, there is no set number of
transactions in the Fund that constitutes market timing. Even one purchase
and subsequent sale by related accounts may be market timing. Generally, the
Fund seeks to restrict the exchange privilege of an investor who makes more
than three exchanges into or out of the Fund in any 90-day period. Accounts
held by a retirement plan or an institution for the benefit of its
participants or clients, which typically engage in daily transactions, are
not subject to this limit. The Fund seeks the assistance of financial
intermediaries in applying similar restrictions on the sub-accounts of their
participants or clients.
o If an investor's trading activity is determined to be market timing or
otherwise harmful to existing shareholders, the Fund reserves the right to
modify or discontinue the investor's exchange privilege or reject the
investor's purchases or exchanges, including purchases or exchanges accepted
by a financial intermediary. The Fund may treat accounts it believes to be
under common control as a single account for these purposes, although it may
not be able to identify all such accounts.
o Although the Fund does not knowingly permit market timing, it cannot
guarantee that it will be able to identify and restrict all short-term
trading activity. The Fund receives purchase and sale orders through
financial intermediaries where market timing activity may not always be
successfully detected.
Other exchange policies:
o Exchanges must be made into the same class of shares of the new fund.
o If your exchange creates a new account, it must satisfy the minimum
investment amount for new purchases.
o Once we receive your exchange request, you cannot cancel it.
o Shares of the new fund may not be used on the same day for another exchange.
o If your shares are pledged as collateral, the exchange will be delayed until
written approval is received from the secured party.
Selling Shares
You may sell your shares at any time. The payment will be mailed within seven
days after your request is received in good order.
When you sell shares, the amount you receive may be more or less than the amount
you invested. Your sale price will be the next NAV calculated after your request
is received in good order, minus any applicable CDSC.
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26p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Repurchases. You can change your mind after requesting a sale and use all or
part of the proceeds to purchase new shares in the same account from which you
sold. If you reinvest in Class A, you will purchase the new shares at NAV rather
than the offering price on the date of a new purchase. If you reinvest in Class
B or Class C, any CDSC you paid on the amount you are reinvesting also will be
reinvested. To take advantage of this waiver, you must send a written request
within 90 days of the date your sale request was processed and include your
account number. This privilege may be limited or withdrawn at any time and use
of this option may have tax consequences.
The Fund reserves the right to redeem in kind.
For more details and a description of other sales policies, please see the SAI.
If you decide to sell your shares within 30 days of a telephoned-in address
change, a written request is required.
Important: Payments sent by a bank authorization, check or money order that are
not guaranteed may take up to ten days to clear. This may cause your scheduled
arrangement or unscheduled request to fail to process if the requested amount
includes unguaranteed funds.
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27p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Ways to request an exchange or sale of shares
By regular or express mail
Ameriprise Financial Services
70200 Ameriprise Financial Center
Minneapolis, MN 55474
Include in your letter:
o your account number
o the name of the fund(s)
o the class of shares to be exchanged or sold
o your Social Security number or Employer Identification number
o the dollar amount or number of shares you want to exchange or sell
o specific instructions regarding delivery or exchange destination
o signature(s) of registered account owner(s) (All signatures may be required.
Contact your financial advisor or Ameriprise Financial Services for more
information.)
o any paper certificates of shares you hold
Payment will be mailed to the address of record and made payable to the names
listed on the account, unless your request specifies differently and is signed
by all owners.
The express mail delivery charges you pay will vary depending on domestic or
international delivery instructions.
By telephone
(800) 297-7378 for brokerage accounts
(800) 967-4377 for wrap accounts
(800) 862-7919 for non-brokerage/wrap accounts
o Reasonable procedures will be used to confirm authenticity of telephone
exchange or sale requests.
o Telephone exchange and sale privileges automatically apply to all accounts
except custodial, corporate or qualified retirement accounts. You may request
that these privileges NOT apply by writing the distributor. Each registered
owner must sign the request.
o Acting on your instructions, your financial advisor may conduct telephone
transactions on your behalf.
o Telephone privileges may be modified or discontinued at any time.
Minimum sale amount: $100
Maximum sale amount: $100,000
- --------------------------------------------------------------------------------
28p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
By wire
You can wire money from your account to your bank account. Contact your
financial advisor or Ameriprise Financial Services at the above numbers for
additional information.
o Minimum amount: $1,000
o Pre-authorization is required.
o A service fee may be charged against your account for each wire sent.
By scheduled payout plan
o Minimum payment: $100*
o Contact your financial advisor or Ameriprise Financial Services to set up
regular payments.
o Purchasing new shares while under a payout plan may be disadvantageous
because of the sales charges.
* Minimum is $50 in a non-brokerage/wrap account.
Electronic transactions
The ability to initiate transactions via the internet may be unavailable or
delayed at certain times (for example, during periods of unusual market
activity). The Fund and the distributor are not responsible for any losses
associated with unexecuted transactions. In addition, the Fund and the
distributor are not responsible for any losses resulting from unauthorized
transactions if reasonable security measures are followed to validate the
investor's identity. The Fund may modify or discontinue electronic privileges at
any time for any shareholder without prior notice as deemed necessary and in the
best interest of the Fund.
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29p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Distributions and Taxes
As a shareholder you are entitled to your share of the Fund's net income and net
gains. The Fund distributes dividends and capital gains to qualify as a
regulated investment company and to avoid paying corporate income and excise
taxes.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income is distributed to you as dividends. Dividends
may be composed of qualifying dividend income, which is eligible for
preferential tax rates under current tax law, as well as other ordinary dividend
income, which may include non-qualifying dividends, interest income and
short-term capital gains. Capital gains are realized when a security is sold for
a higher price than was paid for it. Each realized capital gain or loss is
long-term or short-term depending on the length of time the Fund held the
security. Realized capital gains and losses offset each other. The Fund offsets
any net realized capital gains by any available capital loss carryovers. Net
short-term capital gains are included in net investment income. Net realized
long-term capital gains, if any, are distributed by the end of the calendar year
as capital gain distributions.
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the Fund, unless:
o you request distributions in cash, or
o you direct the Fund to invest your distributions in the same class of any
publicly offered RiverSource fund for which you have previously opened an
account.
We reinvest the distributions for you at the next calculated NAV after the
distribution is paid.
If you choose cash distributions, you will receive cash only for distributions
declared after your request has been processed.
TAXES
Distributions are subject to federal income tax and may be subject to state and
local taxes in the year they are declared. You must report distributions on your
tax returns, even if they are reinvested in additional shares.
If you buy shares shortly before the record date of a distribution, you may pay
taxes on money earned by the Fund before you were a shareholder. You will pay
the full pre-distribution price for the shares, then receive a portion of your
investment back as a distribution, which may be taxable.
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30p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
For tax purposes, an exchange is considered a sale and purchase, and may result
in a gain or loss. A sale is a taxable transaction. If you sell shares for less
than their cost, the difference is a capital loss. If you sell shares for more
than their cost, the difference is a capital gain. Your gain may be short term
(for shares held for one year or less) or long term (for shares held for more
than one year).
You may not create a tax loss, based on paying a sales charge, by exchanging
shares within 91 days of purchase. If you buy Class A shares and within 91 days
exchange into another fund, you may not include the sales charge in your
calculation of tax gain or loss on the sale of the first fund you purchased. The
sales charge may be included in the calculation of your tax gain or loss on a
subsequent sale of the second fund you purchased. For more information, see the
SAI.
Selling shares held in an IRA or qualified retirement account may subject you to
federal taxes, penalties and reporting requirements. Please consult your tax
advisor.
Important: This information is a brief and selective summary of some of the tax
rules that apply to this Fund. Because tax matters are highly individual and
complex, you should consult a qualified tax advisor.
- --------------------------------------------------------------------------------
31p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Financial Highlights
The financial highlights tables are intended to help you understand the Fund's
financial performance. Certain information reflects financial results for a
single Fund share. The total returns in the tables represent the rate that an
investor would have earned or lost on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by KPMG LLP, whose report, along with the Fund's financial statements,
is included in the annual report which, if not included with this prospectus, is
available upon request.
Class A
Per share income and capital changes(a)
Fiscal period ended July 31, 2005 2004 2003 2002(b)
Net asset value, beginning of period $4.64 $4.53 $4.11 $5.00
----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .04 .01 .01 --
Net gains (losses) (both realized and unrealized) .61 .32 .41 (.89)
----- ----- ----- -----
Total from investment operations .65 .33 .42 (.89)
----- ----- ----- -----
Less distributions:
Dividends from net investment income (.02) -- -- --
Distributions from realized gains (.01) (.22) -- --
----- ----- ----- -----
Total distributions (.03) (.22) -- --
----- ----- ----- -----
Net asset value, end of period $5.26 $4.64 $4.53 $4.11
----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $1,029 $1,248 $83 $11
Ratio of expenses to average daily net assets(c),(d) 1.11% 1.20% 1.25% 1.25%(e)
Ratio of net investment income (loss) to average daily net assets .79% .36% .24% (.11%)(e)
Portfolio turnover rate (excluding short-term securities) 128% 99% 135% 88%
Total return(f) 13.99% 7.19% 10.22% (17.80%)(g)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 28, 2002 (when shares became publicly available)
to July 31, 2002.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had
Ameriprise Financial not done so, the annual ratios of expenses for Class A
would have been 1.16%, 1.23%, 1.84% and 5.12% for the periods ended July
31, 2005, 2004, 2003 and 2002, respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
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32p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Class B
Per share income and capital changes(a)
Fiscal period ended July 31, 2005 2004 2003 2002(b)
Net asset value, beginning of period $4.56 $4.48 $4.10 $5.00
----- ----- ----- -----
Income from investment operations:
Net investment income (loss) -- (.01) (.01) (.01)
Net gains (losses) (both realized and unrealized) .60 .31 .39 (.89)
----- ----- ----- -----
Total from investment operations .60 .30 .38 (.90)
----- ----- ----- -----
Less distributions:
Distributions from realized gains (.01) (.22) -- --
----- ----- ----- -----
Net asset value, end of period $5.15 $4.56 $4.48 $4.10
----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $472 $572 $36 $5
Ratio of expenses to average daily net assets(c),(d) 1.88% 1.95% 2.01% 2.01%(e)
Ratio of net investment income (loss) to average daily net assets .02% (.46%) (.52%) (.86%)(e)
Portfolio turnover rate (excluding short-term securities) 128% 99% 135% 88%
Total return(f) 13.09% 6.48% 9.27% (18.00%)(g)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 28, 2002 (when shares became publicly available)
to July 31, 2002.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) 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 1.93%, 1.98%, 2.60% and 5.88% for the periods ended July
31, 2005, 2004, 2003 and 2002, respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- --------------------------------------------------------------------------------
33p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Class C
Per share income and capital changes(a)
Fiscal period ended July 31, 2005 2004 2003 2002(b)
Net asset value, beginning of period $4.57 $4.49 $4.10 $5.00
----- ----- ----- -----
Income from investment operations:
Net investment income (loss) -- (.01) (.01) (.01)
Net gains (losses) (both realized and unrealized) .60 .31 .40 (.89)
----- ----- ----- -----
Total from investment operations .60 .30 .39 (.90)
----- ----- ----- -----
Less distributions:
Distributions from realized gains (.01) (.22) -- --
----- ----- ----- -----
Net asset value, end of period $5.16 $4.57 $4.49 $4.10
----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $9 $11 $2 $--
Ratio of expenses to average daily net assets(c),(d) 1.88% 1.98% 2.01% 2.01%(e)
Ratio of net investment income (loss) to average daily net assets .02% (.43%) (.53%) (.92%)(e)
Portfolio turnover rate (excluding short-term securities) 128% 99% 135% 88%
Total return(f) 13.06% 6.46% 9.51% (18.00%)(g)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 28, 2002 (when shares became publicly available)
to July 31, 2002.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) 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 1.93%, 2.01%, 2.60% and 5.88% for the periods ended July
31, 2005, 2004, 2003 and 2002, respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- --------------------------------------------------------------------------------
34p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
Class Y
Per share income and capital changes(a)
Fiscal period ended July 31, 2005 2004 2003 2002(b)
Net asset value, beginning of period $4.66 $4.54 $4.11 $5.00
----- ----- ----- -----
Income from investment operations:
Net investment income (loss) .04 .01 .01 --
Net gains (losses) (both realized and unrealized) .61 .34 .42 (.89)
----- ----- ----- -----
Total from investment operations .65 .35 .43 (.89)
----- ----- ----- -----
Less distributions:
Dividends from net investment income (.02) (.01) -- --
Distributions from realized gains (.01) (.22) -- --
----- ----- ----- -----
Total distributions (.03) (.23) -- --
----- ----- ----- -----
Net asset value, end of period $5.28 $4.66 $4.54 $4.11
----- ----- ----- -----
Ratios/supplemental data
Net assets, end of period (in millions) $-- $8 $-- $--
Ratio of expenses to average daily net assets(c),(d) .90% 1.00% 1.07% 1.07%(e)
Ratio of net investment income (loss) to average daily net assets 1.08% .50% .45% .09%(e)
Portfolio turnover rate (excluding short-term securities) 128% 99% 135% 88%
Total return(f) 14.06% 7.44% 10.46% (17.80%)(g)
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 28, 2002 (when shares became publicly available)
to July 31, 2002.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had
Ameriprise Financial not done so, the annual ratios of expenses for Class Y
would have been 0.95%, 1.03%, 1.66% and 4.94% for the periods ended July
31, 2005, 2004, 2003 and 2002, respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
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35p --- RIVERSOURCE LARGE CAP EQUITY FUND --- 2005 PROSPECTUS
This Fund, along with the other RiverSource funds, is distributed by Ameriprise
Financial Services, Inc. and can be purchased from Ameriprise Financial Services
or from a limited number of other authorized financial intermediaries. The Fund
can be found under the "RiverSource " banner in most mutual fund quotations.
Additional information about the Fund and its investments is available in the
Fund's SAI, and annual and semiannual reports to shareholders. In the Fund's
annual report, you will find a discussion of market conditions and investment
strategies that significantly affected the Fund's performance during its most
recent fiscal year. The SAI is incorporated by reference in this prospectus. For
a free copy of the SAI, the annual report, or the semiannual report, or to
request other information about the Fund or make a shareholder inquiry, contact
your financial advisor, investment professional or Ameriprise Financial
Services.
Ameriprise Financial Services
70100 Ameriprise Financial Center
Minneapolis, MN 55474
(800) 862-7919
TTY: (800) 846-4852
RiverSource Investments Website address:
riversource.com/investments
You may review and copy information about the Fund, including the SAI, at the
Securities and Exchange Commission's (Commission) Public Reference Room in
Washington, D.C. (for information about the public reference room call
1-202-942-8090). Reports and other information about the Fund are available on
the EDGAR Database on the Commission's Internet site at www.sec.gov. Copies of
this information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing to
the Public Reference Section of the Commission, Washington, D.C. 20549-0102.
Investment Company Act File #811-2111
Ticker Symbol
Class A: ALEAX Class B:ALEBX
Class C: ARQCX Class I:--
Class Y: ALEYX
[RiverSource Investments Logo]
RiverSource Investments
200 Ameriprise Financial Center
Minneapolis, MN 55474
S-6244-99 F (10/05)
Exhibit E
Board Effectiveness Committee Charter
RESOLVED, That the Board Effectiveness Committee be composed of the independent
members appointed annually by the Board and the Chair of the Board;
RESOLVED, That one member shall be appointed to Chair the Committee and the
Committee shall meet upon call of the Chair;
RESOLVED, That the Committee will make recommendations to the Board on:
o The responsibilities and duties of the Board;
o The criteria to be used to determine the size and structure of the Boards and
the background and characteristics of independent Board members;
o The persons to serve as Board members based on approved criteria whenever
necessary to fill a vacancy or in conjunction with a regular meeting of
shareholders in which nominees are required to be submitted for a vote of
shareholders;
o The annual evaluation of the Board's performance and the attendance of
members; and
o The compensation to be paid to independent members; and further
RESOLVED, That the Committee shall be assigned such further areas of
responsibility as appropriate to assist the Board in meeting its fiduciary
duties in an efficient and effective manner.
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT E.1
- --------------------------------------------------------------------------------
Exhibit F
Joint Audit Committee Charter
Membership and Qualifications
The Joint Audit Committee shall consist of at least three members appointed by
the Board. The Board may replace members of the Committee for any reason.
No member shall be an "interested person" as that term is defined in Section
2(a)(19) of the Investment Company Act, nor shall any member receive any
compensations from the Fund except compensations for service as a member of the
Board and Board committees.
At least one member of the Committee shall be an "audit committee financial
expert." An "audit committee financial expert" means a person who has the
following attributes:
o An understanding of generally accepted accounting principles and financial
statements;
o The ability to assess the general application of such principles in
connection with the accounting for estimates, accruals, and reserves;
o Experience preparing, auditing, analyzing, or evaluating financial statements
that present a breadth and level of complexity of accounting issues that
are generally comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the registrant's financial
statements, or experience actively supervising one or more persons engaged
in such activities;
o An understanding of internal controls and procedures for financial reporting;
and
o An understanding of audit committee functions.
A person shall have acquired such attributes through:
o Education and experience as a principal financial officer, principal
accounting officer, controller, public accountant, or auditor or experience
in one or more positions that involve the performance of similar functions;
o Experience actively supervising a principal financial officer, principal
accounting officer, controller, public accountant, auditor, or person
performing similar functions;
o Experience overseeing or assessing the performance of companies or public
accountants with respect to the preparation, auditing, or evaluation of
financial statements; or
o Other relevant experience.
The Board shall determine "audit committee financial experts" annually.
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT F.1
- --------------------------------------------------------------------------------
Purposes of the Committee
The Committee is to assist independent members of the Boards in fulfilling
their oversight responsibilities to the shareholders, potential shareholders
and investment community relating to the reliability of financial reporting,
the effectiveness and efficiency of operations, the work done by external
auditors, the adequacy of internal controls, and the compliance with applicable
laws and regulations by:
o Overseeing the accounting and financial reporting processes of the Fund and
its internal control over financial reporting and, as the Committee deems
appropriate, to inquire into the internal control over financial reporting
of certain third-party service providers;
o Overseeing, or, as appropriate, assisting Board oversight of, the quality and
integrity of the Fund's financial statements and the independent audit
thereof;
o Overseeing, or, as appropriate, assisting Board oversight of, the Fund's
compliance with legal and regulatory requirements that relate to the Fund's
accounting and financial reporting, internal control over financial
reporting and independent audits; and
o Approving prior to appointment the engagement of the Fund's independent
auditor (Auditor) and, in connection therewith, to review and evaluate the
qualifications, independence and performance of the Fund's Auditor.
The Auditor for the Fund shall report directly to the Committee.
Duties and Powers
To carry out its purposes, the Committee shall have the following duties and
powers:
o Recommend the Auditor that the Committee believes is qualified to examine and
report on the financial statements to the independent members of the Board
within 90 days before or after the fiscal year end of the Fund;
o Meet with representatives of the Auditor to:
o Review and evaluate matters potentially affecting its independence and
capabilities by:
o Approving prior to appointment the professional services the Auditor
requests to perform for American Express Financial Corporation and any of
its subsidiaries that provide services to the Fund;
o Considering the controls applied by the Auditor and measures taken by
American Express Financial Corporation to assure that all items requiring
pre-approval are identified and referred to the Committee in a timely
fashion; and
- --------------------------------------------------------------------------------
F.2 RIVERSOURCE FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
o Evaluating the auditor's independence by receiving a report on business
relationships at each meeting setting forth the work it has been engaged
to do for American Express Company or its subsidiaries.
o Consider the scope of the annual audit and any special audits and review
and approve the estimated fees to be charged;
o Consider the information and comments from the Auditor with respect to the
Fund's accounting and financial reporting policies, procedures and
internal controls over financial reporting; the responses to the comments
by American Express Financial Corporation; and possible improvements that
can be made in the quality of the Fund's accounting and financial
reporting;
o Meet with representatives of American Express Enterprise Risk and Assurance
Services to:
o Discuss its responsibility to the Fund with respect to its review of
operations of American Express Financial Corporation and affiliates to the
extent they pertain to the registered investment companies;
o Consider its authority, including the support it receives from American
Express Financial Corporation's senior management and American Express
Company's General Auditor;
o Discuss whether it complies with the Institute of Internal Auditors'
"Standard for the Professional Practice of Internal Auditing;"
o Review its budget, staffing and proposed audit plans each year; and
o Review reports issued by American Express Enterprise Risk and Assurance
Services that pertain to American Express Financial Corporation's
operations related to the registered investment companies.
o Encourage open lines of communications among the Committee, the Auditor, and
American Express Enterprise Risk and Assurance Services to:
o Consider information and comments from the Auditor with respect to the
Fund's financial statements, including any adjustments to such statements
recommended by the Auditor and to review the opinion of the Auditor;
o Resolve any disagreements between American Express Financial Corporation
and the Auditor;
o Review, in connection with required certifications of Form N-CSR, any
significant deficiencies in the design or operations of internal control
over financial reporting or material weaknesses therein and any reported
evidence of fraud involving any person who has a significant role in the
Fund's internal control over financial reporting;
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT F.3
- --------------------------------------------------------------------------------
o Establish procedures for the receipt, retention and treatment of
complaints received by the Fund relating to accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by employees of American Express Financial Corporation of
concerns about accounting or auditing matters, and address reports from
attorneys or auditors of possible violations of federal or state laws or
fiduciary duty;
o Investigate or initiate an investigation of reports of improprieties or
suspected improprieties in connection with the Fund's accounting or
financial reporting;
o Consider the adequacy and effectiveness of internal controls, including the
controls over computerized information systems, through discussions with
the Auditor, American Express Enterprise Risk and Assurance Services and
appropriate American Express Financial Corporation managers who provide
reports to the Committee and elicit their recommendations for improving or
identifying particular areas where new or more detailed controls or
procedures are desirable giving particular emphasis to the adequacy of
internal controls for exposing any payments, transactions, or procedures
that might be deemed illegal or otherwise improper;
o Request to be informed about all new or changed accounting principles and
disclosure practices on a timely basis and inquire regarding the judgment
and reasoning regarding the appropriateness, not just the acceptability, of
the changes or proposed changes;
o Report the work of the Committee to the Board as frequently as the Committee
deems appropriate;
o Review and assess the adequacy of the Committee's charter at least annually
and recommend any changes to the Board;
o Meet at least once a year in a private meeting with each of the three
following groups: the Auditor, the American Express Financial Corporation's
management personnel responsible for the financial statements and
recordkeeping of the Fund, the Senior Vice President -- Enterprise Risk and
Assurance Services for American Express Financial Corporation, and the
General Auditor and Chief Operational Risk Officer for American Express
Company;
o Consider such other matters as any Board or Committee deems appropriate and
perform such additional tasks as directed by resolution of any Board;
o Conduct its own investigations into issues related to its responsibilities
and is authorized to employ such professional and technical assistance as
it deems necessary.
- --------------------------------------------------------------------------------
F.4 RIVERSOURCE FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
The Committee shall have the resources and authority appropriate to discharge
its responsibilities, including appropriate funding, as determined by the
Committee, for payment of compensation to the Auditor for the purpose of
conducting the audit and rendering their audit report, the authority to retain
and compensate special counsel and other experts or consultants as the
Committee deems necessary, and the authority to obtain specialized training for
Committee members, at the expense of the Fund, as appropriate.
The Committee may delegate any portion of its authority, including the
authority to grant pre-approvals of audit and permitted non-audit services to
one or more members. Any decisions of the member to grant pre-approvals shall
be presented to the Committee at its next regularly scheduled meeting.
Role and Responsibilities
The function of the Committee is oversight; it is American Express Financial
Corporation's responsibility to maintain appropriate systems for accounting and
internal control over financial reporting, and the Auditor's responsibility to
plan and carry out a proper audit. Specifically, American Express Financial
Corporation is responsible for: (1) the preparation, presentation and integrity
of the Fund's financial statements; (2) the maintenance of appropriate
accounting and financial reporting principles and policies; and (3) the
maintenance of internal control over financial reporting and other procedures
designed to assure compliance with accounting standards and related laws and
regulations. The Auditor is responsible for planning and carrying out an audit
consistent with applicable legal and professional standards and the terms of
their engagement letter. Nothing in the Charter shall be construed to reduce
the responsibilities or liabilities of the Fund's service providers, including
the Auditor.
Although the Committee is expected to take a detached and questioning approach
to the matters that come before it, the review of a Fund's financial statements
by the Committee is not an audit, nor does the Committee's review substitute
for the responsibilities of American Express Financial Corporation's for
preparing, or the Auditor for auditing, the financial statements. Members of
the Committee are not employees of the Fund and, in serving on this Committee,
are not, and do not hold themselves out to be, acting as accountants or
auditors. As such, it is not the duty or responsibility of the Committee or its
members to conduct "field work" or other types of auditing or accounting
reviews or procedures.
In discharging their duties, the members of the Committee are entitled to rely
on information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by: (1) one or
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT F.5
- --------------------------------------------------------------------------------
more officers of the Fund whom the director reasonably believes to be reliable
and competent in the matters presented; (2) legal counsel, public accountants,
or other persons as to matters the director reasonably believes are within the
person's professional or expert competence; or (3) a Board committee of which
the director is not a member.
Operations
The Board shall adopt and approve this Charter and may amend it on the Board's
own motion. The Committee shall review this Charter at least annually and
recommend to the full Board any changes the Committee deems appropriate.
The Committee may select one of its members to be the chair and may select a
vice chair. A majority of the members of the Committee shall constitute a
quorum for the transaction of business at any meeting of the Committee. The
action of a majority of the members of the Audit Committee present at a meeting
at which a quorum is present shall be the action of the Committee.
The Committee shall meet on a regular basis and at least four times annually
and is empowered to hold special meetings as circumstances require. The
Chairperson or a majority of the members shall be authorized to call a meeting
of the Committee or meetings may be fixed in advance by the Committee.
The agenda shall be prepared under the direction and control of the
Chairperson.
The Committee shall ordinarily meet in person; however, members may attend
telephonically, and the Committee may act by written consent, to the extent
permitted by law and by the Fund's bylaws.
The Committee shall have the authority to meet privately and to admit
non-members individually. The Committee may also request to meet with internal
legal counsel and compliance personnel of American Express Financial
Corporation and with entities that provide significant accounting or
administrative services to the Fund to discuss matters relating to the Fund's
accounting and compliance as well as other Fund-related matters.
The Committee shall prepare and retain minutes of its meetings and appropriate
documentation of decisions made outside of meetings by delegated authority.
The Committee shall evaluate its performance at least annually.
- --------------------------------------------------------------------------------
F.6 RIVERSOURCE FUNDS -- PROXY STATEMENT
- --------------------------------------------------------------------------------
ezVote(SM)Consolidated Proxy Card
PROXY TABULATOR
P.O. BOX 9132 This form is your EzVote Consolidated Proxy.
HINGHAM, MA 02043-9132 It reflects all of your accounts registered to
the same Social Security or Tax I.D. number at
this address. By voting and signing the
Consolidated Proxy Card, you are voting all of
these accounts in the same manner as indicated
on the reverse side of the form.
999 999 999 999 99 <-
RIVERSOURCE FUNDS
(formerly known as AMERICAN EXPRESS FUNDS)
AXP DIMENSIONS SERIES, INC. PROXY FOR THE REGULAR MEETING OF SHAREHOLDERS
RIVERSOURCE NEW DIMENSIONS FUND FEBRUARY 15, 2006
Your fund will hold a shareholders' meeting at 901 Marquette Avenue South, Suite
2810, Minneapolis, MN, at _____ [a.m./p.m.] on February 15, 2006. You are
entitled to vote at the meeting if you were a shareholder on December 16, 2005.
Please read the proxy statement and vote immediately by mail, telephone or
internet, even if you plan to attend the meeting. Just follow the instructions
on this proxy card. The Board of Directors recommends that you vote FOR each
proposal.
The undersigned hereby appoints Arne H. Carlson and Leslie L. Ogg or any one of
them, as proxies, with full power of substitution, to represent and to vote all
of the shares of the undersigned at the regular meeting to be held on February
15, 2006, and any adjournment thereof.
Date __________________
Signature(s) (Joint owners) (Sign in the Box)
Note: Please sign this proxy exactly as your
name or names appears on this card. Joint owners
should each sign personally. Trustees and other
fiduciaries should indicate the capacity in
which they sign, and where more than one name
appears, a majority must sign. If a corporation,
this signature should be that of an authorized
officer who should state his or her title.
AMEX New Dim EZ - DH
IF VOTING THE CONSOLIDATED PROXY CARD DO NOT SIGN, DATE OR RETURN THE INDIVIDUAL
BALLOTS
THREE EASY WAYS TO VOTE
To vote by Telephone To vote by Internet To vote by Mail
1) Read the proxy statement and have the 1) Read the proxy statement and have 1) Read the Proxy Statement.
Consolidated Proxy Card at hand. Consolidated Proxy Card at hand. 2) Check the appropriate boxes on the
2) Call 1-888-221-0697. 2) Go to www.proxyweb.com reverse side.
3) Follow the recorded instructions. 3) Follow the on-line directions. 3) Sign and date the proxy card.
4) Return the proxy card in the envelope
provided.
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR CARD.
LABEL BELOW FOR MIS USE ONLY! INDIVIDUAL BALLOTS
M1197 On the reverse side of this form (and on accompanying pages,
AMERICAN EXPRESS - AMERIPRISE if necessary) you will find individual ballots, one for each of
AXP DIMENSIONS SERIES, INC your accounts. If you would wish to vote each of these accounts
RIVERSOURCE NEW DIMENSIONS FUND separately, sign in the signature box below, mark each individual
ORIGINAL EZVOTE 10-06-05 KD ballot to indicate your vote, detach the form at the perforation
DOREEN (AMEX-RIVERSOURCE NEW DIMENSIONS EZVOTE 2006 DH) above and return the individual ballots portion only.
NOTE: If you choose to vote each account separately, do
not return the Consolidated Proxy Card above.
Date _____________________________
MIS EDITS: # OF CHANGES ___/___ PRF 1 ___ PRF 2 ___
-------------------------------------------------------
Signature(s) (Joint owners) (Sign in the Box)
OK TO PRINT AS IS*_______ *By signing this form you are Note: Please sign this proxy exactly as your
authorizing MIS to print this form in its current state. name or names appears on this card. Joint owners
should each sign personally. Trustees and other
fiduciaries should indicate the capacity in
which they sign, and where more than one name
appears, a majority must sign. If a corporation,
this signature should be that of an authorized
- --------------------------------------------------------- officer who should state his or her title.
SIGNATURE OF PERSON AUTHORIZING PRINTING DATE
AMEX New Dim IND - DH
ezVote(SM)Consolidated Proxy Card
Please fill in box(es) as shown using black or
blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
If you do not mark a proposal, your proxy will be voted FOR the proposal.
FOR AGAINST ABSTAIN
1. Approve the Agreement and Plan of Reorganization. [ ] [ ] [ ] 1.
2. ELECTION OF BOARD MEMBERS.
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
(01) Arne H. Carlson (05) Catherine James Paglia
(02) Patricia M. Flynn (06) Alan K. Simpson [ ] [ ] [ ] 2.
(03) Anne P. Jones (07) Alison Taunton-Rigby
(04) Stephen R. Lewis, Jr. (08) William F. Truscott
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "FOR ALL EXCEPT" box and write the nominee's number on the line below.)
FOR AGAINST ABSTAIN
3. Approve an Amendment to the Articles of
Incorporation. [ ] [ ] [ ] 3.
4. Approve an Investment Management Services Agreement
with RiverSource Investments, LLC. [ ] [ ] [ ] 4.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
AMEX New Dim EZ - DH
IF VOTING THE CONSOLIDATED PROXY CARD DO NOT SIGN, DATE OR RETURN
THE INDIVIDUAL BALLOTS
INDIVIDUAL BALLOTS
NOTE: IF YOU HAVE USED THE CONSOLIDATED BALLOT ABOVE, DO NOT VOTE THE INDIVIDUAL
BALLOTS BELOW.
000 0000000000 000 0 000 0000000000 000 0
JOHN Q. PUBLIC JOHN Q. PUBLIC
123 MAIN STREET 123 MAIN STREET
ANYTOWN, MA 02030 999 999 999 999 99 ANYTOWN, MA 02030 999 999 999 999 99
FUND NAME PRINTS HERE FUND NAME PRINTS HERE
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Approve the Agreement 1. Approve the Agreement
and Plan of and Plan of
Reorganization. [ ] [ ] [ ] Reorganization. [ ] [ ] [ ]
2. ELECTION OF BOARD 2. ELECTION OF BOARD
MEMBERS. FOR WITHHOLD FOR ALL MEMBERS. FOR WITHHOLD FOR ALL
(See Nominee list on ALL ALL EXCEPT* (See Nominee list on ALL ALL EXCEPT*
consolidated ballot.) consolidated ballot.)
*EXCEPT____________________ [ ] [ ] [ ] *EXCEPT____________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
3. Amend the Articles of 3. Amend the Articles of
Incorporation. [ ] [ ] [ ] Incorporation. [ ] [ ] [ ]
4. Approve Service 4. Approve Service
Agreement. [ ] [ ] [ ] Agreement. [ ] [ ] [ ]
LABEL BELOW FOR MIS USE ONLY!
M1197
AMERICAN EXPRESS - AMERIPRISE
AXP DIMENSIONS SERIES, INC
RIVERSOURCE DIMENSIONS FUND
ORIGINAL EZVOTE 10-06-05 KD
DOREEN (AMEX-RIVERSOURCE DIMENSIONS EZVOTE 2006 DH)
AMEX New Dim IND - DH
AXP(R) Dimensions Series, Inc.
- RiverSource(SM) New Dimensions Fund
(formerly AXP New Dimensions Fund)
Proxy Statement
December 16, 2005
Here is a brief overview of the changes being recommended for your RiverSource
mutual fund. We encourage you to read the full text of the enclosed proxy
statement.
Q: What organization changes have recently taken place?
On Sept. 30, Ameriprise Financial, Inc. (formerly American Express Financial
Corporation) became an independent company from American Express. An affiliate
of Ameriprise Financial, RiverSource Investments now serves as investment
manager to your fund. As a result, your fund's name and the names of service
providers to your fund have changed. Your statements should now reflect this
new name and the funds are now listed under RiverSource in the newspaper.
Q: Why am I being asked to vote?
Mutual funds are required to get shareholders' votes for certain kinds of
changes, like the ones included in this proxy statement. You have a right to
vote on these changes either by mailing your proxy card, calling a toll-free
number, responding by internet or attending the shareholder meeting.
Q: Is my vote important?
Absolutely! While the Board of Directors ("Board") for RiverSource Funds has
reviewed these changes and recommends you approve them, you have the right to
voice your opinion. Until the Fund is sure that a quorum has been reached (50%
of existing shares), it will continue to contact shareholders asking them to
vote. These efforts cost money -- so please, vote immediately.
Q: What am I being asked to vote on?
Shareholders are being asked to vote on:
o The merger ("Reorganization") of RiverSource New Dimensions Fund and
RiverSource Large Cap Equity Fund.
o Election of Board members.
o An amendment to the Fund's Articles of Incorporation to permit the Board to
establish the minimum account value and to change the name of the
corporation to "RiverSource" consistent with the names of the funds.
o An Investment Management Services Agreement ("IMS Agreement") with
RiverSource Investments, LLC.
We encourage you to read the full text of the proxy statement to obtain a more
detailed understanding of the issues.
Q: If approved, when will the merger happen?
If shareholders approve the merger, it will take place shortly after the
shareholder meeting. In the interim, however, it will be important for the Fund
to have a properly elected Board and an IMS agreement that has been approved by
shareholders.
Q: What do Board Members do?
Board members represent the interests of the shareholders and oversee the
management of the Fund.
Q: What changes are proposed to the Investment Management Services Agreement?
In September, the Fund's investment manager, Ameriprise Financial, Inc.
(formerly known as American Express Financial Corporation) was spun off from
its parent company, American Express Company. The investment management
functions were then moved to RiverSource Investments, LLC, a wholly owned
subsidiary of Ameriprise Financial. While this change did not cause a
termination of the IMS Agreement, or otherwise affect its terms and conditions,
the Board determined that it would be prudent to give shareholders an
opportunity to vote on the new arrangement. The new agreement also clarifies
the circumstances under which the Board may change an index for purposes of
calculating a performance incentive adjustment.
Q: How does the Board recommend that I vote?
After careful consideration, the Board recommends that you vote FOR each
proposal.
Q: How do I vote?
You can vote in one of four ways:
o By mail with the enclosed proxy card
o By telephone
o By web site
o In person at the meeting
Please refer to the enclosed voting instruction card for the telephone number
and internet address.
Q: Whom should I call if I have questions?
If you have questions about any of the issues described in the proxy statement
or about voting procedures, please call your financial advisor or call client
services toll free at (877) 256-6085.
RIVERSOURCE FUNDS
(formerly known as American Express Funds)
Principal Executive Office
901 Marquette Avenue South, Suite 2810
Minneapolis, MN 55402-3268
NOTICE OF A REGULAR MEETING OF SHAREHOLDERS
TO BE HELD FEB. 15, 2006
AXP(R) STOCK SERIES, INC.
- RiverSource Stock Fund
(formerly AXP Stock Fund)
RiverSource Stock Fund ("Stock" or the "Selling Fund") will hold a regular
shareholders' meeting at 10:00 a.m. on Feb. 15, 2006 at the IDS Center, 80 S.
Eighth Street, Minneapolis, MN on the 50th floor. At the meeting, shareholders
will consider the following proposals:
- - To approve an Agreement and Plan of Reorganization (the "Agreement") between
the Selling Fund and RiverSource Disciplined Equity Fund ("Disciplined
Equity" or the "Buying Fund") (formerly AXP Quantitative Large Cap Equity
Fund). Under this Agreement, the Selling Fund will transfer all of its assets
attributable to Classes A, B, C, I and Y to the Buying Fund in exchange for
corresponding Class A, B, C, I and Y shares of the Buying Fund. These shares
will be distributed proportionately to you and the other shareholders of the
Selling Fund. The Buying Fund will assume the Selling Fund's liabilities.
- - To elect Board members.
- - To amend the Articles of Incorporation.
- - To approve an Investment Management Services Agreement with RiverSource
Investments, LLC.
- - Other business as may properly come before the meeting, or any adjournment of
the meeting.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
1
<Page>
Please take some time to read the proxy statement. It discusses the proposals in
more detail. If you were a shareholder on Dec. 16, 2005, you may vote at the
meeting or any adjournment of the meeting. We hope you can attend the meeting.
For those of you who cannot attend, please vote by mail, telephone or internet.
Just follow the instructions on the enclosed proxy card. If you have questions,
please call your advisor or call client services toll free at (877) 256-6085. It
is important that you vote. The Board of Directors (the "Board") recommends that
you vote FOR the proposals. This proxy statement was first mailed to
shareholders on or about Dec. 16, 2005.
By order of the Board of Directors
Leslie L. Ogg, Secretary
Dec. 16, 2005
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
2
<Page>
COMBINED PROXY STATEMENT/PROSPECTUS
DATED DEC. 16, 2005
This document is a proxy statement for Stock and a prospectus for Disciplined
Equity (each individually a "Fund" and collectively the "Funds"). It contains
the information you should know before voting on the proposals. Please read it
carefully and keep it for future reference. The address of each of the Funds is
901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268. The phone
number for each of the Funds is (612) 330-9283.
The following information describes the proposed reorganization of the Selling
Fund into the Buying Fund (the "Reorganization").
HOW THE REORGANIZATION WILL WORK
- - The Selling Fund will transfer all of its assets to the Buying Fund. The
Buying Fund will assume the Selling Fund's liabilities.
- - The Buying Fund will issue shares of Classes A, B, C, I and Y to the Selling
Fund in an amount equal to the value of the assets of Classes A, B, C, I and
Y that it receives from the Selling Fund, less the liabilities it assumes.
These shares will be distributed to the Selling Fund's shareholders in
proportion to their holdings in the Selling Fund. Selling Fund shareholders
will not pay any sales charge in connection with this distribution of shares.
FUND INVESTMENT OBJECTIVES
The investment objective for each of the Funds is as follows:
SELLING FUND: The Fund seeks to provide shareholders with current income and
growth of capital.
BUYING FUND: The Fund seeks to provide shareholders with long-term capital
growth.
Please note that the Fund is not a bank deposit, is not federally insured, is
not endorsed by any bank or government agency and is not guaranteed to achieve
its investment objective.
As with all mutual funds, the Securities and Exchange Commission (the "SEC") has
not approved or disapproved these securities or passed on the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
3
<Page>
WHERE TO GET MORE INFORMATION
<Table>
THE BUYING FUND
Most recent prospectus, dated Oct. 3, 2005. Accompanying, and incorporated by reference into,
this proxy statement/prospectus.
Most recent annual report, for the period Incorporated by reference into this proxy
ended July 31, 2005. statement/prospectus. For a copy at no charge, call
toll-free (800) 862-7919 or write to the address at
the bottom of this table.
THE SELLING FUND
Most recent prospectus, dated Nov. 29,2004, Incorporated by reference into this proxy
as supplemented. statement/prospectus. For a copy at no charge, call
toll-free (800) 862-7919 or write to the address at
the bottom of this table.
Most recent annual report, for the period Incorporated by reference into this proxy
ended Sept. 30, 2005. statement/prospectus. For a copy at no charge, call
toll-free (800) 862-7919 or write to the address at
the bottom of this table.
THIS PROXY STATEMENT/PROSPECTUS
Statement of Additional Information dated Incorporated by reference into this proxy
the same date as this proxy statement/prospectus. For a copy at no charge, call
statement/prospectus. This document toll-free (877) 256-6085 or write to the address at
contains information about both the the bottom of this table.
Selling Fund and the Buying Fund.
To ask questions about this proxy Call toll-free (877) 256-6085 or write to:
statement/prospectus. RiverSource Service Corporation,
70100 Ameriprise Financial Center,
Minneapolis, MN 55474.
</Table>
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
4
<Page>
Each of the Funds is subject to the information requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and
files reports, proxy materials and other information with the SEC. These
reports, proxy materials and other information can be inspected and copied at
the Public Reference Room maintained by the SEC. Copies may be obtained, after
paying a duplicating fee, by electronic request at
http://www.publicinfo@sec.gov, or by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102. In addition, copies of these documents may
be viewed on-line or downloaded from the SEC's Web site at http://www.sec.gov.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
5
<Page>
TABLE OF CONTENTS
PAGE
SECTION A -- FUND PROPOSALS
PROPOSAL 1. APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION 7
SUMMARY 7
How the Reorganization Will Work 7
Comparison of the Selling Fund and the Buying Fund 7
Risk Factors 12
Tax Consequences 14
FEES AND EXPENSES 14
THE REORGANIZATION 19
Terms of the Reorganization 19
Conditions to Closing the Reorganization 19
Termination of the Agreement 20
Tax Status of the Reorganization 20
Reasons for the Proposed Reorganization and Board Deliberations 23
Boards' Determinations 24
Recommendation and Vote Required 25
PROPOSAL 2. ELECT BOARD MEMBERS 25
PROPOSAL 3. APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES
OF INCORPORATION 32
PROPOSAL 4. APPROVE OR REJECT AN INVESTMENT MANAGEMENT SERVICES
AGREEMENT WITH RIVERSOURCE INVESTMENTS, LLC 34
SECTION B -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION 41
SECTION C -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER
FUND INFORMATION 44
EXHIBITS
A. Form of Agreement and Plan of Reorganization A.1
B. Matters Subject to Approval at Regular Meeting of Buying Fund B.1
C. Minnesota Business Corporation Act Sections 302A.471 and 302A.473 C.1
D. Most Recent Buying Fund Prospectus D.1
E. Board Effectiveness Committee Charter E.1
F. Joint Audit Committee Charter F.1
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
6
<Page>
SECTION A -- FUND PROPOSALS
PROPOSAL 1. APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY
This proxy statement/prospectus is being used by the Board of the Selling Fund
to solicit proxies to vote at a meeting of shareholders. Shareholders will
consider a proposal to approve the Agreement providing for the Reorganization of
the Selling Fund into the Buying Fund. A form of the Agreement is included in
Exhibit A.
The following is a summary. More complete information appears later in this
proxy statement/prospectus. You should read the entire proxy
statement/prospectus and the exhibits because they contain details that are not
in the summary.
HOW THE REORGANIZATION WILL WORK
- - The Selling Fund will transfer all of its assets to the Buying Fund. The
Buying Fund will assume the Selling Fund's stated liabilities.
- - The Buying Fund will issue shares of Classes A, B, C, I and Y to the Selling
Fund in an amount equal to the value of the assets of Classes A, B, C, I and
Y that it receives from the Selling Fund, less the liabilities it assumes.
These shares will be distributed to the Selling Fund's shareholders in
proportion to their holdings in the Selling Fund.
- - Neither the Selling Fund nor the shareholders of the Selling Fund will pay
any sales charge in connection with the Reorganization.
- - After the Reorganization is completed, current Selling Fund shareholders will
be shareholders of the Buying Fund. The Selling Fund will be terminated.
COMPARISON OF THE SELLING FUND AND THE BUYING FUND
Both the Selling Fund and the Buying Fund:
- - Are structured as a series of capital stock of an open-end management
investment company organized as a Minnesota corporation.
- - Have RiverSource Investments, LLC (the "investment manager" or "RiverSource
Investments") as an investment adviser.
- - Have the same policies for buying and selling shares and the same exchange
rights.
- - Have the same distribution policies.
- - Have different classes of shares: Classes A, B, C, I and Y.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
7
<Page>
COMPARISON OF INVESTMENT OBJECTIVES
The investment objectives for the Funds are as follows:
SELLING FUND: The Fund seeks to provide shareholders with current income and
growth of capital.
BUYING FUND: The Fund seeks to provide shareholders with long-term capital
growth.
COMPARISON OF INVESTMENT STRATEGIES STOCK:
The Fund's assets primarily are invested in common stocks and securities
convertible into common stocks. Under normal market conditions, at least 80% of
the Fund's net assets are invested in these securities. In pursuit of its income
objective, the Fund will invest in income-producing equity securities (such as
convertible securities and preferred stocks) and short-term debt instruments
(such as commercial paper). The Fund will provide shareholders with at least 60
days' notice of any change in the 80% policy.
In pursuit of the Fund's objective, the investment manager uses two different
approaches to the selection of equity investments.
With respect to approximately 50% of the Fund's portfolio, the investment
manager uses a traditional stock selection methodology and chooses investments
by:
- - Considering opportunities and risks by reviewing overall market conditions
and industry outlook.
- - Identifying market trends that the investment manager believes will lead to
good long-term growth potential.
- - Identifying companies with strong, sustainable earnings growth based on:
- effective management, as demonstrated by overall performance,
- competitive market position, and
- financial strength.
- - Focusing on those companies that the investment manager considers to be blue
chips. Blue chip stocks are issued by companies with a market capitalization
of at least $1 billion, an established management, a history of consistent
earnings and a leading position within their respective industries.
- - Identifying investments that contribute to portfolio diversification.
- - Identifying income-producing securities.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
8
<Page>
In evaluating whether to sell a security, the investment manager considers,
among other factors, whether:
- - The security is overvalued relative to other potential investments.
- - The security has reached the investment manager's price objective.
- - The company has met the investment manager's earnings and/or growth
expectations.
- - Political, economic or other events could affect the company's performance.
With respect to approximately 50% of the Fund's portfolio, the investment
manager uses proprietary quantitative methods based on sophisticated statistical
analysis and chooses investments by:
The universe of stocks from which the investment manager selects the Fund's
investments will be those included in the Fund's benchmark, the Standard &
Poor's 500 Index (S&P 500 Index). Through extensive analysis of the domestic
equity markets, the investment manager has identified characteristics of certain
stocks that have historically outperformed their benchmarks. The Fund will hold
both growth and value stocks. Characteristics used to select stocks for the Fund
include:
- - Superior growth characteristics such as:
- strong earnings growth,
- positive earnings that exceed expectations published by third-party
business analysts,
- consistency of earnings, and
- strong positive price trend.
- - Superior value characteristics based on analysis of current stock prices
relative to estimates of future prices.
In selecting the stocks from the S&P 500 Index for the Fund's portfolio, the
investment manager employs a rigorous process for evaluating the relationship
between the risk associated with each security and its potential for positive
returns. This process includes factors such as:
- - Limits on positions relative to the benchmark through overweighting or
underweighting.
- - Limits on sector and industry allocations relative to the benchmark.
- - Limits on size of holdings relative to market liquidity.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
9
<Page>
DISCIPLINED EQUITY:
Under normal market conditions, at least 80% of the Fund's net assets are
invested in equity securities of companies listed on U.S. exchanges with market
capitalizations greater than $5 billion at the time of purchase. The Fund will
provide shareholders with at least 60 days' notice of any change in the 80%
policy.
In pursuit of the Fund's objective, the investment manager will choose equity
investments by employing proprietary quantitative methods based on sophisticated
statistical analysis.
The universe of stocks from which the investment manager selects the Fund's
investments primarily will be those included in the Fund's benchmark, the S&P
500. Through extensive analysis of the domestic equity markets, the investment
manager has identified characteristics of certain stocks that have historically
outperformed their benchmarks. The Fund will hold both growth and value stocks.
Characteristics used to select stocks for the Fund include:
- - Superior growth characteristics such as:
- strong earnings growth,
- positive earnings that exceed expectations published by third-party
business analysts,
- consistency of earnings, and
- strong positive price trend.
- - Superior value characteristics based on analysis of current stock prices
relative to estimates of future prices.
In selecting the stocks for the Fund's portfolio, the investment manager employs
a rigorous process for evaluating the relationship between the risk associated
with each security and its potential for positive returns. This process includes
factors such as:
- - Limits on positions relative to the benchmark through overweighting or
underweighting.
- - Limits on sector and industry allocations relative to the benchmark.
- - Limits on size of holdings relative to market liquidity.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
10
<Page>
BOTH FUNDS:
- - UNUSUAL MARKET CONDITIONS. During unusual market conditions, each of the
Funds may temporarily invest more of its assets in money market securities
than during normal market conditions. Although investing in these securities
would serve primarily to avoid losses, this type of investing also could
prevent the Fund from achieving its investment objective. During these times,
the portfolio managers may make frequent securities trades that could result
in increased fees, expenses and taxes, and decreased performance.
- - OTHER INVESTMENT STRATEGIES. Each Fund may invest in other securities and may
use other investment strategies that are not principal investment strategies.
Additionally, each Fund may use derivatives (financial instruments where the
value depends upon, or is derived from, the value of something else) such as
futures, options and forward contracts, to produce incremental earnings, to
hedge existing positions or to increase flexibility. Just as with securities
in which the Fund invests directly, derivatives are subject to a number of
risks, including market, liquidity, interest rate and credit risk. In
addition, a relatively small price movement in the underlying security,
currency or index may result in a substantial gain or loss for the Fund using
derivatives. Even though the Fund's policies permit the use of derivatives in
this manner, the portfolio managers are not required to use derivatives.
COMPARISON OF FUNDAMENTAL POLICIES
The Buying Fund shareholders will vote on changes to the fundamental policies
for the Buying Fund at a meeting scheduled to be held on the same day as the
Selling Fund shareholder meeting. The proposed changes are shown in Exhibit B.
If all of the proposed changes to the Buying Fund's fundamental policies are
approved, the differences in investment policies will be as follows:
Both Funds have substantially similar fundamental investment policies. The
Buying Fund has a policy permitting borrowing money for temporary purposes in an
amount not exceeding one-third of the market value of its total assets. The
Selling Fund has a similar policy that applies to money or property and permits
borrowing only for extraordinary or emergency purposes. The Buying Fund has a
policy prohibiting the issuing of senior securities, except as permitted under
the 1940 Act. Even though this is not stated as a fundamental policy of the
Selling Fund, the Fund is nonetheless subject to that restriction under the
provisions of the 1940 Act.
The Buying Fund has a policy that it will not purchase more than 10% of the
outstanding voting securities of an issuer, except up to 25% of its total assets
may be invested without regard to this 10% limitation. The Selling Fund has a
similar policy, but does not have the 25% exception.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
11
<Page>
The Buying Fund has a policy that it will not invest more than 5% of its total
assets in securities of any one company, government or political subdivision
thereof, except the limitation will not apply to investments in securities
issued by the U.S. government, its agencies, or instrumentalities or other
investment companies, and except that up to 25% of its total assets may be
invested without regard to this 5% limitation. The Selling Fund has a similar
policy, but does not include other investment companies in the exception.
The Buying Fund has a policy permitting the Fund to lend fund securities and
participate in an interfund lending program up to 33-1/3% of the value of the
fund's total assets. This policy does not prohibit the Buying Fund from
purchasing money market, loan participation or other debt securities, or from
entering into repurchase agreements. The Selling Fund has a policy permitting
the Selling Fund to lend fund securities up to 30% of its net assets. In
addition, the Selling Fund has a policy that it may make cash loans up to 5% of
its total assets. The Buying Fund has a policy prohibiting loans of any part of
its assets to the investment manager, its board members and officers and to the
board members and officers of the Buying Fund. Even though this is not stated as
the fundamental policy of the Selling Fund, the Fund is nonetheless subject to
that restriction under the provisions of the 1940 Act.
If shareholders of the Selling Fund approve the Reorganization, they will be
subject to the fundamental investment policies of the Buying Fund. The
investment manager does not believe that the differences between the fundamental
investment policies will result in any material difference in the way the Funds
are managed.
RISK FACTORS
The principal risks associated with an investment in the Fund are shown below.
<Table>
<Caption>
RISK STOCK DISCIPLINED EQUITY
Active Management Risk x x
Issuer Risk x x
Market Risk x x
</Table>
- - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to make
investment decisions that are suited to achieving the Fund's investment
objective. Due to its active management, the Fund could underperform other
mutual funds with similar investment objectives.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
12
<Page>
- - ISSUER RISK. An issuer may perform poorly and therefore, the value of its
stocks and bonds may decline. Poor performance may be caused by poor
management decisions, competitive pressures, breakthroughs in technology,
reliance on suppliers, labor problems or shortages, corporate restructurings,
fraudulent disclosures, or other factors.
- - MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the
market as a whole. The market value of securities may fluctuate, sometimes
rapidly and unpredictably. This risk is generally greater for small and
mid-sized companies, which tend to be more vulnerable to adverse
developments. In addition, focus on a particular style, for example,
investment in growth or value securities, may cause the Fund to underperform
other mutual funds if that style falls out of favor with the market. The
quantitative methodology employed by the investment manager has been
extensively tested using historical securities market data, but has only
recently begun to be used to manage open-end mutual funds. There can be no
assurance that the methodology will enable the Fund to achieve its objective.
PERFORMANCE
Performance information for Class A shares of the Funds is shown below.
TABLE A-1
AVERAGE ANNUAL TOTAL RETURNS AS OF SEPT. 30, 2005(a)
<Table>
<Caption>
SINCE INCEPTION
FUND 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
Stock 6.11% -3.66% 5.84% 9.68% 4/6/1945
Disciplined Equity 8.92% N/A N/A 13.09% 4/24/2003
</Table>
(a) Returns include the 5.75% Class A sales charge.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
13
<Page>
TAX CONSEQUENCES
The Reorganization is expected to be tax-free for federal income tax purposes
and will not take place unless the Selling Fund and the Buying Fund receive a
satisfactory opinion of tax counsel, substantially to that effect. Accordingly,
no gain or loss is expected to be recognized by the Selling Fund or its
shareholders as a direct result of the Reorganization. However, the
Reorganization will end the tax year of the Selling Fund, and so it may
accelerate distributions from the Selling Fund for its short tax year ending on
the date of the Reorganization to shareholders. At any time prior to the
consummation of the Reorganization a shareholder may redeem shares. This would
likely result in recognition of gain or loss to the shareholder for federal
income tax purposes.
The tax basis and holding period of the shareholders' Selling Fund shares is
expected to carry over to the shareholders' new shares in the Buying Fund.
For more information about the federal income tax consequences of the
Reorganization, see the section entitled "Tax Status of the Reorganization."
FEES AND EXPENSES
The following table describes the fees and expenses, adjusted to reflect current
fees, that you pay if you buy and hold shares of the Selling Fund or shares of
the Buying Fund. The table also shows pro forma expenses of the Buying Fund
assuming the proposed Reorganization had been effective during the most recent
fiscal year, adjusted to reflect current fees. If shareholders approve the
Reorganization, for a period of 12 months following implementation of the
Reorganization, the investment manager and its affiliates have agreed to waive
fees or to cap expenses of the Buying Fund sufficient to keep total expenses
within 5 basis points (0.05%) of the Selling Fund's expense ratio at the time of
the Reorganization. For a period of 5 years following the 12-month period, the
investment manager and its affiliates have agreed to waive fees or to cap
expenses of the Buying Fund at the median expense ratio of the Buying Fund's
Lipper peer group. The level of the Buying Fund's expense cap will be reviewed
and reset annually by the Buying Fund's Board. For purposes of these
calculations, the expense ratio will be determined prior to application of the
performance incentive adjustment.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
14
<Page>
TABLE A-2
ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS I CLASS Y
Maximum sales charge (load) imposed on purchases(a)
as a percentage of offering price 5.75% none none none none
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) none(b) 5% 1% none none
</Table>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS I CLASS Y
STOCK(c)
Management fees(d) 0.46% 0.46% 0.46% 0.46% 0.46%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00%
Other expenses(e) 0.20% 0.23% 0.23% 0.08% 0.29%
Total 0.91% 1.69% 1.69% 0.54% 0.75%
DISCIPLINED EQUITY
Management fees(f) 0.62% 0.62% 0.62% 0.62% 0.62%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00%
Other expenses(e) 0.49% 0.52% 0.52% 0.29% 0.57%
Total 1.36% 2.14% 2.14% 0.91% 1.19%
Fee waiver/expense reimbursement 0.09% 0.08% 0.06% 0.00% 0.11%
Net expenses(g) 1.27% 2.06% 2.08% 0.91% 1.08%
DISCIPLINED EQUITY - PRO FORMA WITH STOCK
Management fees(f) 0.60% 0.60% 0.60% 0.60% 0.60%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00%
Other expenses(e) 0.20% 0.23% 0.24% 0.09% 0.30%
Total 1.05% 1.83% 1.84% 0.69% 0.90%
Fee waiver/expense reimbursement 0.03% 0.03% 0.05% 0.03% 0.04%
Net expenses(h) 1.02% 1.80% 1.79% 0.66% 0.86%
</Table>
NOTES TO ANNUAL FUND OPERATING EXPENSES.
(a) This charge may be reduced depending on the value of your total investments
in RiverSource funds.
(b) For Class A purchases over $1,000,000 on which no sales charge is assessed,
a 1% sales charge may apply if you sell your shares within one year after
purchase.
(c) Stock is a feeder fund that is part of a master/feeder structure. For
Stock, both in this table and the following example fund operating expenses
include expenses charged by both the Fund and its master portfolio.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
15
<Page>
NOTES TO ANNUAL FUND OPERATING EXPENSES (CONTINUED).
(d) The management fee rate is the actual fee rate charged as of fiscal year
ended Sept. 30, 2004. It includes the impact of a performance incentive
adjustment fee that decreased the management fee by .03% for the most
recent fiscal year for Stock. The index against which Stock's performance
is measured for purposes of determining the performance incentive
adjustment is the Lipper Large-Cap Core Funds Index.
(e) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee and other nonadvisory expenses and, for Class Y shares,
a shareholder service fee. The other expense ratios shown in this chart
have been adjusted to reflect the new administrative fee that went into
effect in Oct. 2005.
(f) The management fee ratio shown reflects what the ratio would be based on
the Fund's average net assets as of July 31, 2005 under the proposed
management fee schedule. The ratio includes the impact of a performance
incentive adjustment fee that increased the management fee by .02% for the
most recent fiscal year for Disciplined Equity. The index against which
Disciplined Equity's performance is measured for purposes of determining
the performance incentive adjustment is the Lipper Large-Cap Core Funds
Index.
(g) For Disciplined Equity, the investment manager and its affiliates have
contractually agreed to waive certain fees and to absorb certain expenses
until July 31, 2006, unless sooner terminated at the discretion of the
Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under
this agreement, net expenses, before giving effect to any performance
incentive adjustment (.02% increase for the most recent fiscal year), will
not exceed 1.25% for Class A, 2.04% for Class B, 2.06% for Class C, 0.93%
for Class I and 1.06% for Class Y.
(h) If shareholders approve the Reorganization, the investment manager and its
affiliates have contractually agreed to waive certain fees and to absorb
certain expenses for six years following implementation of the
Reorganization, unless sooner terminated at the discretion of the Fund's
Board. Any amounts waived will not be reimbursed by the Fund. Under this
agreement, in year one, net expenses, before giving effect to any
performance incentive adjustment (.02% increase for the most recent fiscal
year), will not exceed 1.00% for Class A, 1.78% for Class B, 1.77% for
Class C, 0.64% for Class I and 0.84% for Class Y. In years two through six
after the merger, expense caps of the Buying Fund will be at the median
expense ratio of the Buying Fund Lipper peer group reviewed annually
by the Board.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
16
<Page>
EXAMPLE: These examples are intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds.
These examples assume that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods
indicated under the current arrangements and if the proposed Reorganization had
been in effect. These examples also assume that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<Table>
<Caption>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
STOCK
Class A(a) $663 $ 849 $1,051 $1,634
Class B $672(b) $ 933(b) $1,119(b) $1,795(c)
Class C $272(b) $ 533 $ 919 $2,003
Class I $ 55 $ 173 $ 302 $ 680
Class Y $ 77 $ 240 $ 418 $ 934
DISCIPLINED EQUITY(d)
Class A(a) $697 $ 973 $1,270 $2,113
Class B $709(b) $1,063(b) $1,343(b) $2,272(c)
Class C $311(b) $ 665 $1,145 $2,472
Class I $ 93 $ 290 $ 505 $1,124
Class Y $110 $ 367 $ 645 $1,438
DISCIPLINED EQUITY - PRO FORMA WITH STOCK(d)
Class A(a) $673 $ 887 $1,119 $1,786
Class B $683(b) $ 973(b) $1,189(b) $1,945(c)
Class C $282(b) $ 574 $ 992 $2,159
Class I $ 67 $ 218 $ 382 $ 859
Class Y $ 88 $ 283 $ 495 $1,109
</Table>
(a) Includes a 5.75% sales charge.
(b) Includes the applicable contingent deferred sales charge.
(c) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
(d) Includes new expense waivers in year 1 only.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
17
<Page>
You would pay the following expenses if you did not redeem your shares.
<Table>
<Caption>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
STOCK
Class A(a) $663 $849 $1,051 $1,634
Class B $172 $533 $ 919 $1,795(b)
Class C $172 $533 $ 919 $2,003
Class I $ 55 $173 $ 302 $ 680
Class Y $ 77 $240 $ 418 $ 934
DISCIPLINED EQUITY(c)
Class A(a) $697 $973 $1,270 $2,113
Class B $209 $663 $1,143 $2,272(b)
Class C $211 $665 $1,145 $2,472
Class I $ 93 $290 $ 505 $1,124
Class Y $110 $367 $ 645 $1,438
DISCIPLINED EQUITY - PRO FORMA WITH STOCK(c)
Class A(a) $673 $887 $1,119 $1,786
Class B $183 $573 $ 989 $1,945(b)
Class C $182 $574 $ 992 $2,159
Class I $ 67 $218 $ 382 $ 859
Class Y $ 88 $283 $ 495 $1,109
</Table>
(a) Includes a 5.75% sales charge.
(b) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
(c) Includes new expense waivers for year 1 only.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
18
<Page>
THE REORGANIZATION
TERMS OF THE REORGANIZATION
The Board has approved the Agreement, a copy of which is attached as Exhibit A.
The Agreement provides for Reorganization on the following terms:
- - The Reorganization is scheduled to occur on the first day that the New York
Stock Exchange is open for business following shareholder approval and
receipt of any necessary regulatory approvals, but may occur on any later
date agreed to by the Selling Fund and the Buying Fund.
- - The Selling Fund will transfer all of its assets to the Buying Fund and, in
exchange, the Buying Fund will assume the Selling Fund's stated liabilities.
- - The Buying Fund will issue Class A, B, C, I and Y shares to the Selling Fund
in an amount equal to the value of the assets of Classes A, B, C, I and Y
that it receives from the Selling Fund, less the liabilities assumed by the
Buying Fund in the transaction. These shares will immediately be distributed
by the Selling Fund to its shareholders in proportion to their holdings in
the Selling Fund. As a result, shareholders of the Selling Fund will become
Class A, B, C, I or Y shareholders of the Buying Fund.
- - Neither the Selling Fund nor the shareholders of the Selling Fund will pay
any sales charge in connection with the Reorganization.
- - The net asset value of the Selling Fund and the Buying Fund will be computed
as of 3:00 p.m. Central time, on the closing date.
- - After the Reorganization, the Selling Fund will be terminated.
CONDITIONS TO CLOSING THE REORGANIZATION
The completion of the Reorganization is subject to certain conditions described
in the Agreement, including:
- - The Selling Fund will have declared and paid a dividend that will distribute
all of the Fund's taxable income, if any, to the shareholders of the Fund for
the taxable years ending at or prior to the closing.
- - The Funds will have received any approvals, consents or exemptions from the
SEC or any regulatory body necessary to carry out the Reorganization.
- - A registration statement on Form N-14 will have been filed with the SEC and
declared effective.
- - The shareholders of the Selling Fund will have approved the Agreement.
- - The Selling Fund will have received an opinion of tax counsel that the
proposed Reorganization will result in no gain or loss being recognized by
any shareholder.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
19
<Page>
TERMINATION OF THE AGREEMENT
The Agreement and the transactions contemplated by it may be terminated and
abandoned by resolutions of the Board of the Selling Fund or the Buying Fund at
any time prior to closing. In the event of a termination, there will be no
liability for damages on the part of either the Selling Fund or the Buying Fund
or the Board members, officers or shareholders of the Selling Corporation or of
the Buying Corporation.
TAX STATUS OF THE REORGANIZATION
The Reorganization is expected to be tax-free for federal income tax purposes
and will not take place unless the Selling Fund and the Buying Fund receive a
satisfactory opinion of tax counsel (which opinion will be based on certain
factual representations and certain customary assumptions), to the effect that,
although not entirely free from doubt, on the basis of existing provisions of
the Internal Revenue Code of 1986, as amended (the "Code"):
- - The transfer of the Selling Fund's assets to the Buying Fund in exchange for
Class A, B, C, I and Y shares of the Buying Fund and the assumption of the
Selling Fund's liabilities, followed by the distribution of those Class A, B,
C, I and Y shares to the Selling Fund's shareholders and the termination of
the Selling Fund will be a "reorganization" within the meaning of Section
368(a)(1) of the Code, and the Selling Fund and the Buying Fund will each be
a "party to the reorganization" within the meaning of Section 368(b) of the
Code.
- - Under Section 361 of the Code, no gain or loss will be recognized by the
Selling Fund upon the transfer of all of its assets to the Buying Fund or on
the distribution by the Selling Fund of Class A, B, C, I and Y shares of the
Buying Fund to Selling Fund shareholders in liquidation.
- - Under Section 354 of the Code, the shareholders of the Selling Fund will not
recognize gain or loss upon the exchange of their Class A, B, C, I or Y
shares of the Selling Fund solely for Buying Fund Class A, B, C, I or Y
shares as part of the Reorganization.
- - Under Section 358 of the Code, the aggregate basis of the Class A, B, C, I or
Y shares of the Buying Fund that a Selling Fund shareholder receives in the
Reorganization will be the same as the aggregate basis of the Class A, B, C,
I or Y shares of the Selling Fund exchanged therefor.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
20
<Page>
- - Under Section 1223(1) of the Code, the holding period for the Class A, B, C,
I or Y shares of the Buying Fund that a Selling Fund shareholder receives in
the Reorganization will include the period for which he or she held the Class
A, B, C, I or Y shares of the Selling Fund exchanged therefor, provided that
on the date of the exchange he or she held such Selling Fund shares as
capital assets.
- - Under Section 1032 of the Code, no gain or loss will be recognized by the
Buying Fund upon the receipt of the Selling Fund's assets solely in exchange
for the issuance of Buying Fund's Class A, B, C, I and Y shares to the
Selling Fund and the assumption of all of the Selling Fund's liabilities by
the Buying Fund.
- - Under Section 362(b) of the Code, the Buying Fund's tax basis in the assets
that the Buying Fund receives from the Selling Fund will be the same as the
Selling Fund's tax basis in those assets immediately prior to the transfer.
- - Under Section 1223(2) of the Code, the Buying Fund's holding periods in the
assets received from the Selling Fund will include the Selling Fund's holding
periods in such assets.
- - Under Section 381 of the Code, the Buying Fund will succeed to and take into
account the items of the Selling Fund described in Section 381(c) of the
Code, subject to the conditions and limitations specified in Sections 381,
382, 383 and 384 of the Code and Regulations thereunder.
Tax counsel will express no view with respect to the effect of the
Reorganization on any transferred asset as to which any unrealized gain or loss
is required to be recognized at the end of a taxable year (or on the termination
or transfer thereof) under federal income tax principles.
Prior to the closing of the Reorganization, the Selling Fund will, and the
Buying Fund may, declare a distribution to shareholders, which together with all
previous distributions, will have the effect of distributing to shareholders all
of its investment company taxable income (computed without regard to the
deduction for dividends paid) and net realized capital gains (after reduction by
any available capital loss carryforwards), if any, through the closing of the
Reorganization. These distributions will be taxable to shareholders.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
21
<Page>
A fund's ability to carry forward capital losses and use them to offset future
gains may be limited. First, one fund's "pre-acquisition losses" (including
capital loss carryforwards, net current-year capital losses, and unrealized
losses that exceed certain thresholds) cannot be used to offset unrealized gains
in another fund that are "built in" at the time of the reorganization and that
exceed certain thresholds ("non-de minimis built-in gains") for five tax years.
Second, a portion of a fund's pre-acquisition losses may become unavailable to
offset any gains at all. Third, any remaining pre-acquisition losses will offset
capital gains realized after a reorganization and thus will reduce subsequent
capital gain distributions to a broader group of shareholders than would have
been the case absent such reorganization. Therefore, in certain circumstances,
former shareholders of a fund may pay taxes sooner, or pay more taxes, than they
would have had a reorganization not occurred.
The Buying Fund's ability to carry forward its own pre-acquisition losses, if
any, and use them to offset future gains will technically be limited as a result
of the Reorganization due to the effect of loss limitation rules under
applicable tax law. The effect of this limitation will depend on the losses and
gains in each fund at the time of the Reorganization. For example, based on data
as of Aug. 31, 2005, such limitation would have had no impact at all as neither
the Buying Fund nor the Selling Fund had pre-Reorganization "net losses" (i.e.,
capital loss carryforwards as of its last fiscal year end as adjusted by
year-to-date realized gains or losses and all net unrealized gains).
For five years beginning after the closing date, the combined fund will not be
allowed to offset gains "built in" to either fund at the time of the
Reorganization against capital losses (including capital loss carryforwards)
built in to the other fund.
The realized and unrealized gains and losses of each Fund at the time of the
Reorganization will determine the extent to which the combining Funds'
respective losses, both realized and unrealized, will be available to reduce
gains realized by the combined Fund following the Reorganization, and
consequently the extent to which the combined Fund may be required to distribute
gains to its shareholders earlier than would have been the case absent the
Reorganization.
This description of the federal income tax consequences of the Reorganization
does not take into account your particular facts and circumstances. Consult your
own tax adviser about the effect of state, local, foreign, and other tax laws.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
22
<Page>
REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS
The Board believes that the proposed Reorganization will be advantageous to
Selling Fund shareholders for several reasons. The Board considered the
following matters, among others, in approving the Reorganization.
- - TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms
and conditions of the Reorganization as described in the previous paragraphs.
- - TAX CONSEQUENCES. The Board considered the tax-free nature of the
Reorganization.
- - CONTINUITY OF INVESTMENT. The Board took into account the fact that,
following the Reorganization, shareholders of the Selling Fund will be
invested in a fund holding a similar investment securities portfolio, with
similar investment objectives, policies, and restrictions.
- - EXPENSE RATIOS. The Board considered the relative expenses of the Funds. As
of the end of each Fund's most recent fiscal year, the expense ratios for the
Buying Fund were higher than the expense ratios for the Selling Fund. For
example, the Selling Fund's expense ratio for Class A shares as of Sept. 30,
2004 fiscal year end, adjusted to reflect current fees, was 0.91%. The Buying
Fund's expense ratio for Class A shares as of July 31, 2005, its most recent
fiscal year end, adjusted to reflect current fees, was capped at 1.25%,
before giving effect to any performance adjustment. After giving effect to
the performance incentive adjustment, the Buying Fund's expense ratio for
Class A shares as of July 31, 2005, was 1.27%. As a result, approval of the
Reorganization may result in higher expenses for the Selling Fund. However,
the Buying Fund is attracting assets, and its expense ratio is projected to
fall in the future as it realizes breakpoints in management and
administrative fee schedules. Additionally, if shareholders approve the
Reorganization, the investment manager has agreed to cap total expenses of
the Buying Fund as follows: for a period of 12 months following
implementation of the Reorganization, the investment manager and its
affiliates will waive fees or cap expenses of the Buying Fund sufficient to
keep total expenses within 5 basis points (0.05%) of the Selling Fund's
expense ratio at the time of the Reorganization. For a period of 5 years
following the 12-month period, the investment manager and its affiliates will
waive fees or cap expenses so that the Buying Fund's expense ratio is at or
below the median expense ratio of comparable funds sold through investment
advisers in the Buying Fund's Lipper peer group. The level of the expense cap
will be reviewed and reset annually by the Buying Fund's Board. For purposes
of these calculations, the expense ratio will be determined prior to
application of the PIA.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
23
<Page>
- - ECONOMIES OF SCALE. The Board considered the advantage of combining Funds
that share similar investment objectives, styles and holdings. The Board
believes that by combining the Funds, the shareholders continue to have
available to them a Fund with a similar investment objective, but can at the
same time take advantage of the economies of scale associated with a larger
fund. A larger fund should have an enhanced ability to effect portfolio
transactions on more favorable terms and should have greater investment
flexibility. Expenses such as audit expenses and accounting expenses that are
charged on a per fund basis will be reduced. In addition, if shareholders
approve the Reorganization, the investment manager and its affiliates have
agreed to cap total expenses of the Buying Fund as discussed in the paragraph
on Expense Ratios.
- - COSTS. The Board considered the fact that the investment manager has agreed
to bear all solicitation expenses in order to achieve shareholder approval of
the Reorganization and to bear any other costs of effecting the
Reorganization.
- - DILUTION. The Board considered the fact that the Reorganization will not
dilute the interests of the current shareholders.
- - PERFORMANCE. The Board considered the relative performance records of the
Funds.
- - POTENTIAL BENEFITS TO THE INVESTMENT MANAGER AND ITS AFFILIATES. The Board
also considered the potential benefits from the Reorganization that could be
realized by the investment manager and its affiliates. The Board recognized
that the potential benefits to the investment manager consist principally of
the elimination of expenses incurred in duplicative efforts to administer
separate funds. The Board also noted, however, that shareholders of the
Selling Fund will benefit over time from any decrease in overall operating
expense ratios resulting from the proposed Reorganization.
BOARDS' DETERMINATIONS
After considering the factors described above and other relevant information, at
a meeting held on Sept. 7-8, 2005, the Selling Fund Board members, including a
majority of the independent Board members, found that participation in the
Reorganization is in the best interests of the Selling Fund and that the
interests of existing shareholders of the Fund will not be diluted as a result
of the Reorganization.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
24
<Page>
The Board of Directors of the Buying Fund approved the Agreement at a meeting
held on Sept. 7-8, 2005. The Board members considered the terms of the
Agreement, the provisions intended to avoid the dilution of shareholder
interests and the anticipated tax consequences of the Reorganization. The Board
found that participation in the Reorganization is in the best interests of the
Buying Fund and that the interests of existing shareholders of the Buying Fund
will not be diluted as a result of the Reorganization.
RECOMMENDATION AND VOTE REQUIRED
The Board recommends that shareholders approve the proposed Agreement. The
Agreement must be approved by a majority of the voting power of all shares
entitled to vote. If the Agreement is not approved, the Board will consider what
further action should be taken.
If shareholders approve the merger, it will take place shortly after the
shareholder meeting. In the interim, however, it will be important for the Fund
to have a properly elected Board and an IMS Agreement that has been approved by
shareholders.
PROPOSAL 2. ELECT BOARD MEMBERS
NOMINEES FOR THE BOARD. Nominees are listed in the following table. Each person
is a nominee for each of the 90 RiverSource Funds. Each nominee was elected a
member of the Board at the last regular shareholders' meeting except for
Ms. Flynn, Ms. Paglia, Mr. Laikind, Ms. Blatz and Ms. Pryor. These nominees were
recommended for the position of Board member by the independent Board members.
Ms. Flynn and Ms. Paglia began serving the fund in 2004. Mr. Laikind and
Ms. Blatz began serving the fund in 2005.
Each Board member will serve until the next regular shareholders' meeting or
until he or she reaches the mandatory retirement age established by the Board.
Under the current Board policy, members may serve until the end of the meeting
following their 75th birthday, or the fifteenth anniversary of the first Board
meeting they attend as members of the Board, whichever occurs first.
All nominees have agreed to serve. If an unforeseen event prevents a nominee
from serving, your votes will be cast for the election of a substitute selected
by the Board. Information on each nominee follows. Election requires a vote by a
majority of the fund's shares voted at the meeting.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
25
<Page>
TABLE A-3. INDEPENDENT NOMINEES
<Table>
<Caption>
NAME, POSITION HELD WITH
ADDRESS, FUND AND LENGTH PRINCIPAL OCCUPATION
AGE OF SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS
- -------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz
901 S. Marquette Ave.
Minneapolis, MN 55402
Age 51
Arne H. Carlson Board member Chair, Board Services Contracts,
901 S. Marquette Ave. since 1999 Corporation (provides Executive,
Minneapolis, MN 55402 administrative services Investment Review,
Age 71 to boards). Former Board Effectiveness
Governor of Minnesota.
Patricia M. Flynn Board member Trustee Professor of Investment Review,
901 S. Marquette Ave. since 2004 Economics and Joint Audit
Minneapolis, MN 55402 Management, Bentley
Age 54 College; former Dean,
McCallum Graduate
School of Business,
Bentley College
Anne P. Jones Board member Attorney and consultant Joint Audit, Board
901 S. Marquette Ave. since 1985 Effectiveness,
Minneapolis, MN 55402 Executive,
Age 70 Investment Review
</Table>
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
26
<Page>
INDEPENDENT NOMINEES (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD WITH
ADDRESS, FUND AND LENGTH OF PRINCIPAL OCCUPATION
AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS
- -------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind Board member Former Managing American Progressive
901 S. Marquette Ave. since 2005 Director, Shikiar Asset Insurance
Minneapolis, MN 55402 Management
Age 70
Stephen R. Lewis, Jr. Board member President Emeritus and Valmont Industries, Contracts, Investment
901 S. Marquette Ave. since 2002 professor of economics, Inc. (manufactures Review, Executive,
Minneapolis, MN 55402 Carleton College irrigation systems) Board Effectiveness
Age 66
Catherine James Paglia Board member Director, Enterprise Strategic Contracts, Investment
901 S. Marquette Ave. since 2004 Asset Management, Inc. Distribution, Inc. Review
Minneapolis, MN 55402 (private real estate (transportation,
Age 53 and asset management distribution and
company) logistics
consultants)
Vikki L. Pryor
901 S. Marquette Ave.
Minneapolis, MN 55402
Age ___
Alan K. Simpson Board member Former three-term Investment Review,
1201 Sunshine Ave. since 1997 United States Board Effectiveness
Cody, Wyoming 82414 Senator for Wyoming
Age 74
</Table>
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
27
<Page>
INDEPENDENT NOMINEES (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD WITH
ADDRESS, FUND AND LENGTH OF PRINCIPAL OCCUPATION
AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS
- -------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member Chief Executive Hybridon, Inc. Investment Review,
901 S. Marquette Ave. since 2002 Officer, RiboNovix, (biotechnology) Contracts
Minneapolis, MN 55402 Inc. since 2003
Age 61 (biotechnology);
President, Forester
Biotech
</Table>
TABLE A-4. NOMINEES AFFILIATED WITH RIVERSOURCE INVESTMENTS
<Table>
<Caption>
NAME, POSITION HELD WITH
ADDRESS, FUND AND LENGTH OF PRINCIPAL OCCUPATION
AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS
- -------------------------------------------------------------------------------------------------------------------------
William F. Truscott* Board member President, U.S. Asset
53600 AXP Financial Center since 2001, Management - Chief
Minneapolis, MN 55474 Vice President Investment Officer of
Age 44 since 2002 Ameriprise Financial,
Inc. and President,
Chairman of the Board
and Chief Investment
Officer of RiverSource
Investments since 2001.
Former chief investment
officer and managing
director, Zurich
Scudder Investments.
</Table>
* Interested person by reason of being an officer, director, securityholder
and/or employee of RiverSource Investments.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
28
<Page>
BOARD COMMITTEES. The Board has several committees that facilitate the work of
the Board. The Executive Committee has authority to act for the full Board
between meetings. The Contracts Committee receives and analyzes reports covering
the level and quality of services provided under contracts with the fund and
advises the Board regarding actions taken on these contracts during the annual
review process. The Investment Review Committee considers investment management
policies and strategies; investment performance; risk management techniques; and
securities trading practices and reports areas of concern to the Board.
The Board Effectiveness Committee's charter, Exhibit E, requires it to make
recommendations regarding nominees based on criteria approved by the Board. All
members of the Committee are independent. Nominee recommendations are based on a
matrix of skill sets, experience, and geographical location and each nominee
must have a background that demonstrates the ability to furthering the interest
of all shareholders. The Committee will consider recommendations from
shareholders who write to the Boards and provide detailed information about a
candidate. All candidates are processed in the same fashion; first by evaluating
a candidate's detailed information against the criteria; then interviewing those
candidates who best fill vacancies identified by the matrix.
You may write the Board by addressing a letter to Arne H. Carlson, the
independent Chairman of the Board or any other independent member of the Board,
at Board Services Corporation, 901 Marquette Avenue South, Suite 2810,
Minneapolis, MN 55402-3268. However, do not address letters to this address if
you are requesting some action regarding your investments. In order to avoid any
delay in processing a request regarding an investment, please address these
requests to 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
The Joint Audit Committee, made up entirely of independent Board members,
operates under a written charter, Exhibit F. The Joint Audit Committee meets
with the independent auditors, internal auditors and corporate officers to
review and discuss audited financial statements, reports, issues, and compliance
matters. This Committee reports significant issues to the Board and makes
recommendations to the independent Board members regarding the selection of the
independent public accountant. More information regarding this Committee and the
fund's independent auditor is found in Section C.
During the 12-month period ended Sept. 30, 2005, the Board met 8 times,
Executive 2 times, Contracts 7 times, Investment Review 5 times, Board
Effectiveness 6 times and Joint Audit 4 times. All Board members had 100%
attendance except for Mr. Simpson who had 82% attendance due to serious illness
in January 2005.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
29
<Page>
SHAREHOLDER COMMUNICATIONS WITH THE BOARD.
Shareholders may communicate directly with the Board by sending correspondence
to Arne H. Carlson, Chair of the Board, RiverSource Funds, 901 Marquette Avenue
South, Suite 2810, Minneapolis, MN 55402-3268. Correspondence to specific
individual Board members also may be directed to the same address.
Account-specific correspondence should be directed to RiverSource Funds, 70100
Ameriprise Financial Center, Minneapolis, MN 55474.
BOARD MEMBER COMPENSATION. The following table shows the total compensation
received by each Board member from all of the RiverSource Funds. The funds do
not pay retirement benefits to Board members. Under a Deferred Compensation
Plan, independent Board members may defer receipt of their compensation.
Deferred amounts are treated as though equivalent dollar amounts had been
invested in shares of one or more designated RiverSource funds.
TABLE A-5. BOARD MEMBER COMPENSATION(a)
<Table>
<Caption>
AGGREGATE COMPENSATION FROM COMPENSATION FROM
ALL RIVERSOURCE FUNDS FOR THE THE SELLING FUND DURING
NOMINEE YEAR ENDED SEPT. 30, 2005 THE LAST FISCAL YEAR
Flynn $143,675(c) $0
Jones 185,892 2,054
Lewis 204,700(d) 2,204(b)
Paglia 157,708 0
Simpson 138,842 1,850
Taunton-Rigby 166,842 2,050
</Table>
(a) Board members affiliated with RiverSource Investments or Board Services
Corporation, a company providing administrative services to the funds, are
not paid by the funds. Mr. Carlson's total compensation was $373,750. Board
member compensation is a combination of a base fee and meeting fees. Because
the spin-off of Ameriprise Financial from American Express Company
necessitated 5 additional meetings, Ameriprise Financial reimbursed the
funds $23,500 for each member to cover those additioinal meetings.
Mr. Laikind, Ms. Blatz and Ms. Pryor were not Board members prior to Sept.
30, 2005 and therefore are not included in the table.
(b) Includes portion of compensation deferred in the amount of $889 from the
Fund.
(c) Includes portion of compensation deferred in the amount of $60,371 from
the Fund.
(d) Includes portion of compensation deferred in the amount of $54,839 from
the Fund.
The following table shows the dollar range of shares of all the funds owned by
the Board members and the dollar range of shares owned in the Selling Fund.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
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<Page>
TABLE A-6. BOARD MEMBER HOLDINGS*
Dollar range of equity securities beneficially owned as of Aug. 31, 2005
<Table>
<Caption>
AGGREGATE DOLLAR RANGE OF EQUITY DOLLAR RANGE OF
SECURITIES OF ALL RIVERSOURCE FUNDS EQUITY SECURITIES IN
NOMINEE OVERSEEN BY BOARD MEMBER THE SELLING FUND
Carlson over $100,000 None
Flynn $10,001-$50,000 None
Jones over $100,000 None
Lewis over $100,000 None
Paglia $50,001-$100,000 None
Simpson $50,001-$100,000 None
Taunton-Rigby over $100,000 None
Truscott over $100,000 None
</Table>
* The percentage of shares beneficially owned by all Board members and officers
as a group does not exceed 1% of any class of shares of any fund.
FUND OFFICERS. In addition to Mr. Truscott, the fund's other executive officers
are:
LESLIE L. OGG, age 67. Vice president, general counsel and secretary since 1978.
President of Board Services Corporation.
JEFFREY P. FOX, age 50. Treasurer since 2002. Vice President - Investment
Accounting of Ameriprise Financial.
PAULA R. MEYER, age 51. President since 2002. Senior Vice President and General
Manager - Mutual Funds, RiverSource Investments.
Officers serve at the pleasure of the Board. Officers are paid by Ameriprise
Financial, Inc., RiverSource Investments or Board Services Corporation. During
the last fiscal year, no officer earned more than $60,000 from any fund.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
31
<Page>
PROPOSAL 3: APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES OF INCORPORATION
The Fund is a Minnesota corporation and operates under an organizational
document called the articles of incorporation. The articles of incorporation set
forth various provisions relating to the authority of the fund to conduct
business and the governance of the fund.
The Board has approved, and recommends that shareholders approve, a proposal to
amend the fund's articles of incorporation (the "Articles"). The fund's
investments and investment policies will not change by virtue of the adoption of
the amendment to the Articles.
A. MINIMUM ACCOUNT VALUE
Generally, shareholders must invest at least $2,000 to open a fund account.
Section 7 of the Articles currently provides that the fund may redeem shares if
an account falls below a value of $1,000. Small accounts can be costly to
maintain and this provision allows the Board to close accounts that no longer
meet the fund's minimum standards. However, the current provision does not allow
the Board to redeem accounts if the value is higher than $1,000. In the future,
there may be circumstances in which a minimum account value higher than $1,000
is in the best interest of the fund and its shareholders. As a consequence, the
Board recommends that the Articles be amended to eliminate the reference to a
specific dollar amount. As proposed, the amended Articles will permit the Board
to establish a minimum account value that will be disclosed in the fund
prospectus. The Board will be able to change the minimum account value without
further action by shareholders.
If the change is approved, the Articles will be amended as follows
([Underline]additions are underlined[/Underline], [Strikethrough]deletions
are lined through[/Strikethrough]):
Article III, Section 7 will be amended to read:
Section 7. The Fund may redeem the shares of a shareholder if the amount
invested is less than [Strikethrough]$1,000[/Strikethrough] [Underline]an
amount determined by the Board of Directors and set forth in the current Fund
prospectus.[/Underline]
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
32
<Page>
B. NAME CHANGE.
Historically the name of the fund has reflected the name of the investment
manager. Since 1999, the name of the fund has included the letters AXP, which is
an abbreviated form of the name American Express. In August 2005, American
Express Financial Corporation ("AEFC"), the fund's investment manager changed
its name to Ameriprise Financial, Inc. ("Ameriprise Financial") in anticipation
of its spin off from American Express Company, its parent company. On October 1,
2005, Ameriprise Financial transferred responsibility for the fund's investment
advisory services to its wholly owned subsidiary, RiverSource Investments. The
Board made a corresponding change to the name of the fund by substituting the
name RiverSource for AXP. The name of the corporate entity can be changed only
with approval of the shareholders of all the underlying funds that make up the
corporation. The Board recommends that the name of the corporate entity also be
changed to include the name RiverSource instead of AXP. The changes are shown in
the table below.
This is the first shareholder meeting since the spin off of the investment
manager and the first opportunity for shareholders to consider a name change for
the corporation.
TABLE A-7. PROPOSED NAME OF CORPORATION
<Table>
<Caption>
CURRENT NAME OF CORPORATION PROPOSED NAME OF CORPORATION
AXP Stock Series, Inc. RiverSource Stock Series, Inc.
</Table>
BOARD RECOMMENDATION AND VOTE REQUIRED. The Board recommends that you vote to
approve the amendments to the Articles. The changes require the approval by a
majority of the shares voted at the meeting. The changes will be effective when
the amendments are filed with the Secretary of State's office. This filing is
expected to occur shortly after the shareholder meeting.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
33
<Page>
PROPOSAL 4: APPROVE OR REJECT AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH
RIVERSOURCE INVESTMENTS, LLC
The fund pays fees to RiverSource Investments under an Investment Management
Services Agreement (the "IMS Agreement") for investment management services. The
services include providing the personnel, equipment and office facilities
necessary for the management of the fund's assets. Subject to the direction of
the Board and consistent with the fund's investment policies, the investment
manager decides what securities to buy, hold or sell. The investment manager
also executes buy and sell orders and provides research and statistical data to
support investment management activities. The Fund is part of a master/feeder
structure. In this structure, the fund invests all of its assets in a master
fund (the "portfolio") with the same policies as the fund. For purposes of this
discussion, the portfolio is referred to as a "fund".
TERMS OF THE CURRENT IMS AGREEMENT. The fee the fund pays to RiverSource
Investments for its services under the current IMS Agreement is based on the net
assets of the fund and decreases as the size of the fund increases. The complete
fee schedule for the fund and other funds managed by RiverSource Investments is
found in Section C. The fund also pays its taxes, brokerage commission and
nonadvisory expenses, which include custodian fees; audit and certain legal
fees; fidelity bond premiums; registration fees for shares; consultant fees;
Board compensation; corporate filing fees; organizational expenses; expenses
incurred in connection with lending portfolio securities; and other expenses
properly payable by the fund, approved by the Board. Section C includes
information on the date of the current IMS Agreement, the date it was last
approved by shareholders and the reason why it was submitted to shareholders at
that time.
INVESTMENT MANAGER. On Sept. 30, 2005, Ameriprise Financial became a publicly
traded company and on Oct. 1, 2005 transferred the investment management
functions to RiverSource Investments, a wholly owned subsidiary. While this
change did not cause a termination of the IMS Agreement, the Board determined
that it would be prudent to give shareholders an opportunity to vote on the
arrangement.
PERFORMANCE INCENTIVE ADJUSTMENT ("PIA") CALCULATION. The management fee
includes a PIA as part of the fee. The adjustment is based on the performance of
the fund compared to the performance of a group of similar funds, as measured by
a Lipper Index. The proposed modification clarifies the circumstances where the
Board may change the index. The provision in the current IMS Agreement will be
modified to read as follows ([Underline]additions are underlined[/Underline],
[Strikethrough]deletions are lined through[/Strikethrough]):
If an Index ceases to be published for a period of more than 90 days,
changes in any material respect, otherwise becomes impracticable
[Underline]or, in
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
34
<Page>
the discretion of the Board, is no longer appropriate[/Underline] to
use for purposes of a performance incentive adjustment, [Underline]for
example, if Lipper reclassifies the Fund from one peer group to
another, the Board may take action it deems appropriate and in the
best interests of shareholders, including: (1) discontinuance of the
performance incentive adjustment until such time as it approves a
substitute index, or (2) adoption of a methodology to transition to a
substitute index it has approved.[/Underline] [Strikethrough]no
adjustment will be made until such time as the Board approves a
substitute index.[/Strikethrough]
BASIS FOR RECOMMENDATION OF THE BOARD
Following announcement of the spin-off of Ameriprise Financial from American
Express Company, the Board and Ameriprise Financial agreed to review and revise,
where appropriate, the terms of all contracts, including the IMS Agreement,
pursuant to which Ameriprise Financial or its affiliates provides services to
the funds. Each year, the Board determines whether to continue the IMS Agreement
for each fund and, in doing so, evaluates the quality and level of service
received under the IMS Agreement and the costs associated with those services.
Accordingly, in March and April of each year, Ameriprise (formerly American
Express Financial Corporation) prepares detailed reports for the Board, which
include data prepared by independent organizations, to assist the Board in
making this determination. The Board accords considerable weight to the
deliberations and conclusions of its committees in determining whether to
continue the IMS Agreement.
After thorough review of the reports and data provided at a meeting held in
person on April 14, 2005, the Board, including a majority of its independent
members, determined that the quality and level of advisory services provided
pursuant to the IMS Agreement for each fund were satisfactory and that fees were
fair and reasonable. However, in light of the announced plans of the spin-off,
the Board approved continuation of the IMS Agreement for only an interim period
ending on the earlier of (i) the effective date of the spin-off; or (ii) the
approval of a new investment management services agreement with Ameriprise
Financial by the shareholders of each fund, but in no event for a period longer
than one year. While it was expected that the spin-off would not result in an
"assignment" of an IMS Agreement under the Investment Company Act of 1940 and,
therefore, would not cause the termination of the IMS Agreement according to its
terms, Schulte Roth & Zabel LLP, was retained as independent counsel to the
Board, advised the Board that the legal question of whether the spin-off would
result in an assignment turns on a highly fact-sensitive analysis. Therefore,
the Board determined, as a matter of prudence, to proceed as if each IMS
Agreement would terminate as a result of the spin-off. Accordingly, the Board
determined to renew each IMS Agreement for the interim period only and to
consider a new IMS Agreement for each fund prior to the spin-off.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
35
<Page>
For the six months following the April 2005 meeting, the Board and its
committees have been evaluating whether to approve a proposed IMS Agreement for
each fund with post-spin Ameriprise Financial. Schulte Roth & Zabel LLP, has
assisted the Board in fulfilling its statutory and other responsibilities
associated with the spin-off and the resulting consideration of new contracts,
including the proposed IMS Agreements. As a key step in this process,
independent counsel sent, on behalf of the independent members of the Board, a
detailed and expansive request for information to American Express Company and
Ameriprise Financial, seeking specified information thought to be relevant to
the Board's consideration of the proposed contracts with post-spin Ameriprise
Financial. The Board and its committees were provided with a wealth of written
and oral information intended to assist them in considering the proposed
contracts, including the proposed IMS Agreements. Furthermore, in connection
with the Board's considerations as to whether post-spin Ameriprise Financial, as
an independent entity, would be capable of continuing to provide a high quality
of services to the funds, the Board's independent members retained their own
financial adviser, Credit Suisse First Boston LLC ("CSFB"). At the Board's
requests, CSFB provided various written materials and oral presentations
analyzing the capital adequacy of Ameriprise Financial. The costs of independent
counsel and CSFB and of additional meetings of the Board were borne by
Ameriprise Financial as part of the commitment of American Express Company to
ensure a complete and thorough review of the proposed spin-off and its effect on
the services provided by Ameriprise Financial and its subsidiaries.
During the course of the six-month period following the April 2005 meeting, the
Board and its committees met at five in-person meetings to consider the
information provided by American Express Company, Ameriprise Financial,
independent counsel and CSFB. At an in-person meeting held on Sept. 8, 2005,
based on all of the information provided as well as the deliberations occurring
at that meeting and the previous meetings held since the announcement of the
spin-off, the Board, including all of its independent members, approved the new
contracts, including each proposed IMS Agreement.
ON OCT. 1, 2005, PURSUANT TO AN AGREEMENT BETWEEN THE FUND AND AMERIPRISE
FINANCIAL, THE IMS AGREEMENT WAS TRANSFERRED TO RIVERSOURCE INVESTMENTS, LLC, A
WHOLLY-OWNED SUBSIDIARY OF AMERIPRISE FINANCIAL.
FOR THESE REASONS, THE BOARD, INCLUDING ALL OF ITS INDEPENDENT MEMBERS,
RECOMMENDS THAT YOU APPROVE THE PROPOSED IMS AGREEMENT FOR YOUR FUND(S).
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
36
<Page>
THE BOARD'S SPECIFIC CONSIDERATIONS RELATING TO THE PROPOSED IMS AGREEMENTS
In carrying out its legal responsibilities associated with the consideration of
the proposed IMS Agreements, the Board evaluated the following four factors: (i)
the nature, extent and quality of services to be provided by RiverSource
Investments; (ii) the investment performance of the fund; (iii) the costs of the
services to be provided and the profits to be realized by Ameriprise Financial;
and (iv) the extent to which economies of scale would be realized as the fund
grows and whether the fee level reflects these economies of scale for the
benefit of fund investors.
NATURE, EXTENT AND QUALITY OF SERVICES TO BE PROVIDED BY POST-SPIN AMERIPRISE
FINANCIAL (AND ITS SUBSIDIARIES)
The Board recognized that only a few months had passed since its April 2005
determination to renew the IMS Agreement for each fund and that in April 2005,
it had concluded that the nature, extent and quality of services provided by
Ameriprise Financial were satisfactory and consistent with those that would be
expected for a fund family of the size of the funds. However, the Board also
recognized that this assessment must be supplemented with an evaluation of
whether the spin-off or other factors would result in any changes to the
advisory services currently provided to the funds. In this regard, the Board
focused its evaluation on the following factors potentially impacting the
nature, extent and quality of advisory services to be provided by RiverSource
Investments: (i) Ameriprise Financial's projected capital structure and capital
adequacy as a stand-alone entity; (ii) its legal and regulatory risks; (iii) its
ability to retain and attract personnel; and (iv) its ability to successfully
rebrand its products and services. Based on extensive presentations and reports
by Ameriprise Financial, CSFB and independent counsel, the Board concluded that
the proposed capital structure (which includes certain indemnification
commitments made by American Express) should enable RiverSource Investments to
continue to provide a high quality and level of advisory services to the funds.
In making this determination, the Board took into account representations by
management of Ameriprise Financial that projected capital levels would allow
Ameriprise Financial to continue to meet its legal and compliance
responsibilities, build its distribution network, pursue technological upgrades,
make capital commitments necessary to retain and attract key personnel devoted
to legal and compliance responsibilities, portfolio management and distribution,
and pursue smaller asset management acquisitions to help grow its business. The
Board accorded significant weight to CSFB's confirmation as to the
reasonableness of the foregoing representations. The Board also considered the
fact that there were no expected departures of key personnel involved in the
portfolio management, operations and marketing of the funds as a result of the
announcement of the spin-off.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
37
<Page>
The Board concluded that, based on all of the materials and information provided
(and with the assistance of independent counsel), post-spin Ameriprise Financial
would be in a position to continue to provide a high quality and level of
investment management services to the funds.
INVESTMENT PERFORMANCE
The Board next focused on investment performance. The Board reviewed reports
documenting the fund's performance over one-, three- and/or five-year periods,
as well as the entire period during which its current portfolio manager has
managed the fund, and compared to relevant Lipper and market indices. The Board
took into account its determination in April 2005 that investment performance
either met expectations or, if not, that appropriate action (such as changes to
portfolio management) had been (or was being) pursued in order to help the fund
achieve its longer-term performance objective.
The Board also considered that it has received monthly performance reports for
the funds. The Board and its committees concluded in September 2005 that there
have been no significant deviations from April's overall performance data.
COST OF SERVICES PROVIDED
The Board evaluated comparative fees and the costs of services to be provided
under the current and proposed IMS Agreements, including fees charged by
RiverSource Investments to its institutional clients and paid to sub-advisers.
The Board studied RiverSource Investments' effort (i.e., its "pricing
philosophy") to set substantially all funds' total expense ratios at or below
the median expense ratio of a group of comparable mutual funds compiled by
Lipper, Inc. The Board observed that the proposed advisory fee changes are
designed to work in tandem with proposed changes to the administrative services
fees. It also noted that RiverSource Investments agreed to voluntarily imposed
expense caps or waivers to achieve this pricing objective whenever the expense
ratio exceeded the median expense ratio by more than three basis points unless
the higher ratio was due to the impact of the performance fee adjustment or was
due to the added costs associated with having subadvisers manage a fund. The
Board considered that, with respect to all funds, other than [Mid Cap Growth,
Small Cap Advantage, Strategic Allocation, Variable Portfolio Diversified Equity
Income and Variable Portfolio Mid Cap Growth], advisory fees under the proposed
IMS Agreements would stay the same or decrease (as indicated in Table B-5,
below) and that, with respect to [Diversified Equity Income, Mid Cap Growth,
Small Cap Advantage, VP Diversified Equity Income and VP Mid Cap Growth], would
increase under each applicable proposed IMS Agreement. The Board accorded
significant weight to the fact that the proposed changes in fee schedules were
intended primarily to achieve a rational pricing model applied consistently
across the
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
38
<Page>
various product lines in the fund family, while assuring that overall fees for
each fund are in line with the "pricing philosophy." With respect to the equity
and balanced funds, the Board also took into account the effect of the proposed
performance incentive adjustment on the advisory fee. In this regard, the Board
took into account its past determinations regarding the appropriateness of (i)
the use of the relevant index for each fund for the comparison of performance;
(ii) the methodology for determining when the Board may change an index used to
calculate the performance incentive adjustment; (iii) the periods used for
averaging the funds' assets and computing investment performance; and (iv) the
length of the period over which performance is computed. Furthermore, the Board
considered that with respect to the relevant sub-advised funds, there was
limited opportunity for these funds to achieve large scale growth and thus
provide RiverSource Investments with potential economies of scale.
The Board next considered the expected profitability to RiverSource Investments
and its affiliates derived from its relationship with the fund, recalling the
April 2005 determination that the profitability level was appropriate. The Board
noted that projected profitability of RiverSource Investments would allow it to
operate effectively and, at the same time, reinvest in its businesses. The Board
also considered that the proposed changes in advisory fees and the mergers of
certain funds would result in revenue gains, while taking into account that
these increases would not materially alter profit margins due to expected
increases in costs associated with the spin-off, particularly rebranding and
separation. CSFB also reported that Ameriprise Financial's projected level of
return on equity was generally reasonable in light of the returns on equity of
its industry competitors. In evaluating profitability, the Board also considered
the benefits Ameriprise Financial obtains through the use of commission dollars
paid on portfolio transactions for the funds and from other business
relationships that result from managing the funds. The Board also considered the
fees charged by Ameriprise Financial to its institutional clients and paid to
sub-advisers, noting the differences in services provided in each case. In light
of these considerations, the Board concluded that projected profitability levels
were appropriate.
ECONOMIES OF SCALE
The Board also considered the "breakpoints" in fees that would be triggered as
fund net asset levels grew and the extent to which shareholders would benefit
from such growth. The Board observed that the revised fee schedules under the
proposed IMS Agreement would continue to provide breakpoints similar to those in
place pursuant to the current IMS Agreement. Accordingly, the Board concluded
that the proposed IMS Agreement provides adequate opportunity for shareholders
to realize benefits as fund assets grew.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
39
<Page>
OTHER CONSIDERATIONS
In addition, the Board accorded weight to the fact that, under the proposed IMS
Agreement, RiverSource Investments is held to a higher standard of care than
under the current IMS Agreements. The Board also noted Ameriprise Financial's
commitment to a culture that adheres to ethical business practice, assigns
accountability to senior management and seeks to identify conflicts and propose
appropriate action to minimize the risks posed by the conflicts. Furthermore,
the Board recognized that it was not limited to considering management's
proposed contracts. In this regard, the Board evaluated the circumstances under
which it would consider the retention of an investment adviser different from
RiverSource Investments (or its subsidiaries). The Board concluded, based on its
consultation with independent counsel, that pursuing the retention of a
different adviser was not necessary, primarily because, in its best judgment,
RiverSource Investments continues to be basically the same organization (from a
functional and managerial standpoint) as it was prior to the spin-off. The Board
reasoned that shareholders purchased shares of the funds with an expectation
that the current investment advisory organization would be servicing the funds.
As a result of all of the foregoing, the Board determined that the fees to be
paid under each proposed IMS Agreement were fair and reasonable in light of
services proposed to be provided.
BOARD RECOMMENDATION AND VOTE REQUIRED. For the foregoing reasons, the Board
recommends that shareholders of each fund approve the applicable proposed IMS
Agreement. The proposed IMS Agreement must be approved by the lesser of (a) a
majority of the fund's outstanding shares or (b) 67% of the shares voted at the
meeting, so long as more than 50% of the shares actually vote. If shareholders
approve the proposed IMS Agreement, it will take effect shortly after the
shareholder meeting. If the proposed IMS Agreement is not approved, the Board
will consider appropriate steps to take.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
40
<Page>
SECTION B -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
VOTING. You are entitled to vote based on your total dollar interest in the
Fund. Each dollar is entitled to one vote. For those of you who cannot come to
the meeting, the Board is asking permission to vote for you. The shares will be
voted as you instruct either by mail, telephone or internet. Signed proxy cards
returned without instructions will be voted in favor of all proposals.
The corporation of which the Fund is part issues several series of common stock.
Each series is a separate fund. On the election of Board members and the
amendment of the Articles of Incorporation, you vote together with the owners of
shares of all the other funds that are part of the corporation. On the
Reorganization and the IMS Agreement you vote together with the owners of the
other shares in your fund.
In voting for Board members, you may vote all of your shares cumulatively. This
means that you have the right to give each nominee an equal number of votes or
divide the votes among the nominees as you wish. You have as many votes as the
number of dollars you own on the record date, multiplied by the number of Board
members to be elected. If you elect to withhold authority for any individual
nominee or nominees, you may do so by marking the box labeled "For All Except,"
and by striking the name of any excepted nominee, as is further explained on the
card itself. If you do withhold authority, the proxies will not vote shares
equivalent to the proportionate number applicable to the names for which
authority is withheld.
All votes count toward a quorum, regardless of how they are voted (For, Against
or Abstain). Broker non-votes will be counted toward a quorum but not toward the
approval of any proposals. (Broker non-votes are shares for which the underlying
owner has not voted and the broker holding the shares does not have authority to
vote.)
If your shares are held in an IRA account with Ameriprise Trust Company as
custodian, you have the right to instruct the IRA Custodian how to vote those
shares. The IRA Custodian will vote any shares for which it has not received
voting instructions in proportionately the same manner -- either For, Against,
or Abstain -- as other fund shareholders have voted.
MASTER/FEEDER FUNDS. Stock currently is part of a master/feeder structure. The
feeder fund seeks its investment objective by investing its assets in a master
fund with the same policies. The master fund invests in and manages the
securities. Immediately prior to the Reorganization, the Board intends to
withdraw the Fund's assets from the master fund.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
41
<Page>
REVOKING YOUR PROXY. If you change your mind after you vote and you can attend
the meeting, simply inform the Secretary at the meeting that you will be voting
your shares in person. Also, if you change your mind after you vote, but cannot
attend the meeting, you may change your vote or revoke it by mail, telephone or
internet.
SIMULTANEOUS MEETINGS. The meeting will be held simultaneously with meetings of
other RiverSource mutual funds. Each proposal will be voted on separately by
shareholders of a corporation or by shareholders of a fund or by a class of
shares of the fund where appropriate. If any shareholder objects to the holding
of simultaneous meetings, the shareholder may move for an adjournment of his or
her fund's meeting to a time immediately after the simultaneous meetings so that
a meeting of that fund may be held separately. If a shareholder makes this
motion, the persons named as proxies will take into consideration the reasons
for the objection in deciding whether to vote in favor of the adjournment.
SOLICITATION OF PROXIES. The Board is asking for your vote and for you to vote
as promptly as possible. The investment manager will pay the expenses of the
solicitation. Supplementary solicitations may be made by mail, telephone,
electronic means or personal contact.
SHAREHOLDER PROPOSALS. No proposals were received from shareholders. The Funds
are not required to hold regular meetings of shareholders each year. However,
meetings of shareholders are held from time to time and proposals of
shareholders that are intended to be presented at future shareholder meetings
must be submitted in writing to the Funds in reasonable time prior to the
solicitation of proxies for the meeting.
DISSENTERS' RIGHT OF APPRAISAL. Under Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act, Selling Fund shareholders are entitled to
assert dissenters' rights in connection with the Reorganization and obtain
payment of the "fair value" of their shares, provided that they comply with the
requirements of Minnesota law. A copy of the relevant provisions is attached as
Exhibit C.
Notwithstanding the provisions of Minnesota law, the SEC has taken the position
that use of state appraisal procedures by a mutual fund would be a violation of
Rule 22c-1, the forward pricing rule, under the 1940 Act. This rule states that
no mutual fund may redeem its shares other than at net asset value next computed
after receipt of a request for redemption. It is the SEC's position that Rule
22c-1 supersedes appraisal provisions in state statutes.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
42
<Page>
In the interest of ensuring equal valuation for all shareholders, dissenters'
rights will be determined in accordance with the SEC's interpretation. As a
result, if any shareholder elects to exercise dissenters' rights under Minnesota
law, the Selling Fund intends to submit this question to a court of competent
jurisdiction. In that event, a dissenting shareholder would not receive any
payment until the end of the court proceeding.
OTHER BUSINESS. The Board does not know at this time of any other business to
come before the meetings. If something does come up, the proxies will use their
best judgment to vote for you on the matter.
ADJOURNMENT. In the event that not enough votes in favor of the proposals are
received by the time scheduled for the meeting, the persons named as proxies may
move for one or more adjournments of the meeting for a period of not more than
120 days in the aggregate to allow further solicitation of shareholders on the
proposals. Any adjournment requires the affirmative vote of a majority of the
voting power of the shares present at the meeting. The persons named as proxies
will vote in favor of adjournment those shares they are entitled to vote that
have voted in favor of the proposals. They will vote against any adjournment
those shares that have voted against the proposals. The investment manager will
pay the costs of any additional solicitation and of any adjourned meeting. A
shareholder vote may be taken on one or more of the items in this proxy
statement prior to adjournment if sufficient votes have been received.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
43
<Page>
SECTION C -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION
This section contains the following information about your fund, its investment
manager and the independent auditors:
TABLE CONTENT
(all information is shown for the last fiscal year unless noted
otherwise)
C-1 Actual and pro forma capitalization of the Selling Fund and the
Buying Fund
C-2 Current management fee schedule for the Fund and other RiverSource
funds with similar investment objectives
C-3 The fund's current fee schedule under its management agreement
C-4 Payments the fund made to the investment manager and its affiliates
C-5 Brokerage commissions the fund paid to a broker-dealer affiliate
C-6 Information about shareholder approval of current management
agreements
C-7A Audit fees
C-7B Audit-related, tax and other fees
THE FUND'S INVESTMENT MANAGER AND DISTRIBUTOR. RiverSource Investments is the
investment manager for the fund. Ameriprise Financial Services, Inc., a wholly
owned subsidiary of Ameriprise Financial, is the distributor for the fund. The
address for RiverSource Investments and Ameriprise Financial Services, Inc. is
200 Ameriprise Financial Center, Minneapolis, MN 55474.
PRESIDENT AND BOARD OF DIRECTORS OF RIVERSOURCE INVESTMENTS. William F. Truscott
is President of RiverSource Investments. The following individuals are directors
of RiverSource Investments. Each director is an officer of RiverSource
Investments, 200 Ameriprise Financial Center, Minneapolis, MN 55474. Directors:
William F. Truscott, Ward D. Armstrong and Michelle M. Keeley.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
44
<Page>
CAPITALIZATION
The following table shows the capitalization of the Funds as of Sept. 30, 2005
and on a pro forma basis, assuming the proposed Reorganization had taken place.
TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE SELLING FUND AND THE
BUYING FUND
<Table>
<Caption>
NET ASSET SHARES
FUND NET ASSETS VALUE PER SHARE OUTSTANDING
STOCK
Class A $1,465,935,660 $20.03 73,190,529
Class B 96,845,429 19.86 4,876,852
Class C 2,561,511 19.78 129,515
Class I 29,863,009 20.03 1,491,161
Class Y 332,418,938 20.03 16,599,166
DISCIPLINED EQUITY
Class A $ 32,276,709 $ 6.79 $ 4,753,442
Class B 9,368,502 6.71 1,396,861
Class C 215,153 6.71 32,080
Class I 90,562,547 6.83 13,259,515
Class Y 34,836 6.81 5,118
DISCIPLINED EQUITY - PRO FORMA WITH STOCK
Class A $1,498,212,369 $ 6.79 220,649,710
Class B 106,213,931 6.71 15,829,861
Class C 2,776,664 6.71 413,825
Class I 120,425,556 6.83 17,631,844
Class Y 332,453,774 6.81 48,818,472
</Table>
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
45
<Page>
OWNERSHIP OF FUND SHARES
The following table provides information on shareholders who owned more than 5%
of each Fund's outstanding shares as of Sept. 30, 2005. As of Sept. 30, 2005,
officers and Board members of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES
<Table>
<Caption>
PERCENT OF
PERCENT SHARES HELD
OF SHARES FOLLOWING THE
FUND 5% OWNERS HELD REORGANIZATION
STOCK
Class A None -- --
Class B None -- --
Class C None -- --
Class I (1) 98% 24%
Class Y (2) 100% 100%
DISCIPLINED EQUITY
Class A (3) 10% *
Class B None -- --
Class C (4) 33% 3%
Class I (5) 98% 74%
Class Y (6) 100% *
</Table>
(1) RiverSource Portfolio Builder Moderate Aggressive Fund owns 32.96%.
RiverSource Portfolio Builder Moderate Fund owns 20.62%. RiverSource
Portfolio Builder Aggressive Fund owns 19.55%. RiverSource Portfolio
Builder Total Equity Fund owns 19.25%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.82%.
(2) Ameriprise Trust Company, Minneapolis, MN owns of record 99.52%.
(3) Charles Schwab & Co Inc., a brokerage firm, owns of record 10.23%.
(4) Emmanual A. and Kelly D. Madeira, S. Dartmouth, MA owns 8.49%. Brian L. and
Mary Jane Hopp, Beldenville, WI own 7.33%. IDS Life Insurance Company,
Minneapolis, MN owns 6.23%. Linda L. Lane, Bay Pines, FL owns 5.59%. Paul
M. and Nikki S. Farmer, Franklin, TN own 5.03%.
(5) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.04%.
RiverSource Portfolio Builder Moderate Fund owns 20.50%. RiverSource
Portfolio Builder Aggressive Fund owns 19.57%. RiverSource Portfolio
Builder Total Equity Fund owns 19.27%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.90%.
(6) Charles Schwab & Co Inc., a brokerage firm, owns of record 60.92%. IDS Life
Insurance Company, Minneapolis, MN owns 39.08%.
* Less than 1%.
The following table shows the management fee schedule for the fund and other
domestic equity funds managed by the investment manager.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
46
<Page>
TABLE C-3. CURRENT MANAGEMENT FEE SCHEDULE FOR THE FUND AND OTHER RIVERSOURCE
FUNDS WITH SIMILAR INVESTMENT OBJECTIVES
<Table>
<Caption>
MANAGEMENT FEE FEE CAP OR WAIVERS(1)
RETAIL FUNDS (ANNUAL RATE; IN BILLIONS) (IF APPLICABLE)
- ---------------------------------------------------------------------------------------------------------------------------------
Aggressive Growth(2),(4) First $.5 - .89%; next $.5 - .865%; 1.53% until 5/31/06
next $1 - .84%; next $1 - .815%;
next $3 - .79%; over $6 - .765%
Disciplined Equity(2) First $1 - .60%; next $1 - .575%; Disciplined Equity: 1.25% until 7/31/06
Growth(2),(3) next $1 - .55%; next $3 - .525%; Large Cap Value: 1.35% until 7/31/06
Large Cap Equity(2) next $6 - .50%; next $12 - .49%;
Large Cap Value(2) over $24 - .48%
Mid Cap Growth(2)
New Dimensions(2),(3)
Discovery(2),(5) First $.25 - .64%; next $.25 - .615%; 1.49% until 7/31/06
next $.25 - .59%; next $.25 - .565%;
next $1 - .54%; over $2 - .515%
Diversified Equity Income(2),(3) First $.5 - .53%; next $.5 - .505%;
Equity Value(2) next $1 - .48%; next $1 - .455%;
Stock(2),(3) next $3 - .43%; over $6 - .40%
Strategic Allocation(2),(3)
Dividend Opportunity(2) First $.5 - .61%; next $.5 - .585%;
next $1 - .56%; next $1 - .535%;
next $3 - .51%; over $6 - .48%
Fundamental Growth(2),(6) First $.5 - .78%; next $.5 - .78%; 1.50% until 5/31/06
next $1 - .755%; next $1 - .73%;
next $3 - .705%; over $6 - .68%
Fundamental Value(2),(7) First $.5 - .73%; next $.5 - .705%;
Value(2),(8) next $1 - .68%; next $1 - .655%;
next $3 - .63%; over $6 - .60%
Mid Cap Value(2) First $1 - .70%; next $1 - .675%;
next $1 - .65%; next $3 - .625%;
next $6 - .60%; next $12 - .59%
over $24 - .58%
Select Value(2),(9) First $.5 - .78%; next $.5 - .755%;
next $1 - .73%; next $1 - .705%; next
$3 - .68%; over $6 - .65%
Small Cap Advantage(2),(10) First $.25 - .74%; next $.25 - .715%;
next $.25 - .69%; next $.25 - .665%;
next $1 - .64%; over $2 - .615%
Small Cap Equity(2),(5) First $.25 - .97%; next $.25 - .945%; 1.55% until 5/31/06
Small Cap Value(2),(11) next $.25 - .92%; next $.25 - .895%; 1.59% until 5/31/06
over $1 - .87%
Small Cap Growth(2),(12) First $.25 - .92%; next $.25 - .895%; 1.70% until 3/31/07
next $.25 - .87%; next $.25 - .845%;
next $1 - .82%; over $2 - .795%
Strategy Aggressive(2) First $1 - .60%; next $1 - .575%;
next $1 - .55%; next $3 - .525%;
over $6 - .50%
</Table>
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
47
<Page>
(1) The information is shown for Class A shares. Fees and expenses in excess of
the percentage shown will be waived. Fee caps for other classes of shares
will vary slightly based on the expenses of those classes.
(2) The fund has a PIA based on its performance compared to a Lipper index of
comparable funds over a rolling 12-month period.
(3) The fund is part of a master/feeder structure. Management fees are paid by
the portfolio on behalf of the fund.
(4) The fund has a subadvisory agreement with American Century Investment
Management, Inc. and Turner Investment Partners, Inc.
(5) The fund has subadvisory agreements with American Century Investment
Management, Inc., Lord, Abbett & Co. and Wellington Management Company,
LLP.
(6) The fund has subadvisory agreements with Wellington Management Company, LLP
and Goldman Sachs Asset Management L.P.
(7) The fund has a subadvisory agreement with Davis Advisors.
(8) The fund has a subadvisory agreement with Lord, Abbett & Co.
(9) The fund has a subadvisory agreement with Gabelli Asset Management Company.
(10) The fund has a subadvisory agreement with Kenwood Capital Management LLC.
(11) The fund has subadvisory agreements with Royce & Associates, Inc.; Goldman
Sachs Asset Management L.P.; Barrow, Hanley, Mewhinney & Strauss, Inc.;
Donald Smith & Co., Inc.; and Franklin Portfolio Associates.
(12) The fund has subadvisory agreements with Turner Investment Partners, Inc.;
UBS Global Asset Management (Americas) Inc.; Essex Investment Management
Company, LLC; and MDT Advisers, a division of Harris Bietall Sullivan &
Smith, LLC.
TABLE C-4. FUND PAYMENTS TO THE INVESTMENT MANAGER AND ITS AFFILIATES*
<Table>
<Caption>
FUND ADMIN DIST IMS SERVICE TA CUSTODY
Stock $789,200 $6,154,982 $11,111,422 $497,150 $2,914,137 $152,542
</Table>
* The Administrative Services Agreement ("Admin") is between the fund and
Ameriprise Financial. The Agreement of Distribution ("Dist") and Shareholder
Service Agreement ("Service") are between the fund and Ameriprise Financial
Services, Inc. The Investment Management Services Agreement ("IMS") is
between the fund and RiverSource Investments. The Transfer Agent ("TA")
Agreement is between the fund and RiverSource Service Corporation. The
Custodian Agreement ("Custody") is between the fund and Ameriprise Trust
Company. Services under these agreements will continue to be provided after
the IMS Agreement is approved.
TABLE C-5. BROKERAGE COMMISSIONS PAID TO BROKER-DEALER AFFILIATES
<Table>
<Caption>
BROKER/ AMOUNT OF % OF ALL
FUND DEALER COMMISSIONS COMMISSIONS
Stock AEIS(1) $514,423 12.46%
</Table>
(1) Wholly owned subsidiary of Ameriprise Financial. The amount shown reflects
brokerage clearing fees.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
48
<Page>
TABLE C-6. DATES RELATING TO APPROVAL OF MANAGEMENT AGREEMENT
<Table>
<Caption>
DATE LAST REASON
DATE OF APPROVED BY SUBMITTED TO
FUND CONTRACT SHAREHOLDERS SHAREHOLDERS
Stock 12/1/02 11/13/2002 1
</Table>
(1) Shareholders approved modifications to the performance incentive adjustment.
THE FUND'S INDEPENDENT REGISTERED PUBLIC ACCOUNTANT. The 1940 Act provides that
every registered investment company must be audited at least once each year by
independent registered public accountants selected by a majority of the
independent Board members. The Selling Fund's Board has selected KPMG LLP to be
the Fund's independent registered public accountant for the current fiscal year.
KPMG LLP, in accordance with Independence Standards Board Standard No. 1 (ISB
No. 1), has confirmed in writing to the Board's Joint Audit Committee that they
are independent accountants with respect to the Fund.
The independent accountants examine the financial statements for the Fund that
are set forth in the annual report to shareholders and provide other requested
non-audit and tax-related services to the Fund. The Joint Audit Committee
reviewed and discussed the audited financial statements with RiverSource
Investments and reviewed with KPMG LLP the matters required to be discussed by
SAS 61 (for example, methods used to account for significant unusual
transactions).
The Joint Audit Committee does not consider other non-audit services provided by
KPMG LLP to be incompatible with maintaining the independence of KPMG LLP in its
audits of the Fund, taking into account representations from KPMG LLP, in
accordance with ISB No. 1, regarding its independence from the Fund and its
related entities.
Representatives of KPMG LLP are expected to be present at the meeting. They will
be given the opportunity to make a statement to shareholders and are expected to
be available to respond to any questions that may be raised at the meeting.
JOINT AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. Pursuant to the
pre-approval requirements of the Sarbanes-Oxley Act of 2002, all services to be
performed by KPMG LLP for the Fund; the Fund's investment adviser; and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the Fund, must be pre-approved by the
Joint Audit Committee.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
49
<Page>
AUDIT FEES. During the last two fiscal years, the aggregate fees paid to KPMG
LLP for professional services rendered for the audit of the annual financial
statements or services that are normally provided in connection with statutory
and regulatory filings for the fund were as follows:
TABLE C-7A. AUDIT FEES
DURING THE FUND'S LAST TWO FISCAL YEARS
<Table>
<Caption>
FUND LAST FISCAL YEAR PREVIOUS FISCAL YEAR
Stock $43,000 $43,000
</Table>
The following table shows aggregate fees paid by the Fund to KPMG LLP in each of
the last two fiscal years for services that are not included in Table C-7A. All
of the services performed were pre-approved by the Joint Audit Committee.
- - AUDIT-RELATED FEES. Assurance and related services that are reasonably
related to the performance of the audit or review.
- - TAX FEES. Tax compliance, tax advice and tax planning.
- - ALL OTHER FEES. All other services rendered by KMPG LLP.
TABLE C-7B. AUDIT-RELATED, TAX AND OTHER FEES
DURING THE FUND'S LAST TWO FISCAL YEARS
<Table>
<Caption>
AGGREGATE AGGREGATE AGGREGATE
AUDIT-RELATED FEES TAX FEES OTHER FEES
- --------------------------------------------------------------------------------
LAST PREVIOUS LAST PREVIOUS LAST PREVIOUS
FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL
FUND YEAR YEAR YEAR YEAR YEAR YEAR
Stock $502 $424 $6,650 $6,470 $0 $29
</Table>
AGGRAGATE NON-AUDIT FEES TO STOCK, INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended Sept. 30, 2005, the aggregate non-audit fees billed for
services rendered to the Fund, to the investment manager and to any entity
controlling, controlled by or under common control with the investment manager
that provides ongoing services to the funds was $94,152. For the year ended
Sept. 30, 2004, the aggregate amount was $133,823.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
50
<Page>
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization dated as of ___, 2005 (the
"Agreement") is between AXP Stock Series, Inc. (the "Selling Corporation"), a
Minnesota corporation, on behalf of its series, RiverSource Stock Fund (the
"Selling Fund"), and AXP Growth Series, Inc. (the "Buying Corporation), a
Minnesota corporation, on behalf of its series, RiverSource Disciplined Equity
Fund (the "Buying Fund), and RiverSource Investments, LLC (solely for the
purposes of Section 3c and 10 of the Agreement).
In consideration of their mutual promises, the parties agree as follows:
1. SHAREHOLDER APPROVAL. The Selling Fund will call a meeting of its
shareholders for the purpose of approving the Agreement and the
transactions it contemplates (the "Reorganization"). The Buying Fund agrees
to furnish data and information, as reasonably requested, for the proxy
statement to be furnished to shareholders of the Selling Fund.
2. REORGANIZATION.
a. Plan of Reorganization. The Reorganization will be a reorganization
within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"). At the Closing, the Selling Corporation
will convey all of the assets of the Selling Fund to the Buying Fund.
The Buying Fund will assume all liabilities of the Selling Fund. At
the Closing, the Buying Corporation will deliver shares of the Buying
Fund, including fractional shares, to the Selling Corporation. The
number of shares will be determined by dividing the value of the net
assets of shares of the Selling Fund, computed as described in
paragraph 3(a), by the net asset value of one share of the Buying
Fund, computed as described in paragraph 3(b). The Selling Fund will
not pay a sales charge on the receipt of Buying Fund shares in
exchange for the assets of the Selling Fund. In addition, the
shareholders of the Selling Fund will not pay a sales charge on
distribution to them of shares of the Buying Fund.
b. Closing and Effective Time of the Reorganization. The Reorganization
and all related acts necessary to complete the Reorganization (the
"Closing") will occur on the first day on which the New York Stock
Exchange (the "NYSE") is open for business following approval of
shareholders of the Selling Fund and receipt of all necessary
regulatory approvals, or such later date as the parties may agree.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
A.1
<Page>
3. VALUATION OF NET ASSETS.
a. The net asset value of shares of the Selling Fund will be computed as
of the close of regular trading on the NYSE on the day of Closing (the
"Valuation Date") using the valuation procedures in the Buying Fund's
prospectus.
b. The net asset value per share of shares of the Buying Fund will be
determined as of the close of regular trading on the NYSE on the
Valuation Date, using the valuation procedures in the Buying Fund's
prospectus.
c. At the Closing, the Selling Fund will provide the Buying Fund with a
copy of the computation showing the valuation of the net asset value
per share of shares of the Selling Fund on the Valuation Date. The
Buying Fund will provide the Selling Fund with a copy of the
computation showing the determination of the net asset value per share
of shares of the Buying Fund on the Valuation Date. Both computations
will be certified by an officer of RiverSource Investments, LLC, the
investment manager.
4. LIQUIDATION AND DISSOLUTION OF THE SELLING FUND.
a. As soon as practicable after the Valuation Date, the Selling
Corporation will liquidate the Selling Fund and distribute shares of
the Buying Fund to the Selling Fund's shareholders of record. The
Buying Fund will establish shareholder accounts in the names of each
Selling Fund shareholder, representing the respective pro rata number
of full and fractional shares of the Buying Fund due to each
shareholder. All issued and outstanding shares of the Selling Fund
will simultaneously be cancelled on the books of the Selling
Corporation. The Buying Fund or its transfer agent will establish
shareholder accounts in accordance with instructions from the Selling
Corporation.
b. Immediately after the Valuation Date, the share transfer books of the
Selling Corporation relating to the Selling Fund will be closed and no
further transfer of shares will be made.
c. Promptly after the distribution, the Buying Fund or its transfer agent
will notify each shareholder of the Selling Fund of the number of
shares distributed to the shareholder and confirm the registration in
the shareholder's name.
d. As promptly as practicable after the liquidation of the Selling Fund,
and in no event later than twelve months from the date of the Closing,
the Selling Fund will be dissolved.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
A.2
<Page>
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYING CORPORATION. The
Buying Corporation represents and warrants to the Selling Fund as follows:
a. Organization, Existence, etc. The Buying Corporation is a corporation
duly organized, validly existing and in good standing under the laws
of the state of Minnesota and has the power to carry on its business
as it is now being conducted.
b. Registration as Investment Company. The Buying Fund is a series of the
Buying Corporation, registered under the Investment Company Act of
1940 (the "1940 Act") as an open-end, management investment company.
c. Capitalization. The Buying Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share. All
of the outstanding shares have been duly authorized and are validly
issued, fully paid and non-assessable. Since the Buying Fund is
engaged in the continuous offering and redemption of its shares, the
number of outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the end
of the last fiscal year, and the subsequent unaudited semi-annual
financial statements, if any (the "Buying Fund Financial Statements"),
fairly present the financial position of the Buying Fund, and the
results of its operations and changes in its net assets for the
periods shown.
e. Shares to be Issued Upon Reorganization. The shares to be issued in
connection with the Reorganization will be duly authorized and, at the
time of the Closing, will be validly issued, fully paid and
non-assessable.
f. Authority Relative to the Agreement. The Buying Corporation has the
power to enter into and carry out the obligations described in this
Agreement. The Agreement and the transactions contemplated by it have
been duly authorized by the Board of Directors of the Buying
Corporation and no other proceedings by the Buying Corporation or the
Buying Fund are necessary.
g. No Violation. The Buying Corporation is not in violation of its
Articles of Incorporation or By-Laws (the "Articles") or in default in
the performance of any material agreement to which it is a party. The
execution of this Agreement and the completion of the transactions
contemplated by it will not conflict with, or constitute a breach of,
any material contract or other instrument to which the Buying Fund is
subject. The transactions will not result in any violation of the
provisions of the Articles or any law, administrative regulation or
administrative or court decree applicable to the Buying Fund.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
A.3
<Page>
h. Liabilities. There are no liabilities of the Buying Fund other than:
- liabilities disclosed in the Buying Fund Financial Statements,
- liabilities incurred in the ordinary course of business
subsequent to the date of the latest annual or semi-annual
financial statements, or
- liabilities previously disclosed to the Selling Fund, none of
which has been materially adverse to the business, assets or
results of operation of the Buying Fund.
i. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending
or, to the knowledge of the Buying Fund, threatened, that would
materially and adversely affect the Buying Fund, its financial
condition or the conduct of its business, or that would prevent or
hinder completion of the transactions contemplated by this Agreement.
The Buying Fund knows of no facts that might form the basis for the
institution of any such litigation, proceeding or investigation and
the Buying Fund is not a party to or subject to the provisions of any
order, decree or judgment.
j. Contracts. Except for contracts and agreements previously disclosed to
the Selling Corporation, the Buying Fund is not a party to or subject
to any material contract, debt instrument, plan, lease, franchise,
license or permit.
k. Taxes. The Buying Fund has qualified as a regulated investment company
under the Internal Revenue Code with respect to each taxable year
since commencement of its operations and will qualify as a regulated
investment company at all times through the Closing. As of the
Closing, the Buying Fund will (i) have filed all federal and other tax
returns and reports that have been required to be filed, (ii) have
paid or provided for payment of all federal and other taxes shown to
be due on such returns or on any assessments received, (iii) have
adequately provided for all tax liabilities on its books, (iv) except
as disclosed to the Selling Fund, not have had any tax deficiency or
liability asserted against it or question with respect thereto raised,
and (v) except as disclosed to the Selling Fund, not be under audit by
the Internal Revenue Service or by any state or local tax authority
for taxes in excess of those already paid.
l. Registration Statement. The Buying Fund will file a registration
statement on Form N-14 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933
(the "1933 Act") relating to the shares to be issued in the
Reorganization. At the time the Registration Statement becomes
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effective, at the time of the shareholders' meeting and at the
Closing, the Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading. However, none
of the representations and warranties in this subsection apply to
statements in, or omissions from, the Registration Statement made in
reliance on information furnished by the Selling Fund for use in the
Registration Statement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING CORPORATION. The
Selling Corporation represents and warrants to the Buying Fund as follows:
a. Organization, Existence, etc. The Selling Corporation is a corporation
duly organized, validly existing and in good standing under the laws
of the state of Minnesota and has the power to carry on its business
as it is now being conducted.
b. Registration as Investment Company. The Selling Fund is a series of
the Selling Corporation, registered under the 1940 Act as an open-end,
management investment company.
c. Capitalization. The Selling Corporation has authorized capital of
10,000,000,000 shares of common stock, par value $0.01 per share. All
of the outstanding shares have been duly authorized and are validly
issued, fully paid and non-assessable. Since the Selling Fund is
engaged in the continuous offering and redemption of its shares, the
number of outstanding shares may vary daily.
d. Financial Statements. The audited financial statements as of the end
of the last fiscal year, and the subsequent unaudited semi-annual
financial statements, if any (the "Selling Fund Financial
Statements"), fairly present the financial position of the Selling
Fund, and the results of its operations and changes in its net assets
for the periods shown.
e. Authority Relative to the Agreement. The Selling Corporation has the
power to enter into and to carry out its obligations under this
Agreement. The Agreement and the transactions contemplated by it have
been duly authorized by the Board of Directors of the Selling
Corporation and no other proceedings by the Selling Corporation or the
Selling Fund are necessary.
f. No Violation. The Selling Corporation is not in violation of its
Articles or in default in the performance of any material agreement to
which it is a party. The execution of this Agreement and the
completion of the transactions contemplated by it will not conflict
with or constitute a breach of, any material contract to which the
Selling Fund is subject.
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The transactions will not result in any violation of the provisions of
the Articles or any law, administrative regulation or administrative
or court decree applicable to the Selling Fund.
g. Liabilities. There are no liabilities of the Selling Fund other than:
- liabilities disclosed in the Selling Fund Financial Statements,
- liabilities incurred in the ordinary course of business
subsequent to the date of the latest annual or semi-annual
financial statements, or
- liabilities previously disclosed to the Buying Fund, none of
which has been materially adverse to the business, assets or
results of operation of the Selling Fund.
h. Litigation. There is no litigation, administrative proceeding or
investigation before any court or governmental body currently pending
or, to the knowledge of the Selling Fund, threatened, that would
materially and adversely affect the Selling Fund, its financial
condition or the conduct of its business, or that would prevent or
hinder completion of the transactions contemplated by this Agreement.
The Selling Fund knows of no facts that might form the basis for the
institution of any such litigation, proceeding or investigation and is
not a party to or subject to the provisions of any order, decree or
judgment.
i. Contracts. Except for contracts and agreements previously disclosed to
the Buying Corporation, the Selling Fund is not a party to or subject
to any material contract, debt instrument, plan, lease, franchise,
license or permit.
j. Taxes. The Selling Fund has qualified as a regulated investment
company under the Internal Revenue Code with respect to each taxable
year since commencement of its operations and will qualify as
regulated investment company at all times through the Closing. As of
the Closing, the Selling Fund will (i) have filed all federal and
other tax returns and reports that have been required to be filed,
(ii) have paid or provided for payment of all federal and other taxes
shown to be due on such returns or on any assessments received, (iii)
have adequately provided for all tax liabilities on its books, (iv)
except as disclosed to the Buying Fund, not have had any tax
deficiency or liability asserted against it or question with respect
thereto raised, and (v) except as disclosed to the Buying Fund, not be
under audit by the Internal Revenue Service or by any state or local
tax authority for taxes in excess of those already paid.
k. Fund Securities. All securities listed in the schedule of investments
of the Selling Fund as of the Closing will be owned by the Selling
Fund free and clear of any encumbrances, except as indicated in the
schedule.
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l. Registration Statement. The Selling Fund will cooperate with the
Acquiring Fund and will furnish information relating to the Selling
Corporation and the Selling Fund required in the Registration
Statement. At the time the Registration Statement becomes effective,
at the time of the shareholders' meeting and at the Closing, the
Registration Statement, as it relates to the Selling Corporation or
the Selling Fund, will not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein not misleading. However, the representations and warranties in
this subsection apply only to statements in or omissions from the
Registration Statement made in reliance upon information furnished by
the Selling Corporation or the Selling Fund for use in the
Registration Statement.
7. CONDITIONS TO OBLIGATIONS OF THE BUYING CORPORATION. The obligations of the
Buying Corporation with respect to the Reorganization are subject to the
satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of
all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Selling Corporation
and the Selling Fund will have complied with this Agreement and each
of the representations and warranties in this Agreement will be true
in all material respects as of the Closing. An officer of the Selling
Corporation will provide a certificate to the Buying Fund confirming
that, as of the Closing, the representations and warranties set forth
in Section 6 are true and correct and that there have been no material
adverse changes in the financial condition, results of operations,
business, properties or assets of the Selling Fund since the date of
its last financial statement, except as otherwise indicated in any
financial statements, certified by an officer of the Selling
Corporation, and delivered to the Buying Fund on or prior to the last
business day before the Closing.
c. Regulatory Approvals.
- The Registration Statement referred to in Section 5(l) will be
effective and no stop orders under the 1933 Act will have been
issued.
- All necessary approvals, consents and exemptions from federal and
state regulatory authorities will have been obtained.
d. Tax Opinion. The Buying Corporation will have received the opinion of
Ropes & Gray LLP dated as of the Closing, as to the federal income tax
consequences of the Reorganization to the Buying Fund
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
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and its shareholders. For purposes of rendering their opinion, Ropes &
Gray LLP may rely, as to factual matters, upon the statements made in
this Agreement, the proxy statement which will be distributed to the
shareholders of the Selling Fund, and other written representations as
an officer of the Selling Corporation will have verified as of
Closing. The opinion of Ropes & Gray LLP will be to the effect that:
(i) neither the Selling Fund nor the Buying Fund will recognize any
gain or loss upon the transfer of the assets of the Selling Fund to,
and assumption of its liabilities by, the Buying Fund in exchange for
shares of the Buying Fund and upon the distribution of the shares to
the Selling Fund shareholders in exchange for their shares of the
Selling Fund; (ii) the shareholders of the Selling Fund who receive
shares of the Buying Fund in the Reorganization will not recognize any
gain or loss on the exchange of their shares of the Selling Fund for
the shares of the Buying Fund; (iii) the holding period and the basis
of the shares received by the Selling Fund shareholders will be the
same as the holding period and the basis of the shares of the Selling
Fund surrendered in the exchange; (iv) the holding period and the
basis of the assets acquired by the Buying Fund will be the same as
the holding period and the basis of the assets to the Selling Fund
immediately prior to the Reorganization.
e. Opinion of Counsel. The Buying Corporation will have received an
opinion of counsel for the Selling Corporation, dated as of the
Closing, to the effect that: (i) the Selling Corporation is a
corporation duly organized and validly existing under the laws of the
state of Minnesota; (ii) the Selling Fund is a series of the Selling
Corporation, an open-end investment company registered under the 1940
Act; (iii) this Agreement and the Reorganization have been duly
authorized and approved by all requisite action of the Selling
Corporation and the Selling Fund and this Agreement has been duly
executed by, and is a valid and binding obligation of, the Selling
Corporation.
f. Declaration of Dividend. The Selling Fund, prior to the Closing, has
declared a dividend or dividends, which, together with all previous
such dividends, shall have the effect of distributing to the Selling
Fund shareholders (i) all of the excess of (x) the Selling Fund's
investment income excludable from gross income under Section 103 of
the Code over (y) the Selling Fund's deductions disallowed under
Sections 265 and 171 of the Code, (ii) all of the Selling Fund's
investment company taxable income as defined in Section 852 of the
Code (in each case computed without regard to any deduction for
dividends paid) and (iii) all of the Selling Fund's net capital gain
realized (after reduction
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for any capital loss carryover), in each case for the current taxable
year (which will end on the Closing date) and any preceding taxable
years for which such a dividend is eligible to be made under Section
855 of the Code.
8. CONDITIONS TO OBLIGATIONS OF THE SELLING CORPORATION. The obligations of
the Selling Corporation with respect to the Reorganization are subject to
the satisfaction of the following conditions:
a. Shareholder Approval. This Agreement will have been approved by the
affirmative vote of the holders of the majority of the voting power of
all Selling Fund shares entitled to vote.
b. Representations, Warranties and Agreements. The Buying Fund will have
complied with this Agreement and each of the representations and
warranties in this Agreement will be true in all material respects as
of the Closing. An officer of the Buying Corporation will provide a
certificate to the Selling Fund confirming that, as of the Closing,
the representations and warranties set forth in Section 5 are true and
correct and that there have been no material adverse changes in the
financial condition, results of operations, business, properties or
assets of the Buying Fund since the date of its last financial
statement, except as otherwise indicated in any financial statements,
certified by an officer of the Buying Corporation, and delivered to
the Selling Fund on or prior to the last business day before the
Closing.
c. Regulatory Approvals.
- The Registration Statement referred to in Section 5(l) will be
effective and no stop orders under the 1933 Act will have been
issued.
- All necessary approvals, consents and exemptions from federal and
state regulatory authorities will have been obtained.
d. Tax Opinion. The Selling Corporation will have received the opinion of
Ropes & Gray LLP dated as of the Closing, as to the federal income tax
consequences of the Reorganization to the Selling Fund and its
shareholders. For purposes of rendering their opinion, Ropes & Gray
LLP may rely, as to factual matters, upon the statements made in this
Agreement, the proxy statement which will be distributed to the
shareholders of the Selling Fund, and other written representations as
an officer of the Buying Corporation will have verified as of Closing.
The opinion of Ropes & Gray LLP will be to the effect that: (i)
neither the Selling Fund nor the Buying Fund will recognize any gain
or loss upon the transfer of the assets of the Selling Fund to, and
assumption of its liabilities by, the Buying Fund in exchange for
shares of the Buying Fund and upon the distribution of the shares to
the Selling
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
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Fund shareholders in exchange for their shares of the Selling Fund;
(ii) the shareholders of the Selling Fund who receive shares of the
Buying Fund in the Reorganization will not recognize any gain or loss
on the exchange of their shares of the Selling Fund for the shares of
the Buying Fund; (iii) the holding period and the basis of the shares
received by the Selling Fund shareholders will be the same as the
holding period and the basis of the shares of the Selling Fund
surrendered in the exchange; (iv) the holding period and the basis of
the assets acquired by the Buying Fund will be the same as the holding
period and the basis of the assets to the Selling Fund immediately
prior to the Reorganization; and (v) the Buying Fund will succeed to
and take into account the items of the Selling Fund described in
Section 381(c) of the Code, subject to the conditions and limitations
specified in Sections 381, 382, 383, and 384 of the Code and the
regulations thereunder.
e. Opinion of Counsel. The Selling Corporation will have received the
opinion of counsel for the Buying Corporation, dated as of the
Closing, to the effect that: (i) the Buying Corporation is a
corporation duly organized and validly existing under the laws of the
state of Minnesota; (ii) the Buying Fund is a series of the Buying
Corporation, an open-end investment company registered under the 1940
Act; (iii) this Agreement and the Reorganization have been authorized
and approved by all requisite action of the Buying Corporation and the
Buying Fund and this Agreement has been duly executed by, and is a
valid and binding obligation of, the Buying Corporation; and (iv) the
shares to be issued in the Reorganization are duly authorized and upon
issuance in accordance with this Agreement will be validly issued,
fully paid and non-assessable shares of the Buying Fund.
9. AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND
REPRESENTATIONS.
a. This Agreement may be amended in writing if authorized by the
respective Boards of Directors. The Agreement may be amended at any
time before or after approval by the shareholders of the Selling Fund,
but after shareholder approval, no amendment shall be made that
substantially changes the terms of paragraphs 2 or 3.
b. At any time prior to the Closing, any of the parties may waive in
writing (i) any inaccuracies in the representations and warranties
made to it and (ii) compliance with any of the covenants or conditions
made for its benefit. However, neither party may waive the requirement
to obtain shareholder approval or the requirement to obtain a tax
opinion.
c. The Selling Corporation may terminate this Agreement at any time
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
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prior to the Closing by notice to the Buying Corporation if a material
condition to its performance or a material covenant of the Buying
Corporation on behalf of the Buying Fund is not fulfilled on or before
the date specified for its fulfillment or a material breach of this
Agreement is made by the Buying Corporation on behalf of the Buying
Fund and is not cured.
d. The Buying Corporation may terminate this Agreement at any time prior
to the Closing by notice to the Selling Corporation if a material
condition to its performance or a material covenant of the Selling
Corporation on behalf of the Selling Fund is not fulfilled on or
before the date specified for its fulfillment or a material breach of
this Agreement is made by the Selling Corporation on behalf of the
Selling Fund and is not cured.
e. This Agreement may be terminated by any party at any time prior to the
Closing, whether before or after approval by the shareholders of the
Selling Fund, without any liability on the part of either party or its
respective directors, officers, or shareholders, on written notice to
the other party, and shall be terminated without liability as of the
close of business on Dec. 31, 2006, or a later date agreed upon by the
parties, if the Closing is not on or prior to that date.
f. The representations, warranties and covenants contained in this
Agreement, or in any document delivered in connection with this
Agreement, will survive the Reorganization.
10. EXPENSES. RiverSource Investments, LLC will pay the costs of carrying out
the provisions of this Agreement whether or not the Reorganization is
completed.
11. GENERAL.
a. Headings. The headings contained in this Agreement are for reference
purposes only and will not affect the meaning or interpretation of
this Agreement. Nothing in this Agreement is intended to confer upon
any other person any rights or remedies by reason of this Agreement.
b. Governing Law. This Agreement will be governed by the laws of the
state of Minnesota.
12. INDEMNIFICATION.
Each party will indemnify and hold the other and its officers and directors
(each an "Indemnitee") harmless from and against any liability or other
cost and expense, in connection with the defense or disposition of any
action, suit, or other proceeding, before any court or administrative or
investigative body in which the Indemnitee may be involved as a party, with
respect to actions taken under this Agreement. However, no
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Indemnitee will be indemnified against any liability or expense arising by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the Indemnitee's
position.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed.
AXP Stock Series, Inc.
on behalf of RiverSource Stock Fund
By
------------------------------------
Leslie L. Ogg
Vice President
AXP Growth Series, Inc.
on behalf of RiverSource Disciplined Equity Fund
By
------------------------------------
Leslie L. Ogg
Vice President
The undersigned is a party to this Agreement for purposes of Section 3c and 10
only.
RiverSource Investments, LLC
By
------------------------------------
Paula R. Meyer
Senior Vice President and General Manager - Mutual Funds
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EXHIBIT B
MATTERS SUBJECT TO APPROVAL AT REGULAR MEETING OF BUYING FUND
In addition to voting on proposals to elect Board members, to amend the Articles
of Incorporation, and to approve the IMS Agreement, Buying Fund shareholders
will consider the following:
APPROVE OR REJECT CHANGES IN FUNDAMENTAL INVESTMENT POLICIES
The fund has some investment policies that are fundamental. This means the
policies can be changed only with the approval of shareholders. RiverSource
Investments recommended to the Board that certain of those policies be modified
in order to standardize the policies for all funds and to eliminate unnecessary
limitations.
RiverSource Investments believes that increased standardization will help to
promote operational efficiencies and facilitate monitoring of compliance with
fundamental investment policies. Adoption of a new or revised policy is not
intended to change current investment techniques employed for the fund. The
Board recommends the following changes to the fund's fundamental investment
policies:
A. DIVERSIFICATION
The Board recommends that the fund's fundamental policy with respect to
diversification be revised to give the fund the maximum flexibility permitted by
the 1940 Act. The Board recommends that shareholders vote to replace the fund's
current fundamental investment policy with the following policy (additional or
revised language is underlined):
The fund will not invest more than 5% of its total assets in securities of
any company, government, or political subdivision thereof, except the
limitation will not apply to investments in securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities or other
investment companies, and except that up to 25% of the fund's total assets
may be invested without regard to this 5% limitation.
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The percentage limits in the proposed policy are required under the 1940 Act.
The amended policy makes one change from the current policy: subject to
applicable 1940 Act requirements, it would permit the fund to invest without
limit in the securities of other investment companies. Pursuant to an exemptive
order granted by the Securities and Exchange Commission (the "SEC"), the fund
may invest up to 25% of its total assets in a non-publicly offered money market
fund managed by RiverSource Investments (the "cash pool fund"). The cash pool
fund is not expected to pay investment advisory, management, or transfer agent
fees, although it may do so subject to the conditions of the SEC order and Board
approval. The cash pool fund will incur minimal costs for services, such as
custodian and auditor fees. The investment manager anticipates that making use
of the cash pool fund will benefit the fund by enhancing the efficiency of cash
management and by providing increased short-term investment opportunities. If
the proposal is approved, the cash pool fund is expected to serve as a principal
option for managing the cash positions of the fund. Future amendments to the
fund's fundamental diversification policy would continue to require shareholder
approval.
B. LENDING
The Board recommends that the fund's fundamental policies with respect to
lending be replaced with the following policy:
The Fund will not lend securities or participate in an interfund lending
program if the total of all such loans would exceed 33 1/3% of the Fund's
total assets except this fundamental investment policy shall not prohibit
the Fund from purchasing money market, loan participation or other debt
securities, or from entering into repurchases agreements.
Currently each of the funds has two policies with respect to lending. One policy
limits lending of portfolio securities to 30% of net assets and the other policy
limits cash loans to 5% of total assets. In addition, certain funds have a
policy prohibiting loans to the investment manager, or to board members and
officers of the investment manager or the fund. This third policy simply states
a prohibition of the 1940 Act and the fund is not required to declare this
policy as a fundamental policy. It is proposed that all three of these policies
be superseded by the policy stated above.
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The proposal is not expected to materially affect the operation of the fund.
However, the proposed policy would clarify that the fund can participate in an
interfund borrowing and lending program with other RiverSource Funds, subject to
the requirements of an SEC exemptive order. A fund may only borow money for
temporary purposes and not make investments. Appropriate safeguards will be
implemented to assure that the fund will not be disadvantaged by making loans to
affiliated funds. The proposed policy also would confirm the fund's ability to
invest in direct debt instruments such as loans and loan participations, which
are interests in amounts owed to another party by a company, government or other
borrower. These types of securities may have additional risks beyond
conventional debt securities because they may provide less legal protection for
the fund, or there may be a requirement that the fund supply additional cash to
a borrower on demand. Finally, the adoption of the proposed investment policy
will advance the goal of standardizing investment policies.
C. BORROWING
The Board recommends that the fund's fundamental policy with respect to
borrowing be replaced with the following policy:
The fund may not borrow money, except for temporary purposes (not for
leveraging or investment) in an amount not exceeding 33 1/3% of its total
assets (including the amount borrowed) less liabilities (other than
borrowings) immediately after the borrowings.
Funds typically borrow money to meet redemptions in order to avoid forced,
unplanned sales of portfolio securities. This technique allows RiverSource
Investments greater flexibility in managing the fund's cash flow. The current
policy limits borrowing to "emergency or extraordinary purposes". In order to
avoid debate over what constitutes emergency or extraordinary purposes, it is
proposed to revise the policy to reflect that the purposes, whatever the
circumstances, must be temporary. The fund may not use borrowing for leverage or
for investment purposes. In addition, the policy for certain funds includes a
prohibition on borrowing "property". The Board recommends the term be deleted in
order to standardize investment policies.
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BOARD RECOMMENDATION AND VOTE REQUIRED. The Board recommends that shareholders
approve the proposed changes. Changes in fundamental policies must be approved
by the lesser of (a) a majority of the fund's outstanding shares or (b) 67% of
the shares voted at the meeting, so long as more than 50% of the shares actually
vote. If the any of the proposed changes is not approved, the fund will continue
to operate under its current policy.
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EXHIBIT C
MINNESOTA BUSINESS CORPORATION ACT SECTIONS 302A.471 AND 302A.473
Minnesota law requires that we provide you with a copy of the state law on
dissenters' rights. Notwithstanding the provisions of the law set out below, the
SEC has taken the position that use of state appraisal procedures by a
registered mutual fund such as the Fund would be a violation of Rule 22c-1, the
forward pricing rule, under the 1940 Act. As a result, if any shareholder elects
to exercise dissenters' rights under Minnesota law, the Fund intends to submit
this question to a court of competent jurisdiction. In that event, a dissenting
shareholder would not receive any payment until the end of the court proceeding.
302A.471. RIGHTS OF DISSENTING SHAREHOLDERS
SUBDIVISION 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that
it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption of
the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to
acquire shares, securities other than shares, or rights to purchase
shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter, or
to cumulate votes, except as the right may be excluded or limited
through the authorization or issuance of securities of an existing or
new class or series with similar or different voting rights; except
that an amendment to the articles of an issuing public corporation
that provides that section 302A.671 does not apply to a control share
acquisition does not give rise to the right to obtain payment under
this section;
(b) A sale, lease, transfer, or other disposition of all or substantially all
of the property and assets of the corporation, but not including a
transaction permitted without shareholder approval in section 302A.661,
subdivision 1, or a disposition in dissolution described in section
302A.725, subdivision 2, or a disposition pursuant to an order of a court,
or a disposition for cash on terms requiring that all or substantially all
of the net proceeds of disposition be distributed to the shareholders in
accordance with their respective interests within one year after the date
of disposition;
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(c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a party, except as provided in subdivision 3, and
except for a plan of merger adopted under section 302A.626;
(d) A plan of exchange, whether under this chapter or under chapter 322B, to
which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, except as provided in subdivision 3;
or
(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the
board directs that dissenting shareholders may obtain payment for their
shares.
SUBDIVISION 2. BENEFICIAL OWNERS.
(a) A shareholder shall not assert dissenters' rights as to less than all of
the shares registered in the name of the shareholder, unless the
shareholder dissents with respect to all the shares that are beneficially
owned by another person but registered in the name of the shareholder and
discloses the name and address of each beneficial owner on whose behalf the
shareholder dissents. In that event, the rights of the dissenter shall be
determined as if the shares as to which the shareholder has dissented and
the other shares were registered in the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of
this section and section 302A.473, if the beneficial owner submits to the
corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
SUBDIVISION 3. RIGHTS NOT TO APPLY.
(a) Unless the articles, the bylaws, or a resolution approved by the board
otherwise provide, the right to obtain payment under this section does not
apply to a shareholder of (1) the surviving corporation in a merger with
respect to shares of the shareholder that are not entitled to be voted on
the merger or (2) the corporation whose shares will be acquired by the
acquiring corporation in a plan of exchange with respect to shares of the
shareholder that are not entitled to be voted on the plan of exchange and
are not exchanged in the plan of exchange.
(b) If a date is fixed according to section 302A.445, subdivision 1, for the
determination of shareholders entitled to receive notice of and to vote on
an action described in subdivision 1, only shareholders as of the date
fixed, and beneficial owners as of the date fixed who hold through
shareholders, as provided in subdivision 2, may exercise dissenters'
rights.
SUBDIVISION 4. OTHER RIGHTS. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at
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law or in equity to have a corporate action described in subdivision 1 set aside
or rescinded, except when the corporate action is fraudulent with regard to the
complaining shareholder or the corporation.
302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS
SUBDIVISION 1. DEFINITIONS.
(a) For purposes of this section, the terms defined in this subdivision have
the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action referred to in section 302A.471, subdivision 1 or the
successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a corporation
immediately before the effective date of the corporate action referred to
in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective date of
the corporate action referred to in section 302A.471, subdivision 1, up to
and including the date of payment, calculated at the rate provided in
section 549.09 for interest on verdicts and judgments.
SUBDIVISION 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
SUBDIVISION 3. NOTICE OF DISSENT. If the proposed action must be approved by the
shareholders, a shareholder who is entitled to dissent under section 302A.471
and who wishes to exercise dissenters' rights must file with the corporation
before the vote on the proposed action a written notice of intent to demand the
fair value of the shares owned by the shareholder and must not vote the shares
in favor of the proposed action.
SUBDIVISION 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES.
(a) After the proposed action has been approved by the board and, if necessary,
the shareholders, the corporation shall send to all shareholders who have
complied with subdivision 3 and to all shareholders entitled to dissent if
no shareholder vote was required, a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the
date by which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received;
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
C.3
<Page>
(3) A form to be used to certify the date on which the shareholder, or the
beneficial owner on whose behalf the shareholder dissents, acquired
the shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief description of
the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting shareholder
must demand payment and deposit certificated shares or comply with any
restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all
other rights of a shareholder until the proposed action takes effect.
SUBDIVISION 5. PAYMENT; RETURN OF SHARES.
(a) After the corporate action takes effect, or after the corporation receives
a valid demand for payment, whichever is later, the corporation shall remit
to each dissenting shareholder who has complied with subdivisions 3 and 4
the amount the corporation estimates to be the fair value of the shares,
plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of income for a
fiscal year ending not more than 16 months before the effective date
of the corporate action, together with the latest available interim
financial statements;
(2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) A copy of section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a) from
a person who was not a shareholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a
person who was not a beneficial owner on that date. If the dissenter has
complied with subdivisions 3 and 4, the corporation shall forward to the
dissenter the materials described in paragraph (a), a statement of the
reason for withholding the remittance, and an offer to pay to the dissenter
the amount listed in the materials if the dissenter agrees to accept that
amount in full satisfaction. The dissenter may decline the offer and demand
payment under subdivision 6. Failure to do so entitles the dissenter only
to the amount offered. If the dissenter makes demand, subdivision 7 and 8
apply.
(c) If the corporation fails to remit payment within 60 days of the deposit of
certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under
subdivision 4 and require deposit or restrict transfer at a later time.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
C.4
<Page>
SUBDIVISION 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
SUBDIVISION 7. PETITION; DETERMINATION. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in a court a petition requesting that
the court determine the fair value of the shares, plus interest. The petition
shall be filed in the county in which the registered office of the corporation
is located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedures apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under subdivision 5, but
shall not be liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
C.5
<Page>
SUBDIVISION 8. COSTS; FEES; EXPENSES.
(a) The court shall determine the costs and expenses of a proceeding under
subdivision 7, including the reasonable expenses and compensation of any
appraisers appointed by the court, and shall assess those costs and
expenses against the corporation, except that the court may assess part or
all of those costs and expenses against a dissenter whose action in
demanding payment under subdivision 6 is found to be arbitrary, vexatious,
or not in good faith.
(b) If the court finds that the corporation has failed to comply substantially
with this section, the court may assess all fees and expenses of any
experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily,
vexatiously, or not in good faith in bringing the proceeding, and may be
awarded to a party injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
C.6
<Page>
EXHIBIT D
Prospectus
[RIVERSOURCE INVESTMENT(SM) LOGO]
RIVERSOURCE(SM)
DISCIPLINED EQUITY FUND
PROSPECTUS OCT. 3, 2005
- - RIVERSOURCE DISCIPLINED EQUITY FUND (FORMERLY AXP(R) QUANTITATIVE LARGE CAP
EQUITY FUND) SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
You may qualify for sales charge discounts on purchases of Class A shares.
Please notify your financial advisor or investment professional if you have
other accounts holding shares of RiverSource funds to determine whether you
qualify for a sales charge discount. See "Buying and Selling Shares" for more
information.
NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.1
<Page>
TABLE OF CONTENTS
THE FUND D. 3
Objective D. 3
Principal Investment Strategies D. 3
Principal Risks D. 4
Past Performance D. 5
Fees and Expenses D. 8
Other Investment Strategies and Risks D. 9
Fund Management and Compensation D. 11
BUYING AND SELLING SHARES D. 16
Transactions Through Unaffiliated Financial Intermediaries D. 16
Valuing Fund Shares D. 17
Investment Options D. 18
Purchasing Shares D. 20
Sales Charges D. 23
Exchanging/Selling Shares D. 29
DISTRIBUTIONS AND TAXES D. 34
Dividends and Capital Gain Distributions D. 34
Reinvestments D. 34
Taxes D. 35
FINANCIAL HIGHLIGHTS D. 36
CORPORATE REORGANIZATION
On Sept. 30, 2005, Ameriprise Financial, Inc. (Ameriprise Financial) (formerly
American Express Financial Corporation), was spun off to shareholders of its
parent corporation, American Express Company (American Express), and is now a
separate public company, trading under the ticker symbol AMP. Ameriprise
Financial provides administrative services to the Fund and is the parent company
of the Fund's investment manager, RiverSource Investments, LLC; 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). On Oct. 1, 2005, the Fund changed its name, such that it no longer is
branded AXP(R). The Fund now bears the RiverSource(SM) brand. Ameriprise
Financial and its subsidiaries are no longer affiliated with American Express.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.2
<Page>
THE FUND
OBJECTIVE
RiverSource Disciplined Equity Fund (the Fund) seeks to provide shareholders
with long-term capital growth. Because any investment involves risk, achieving
this objective cannot be guaranteed.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, at least 80% of the Fund's net assets are
invested in equity securities of companies listed on U.S. exchanges with market
capitalizations greater than $5 billion at the time of purchase. The Fund will
provide shareholders with at least 60 days' notice of any change in the 80%
policy.
In pursuit of the Fund's objective, the investment manager (RiverSource
Investments, LLC) will choose equity investments by employing proprietary
quantitative methods based on sophisticated statistical analysis.
The universe of stocks from which the investment manager selects the Fund's
investments primarily will be those included in the Fund's benchmark, the S&P
500. Through extensive analysis of the domestic equity markets, the investment
manager has identified characteristics of certain stocks that have historically
outperformed their benchmarks. The Fund will hold both growth and value stocks.
Characteristics used to select stocks for the Fund include:
- - Superior growth characteristics such as:
- strong earnings growth,
- positive earnings that exceed expectations published by third-party
business analysts,
- consistency of earnings, and
- strong positive price trend.
- - Superior value characteristics based on analysis of current stock prices
relative to estimates of future prices.
In selecting the stocks for the Fund's portfolio, the investment manager employs
a rigorous process for evaluating the relationship between the risk associated
with each security and its potential for positive returns. This process includes
factors such as:
- - Limits on positions relative to the benchmark through overweighting or
underweighting.
- - Limits on sector and industry allocations relative to the benchmark.
- - Limits on size of holdings relative to market liquidity.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.3
<Page>
PRINCIPAL RISKS
This Fund is designed for investors with above-average risk tolerance. Please
remember that with any mutual fund investment you may lose money. Principal
risks associated with an investment in the Fund include:
ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance
therefore will reflect in part the ability of the portfolio managers to make
investment decisions that are suited to achieving the Fund's investment
objective. Due to its active management, the Fund could underperform other
mutual funds with similar investment objectives.
ISSUER RISK. An issuer may perform poorly, and therefore, the value of its
stocks and bonds may decline. Poor performance may be caused by poor management
decisions, competitive pressures, breakthroughs in technology, reliance on
suppliers, labor problems or shortages, corporate restructurings, fraudulent
disclosures, or other factors.
MARKET RISK. The market value of securities may fall or fail to rise. Market
risk may affect a single issuer, sector of the economy, industry, or the market
as a whole. The market value of securities may fluctuate, sometimes rapidly and
unpredictably. This risk is generally greater for small and mid-sized companies,
which tend to be more vulnerable to adverse developments. In addition, focus on
a particular style, for example, investment in growth or value securities, may
cause the Fund to underperform other mutual funds if that style falls out of
favor with the market. The quantitative methodology employed by the investment
manager has been extensively tested using historical securities market data, but
has only recently begun to be used to manage open-end mutual funds. There can be
no assurance that the methodology will enable the Fund to achieve its objective.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.4
<Page>
PAST PERFORMANCE
The following bar chart and table provide some illustration of the risks of
investing in the Fund by showing, respectively:
- - how the Fund's performance has varied for each full calendar year shown on
the bar chart, and
- - how the Fund's average annual total returns compare to recognized indexes
shown on the table.
Both the bar chart and the table assume that all distributions have been
reinvested. The performance of different classes varies because of differences
in sales charges and other fees and expenses. How the Fund has performed in the
past (before and after taxes) does not indicate how the Fund will perform in the
future. Performance reflects any fee waivers/expense caps in effect for the
periods reported. In the absence of such fee waivers/expense caps, performance
would have been lower. See "Fees and Expenses" for any current fee
waivers/expense caps.
BAR CHART. Class A share information is shown in the bar chart; the sales charge
for Class A shares is not reflected in the bar chart.
TABLE. The table shows total returns from hypothetical investments in Class A,
Class B, Class C and Class Y shares of the Fund. These returns are compared to
the indexes shown for the same periods. For purposes of the performance
calculation in the table we assumed:
- - the maximum sales charge for Class A shares,
- - sales at the end of the period and deduction of the applicable contingent
deferred sales charge (CDSC) for Class B and Class C shares,
- - no sales charge for Class Y shares, and
- - no adjustments for taxes paid by an investor on the reinvested income and
capital gains.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.5
<Page>
AFTER-TAX RETURNS
After-tax returns are shown only for Class A shares. After-tax returns for the
other classes will vary. After-tax returns are calculated using the highest
historical individual federal marginal income tax rate and do not reflect the
impact of state and local taxes. Actual after-tax returns will depend on your
tax situation and most likely will differ from the returns shown in the table.
If you hold your shares in a tax-deferred account, such as a 401(k) plan or an
IRA, the after-tax returns do not apply to you since you will not incur taxes
until you begin to withdraw from your account.
The return after taxes on distributions for a period may be the same as the
return before taxes for the same period if there were no distributions or if the
distributions were small. The return after taxes on distributions and sale of
Fund shares for a period may be greater than the return before taxes for the
same period if there was a tax loss realized on sale of Fund shares. The benefit
of the tax loss (since it can be used to offset other gains) may result in a
higher return.
[CHART]
CLASS A SHARE PERFORMANCE
(BASED ON CALENDAR YEARS)
<Table>
2004 +9.96%
</Table>
During the period shown in the bar chart, the highest return for a calendar
quarter was +9.77% (quarter ended Dec. 31, 2004) and the lowest return for a
calendar quarter was -3.05% (quarter ended Sept. 30, 2004).
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the bar chart; if reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses.
The Fund's Class A year-to-date return at June 30, 2005 was -0.15%.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.6
<Page>
AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2004)
<Table>
<Caption>
SINCE
1 YEAR INCEPTION
RiverSource Disciplined Equity:
Class A
Return before taxes +3.64% +15.85%(a)
Return after taxes on distributions +2.89% +14.94%(a)
Return after taxes on distributions and sale of fund shares +2.65% +13.16%(a)
Class B
Return before taxes +4.16% +16.92%(a)
Class C
Return before taxes +8.16% +19.05%(a)
Class Y
Return before taxes +10.26% +20.23%(a)
S&P 500 Index (reflects no deduction for fees, expenses or taxes) +10.88% +20.32%(b)
Lipper Large-Cap Core Funds Index +8.29% +17.00%(b)
</Table>
(a) Inception date is April 24, 2003.
(b) Measurement period started May 1, 2003.
The Standard & Poor's 500 Index (S&P 500 Index), an unmanaged index of common
stocks, is frequently used as a general measure of market performance. The index
reflects reinvestment of all distributions and changes in market prices, but
excludes brokerage commissions or other fees.
The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap core
funds tracked by Lipper Inc. The index's returns include net reinvested
dividends. The Fund's performance is currently measured against this index for
purposes of determining the performance incentive adjustment. See "Fund
Management and Compensation" for more information.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.7
<Page>
FEES AND EXPENSES
Fund investors pay various expenses. The table below describes the fees and
expenses that you may pay if you buy and hold shares of the Fund. Expenses are
based on the Fund's most recent fiscal year, adjusted to reflect current fees.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS Y
Maximum sales charge (load) imposed on purchases(a)
(as a percentage of offering price) 5.75% none none none
Maximum deferred sales charge (load) imposed on sales
(as a percentage of offering price at time of purchase) none(b) 5% 1% none
</Table>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<Table>
<Caption>
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS: CLASS A CLASS B CLASS C CLASS Y
Management fees(c) 0.62% 0.62% 0.62% 0.62%
Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00%
Other expenses(d) 0.49% 0.52% 0.52% 0.57%
Total 1.36% 2.14% 2.14% 1.19%
Fee waiver/expense reimbursement 0.09% 0.08% 0.06% 0.11%
Net expenses(e) 1.27% 2.06% 2.08% 1.08%
</Table>
(a) This charge may be reduced depending on the value of your total investments
in RiverSource funds. See "Sales Charges."
(b) For Class A purchases over $1,000,000 on which no sales charge is assessed,
a 1% sales charge may apply if you sell your shares within one year after
purchase.
(c) Includes the impact of a performance incentive adjustment fee that
increased the management fee by 0.02% for the most recent fiscal year. The
index against which the Fund's performance is measured for purposes of
determining the performance incentive adjustment is the Lipper Large-Cap
Core Funds Index. See "Fund Management and Compensation" for more
information.
(d) Other expenses include an administrative services fee, a transfer agency
fee, a custody fee and other nonadvisory expenses and, for Class Y shares,
a shareholder service fee.
(e) The investment manager and its affiliates have contractually agreed to
waive certain fees and to absorb certain expenses until July 31, 2006,
unless sooner terminated at the discretion of the Fund's Board. Any amounts
waived will not be reimbursed by the Fund. Under this agreement, net
expenses, before giving effect to any performance incentive adjustment,
will not exceed 1.25% for Class A; 2.04% for Class B; 2.06% for Class C and
1.06% for Class Y.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.8
<Page>
EXAMPLES
These examples are intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
These examples assume that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. These
examples also assume that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $697 $ 973 $1,270 $2,113
Class B $709(b) $1,063(b) $1,343(b) $2,272(c)
Class C $311(b) $ 665 $1,145 $2,472
Class Y $110 $ 367 $ 645 $1,438
</Table>
(a) Includes a 5.75% sales charge.
(b) Includes the applicable CDSC.
(c) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
You would pay the following expenses if you did not redeem your shares:
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Class A(a) $697 $973 $1,270 $2,113
Class B $209 $663 $1,143 $2,272(b)
Class C $211 $665 $1,145 $2,472
Class Y $110 $367 $ 645 $1,438
</Table>
(a) Includes a 5.75% sales charge.
(b) Based on conversion of Class B shares to Class A shares in the ninth year
of ownership.
OTHER INVESTMENT STRATEGIES AND RISKS
OTHER INVESTMENT STRATEGIES. In addition to the principal investment strategies
previously described, the Fund may invest in other securities and may use other
investment strategies that are not principal investment strategies.
Additionally, the Fund may use derivatives (financial instruments where the
value depends upon, or is derived from, the value of something else) such as
futures, options and forward contracts, to produce incremental earnings, to
hedge existing positions or to increase flexibility. Just as with securities in
which the Fund invests directly, derivatives are subject to a number of risks,
including market, liquidity, interest rate and credit risk. In addition, a
relatively small price movement in the underlying security, currency or index
may result in a substantial gain or loss for the Fund using derivatives. Even
though the Fund's policies permit the use of derivatives in this manner, the
portfolio managers are not required to use derivatives. For more information on
strategies and
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.9
<Page>
holdings, and the risks of such strategies, including other derivative
instruments that the Fund may use, see the Fund's Statement of Additional
Information (SAI) and its annual and semiannual reports.
UNUSUAL MARKET CONDITIONS. During unusual market conditions, the Fund may
temporarily invest more of its assets in money market securities than during
normal market conditions. Although investing in these securities would serve
primarily to avoid losses, this type of investing also could prevent the Fund
from achieving its investment objective. During these times, the portfolio
managers may make frequent securities trades that could result in increased
fees, expenses and taxes, and decreased performance.
PORTFOLIO TURNOVER. Trading of securities may produce capital gains, which are
taxable to shareholders when distributed. Active trading may also increase the
amount of commissions or mark-ups paid to broker-dealers that the Fund pays when
it buys and sells securities. The Fund's historical portfolio turnover rate,
which measures how frequently the Fund buys and sells investments, is shown in
the "Financial Highlights."
SECURITIES TRANSACTION COMMISSIONS. Securities transactions involve the payment
by the Fund of brokerage commissions to broker-dealers, on occasion as
compensation for research or brokerage services (commonly referred to as "soft
dollars"), as the portfolio managers buy and sell securities for the Fund in
pursuit of its objective. A description of the policies governing the Fund's
securities transactions and the dollar value of brokerage commissions paid by
the Fund are set forth in the SAI. The brokerage commissions set forth in the
SAI do not include implied commissions or mark-ups (implied commissions) paid by
the Fund for principal transactions (transactions made directly with a dealer or
other counterparty), including most fixed income securities and certain
derivatives. In addition, brokerage commissions do not reflect other elements of
transaction costs, including the extent to which the Fund's purchase and sale
transactions may cause the market to move and change the market price for an
investment.
Although brokerage commissions and implied commissions are not reflected in the
expense table under "Fees and Expenses," they are reflected in the total return
of the Fund.
DIRECTED BROKERAGE. The Fund's Board of Directors (Board) has adopted a policy
prohibiting the investment manager, or any subadviser, from considering sales of
shares of the Fund as a factor in the selection of broker-dealers through which
to execute securities transactions.
Additional information regarding securities transactions can be found in the
SAI.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.10
<Page>
FUND MANAGEMENT AND COMPENSATION
INVESTMENT MANAGER
RiverSource Investments, LLC (the investment manager or RiverSource
Investments), 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, is
the investment manager to the RiverSource funds, and is a wholly-owned
subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Ameriprise
Financial is a financial planning and financial services company that has been
offering solutions for clients' asset accumulation, income management and
protection needs for more than 110 years. In addition to managing investments
for all of the RiverSource funds, RiverSource Investments manages investments
for itself and its affiliates. For institutional clients, RiverSource
Investments and its affiliates provide investment management and related
services, such as separate account asset management, institutional trust and
custody, and employee benefit plan administration, as well as other investment
products. For all of its clients, RiverSource Investments seeks to allocate
investment opportunities in an equitable manner over time. See the SAI for more
information.
The Fund pays RiverSource Investments a fee for managing its assets. Under the
Investment Management Services Agreement (Agreement), the fee for the most
recent fiscal year was 0.62% of the Fund's average daily net assets, including
an adjustment under the terms of a performance incentive arrangement. The
adjustment is computed by comparing the Fund's performance to the performance of
an index of comparable funds published by Lipper Inc. The index against which
the Fund's performance is currently measured for purposes of the performance
incentive adjustment is the Lipper Large-Cap Core Funds Index. In certain
circumstances, the Fund's Board may approve a change in the index. The maximum
adjustment (increase or decrease) is 0.12% of the Fund's average net assets on
an annual basis. Under the Agreement, the Fund also pays taxes, brokerage
commissions, and nonadvisory expenses. A discussion regarding the basis for the
Board approving the Agreement is available in the Fund's most recent shareholder
report.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.11
<Page>
PORTFOLIO MANAGER(S). The portfolio managers responsible for the Fund's
day-to-day management are:
Dimitris J. Bertsimas, Senior Portfolio Manager
- - Managed the Fund since 2003.
- - Joined RiverSource Investments (previously American Express Financial
Corporation (AEFC)) as a portfolio manager in 2002.
- - Co-founded Dynamic Ideas, LLC, a consulting firm specializing in the
development of quantitative tools for the asset management industry, where he
served as Managing Partner, 1999 to 2002. Currently, Boeing Professor of
Operations Research, Sloan School of Management and the Operations Research
Center, MIT.
- - Began investment career as a consultant to asset managers in 1993; became
portfolio manager in 2002.
- - MS and Ph.D., MIT.
Gina K. Mourtzinou, Portfolio Manager
- - Managed the Fund since 2003.
- - Joined RiverSource Investments (previously AEFC) as a portfolio manager in
2002.
- - Co-founded Dynamic Ideas, LLC, a consulting firm specializing in the
development of quantitative tools for the asset management industry, where
she served as Vice President of Research and Analytics, 1999 to 2002.
- - Began investment career as a consultant to asset managers in 1996; became
portfolio manager in 2002.
- - Ph.D., MIT.
The SAI provides additional information about portfolio manager compensation,
management of other accounts and ownership of shares in the Fund.
ADDITIONAL SERVICES AND COMPENSATION
As described above, RiverSource Investments receives compensation for acting as
the Fund's investment manager. RiverSource Investments and its affiliates also
receive compensation for providing other services to the Fund.
ADMINISTRATION SERVICES. Ameriprise Financial, 200 Ameriprise Financial Center,
Minneapolis, Minnesota 55474, provides or compensates others to provide
administrative services to the RiverSource funds. These services include
administrative, accounting, treasury, and other services. Fees paid by the Fund
for these services are included under "Other expenses" in the expense table
under "Fees and Expenses."
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.12
<Page>
CUSTODY SERVICES. Ameriprise Trust Company, 200 Ameriprise Financial Center,
Minneapolis, Minnesota 55474 (the custodian or Ameriprise Trust Company),
provides custody services to all but a limited number of the RiverSource funds,
for which U.S. Bank National Association provides custody services. In addition,
Ameriprise Trust Company is paid for certain transaction fees and out-of-pocket
expenses incurred while providing services to the funds. Fees paid by the Fund
for these services are included under "Other expenses" in the expense table
under "Fees and Expenses."
DISTRIBUTION SERVICES. Ameriprise Financial Services, Inc., 70100 Ameriprise
Financial Center, Minneapolis, Minnesota 55474 (the distributor or Ameriprise
Financial Services), provides underwriting and distribution services to the
RiverSource funds. Under the Distribution Agreement and related distribution and
shareholder servicing plan(s), the distributor receives distribution and
shareholder servicing fees. The distributor pays a portion of these fees to
financial advisors and retains a portion of these fees to support its
distribution and shareholder servicing activity. For third party sales, the
distributor re-allows a portion of these fees to the financial intermediaries
that sell Fund shares and provide services to shareholders, and retains a
portion of these fees to support its distribution and shareholder servicing
activity. Fees paid by the Fund for these services are set forth under
"Distribution (12b-1) fees" in the expense table under "Fees and Expenses." More
information on how these fees are used is set forth under "Investment Options"
and in the SAI. The distributor also administers any sales charges paid by an
investor at the time of purchase or at the time of sale (deferred sales charge).
See "Shareholder Fees (fees paid directly from your investment)" under "Fees and
Expenses" for the scheduled sales charge of each share class. See "Buying and
Selling Shares" for variations in the scheduled sales charges, and for how these
sales charges are used by the distributor. See "Other Investment Strategies and
Risks" for Fund policy regarding directed brokerage.
TRANSFER AGENCY SERVICES. RiverSource Service Corporation, 70100 Ameriprise
Financial Center, Minneapolis, Minnesota 55474 (the transfer agent or
RiverSource Service Corporation), provides or compensates others to provide
transfer agency services to the RiverSource funds. The RiverSource funds pay the
transfer agent a fee, which varies by share class, as set forth in the SAI and
reimburses the transfer agent for its out-of-pocket expenses incurred while
providing these transfer agency services to the funds. Fees paid by the Fund for
these services are included under "Other expenses" in the expense table under
"Fees and Expenses." RiverSource funds are primarily sold through Ameriprise
Financial Services which is allocated a portion of these fees for providing
services to Fund shareholders. RiverSource Service Corporation may also pay a
portion of these fees to other financial intermediaries that provide
sub-recordkeeping and other services to Fund shareholders.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.13
<Page>
The SAI provides additional information about the services provided and the fee
schedules for the agreements set forth above.
PAYMENTS TO FINANCIAL INTERMEDIARIES
RiverSource Investments and its affiliates may make additional cash payments out
of their own resources to financial intermediaries, such as broker-dealers,
banks, qualified plan administrators and recordkeepers, or other institutions,
including inter-company allocation of resources to affiliated broker-dealers
such as Ameriprise Financial Services (financial intermediaries) in connection
with the sale of shares of the Fund and/or the provision of services to the Fund
or its shareholders. These payments may create an incentive for the financial
intermediary, its employees or registered representatives to recommend or sell
shares of the Fund to its customers. These payments and inter-company
allocations are in addition to any 12b-1 distribution and/or shareholder service
fees or other amounts paid by the Fund under distribution or shareholder
servicing plans, or paid by the Fund for shareholder account maintenance,
sub-accounting or recordkeeping services provided directly by the financial
intermediary providing such services. In exchange for these payments and
inter-company allocations, RiverSource Investments and its affiliates may
receive preferred access to registered representatives of a financial
intermediary (for example, the ability to make presentations in branch offices
or at conferences) or preferred access to customers of the financial
intermediary (for example, the ability to advertise or directly interact with
the financial intermediary's customers in order to sell the Fund). These
arrangements are sometimes referred to as "revenue sharing payments." In some
cases, these arrangements may create an incentive for a financial intermediary
or its representatives to recommend or sell shares of a fund and may create a
conflict of interest between a financial intermediary's financial interest and
its duties to its customers. Please contact the financial intermediary through
which you are purchasing shares of the Fund for details about any payments it
may receive in connection with the sale of Fund shares or the provision of
services to the Fund.
These payments and inter-company allocations are usually calculated based on a
percentage of fund sales, and/or as a percentage of fund assets attributable to
a particular financial intermediary. These payments may also be negotiated based
on other criteria or factors including, but not limited to, the financial
intermediary's affiliation with the investment manager, its reputation in the
industry, its ability to attract and retain assets, its access to target
markets, its customer relationships and the scope and quality of services it
provides. The amount of payment or inter-company allocation may vary by
financial intermediary and by type of sale (e.g., purchases of different share
classes or purchases of the Fund through a qualified plan or through a wrap
program), and may be significant.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.14
<Page>
From time to time, RiverSource Investments and its affiliates may make other
payments, including non-cash compensation, to financial intermediaries or their
representatives in the form of gifts of nominal value, occasional meals,
tickets, or other entertainment, support for due diligence trips, educational
meetings or conference sponsorships, support for recognition programs, and other
forms of non-cash compensation permissible under regulations to which these
financial intermediaries and their representatives are subject.
ADDITIONAL MANAGEMENT INFORMATION
MANAGER OF MANAGER EXEMPTION. The Fund operates under an order from the
Securities and Exchange Commission that permits RiverSource Investments, subject
to the approval of the Board, to appoint a subadviser or change the terms of a
subadvisory agreement for the Fund without first obtaining shareholder approval.
The order permits the Fund to add or change unaffiliated subadvisers or the fees
paid to subadvisers from time to time without the expense and delays associated
with obtaining shareholder approval of the change.
AFFILIATED FUNDS-OF-FUNDS. RiverSource Investments also serves as investment
manager to the RiverSource Portfolio Builder Funds (Portfolio Builder Funds), a
group of six funds-of-funds that provide asset-allocation services to
shareholders by investing in shares of other RiverSource funds, including the
Fund. The Fund may experience relatively large purchases or redemptions from the
Portfolio Builder Funds. Although RiverSource Investments seeks to minimize the
impact of these transactions by structuring them over a reasonable period of
time, the Fund may experience increased expenses as it buys and sells securities
to manage transactions for the Portfolio Builder Funds. In addition, because the
Portfolio Builder Funds may own a substantial portion of the Fund, a redemption
by the Portfolio Builder Funds could cause the Fund's expense ratio to increase
as the Fund's fixed costs would be spread over a smaller asset base. RiverSource
Investments monitors expense levels and is committed to offering funds that are
competitively priced. RiverSource Investments will report to the Fund's Board on
the steps it has taken to manage any potential conflicts.
FUND HOLDINGS DISCLOSURE. The Fund's Board has adopted policies and procedures
that govern the timing and circumstances of disclosure to shareholders and third
parties of information regarding the securities owned by the Fund. A description
of these policies and procedures is included in the Fund's SAI.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.15
<Page>
BUYING AND SELLING SHARES
TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES
Where authorized by the distributor, shares of the Fund may be available through
certain 401(k) or other qualified plans, banks, broker-dealers or other
institutions (financial intermediaries). These financial intermediaries may
charge you additional fees for the services they provide and they may have
different policies not described in this prospectus. Some policy differences may
include different minimum investment amounts, exchange privileges, fund choices
and cutoff times for investments. Additionally, recordkeeping, transaction
processing and payments of distributions relating to your account may be
performed by the financial intermediaries or their representatives through whom
shares are held. Since the Fund may not have a record of your transactions, you
should always contact the financial intermediary through whom you purchased the
Fund to make changes to or give instructions concerning your account or to
obtain information about your account. The Fund and the distributor are not
responsible for the failure of one of these financial intermediaries to carry
out its obligations to its customers.
AVAILABILITY AND TRANSFERABILITY OF FUND SHARES. Please consult your investment
professional or financial intermediary to determine availability of the Fund.
Currently, RiverSource funds may be purchased or sold through affiliated
broker-dealers of RiverSource Investments, including Ameriprise Financial
Services and Securities America, Inc. (Securities America), and through a
limited number of unaffiliated institutions. If you set up an account at another
financial intermediary, you will not be able to transfer RiverSource fund
holdings to that account unless that institution has obtained a selling
agreement with the distributor of the RiverSource funds. If you set up an
account with an unaffiliated financial intermediary that does not have, and is
unable to obtain, such a selling agreement, you must either maintain your
position with Ameriprise Financial Services or Securities America, find another
financial intermediary with such a selling agreement, or sell your shares,
paying any applicable deferred sales charge. Please be aware that transactions
in taxable accounts would generate a taxable event and may result in an
increased income tax liability.
For more information, please call RiverSource Service Corporation at
(888) 791-3380.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.16
<Page>
The public offering price for Class A shares of the Fund is the net asset value
(NAV) plus a sales charge, and for Class B, C, and Y shares, the NAV. Orders in
good form are priced at the NAV next determined after you place your order. Good
form or good order means that your instructions have been received in the form
required by the distributor. This may include, for example, providing the fund
name and account number, the amount of the transaction and all required
signatures. For more information, refer to the sections on "Purchasing Shares"
and "Exchanging/Selling Shares," or contact your financial advisor or investment
professional. If you buy or sell shares through an authorized financial
intermediary, consult that firm to determine its procedures for accepting and
processing orders. The financial intermediary may charge a fee for its services.
VALUING FUND SHARES
The NAV is the value of a single share of the Fund. The NAV is determined by
dividing the value of the Fund's assets, minus any liabilities, by the number of
shares outstanding. The NAV is calculated as of the close of business on the
New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day
that the NYSE is open. The Fund's securities are valued primarily on the basis
of market quotations obtained from outside pricing services approved and
monitored under procedures adopted by the Board. Certain short-term securities
with maturities of 60 days or less are valued at amortized cost.
When reliable market quotations are not readily available, securities are priced
at fair value based on procedures adopted by the Board. These procedures are
also used when the value of a security held by the Fund is materially affected
by events that occur after the close of the primary market on which the security
is traded but prior to the time as of which the Fund's NAV is determined.
Valuing securities at fair value involves reliance on judgment. The fair value
of a security is likely to differ from any available quoted or published price.
Foreign investments are valued in U.S. dollars. Some of the Fund's securities
may be listed on foreign exchanges that trade on weekends or other days when the
Fund does not price its shares. In that event, the NAV of the Fund's shares may
change on days when shareholders will not be able to purchase or sell the Fund's
shares.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.17
<Page>
INVESTMENT OPTIONS
1. CLASS A shares are sold to the public with a sales charge at the time of
purchase and an annual distribution and shareholder servicing (12b-1) fee of
0.25%.
2. CLASS B shares are sold to the public with a contingent deferred sales charge
(CDSC) and an annual distribution and shareholder servicing (12b-1) fee of
1.00%.
3. CLASS C shares are sold to the public without a sales charge at the time of
purchase and with an annual distribution and shareholder servicing (12b-1)
fee of 1.00%. Class C shares redeemed within one year after purchase may be
subject to a CDSC.
4. CLASS Y shares are sold to qualifying institutional investors without a sales
charge or distribution fee, but with a separate shareholder servicing fee of
0.10%. Please see the SAI for information on eligibility requirements to
purchase Class Y shares.
The distribution and shareholder servicing fees for Class A, Class B and Class C
shares are subject to the requirements of Rule 12b-1 under the Investment
Company Act of 1940, as amended, and are used to reimburse the distributor for
certain expenses it incurs in connection with distributing the Fund's shares and
providing services to Fund shareholders. These expenses include payment of
distribution and shareholder servicing fees to financial intermediaries that
sell shares of the Fund. Financial intermediaries receive shareholder servicing
fees equal to 0.25% of the average daily net assets of Class A, Class B and
Class C shares sold and held through them. For Class A and Class B shares, the
distributor begins to pay these fees immediately after purchase. For Class C
shares, the distributor begins to pay these fees one year after purchase.
Financial intermediaries also receive distribution fees equal to 0.75% of the
average daily net assets of Class C shares sold and held through them, which the
distributor begins to pay one year after purchase. For Class B shares, the
Fund's distributor retains the 0.75% distribution fee in order to finance the
payment of sales commissions to financial intermediaries that sell Class B
shares, and to pay for other distribution related expenses. Financial
intermediaries may compensate their financial advisors and investment
professionals with the shareholder servicing and distribution fees paid to them
by the distributor.
The shareholder servicing fees for Class Y shares are used to reimburse the
distributor for providing services and assistance to shareholders regarding
ownership of their shares or their accounts.
The Fund also offers an additional class of shares, Class I, exclusively to
certain institutional investors. Class I shares are made available through a
separate prospectus supplement provided to investors eligible to purchase the
shares.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.18
<Page>
INVESTMENT OPTIONS SUMMARY
The Fund offers different classes of shares. There are differences among the
fees and expenses for each class. Not everyone is eligible to buy every class.
After determining which classes you are eligible to buy, decide which class best
suits your needs. Your financial advisor or investment professional can help you
with this decision.
The following table shows the key features of each class:
<Table>
<Caption>
CLASS A CLASS B CLASS C CLASS Y
- --------------------------------------------------------------------------------------------------------
AVAILABILITY Available to all Available to all Available to all Limited to
investors. investors. investors. qualifying
institutional
investors.
INITIAL SALES CHARGE Yes. Payable at No. Entire No. Entire No. Entire
time of purchase. purchase price is purchase price is purchase price is
Lower sales charge invested in shares invested in shares invested in shares
for larger of the Fund. of the Fund. of the Fund.
investments.
DEFERRED SALES CHARGE On purchases over Maximum 5% CDSC 1% CDSC may apply None.
$1,000,000, 1% during the first if you sell your
CDSC may apply if year decreasing shares within one
you sell your to 0% after six year after
shares within one years. purchase.
year after
purchase.
12b-1 DISTRIBUTION FEE Yes. Yes. Yes. Yes.
AND/OR SHAREHOLDER 0.25% 1.00% 1.00% 0.10%
SERVICE FEE*
CONVERSION TO CLASS A N/A Yes, automatically No. No.
in ninth year of
ownership.
</Table>
* The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of
1940, as amended, that allows it to pay distribution and shareholder
servicing-related expenses for the sale of Class A, Class B and Class C
shares. The Fund has also adopted a separate shareholder servicing plan to
pay for servicing-related expenses related to Class Y shares. Because these
fees are paid out of the Fund's assets on an on-going basis, over time, these
fees will increase the cost of your investment and may cost you more than
paying other types of distribution (sales) or servicing charges.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.19
<Page>
SHOULD YOU PURCHASE CLASS A, CLASS B OR CLASS C SHARES?
If your investments in RiverSource funds total $100,000 or more, Class A shares
may be the better option because the sales charge is reduced for larger
purchases. If you qualify for a waiver of the sales charge, Class A shares will
be the best option.
If you invest less than $100,000, consider how long you plan to hold your
shares. Class B shares have a higher annual distribution fee than Class A shares
and a CDSC for six years. Class B shares convert to Class A shares in the ninth
year of ownership. Class B shares purchased through reinvested dividends and
distributions also will convert to Class A shares in the same proportion as the
other Class B shares.
Class C shares also have a higher annual distribution fee than Class A shares.
Class C shares have no sales charge if you hold the shares for longer than one
year. Unlike Class B shares, Class C shares do not convert to Class A. As a
result, you will pay a 1% distribution fee for as long as you hold Class C
shares. If you choose a deferred sales charge option (Class B or Class C), you
should consider the length of time you intend to hold your shares. To help you
determine which investment is best for you, consult your financial advisor or
investment professional.
For more information, see the SAI.
PURCHASING SHARES
Financial intermediaries are required by law to obtain certain personal
information from each person who opens an account in order to verify the
identity of the person. As a result, when you open an account you will be asked
to provide your name, permanent street address, date of birth, and Social
Security or Employer Identification number. You may also be asked for other
identifying documents or information. If you do not provide this information,
the Fund, or the financial intermediary through which you are investing in the
Fund, may not be able to open an account for you. If the Fund or if the
financial intermediary through which you are investing in the Fund is unable to
verify your identity, your account may be closed, or other steps may be taken,
as deemed appropriate.
TO PURCHASE SHARES WITH A FINANCIAL INTERMEDIARY OTHER THAN AMERIPRISE FINANCIAL
SERVICES, PLEASE CONSULT YOUR FINANCIAL INTERMEDIARY. SEE "TRANSACTIONS THROUGH
UNAFFILIATED FINANCIAL INTERMEDIARIES" FOR MORE INFORMATION. THE FOLLOWING
SECTION EXPLAINS POLICIES OF THE RIVERSOURCE FUNDS AND HOW YOU CAN PURCHASE FUND
SHARES FROM AMERIPRISE FINANCIAL SERVICES.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.20
<Page>
If you do not have an existing RiverSource fund account with Ameriprise
Financial Services, you will need to establish a brokerage account. Your
financial advisor or investment professional will help you fill out and submit
an application. Once your account is set up, you can choose among several
convenient ways to invest.
When you purchase, your order will be priced at the next NAV calculated after
your order is accepted by the Fund. If your application does not specify which
class of shares you are purchasing, we will assume you are investing in Class A
shares.
IMPORTANT: When you open an account, you must provide your correct Taxpayer
Identification Number (TIN), which is either your Social Security or Employer
Identification number.
If you do not provide and certify the correct TIN, you could be subject to
backup withholding of 28% of taxable distributions and proceeds from certain
sales and exchanges. You also could be subject to further penalties, such as:
- - a $50 penalty for each failure to supply your correct TIN,
- - a civil penalty of $500 if you make a false statement that results in no
backup withholding, and
- - criminal penalties for falsifying information.
You also could be subject to backup withholding, if the IRS notifies us to do
so, because you failed to report required interest or dividends on your tax
return.
HOW TO DETERMINE THE CORRECT TIN
<Table>
<Caption>
FOR THIS TYPE OF ACCOUNT: USE THE SOCIAL SECURITY OR EMPLOYER IDENTIFICATION NUMBER OF:
Individual or joint account The individual or one of the owners listed on the joint
account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to Minors Act)
A revocable living trust The grantor-trustee (the person who puts the money into the
trust)
An irrevocable trust, pension trust or The legal entity (not the personal representative or trustee,
estate unless no legal entity is designated in the account title)
Sole proprietorship or single-owner LLC The owner
Partnership or multi-member LLC The partnership
Corporate or LLC electing corporate The corporation
status on Form 8832
Association, club or tax-exempt The organization
organization
</Table>
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.21
<Page>
For details on TIN requirements, contact your financial advisor or investment
professional to obtain a copy of Form W-9, "Request for Taxpayer Identification
Number and Certification." You also may obtain the form on the Internet at
www.irs.gov.
METHODS OF PURCHASING SHARES
BY MAIL
Once your account has been established, send your check to:
AMERIPRISE FINANCIAL SERVICES
70200 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNTS
Initial investment: $2,000*
Additional investments: $500**
Account balances: $300
Qualified account balances: none
If your Fund account balance falls below $300 for any reason, including a market
decline, you will be asked to increase it to $300 or establish a scheduled
investment plan. If you do not do so within 30 days, your shares may be
automatically redeemed and the proceeds mailed to you.
* $1,000 for tax qualified accounts.
** $100 minimum add-on for existing mutual fund accounts outside of a brokerage
account.
BY SCHEDULED INVESTMENT PLAN
MINIMUM AMOUNTS
Initial investment: $2,000*
Additional investments: $100**
Account balances: none (on a scheduled investment plan with
monthly payments)
If your Fund account balance is below $2,000, you must make payments at least
monthly.
* $100 for accounts outside of a brokerage account.
** $50 minimum per payment for qualified accounts outside of a brokerage
account.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.22
<Page>
BY WIRE OR ELECTRONIC FUNDS TRANSFER
Please contact your financial advisor or investment professional for specific
instructions.
Minimum wire purchase amount: $1,000 or new account minimum, as applicable.
BY TELEPHONE
If you have a brokerage account, you may use the money in your account to make
initial and subsequent purchases.
To place your order, call:
(800) 297-7378 for brokerage accounts
(800) 967-4377 for wrap accounts
SALES CHARGES
CLASS A -- INITIAL SALES CHARGE ALTERNATIVE
Your purchase price for Class A shares is generally the NAV plus a front-end
sales charge. Sales charges vary depending on the amount of your purchase. The
distributor receives the sales charge and re-allows a portion of the sales
charge to the financial intermediary through which you purchased the shares. The
distributor retains the balance of the sales charge. Sales charge* for Class A
shares:
<Table>
<Caption>
AS A % OF AS A % OF MAXIMUM RE-ALLOWANCE
TOTAL MARKET VALUE PURCHASE PRICE** NET AMOUNT INVESTED AS A % OF PURCHASE PRICE
Up to $49,999 5.75% 6.10% 5.00%
$50,000-$99,999 4.75 4.99 4.00
$100,000-$249,999 3.50 3.63 3.00
$250,000-$499,999 2.50 2.56 2.15
$500,000-$999,999 2.00 2.04 1.75
$1,000,000 or more*** 0.00 0.00 0.00
</Table>
* Because of rounding in the calculation of the offering price, the portion
of the sales charge retained by the distributor may vary and the actual
sales charge you pay may be more or less than the sales charge calculated
using these percentages.
** Offering price includes the sales charge.
*** Although there is no sales charge for purchases with a total market value
over $1,000,000, and therefore no re-allowance, the distributor may pay a
sales commission to a financial intermediary making a sale with a total
market value of $1,000,000 to $3,000,000, a sales commission up to 1.00%;
$3,000,000 to $10,000,000, a sales commission up to 0.50%; and $10,000,000
or more, a sales commission up to 0.25%.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.23
<Page>
RIGHTS OF ACCUMULATION
YOU MAY BE ABLE TO REDUCE THE SALES CHARGE ON CLASS A SHARES, BASED ON THE
COMBINED MARKET VALUE OF YOUR ACCOUNTS.
The current market values of the following investments are eligible to be added
together for purposes of determining the sales charge on your purchase:
- - Your current investment in this Fund, and
- - Previous investments you and members of your primary household group have
made in Class A, Class B or Class C shares in this and other RiverSource
funds, provided your investment was subject to a sales charge.
- Your primary household group consists of you, your spouse or domestic
partner, and your unmarried children under age 21 sharing a mailing
address. For purposes of this policy a domestic partner is an individual
who shares your primary residence and with whom you own joint property. If
you or any member of your primary household group elects to separate from
the primary household group (for example, by asking that account
statements be sent to separate addresses), your assets will no longer be
combined for purposes of reducing your sales charge.
The following accounts are eligible to be included in determining the sales
charge on your purchase:
- - Individual or joint accounts held outside of a brokerage account;
- - Individual or joint accounts held through a brokerage account;
- - Roth and traditional IRAs, SEPs, SIMPLEs and TSCAs, provided they are
invested in Class A, Class B or Class C shares that are subject to a sales
charge;
- - UGMA/UTMA accounts for which you, your spouse, or your domestic partner is
parent or guardian of the minor child;
- - Revocable trust accounts for which you or a member of your primary household
group, individually, is the beneficiary;
- - Accounts held in the name of your, your spouse's, or your domestic partner's
sole proprietorship or single owner limited liability company or S
corporation; and
- - Qualified retirement plan assets, provided that you are the sole owner of the
business sponsoring the plan, are the sole participant (other than a spouse)
in the plan, and have no intention of adding participants to the plan.
The following accounts are NOT eligible to be included in determining the sales
charge on your purchase:
- - Accounts of pension and retirement plans with multiple participants, such as
401(k) plans (which are combined to reduce the sales charge for the entire
pension or retirement plan and therefore are not used to reduce the sales
charge for your individual accounts);
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.24
<Page>
- - Investments in Class A shares where the sales charge is waived, for example,
purchases through wrap accounts, including Ameriprise Strategic Portfolio
Service ADVANTAGE (SPS);
- - Investments in Class D, Class E, or Class Y shares;
- - Investments in 529 plans, donor advised funds, variable annuities, variable
life insurance products, wrap accounts or managed separate accounts; and
- - Charitable and irrevocable trust accounts.
If you purchase RiverSource fund shares through different channels or different
financial intermediaries, and you want to include those assets toward a reduced
sales charge, you must inform Ameriprise Financial Services, your financial
advisor or investment professional in writing about the other accounts when
placing your purchase order. When placing your purchase order, you must provide
your most recent account statement and contact information regarding the other
accounts. A financial intermediary other than Ameriprise Financial Services may
require additional information.
UNLESS YOU PROVIDE AMERIPRISE FINANCIAL SERVICES, YOUR FINANCIAL ADVISOR OR YOUR
INVESTMENT PROFESSIONAL IN WRITING WITH INFORMATION ABOUT ALL OF THE ACCOUNTS
THAT MAY COUNT TOWARD A SALES CHARGE REDUCTION, THERE CAN BE NO ASSURANCE THAT
YOU WILL RECEIVE ALL OF THE REDUCTIONS FOR WHICH YOU MAY BE ELIGIBLE.
For more information on rights of accumulation, please see the SAI.
LETTER OF INTENT (LOI)
Generally, if you intend to invest $50,000 or more over a period of 13 months,
you may be able to reduce the front-end sales charges for investments in Class A
shares by completing and filing a LOI form. The LOI becomes effective only after
the form is processed in good order by the distributor. An LOI can be backdated
up to a maximum of 90 days. If the LOI is backdated, you may include prior
investments in Class A shares that were charged a front-end sales load toward
the LOI commitment amount. If the LOI is backdated, the 13 month period begins
on the date of the earliest purchase included in the LOI.
HOLDINGS MORE THAN 90 DAYS OLD. Purchases made more than 90 days before your LOI
is processed by the distributor will not be counted towards the commitment
amount of the LOI and cannot be used as the starting point for the LOI. While
these purchases cannot be included in an LOI, they may help you obtain a reduced
sales charge on future purchases as described in "Rights of Accumulation."
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.25
<Page>
NOTIFICATION OBLIGATION. If purchasing shares in a brokerage account or through
a financial intermediary, you must request the reduced sales charge when you buy
shares. If you do not complete and file the LOI form, or do not request the
reduced sales charge at the time of purchase, you will not be eligible for the
reduced sales charge.
For more details on LOIs, please contact your financial advisor, investment
professional or see the SAI.
WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES
Sales charges do not apply to:
- - current or retired Board members, officers or employees of the Fund or
Ameriprise Financial or its subsidiaries, their spouses or domestic partners,
children and parents.
- - current or retired Ameriprise Financial Services financial advisors,
employees of financial advisors, their spouses or domestic partners, children
and parents.
- - portfolio managers employed by subadvisers of the RiverSource funds,
including their spouses or domestic partners, children and parents.
- - registered representatives and other employees of financial intermediaries
having a sub-distribution agreement with the distributor, including their
spouses, domestic partners, children and parents.
- - qualified employee benefit plans offering participants daily access to
RiverSource funds. Eligibility must be determined in advance. For assistance,
please contact your financial advisor or investment professional.
Participants in certain qualified plans where the initial sales charge is
waived may be subject to a deferred sales charge of up to 4%.
- - shareholders who have at least $1 million in RiverSource funds. If the
investment is sold within one year after purchase, a CDSC of 1% may be
charged.
- - direct rollovers from Ameriprise Retirement Services, provided that the
rollover involves a transfer of Class Y shares in this Fund to Class A shares
in this Fund.
- - purchases made:
- with dividend or capital gain distributions from this Fund or from the
same class of another RiverSource fund,
- through or under a wrap fee product or other investment product sponsored
by the distributor or another authorized broker-dealer, investment
advisor, bank or investment professional,
- within a segregated separate account offered by Nationwide Life Insurance
Company or Nationwide Life and Annuity Insurance Company,
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.26
<Page>
- through American Express Personal Trust Services' Asset-Based pricing
alternative, provided by American Express Bank, FSB.
- - shareholders whose original purchase was in a Strategist fund merged into a
RiverSource fund in 2000.
Policies related to reducing or waiving the sales charge may be modified or
withdrawn at any time.
UNLESS YOU PROVIDE AMERIPRISE FINANCIAL SERVICES, YOUR FINANCIAL ADVISOR OR
INVESTMENT PROFESSIONAL WITH INFORMATION IN WRITING ABOUT ALL OF THE FACTORS
THAT MAY COUNT TOWARD A WAIVER OF THE SALES CHARGE, THERE CAN BE NO ASSURANCE
THAT YOU WILL RECEIVE ALL OF THE WAIVERS FOR WHICH YOU MAY BE ELIGIBLE.
You also may view this information about sales charges and breakpoints free of
charge on the Fund's website. Go to www.riversource.com/investments and click on
the hyperlink "Sales Charge Discount Information."
CLASS B AND CLASS C -- CONTINGENT DEFERRED SALES CHARGE (CDSC) ALTERNATIVE
FOR CLASS B, the CDSC is based on the sale amount and the number of years --
including the year of purchase -- between purchase and sale. The following table
shows how CDSC percentages on sales decline:
<Table>
<Caption>
IF THE SALE IS MADE DURING THE: THE CDSC PERCENTAGE RATE IS:*
First year 5%
Second year 4%
Third year 4%
Fourth year 3%
Fifth year 2%
Sixth year 1%
Seventh year 0%
</Table>
* Because of rounding in the calculation, the portion of the CDSC retained by
the distributor may vary and the actual CDSC you pay may be more or less than
the CDSC calculated using these percentages.
Although there is no front-end sales charge when you buy Class B shares, the
distributor pays a sales commission of 4% to financial intermediaries that sell
Class B shares. A portion of this commission may, in turn, be paid to your
financial advisor. The distributor receives any CDSC imposed when you sell your
Class B shares.
Purchases made prior to May 21, 2005 age on a calendar year basis. Purchases
made beginning May 21, 2005 age on a daily basis. For example, a purchase made
on Nov. 12, 2004 will complete its first year on Dec. 31, 2004 under calendar
year aging. However, a purchase made on Nov. 12, 2005 will complete its first
year on Nov. 11, 2006 under daily aging.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.27
<Page>
For Class B shares purchased prior to May 21, 2005, those shares will convert to
Class A shares in the ninth calendar year of ownership. For Class B shares
purchased beginning May 21, 2005, those shares will convert to Class A shares
one month after the completion of the eighth year of ownership.
FOR CLASS C, a 1% CDSC may be charged if you sell your shares within one year
after purchase. Although there is no front-end sales charge when you buy Class C
shares, the distributor pays a sales commission of 1% to financial
intermediaries that sell Class C shares. A portion of this commission may, in
turn, be paid to your financial advisor. The distributor receives any CDSC
imposed when you sell your Class C shares.
For both Class B and Class C, if the amount you sell causes the value of your
investment to fall below the cost of the shares you have purchased, the CDSC
will be based on the lower of the cost of those shares purchased or market
value. Because the CDSC is imposed only on sales that reduce your total purchase
payments, you do not have to pay a CDSC on any amount that represents
appreciation in the value of your shares, income earned by your shares, or
capital gains.
In addition, the CDSC on your sale, if any, will be based on your oldest
purchase payment. The CDSC on the next amount sold will be based on the next
oldest purchase payment.
EXAMPLE
Assume you had invested $10,000 in Class B shares and that your investment had
appreciated in value to $12,000 after 3 1/2 years, including reinvested
dividends and capital gain distributions. You could sell up to $2,000 worth of
shares without paying a CDSC ($12,000 current value less $10,000 purchase
amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500
representing part of your original purchase price. The CDSC rate would be 3%
because the sale was made during the fourth year after the purchase.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.28
<Page>
WAIVERS OF THE CDSC FOR CLASS B SHARES
The CDSC will be waived on sales of shares:
- - in the event of the shareholder's death,
- - held in trust for an employee benefit plan, or
- - held in IRAs or certain qualified plans if Ameriprise Trust Company is the
custodian, such as Keogh plans, tax-sheltered custodial accounts or corporate
pension plans, provided that the shareholder is:
- at least 59 1/2 years old AND
- taking a retirement distribution (if the sale is part of a transfer to an
IRA or qualified plan, or a custodian-to-custodian transfer, the CDSC will
not be waived) OR
- selling under an approved substantially equal periodic payment
arrangement.
WAIVERS OF THE CDSC FOR CLASS C SHARES
The CDSC will be waived on sales of shares in the event of the shareholder's
death.
EXCHANGING/SELLING SHARES
TO SELL OR EXCHANGE SHARES HELD WITH FINANCIAL INTERMEDIARIES OTHER THAN
AMERIPRISE FINANCIAL SERVICES, PLEASE CONSULT YOUR FINANCIAL INTERMEDIARY. SEE
"TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES" FOR MORE
INFORMATION. THE FOLLOWING SECTION EXPLAINS POLICIES OF THE RIVERSOURCE FUNDS ON
HOW YOU CAN EXCHANGE OR SELL SHARES HELD WITH AMERIPRISE FINANCIAL SERVICES.
EXCHANGES
You may exchange your Fund shares at no charge for shares of the same class of
any other publicly offered RiverSource fund. Exchanges into RiverSource
Tax-Exempt Money Market Fund may only be made from Class A shares. For complete
information on the other fund, including fees and expenses, read that fund's
prospectus carefully. Your exchange will be priced at the next NAV calculated
after your transaction request is received in good order.
MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING BY CERTAIN SHAREHOLDERS INTENDED
TO PROFIT AT THE EXPENSE OF OTHER SHAREHOLDERS BY SELLING SHARES OF A FUND
SHORTLY AFTER PURCHASE. MARKET TIMING MAY ADVERSELY IMPACT A FUND'S PERFORMANCE
BY PREVENTING THE INVESTMENT MANAGER FROM FULLY INVESTING THE ASSETS OF THE
FUND, DILUTING THE VALUE OF SHARES HELD BY LONG-TERM SHAREHOLDERS, OR INCREASING
THE FUND'S TRANSACTION COSTS. SEE "VALUING FUND SHARES" FOR A DISCUSSION OF THE
FUND'S POLICY ON FAIR VALUE PRICING, WHICH IS INTENDED, IN PART, TO REDUCE THE
FREQUENCY AND EFFECT OF MARKET TIMING.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.29
<Page>
THE FUND'S BOARD HAS ADOPTED A POLICY THAT IS DESIGNED TO DETECT AND DETER
MARKET TIMING. THE FUND SEEKS TO ENFORCE THIS POLICY AS FOLLOWS:
- - The Fund tries to distinguish market timing from trading that it believes is
not harmful, such as periodic rebalancing for purposes of asset allocation or
dollar cost averaging. Under the Fund's procedures, there is no set number of
transactions in the Fund that constitutes market timing. Even one purchase
and subsequent sale by related accounts may be market timing. Generally, the
Fund seeks to restrict the exchange privilege of an investor who makes more
than three exchanges into or out of the Fund in any 90-day period. Accounts
held by a retirement plan or an institution for the benefit of its
participants or clients, which typically engage in daily transactions, are
not subject to this limit. The Fund seeks the assistance of financial
intermediaries in applying similar restrictions on the sub-accounts of their
participants or clients.
- - If an investor's trading activity is determined to be market timing or
otherwise harmful to existing shareholders, the Fund reserves the right to
modify or discontinue the investor's exchange privilege or reject the
investor's purchases or exchanges, including purchases or exchanges accepted
by a financial intermediary. The Fund may treat accounts it believes to be
under common control as a single account for these purposes, although it may
not be able to identify all such accounts.
- - Although the Fund does not knowingly permit market timing, it cannot
guarantee that it will be able to identify and restrict all short-term
trading activity. The Fund receives purchase and sale orders through
financial intermediaries where market timing activity may not always be
successfully detected.
Other exchange policies:
- - Exchanges must be made into the same class of shares of the new fund.
- - If your exchange creates a new account, it must satisfy the minimum
investment amount for new purchases.
- - Once we receive your exchange request, you cannot cancel it.
- - Shares of the new fund may not be used on the same day for another exchange.
- - If your shares are pledged as collateral, the exchange will be delayed until
written approval is received from the secured party.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.30
<Page>
SELLING SHARES
You may sell your shares at any time. The payment will be mailed within seven
days after your request is received in good order.
When you sell shares, the amount you receive may be more or less than the amount
you invested. Your sale price will be the next NAV calculated after your request
is received in good order, minus any applicable CDSC.
REPURCHASES. You can change your mind after requesting a sale and use all or
part of the proceeds to purchase new shares in the same account from which you
sold. If you reinvest in Class A, you will purchase the new shares at NAV rather
than the offering price on the date of a new purchase. If you reinvest in Class
B or Class C, any CDSC you paid on the amount you are reinvesting also will be
reinvested. To take advantage of this waiver, you must send a written request
within 90 days of the date your sale request was processed and include your
account number. This privilege may be limited or withdrawn at any time and use
of this option may have tax consequences.
The Fund reserves the right to redeem in kind.
For more details and a description of other sales policies, please see the SAI.
If you decide to sell your shares within 30 days of a telephoned-in address
change, a written request is required.
IMPORTANT: Payments sent by a bank authorization, check or money order that are
not guaranteed may take up to ten days to clear. This may cause your scheduled
arrangement or unscheduled request to fail to process if the requested amount
includes unguaranteed funds.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.31
<Page>
WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES
BY REGULAR OR EXPRESS MAIL
AMERIPRISE FINANCIAL SERVICES
70200 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
Include in your letter:
- - your account number
- - the name of the fund(s)
- - the class of shares to be exchanged or sold
- - your Social Security number or Employer Identification number
- - the dollar amount or number of shares you want to exchange or sell
- - specific instructions regarding delivery or exchange destination
- - signature(s) of registered account owner(s) (All signatures may be required.
Contact your financial advisor or Ameriprise Financial Services for more
information.)
- - any paper certificates of shares you hold
Payment will be mailed to the address of record and made payable to the names
listed on the account, unless your request specifies differently and is signed
by all owners.
The express mail delivery charges you pay will vary depending on domestic or
international delivery instructions.
BY TELEPHONE
(800) 297-7378 for brokerage accounts
(800) 967-4377 for wrap accounts
(800) 862-7919 for non-brokerage/wrap accounts
- - Reasonable procedures will be used to confirm authenticity of telephone
exchange or sale requests.
- - Telephone exchange and sale privileges automatically apply to all accounts
except custodial, corporate or qualified retirement accounts. You may request
that these privileges NOT apply by writing the distributor. Each registered
owner must sign the request.
- - Acting on your instructions, your financial advisor may conduct telephone
transactions on your behalf.
- - Telephone privileges may be modified or discontinued at any time.
MINIMUM SALE AMOUNT: $100
MAXIMUM SALE AMOUNT: $100,000
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.32
<Page>
BY WIRE
You can wire money from your account to your bank account. Contact your
financial advisor or Ameriprise Financial Services at the above numbers for
additional information.
- - Minimum amount: $1,000
- - Pre-authorization is required.
- - A service fee may be charged against your account for each wire sent.
BY SCHEDULED PAYOUT PLAN
- - Minimum payment: $100*
- - Contact your financial advisor or the Ameriprise Financial Services to set up
regular payments.
- - Purchasing new shares while under a payout plan may be disadvantageous
because of the sales charges.
* Minimum is $50 in a non-brokerage/wrap account.
ELECTRONIC TRANSACTIONS
The ability to initiate transactions via the internet may be unavailable or
delayed at certain times (for example, during periods of unusual market
activity). The Fund and the distributor are not responsible for any losses
associated with unexecuted transactions. In addition, the Fund and the
distributor are not responsible for any losses resulting from unauthorized
transactions if reasonable security measures are followed to validate the
investor's identity. The Fund may modify or discontinue electronic privileges at
any time for any shareholder without prior notice as deemed necessary and in the
best interests of the Fund.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.33
<Page>
DISTRIBUTIONS AND TAXES
As a shareholder you are entitled to your share of the Fund's net income and net
gains. The Fund distributes dividends and capital gains to qualify as a
regulated investment company and to avoid paying corporate income and excise
taxes.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income is distributed to you as DIVIDENDS. Dividends
may be composed of qualifying dividend income, which is eligible for
preferential tax rates under current tax law, as well as other ordinary dividend
income, which may include non-qualifying dividends, interest income and
short-term capital gains. Capital gains are realized when a security is sold for
a higher price than was paid for it. Each realized capital gain or loss is
long-term or short-term depending on the length of time the Fund held the
security. Realized capital gains and losses offset each other. The Fund offsets
any net realized capital gains by any available capital loss carryovers. Net
short-term capital gains are included in net investment income. Net realized
long-term capital gains, if any, are distributed by the end of the calendar year
as CAPITAL GAIN DISTRIBUTIONS.
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares in the same class of the Fund, unless:
- - you request distributions in cash, or
- - you direct the Fund to invest your distributions in the same class of any
publicly offered RiverSource fund for which you have previously opened an
account.
We reinvest the distributions for you at the next calculated NAV after the
distribution is paid.
If you choose cash distributions, you will receive cash only for distributions
declared after your request has been processed.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.34
<Page>
TAXES
Distributions are subject to federal income tax and may be subject to state and
local taxes in the year they are declared. You must report distributions on your
tax returns, even if they are reinvested in additional shares.
If you buy shares shortly before the record date of a distribution, you may pay
taxes on money earned by the Fund before you were a shareholder. You will pay
the full pre-distribution price for the shares, then receive a portion of your
investment back as a distribution, which may be taxable.
For tax purposes, an exchange is considered a sale and purchase, and may result
in a gain or loss. A sale is a taxable transaction. If you sell shares for less
than their cost, the difference is a capital loss. If you sell shares for more
than their cost, the difference is a capital gain. Your gain may be short term
(for shares held for one year or less) or long term (for shares held for more
than one year).
You may not create a tax loss, based on paying a sales charge, by exchanging
shares within 91 days of purchase. If you buy Class A shares and within 91 days
exchange into another fund, you may not include the sales charge in your
calculation of tax gain or loss on the sale of the first fund you purchased. The
sales charge may be included in the calculation of your tax gain or loss on a
subsequent sale of the second fund you purchased. For more information, see the
SAI.
Selling shares held in an IRA or qualified retirement account may subject you to
federal taxes, penalties and reporting requirements. Please consult your tax
advisor.
IMPORTANT: This information is a brief and selective summary of some of the tax
rules that apply to this Fund. Because tax matters are highly individual and
complex, you should consult a qualified tax advisor.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.35
<Page>
FINANCIAL HIGHLIGHTS
THE FINANCIAL HIGHLIGHTS TABLES ARE INTENDED TO HELP YOU UNDERSTAND THE FUND'S
FINANCIAL PERFORMANCE. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A
SINGLE FUND SHARE. THE TOTAL RETURNS IN THE TABLES REPRESENT THE RATE THAT AN
INVESTOR WOULD HAVE EARNED OR LOST ON AN INVESTMENT IN THE FUND (ASSUMING
REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THIS INFORMATION HAS BEEN
AUDITED BY KPMG LLP, WHOSE REPORT, ALONG WITH THE FUND'S FINANCIAL STATEMENTS,
IS INCLUDED IN THE ANNUAL REPORT WHICH, IF NOT INCLUDED WITH THIS PROSPECTUS, IS
AVAILABLE UPON REQUEST.
CLASS A
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003(b)
PER SHARE INCOME AND CAPITAL CHANGES(a)
Net asset value, beginning of period $ 5.95 $ 5.44 $ 5.00
- ------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .02 .01
Net gains (losses) (both realized and unrealized) .90 .63 .43
- ------------------------------------------------------------------------------------------------------------
Total from investment operations .94 .65 .44
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.03) (.02) --
Distributions from realized gains (.16) (.12) --
- ------------------------------------------------------------------------------------------------------------
Total distributions (.19) (.14) --
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.70 $ 5.95 $ 5.44
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 28 $ 13 $ 8
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c),(d) 1.25% 1.13% 1.22%(e)
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .84% .65% .81%(e)
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 64% 64% 17%
- ------------------------------------------------------------------------------------------------------------
Total return(f) 15.95% 11.99% 8.80%(g)
- ------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from April 24, 2003 (when shares became publicly available)
to July 31, 2003.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had
Ameriprise Financial not done so, the annual ratios of expenses for Class A
would have been 1.35%, 1.91% and 7.39% for the periods ended July 31, 2005,
2004 and 2003, respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.36
<Page>
CLASS B
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003(b)
PER SHARE INCOME AND CAPITAL CHANGES(a)
Net asset value, beginning of period $ 5.90 $ 5.43 $5.00
- ------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 (.02) --
Net gains (losses) (both realized and unrealized) .86 .61 .43
- ------------------------------------------------------------------------------------------------------------
Total from investment operations .88 .59 .43
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Distributions from realized gains (.16) (.12) --
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.62 $ 5.90 $5.43
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 9 $ 3 $ 1
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c),(d) 2.04% 1.95% 2.01%(e)
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .06% (.16%) (.08%)(e)
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 64% 64% 17%
- ------------------------------------------------------------------------------------------------------------
Total return(f) 15.03% 10.95% 8.60%(g)
- ------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from April 24, 2003 (when shares became publicly available)
to July 31, 2003.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) 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 2.13%, 2.73% and 8.18% for the periods ended July 31, 2005,
2004 and 2003, respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.37
<Page>
CLASS C
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003(b)
PER SHARE INCOME AND CAPITAL CHANGES(a)
Net asset value, beginning of period $ 5.90 $ 5.43 $5.00
- ------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01 (.02) --
Net gains (losses) (both realized and unrealized) .87 .61 .43
- ------------------------------------------------------------------------------------------------------------
Total from investment operations .88 .59 .43
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Distributions from realized gains (.16) (.12) --
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.62 $ 5.90 $5.43
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c),(d) 2.06% 1.95% 2.01%(e)
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets .02% (.17%) (.05%)(e)
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 64% 64% 17%
- ------------------------------------------------------------------------------------------------------------
Total return(f) 15.03% 10.96% 8.60%(g)
- ------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from April 24, 2003 (when shares became publicly available)
to July 31, 2003.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) 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 2.13%, 2.73% and 8.20% for the periods ended July 31, 2005,
2004 and 2003, respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.38
<Page>
CLASS Y
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003(b)
PER SHARE INCOME AND CAPITAL CHANGES(a)
Net asset value, beginning of period $ 5.95 $ 5.45 $5.00
- ------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05 .03 .01
Net gains (losses) (both realized and unrealized) .91 .61 .44
- ------------------------------------------------------------------------------------------------------------
Total from investment operations .96 .64 .45
- ------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.02) --
Distributions from realized gains (.16) (.12) --
- ------------------------------------------------------------------------------------------------------------
Total distributions (.20) (.14) --
- ------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.71 $ 5.95 $5.45
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c),(d) 1.06% .98% 1.01%(e)
- ------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average daily net assets 1.03% .78% .90%(e)
- ------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (excluding short-term securities) 64% 64% 17%
- ------------------------------------------------------------------------------------------------------------
Total return(f) 16.25% 11.87% 9.00%(g)
- ------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from April 24, 2003 (when shares became publicly available)
to July 31, 2003.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings credits on cash balances.
(d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had
Ameriprise Financial not done so, the annual ratios of expenses for Class Y
would have been 1.18%, 1.76% and 7.20% for the periods ended July 31, 2005,
2004 and 2003, respectively.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.39
<Page>
This Fund, along with the other RiverSource funds, is distributed by Ameriprise
Financial Services, Inc. and can be purchased from Ameriprise Financial Services
or from a limited number of other authorized financial intermediaries. The Fund
can be found under the "RiverSource" banner in most mutual fund quotations.
Additional information about the Fund and its investments is available in the
Fund's SAI, and annual and semiannual reports to shareholders. In the Fund's
annual report, you will find a discussion of market conditions and investment
strategies that significantly affected the Fund's performance during its most
recent fiscal year. The SAI is incorporated by reference in this prospectus. For
a free copy of the SAI, the annual report, or the semiannual report, or to
request other information about the Fund or make a shareholder inquiry, contact
your financial advisor, investment professional or Ameriprise Financial
Services.
Ameriprise Financial Services
70100 Ameriprise Financial Center
Minneapolis, MN 55474
(800) 862-7919
TTY: (800) 846-4852
RiverSource Investments Website address:
riversource.com/investments
You may review and copy information about the Fund, including the SAI, at the
Securities and Exchange Commission's (Commission) Public Reference Room in
Washington, D.C. (for information about the public reference room call
1-202-942-8090). Reports and other information about the Fund are available on
the EDGAR Database on the Commission's Internet site at www.sec.gov. Copies of
this information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing to
the Public Reference Section of the Commission, Washington, D.C. 20549-0102.
Investment Company Act File #811-2111
TICKER SYMBOL
CLASS A: AQEAX CLASS B: --
CLASS C: -- CLASS I: ALEIX
CLASS Y: --
[RIVERSOURCE(SM) INVESTMENTS LOGO]
RIVERSOURCE INVESTMENTS
200 AMERIPRISE FINANCIAL CENTER
MINNEAPOLIS, MN 55474
S-6263-99 E (10/05)
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
D.40
<Page>
EXHIBIT E
BOARD EFFECTIVENESS COMMITTEE CHARTER
RESOLVED, That the Board Effectiveness Committee be composed of the independent
members appointed annually by the Board and the Chair of the Board;
RESOLVED, That one member shall be appointed to Chair the Committee and the
Committee shall meet upon call of the Chair;
RESOLVED, That the Committee will make recommendations to the Board on:
- - The responsibilities and duties of the Board;
- - The criteria to be used to determine the size and structure of the Boards and
the background and characteristics of independent Board members;
- - The persons to serve as Board members based on approved criteria whenever
necessary to fill a vacancy or in conjunction with a regular meeting of
shareholders in which nominees are required to be submitted for a vote of
shareholders;
- - The annual evaluation of the Board's performance and the attendance of
members; and
- - The compensation to be paid to independent members; and further
RESOLVED, That the Committee shall be assigned such further areas of
responsibility as appropriate to assist the Board in meeting its fiduciary
duties in an efficient and effective manner.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
E.1
<Page>
EXHIBIT F
JOINT AUDIT COMMITTEE CHARTER
MEMBERSHIP AND QUALIFICATIONS
The Joint Audit Committee shall consist of at least three members appointed by
the Board. The Board may replace members of the Committee for any reason.
No member shall be an "interested person" as that term is defined in Section
2(a)(19) of the Investment Company Act, nor shall any member receive any
compensations from the Fund except compensations for service as a member of the
Board and Board committees.
At least one member of the Committee shall be an "audit committee financial
expert." An "audit committee financial expert" means a person who has the
following attributes:
- - An understanding of generally accepted accounting principles and financial
statements;
- - The ability to assess the general application of such principles in
connection with the accounting for estimates, accruals, and reserves;
- - Experience preparing, auditing, analyzing, or evaluating financial statements
that present a breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the registrant's financial statements,
or experience actively supervising one or more persons engaged in such
activities;
- - An understanding of internal controls and procedures for financial reporting;
and
- - An understanding of audit committee functions.
A person shall have acquired such attributes through:
- - Education and experience as a principal financial officer, principal
accounting officer, controller, public accountant, or auditor or experience
in one or more positions that involve the performance of similar functions;
- - Experience actively supervising a principal financial officer, principal
accounting officer, controller, public accountant, auditor, or person
performing similar functions;
- - Experience overseeing or assessing the performance of companies or public
accountants with respect to the preparation, auditing, or evaluation of
financial statements; or
- - Other relevant experience.
The Board shall determine "audit committee financial experts" annually.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
F.1
<Page>
PURPOSES OF THE COMMITTEE
The Committee is to assist independent members of the Boards in fulfilling their
oversight responsibilities to the shareholders, potential shareholders and
investment community relating to the reliability of financial reporting, the
effectiveness and efficiency of operations, the work done by external auditors,
the adequacy of internal controls, and the compliance with applicable laws and
regulations by:
- - Overseeing the accounting and financial reporting processes of the Fund and
its internal control over financial reporting and, as the Committee deems
appropriate, to inquire into the internal control over financial reporting of
certain third-party service providers;
- - Overseeing, or, as appropriate, assisting Board oversight of, the quality and
integrity of the Fund's financial statements and the independent audit
thereof;
- - Overseeing, or, as appropriate, assisting Board oversight of, the Fund's
compliance with legal and regulatory requirements that relate to the Fund's
accounting and financial reporting, internal control over financial reporting
and independent audits; and
- - Approving prior to appointment the engagement of the Fund's independent
auditor (Auditor) and, in connection therewith, to review and evaluate the
qualifications, independence and performance of the Fund's Auditor.
The Auditor for the Fund shall report directly to the Committee.
DUTIES AND POWERS
To carry out its purposes, the Committee shall have the following duties and
powers:
- - Recommend the Auditor that the Committee believes is qualified to examine and
report on the financial statements to the independent members of the Board
within 90 days before or after the fiscal year end of the Fund;
- - Meet with representatives of the Auditor to:
- Review and evaluate matters potentially affecting its independence and
capabilities by:
- Approving prior to appointment the professional services the Auditor
requests to perform for American Express Financial Corporation and any
of its subsidiaries that provide services to the Fund;
- Considering the controls applied by the Auditor and measures taken by
American Express Financial Corporation to assure that all items
requiring pre-approval are identified and referred to the Committee in
a timely fashion; and
- Evaluating the auditor's independence by receiving a report on business
relationships at each meeting setting forth the work it has been
engaged to do for American Express Company or its subsidiaries.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
F.2
<Page>
- Consider the scope of the annual audit and any special audits and review
and approve the estimated fees to be charged;
- Consider the information and comments from the Auditor with respect to the
Fund's accounting and financial reporting policies, procedures and
internal controls over financial reporting; the responses to the comments
by American Express Financial Corporation; and possible improvements that
can be made in the quality of the Fund's accounting and financial
reporting;
- - Meet with representatives of American Express Enterprise Risk and Assurance
Services to:
- Discuss its responsibility to the Fund with respect to its review of
operations of American Express Financial Corporation and affiliates to the
extent they pertain to the registered investment companies;
- Consider its authority, including the support it receives from American
Express Financial Corporation's senior management and American Express
Company's General Auditor;
- Discuss whether it complies with the Institute of Internal Auditors'
"Standard for the Professional Practice of Internal Auditing;"
- Review its budget, staffing and proposed audit plans each year; and
- Review reports issued by American Express Enterprise Risk and Assurance
Services that pertain to American Express Financial Corporation's
operations related to the registered investment companies.
- - Encourage open lines of communications among the Committee, the Auditor, and
American Express Enterprise Risk and Assurance Services to:
- Consider information and comments from the Auditor with respect to the
Fund's financial statements, including any adjustments to such statements
recommended by the Auditor and to review the opinion of the Auditor;
- Resolve any disagreements between American Express Financial Corporation
and the Auditor;
- Review, in connection with required certifications of Form N-CSR, any
significant deficiencies in the design or operations of internal control
over financial reporting or material weaknesses therein and any reported
evidence of fraud involving any person who has a significant role in the
Fund's internal control over financial reporting;
- Establish procedures for the receipt, retention and treatment of
complaints received by the Fund relating to accounting, internal
accounting controls, or auditing matters, and the confidential, anonymous
submission by employees of American Express Financial Corporation of
concerns about accounting or auditing matters, and address reports from
attorneys or auditors of possible violations of federal or state laws or
fiduciary duty;
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
F.3
<Page>
- Investigate or initiate an investigation of reports of improprieties or
suspected improprieties in connection with the Fund's accounting or
financial reporting;
- - Consider the adequacy and effectiveness of internal controls, including the
controls over computerized information systems, through discussions with the
Auditor, American Express Enterprise Risk and Assurance Services and
appropriate American Express Financial Corporation managers who provide
reports to the Committee and elicit their recommendations for improving or
identifying particular areas where new or more detailed controls or
procedures are desirable giving particular emphasis to the adequacy of
internal controls for exposing any payments, transactions, or procedures that
might be deemed illegal or otherwise improper;
- - Request to be informed about all new or changed accounting principles and
disclosure practices on a timely basis and inquire regarding the judgment and
reasoning regarding the appropriateness, not just the acceptability, of the
changes or proposed changes;
- - Report the work of the Committee to the Board as frequently as the Committee
deems appropriate;
- - Review and assess the adequacy of the Committee's charter at least annually
and recommend any changes to the Board;
- - Meet at least once a year in a private meeting with each of the three
following groups: the Auditor, the American Express Financial Corporation's
management personnel responsible for the financial statements and
recordkeeping of the Fund, the Senior Vice President - Enterprise Risk and
Assurance Services for American Express Financial Corporation, and the
General Auditor and Chief Operational Risk Officer for American Express
Company;
- - Consider such other matters as any Board or Committee deems appropriate and
perform such additional tasks as directed by resolution of any Board;
- - Conduct its own investigations into issues related to its responsibilities
and is authorized to employ such professional and technical assistance as it
deems necessary.
The Committee shall have the resources and authority appropriate to discharge
its responsibilities, including appropriate funding, as determined by the
Committee, for payment of compensation to the Auditor for the purpose of
conducting the audit and rendering their audit report, the authority to retain
and compensate special counsel and other experts or consultants as the Committee
deems necessary, and the authority to obtain specialized training for Committee
members, at the expense of the Fund, as appropriate.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
F.4
<Page>
The Committee may delegate any portion of its authority, including the authority
to grant pre-approvals of audit and permitted non-audit services to one or more
members. Any decisions of the member to grant pre-approvals shall be presented
to the Committee at its next regularly scheduled meeting.
ROLE AND RESPONSIBILITIES
The function of the Committee is oversight; it is American Express Financial
Corporation's responsibility to maintain appropriate systems for accounting and
internal control over financial reporting, and the Auditor's responsibility to
plan and carry out a proper audit. Specifically, American Express Financial
Corporation is responsible for: (1) the preparation, presentation and integrity
of the Fund's financial statements; (2) the maintenance of appropriate
accounting and financial reporting principles and policies; and (3) the
maintenance of internal control over financial reporting and other procedures
designed to assure compliance with accounting standards and related laws and
regulations. The Auditor is responsible for planning and carrying out an audit
consistent with applicable legal and professional standards and the terms of
their engagement letter. Nothing in the Charter shall be construed to reduce the
responsibilities or liabilities of the Fund's service providers, including the
Auditor.
Although the Committee is expected to take a detached and questioning approach
to the matters that come before it, the review of a Fund's financial statements
by the Committee is not an audit, nor does the Committee's review substitute for
the responsibilities of American Express Financial Corporation's for preparing,
or the Auditor for auditing, the financial statements. Members of the Committee
are not employees of the Fund and, in serving on this Committee, are not, and do
not hold themselves out to be, acting as accountants or auditors. As such, it is
not the duty or responsibility of the Committee or its members to conduct "field
work" or other types of auditing or accounting reviews or procedures.
In discharging their duties, the members of the Committee are entitled to rely
on information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by: (1) one or more officers
of the Fund whom the director reasonably believes to be reliable and competent
in the matters presented; (2) legal counsel, public accountants, or other
persons as to matters the director reasonably believes are within the person's
professional or expert competence; or (3) a Board committee of which the
director is not a member.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
F.5
<Page>
OPERATIONS
The Board shall adopt and approve this Charter and may amend it on the Board's
own motion. The Committee shall review this Charter at least annually and
recommend to the full Board any changes the Committee deems appropriate.
The Committee may select one of its members to be the chair and may select a
vice chair. A majority of the members of the Committee shall constitute a quorum
for the transaction of business at any meeting of the Committee. The action of a
majority of the members of the Audit Committee present at a meeting at which a
quorum is present shall be the action of the Committee.
The Committee shall meet on a regular basis and at least four times annually and
is empowered to hold special meetings as circumstances require. The Chairperson
or a majority of the members shall be authorized to call a meeting of the
Committee or meetings may be fixed in advance by the Committee.
The agenda shall be prepared under the direction and control of the Chairperson.
The Committee shall ordinarily meet in person; however, members may attend
telephonically, and the Committee may act by written consent, to the extent
permitted by law and by the Fund's bylaws.
The Committee shall have the authority to meet privately and to admit
non-members individually. The Committee may also request to meet with internal
legal counsel and compliance personnel of American Express Financial Corporation
and with entities that provide significant accounting or administrative services
to the Fund to discuss matters relating to the Fund's accounting and compliance
as well as other Fund-related matters.
The Committee shall prepare and retain minutes of its meetings and appropriate
documentation of decisions made outside of meetings by delegated authority.
The Committee shall evaluate its performance at least annually.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT
F.6
<Page>
S-6389 A (12/05)
ezVote(SM)Consolidated Proxy Card
PROXY TABULATOR
P.O. BOX 9132 This form is your EzVote Consolidated Proxy.
HINGHAM, MA 02043-9132 It reflects all of your accounts registered to
the same Social Security or Tax I.D. number at
this address. By voting and signing the
Consolidated Proxy Card, you are voting all of
these accounts in the same manner as indicated
on the reverse side of the form.
999 999 999 999 99 <-
RIVERSOURCE FUNDS
(formerly known as AMERICAN EXPRESS FUNDS)
AXP STOCK SERIES, INC. PROXY FOR THE REGULAR MEETING OF SHAREHOLDERS
RIVERSOURCE STOCK FUND FEBRUARY 15, 2006
Your fund will hold a shareholders' meeting at 901 Marquette Avenue South, Suite
2810, Minneapolis, MN, at _____ [a.m./p.m.] on February 15, 2006. You are
entitled to vote at the meeting if you were a shareholder on December 16, 2005.
Please read the proxy statement and vote immediately by mail, telephone or
internet, even if you plan to attend the meeting. Just follow the instructions
on this proxy card. The Board of Directors recommends that you vote FOR each
proposal.
The undersigned hereby appoints Arne H. Carlson and Leslie L. Ogg or any one of
them, as proxies, with full power of substitution, to represent and to vote all
of the shares of the undersigned at the regular meeting to be held on February
15, 2006, and any adjournment thereof.
Date __________________
Signature(s) (Joint owners) (Sign in the Box)
Note: Please sign this proxy exactly as your
name or names appears on this card. Joint owners
should each sign personally. Trustees and other
fiduciaries should indicate the capacity in
which they sign, and where more than one name
appears, a majority must sign. If a corporation,
this signature should be that of an authorized
officer who should state his or her title.
AMEX Stock EZ - DH
IF VOTING THE CONSOLIDATED PROXY CARD DO NOT SIGN, DATE OR RETURN THE INDIVIDUAL
BALLOTS
THREE EASY WAYS TO VOTE
To vote by Telephone To vote by Internet To vote by Mail
1) Read the proxy statement and have the 1) Read the proxy statement and have 1) Read the Proxy Statement.
Consolidated Proxy Card at hand. Consolidated Proxy Card at hand. 2) Check the appropriate boxes on the
2) Call 1-888-221-0697. 2) Go to www.proxyweb.com reverse side.
3) Follow the recorded instructions. 3) Follow the on-line directions. 3) Sign and date the proxy card.
4) Return the proxy card in the envelope
provided.
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR CARD.
LABEL BELOW FOR MIS USE ONLY! INDIVIDUAL BALLOTS
M1197 On the reverse side of this form (and on accompanying pages,
AMERICAN EXPRESS - AMERIPRISE if necessary) you will find individual ballots, one for each of
AXP STOCK SERIES, INC your accounts. If you would wish to vote each of these accounts
RIVERSOURCE STOCK FUND separately, sign in the signature box below, mark each individual
ORIGINAL EZVOTE 10-06-05 KD ballot to indicate your vote, detach the form at the perforation
DOREEN (AMEX-RIVERSOURCE STOCK EZVOTE 2006 DH) above and return the individual ballots portion only.
NOTE: If you choose to vote each account separately, do
not return the Consolidated Proxy Card above.
Date _____________________________
MIS EDITS: # OF CHANGES ___/___ PRF 1 ___ PRF 2 ___
-------------------------------------------------------
Signature(s) (Joint owners) (Sign in the Box)
OK TO PRINT AS IS*_______ *By signing this form you are Note: Please sign this proxy exactly as your
authorizing MIS to print this form in its current state. name or names appears on this card. Joint owners
should each sign personally. Trustees and other
fiduciaries should indicate the capacity in
which they sign, and where more than one name
appears, a majority must sign. If a corporation,
this signature should be that of an authorized
- --------------------------------------------------------- officer who should state his or her title.
SIGNATURE OF PERSON AUTHORIZING PRINTING DATE
AMEX Stock IND - DH
ezVote(SM)Consolidated Proxy Card
Please fill in box(es) as shown using black or
blue ink or number 2 pencil. [X]
PLEASE DO NOT USE FINE POINT PENS.
If you do not mark a proposal, your proxy will be voted FOR the proposal.
FOR AGAINST ABSTAIN
1. Approve the Agreement and Plan of Reorganization. [ ] [ ] [ ] 1.
2. ELECTION OF BOARD MEMBERS.
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
(01) Arne H. Carlson (05) Catherine James Paglia
(02) Patricia M. Flynn (06) Alan K. Simpson [ ] [ ] [ ] 2.
(03) Anne P. Jones (07) Alison Taunton-Rigby
(04) Stephen R. Lewis, Jr. (08) William F. Truscott
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "FOR ALL EXCEPT" box and write the nominee's number on the line below.)
FOR AGAINST ABSTAIN
3. Approve an Amendment to the Articles of
Incorporation. [ ] [ ] [ ] 3.
4. Approve an Investment Management Services Agreement
with RiverSource Investments, LLC. [ ] [ ] [ ] 4.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
AMEX Stock EZ - DH
IF VOTING THE CONSOLIDATED PROXY CARD DO NOT SIGN, DATE OR RETURN
THE INDIVIDUAL BALLOTS
INDIVIDUAL BALLOTS
NOTE: IF YOU HAVE USED THE CONSOLIDATED BALLOT ABOVE, DO NOT VOTE THE INDIVIDUAL
BALLOTS BELOW.
000 0000000000 000 0 000 0000000000 000 0
JOHN Q. PUBLIC JOHN Q. PUBLIC
123 MAIN STREET 123 MAIN STREET
ANYTOWN, MA 02030 999 999 999 999 99 ANYTOWN, MA 02030 999 999 999 999 99
FUND NAME PRINTS HERE FUND NAME PRINTS HERE
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Approve the Agreement 1. Approve the Agreement
and Plan of and Plan of
Reorganization. [ ] [ ] [ ] Reorganization. [ ] [ ] [ ]
2. ELECTION OF BOARD 2. ELECTION OF BOARD
MEMBERS. FOR WITHHOLD FOR ALL MEMBERS. FOR WITHHOLD FOR ALL
(See Nominee list on ALL ALL EXCEPT* (See Nominee list on ALL ALL EXCEPT*
consolidated ballot.) consolidated ballot.)
*EXCEPT____________________ [ ] [ ] [ ] *EXCEPT____________________ [ ] [ ] [ ]
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
3. Amend the Articles of 3. Amend the Articles of
Incorporation. [ ] [ ] [ ] Incorporation. [ ] [ ] [ ]
4. Approve Service 4. Approve Service
Agreement. [ ] [ ] [ ] Agreement. [ ] [ ] [ ]
LABEL BELOW FOR MIS USE ONLY!
M1197
AMERICAN EXPRESS - AMERIPRISE
AXP STOCK SERIES, INC
RIVERSOURCE STOCK FUND
ORIGINAL EZVOTE 10-06-05 KD
DOREEN (AMEX-RIVERSOURCE STOCK EZVOTE 2006 DH)
AMEX Stock IND - DH
<Page>
AXP(R) STOCK SERIES, INC.
- RiverSource(SM) Stock Fund
(formerly AXP Stock Fund)
PROXY STATEMENT
December 16, 2005
HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR YOUR RIVERSOURCE
MUTUAL FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY
STATEMENT.
Q: WHAT ORGANIZATION CHANGES HAVE RECENTLY TAKEN PLACE?
On Sept. 30, Ameriprise Financial, Inc. (formerly American Express Financial
Corporation) became an independent company from American Express. An affiliate
of Ameriprise Financial, RiverSource Investments now serves as investment
manager to your fund. As a result, your fund's name and the names of service
providers to your fund have changed. Your statements should now reflect this new
name and the funds are now listed under RiverSource in the newspaper.
Q: WHY AM I BEING ASKED TO VOTE?
Mutual funds are required to get shareholders' votes for certain kinds of
changes, like the ones included in this proxy statement. You have a right to
vote on these changes either by mailing your proxy card, calling a toll-free
number, responding by internet or attending the shareholder meeting.
Q: IS MY VOTE IMPORTANT?
Absolutely! While the Board of Directors ("Board") for RiverSource Funds has
reviewed these changes and recommends you approve them, you have the right to
voice your opinion. Until the Fund is sure that a quorum has been reached (50%
of existing shares), it will continue to contact shareholders asking them to
vote. These efforts cost money -- so please, vote immediately.
Q: WHAT AM I BEING ASKED TO VOTE ON?
Shareholders are being asked to vote on:
- - The merger ("Reorganization") of RiverSource Stock Fund and RiverSource
Disciplined Equity Fund.
- - Election of Board members.
<Page>
- - An amendment to the Fund's Articles of Incorporation to permit the Board to
establish the minimum account value and to change the name of the corporation
to "RiverSource" consistent with the names of the funds.
- - An Investment Management Services Agreement ("IMS Agreement") with
RiverSource Investments, LLC.
We encourage you to read the full text of the proxy statement to obtain a more
detailed understanding of the issues.
Q: IF APPROVED, WHEN WILL THE MERGER HAPPEN?
If shareholders approve the merger, it will take place shortly after the
shareholder meeting. In the interim, however, it will be important for the Fund
to have a properly elected Board and an IMS Agreement that has been approved by
shareholders.
Q: WHAT DO BOARD MEMBERS DO?
Board members represent the interests of the shareholders and oversee the
management of the Fund.
Q: WHAT CHANGES ARE PROPOSED TO THE INVESTMENT MANAGEMENT SERVICES AGREEMENT?
In September, the Fund's investment manager, Ameriprise Financial, Inc.
(formerly known as American Express Financial Corporation) was spun off from its
parent company, American Express Company. The investment management functions
were then moved to RiverSource Investments, LLC, a wholly owned subsidiary of
Ameriprise Financial. While this change did not cause a termination of the IMS
Agreement, the Board determined that it would be prudent to give shareholders an
opportunity to vote on the arrangement. The agreement also clarifies the
circumstances under which the Board may change an index for purposes of
calculating a performance incentive adjustment.
Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE?
After careful consideration, the Board recommends that you vote FOR each
proposal.
Q: HOW DO I VOTE?
You can vote in one of four ways:
- - By mail with the enclosed proxy card
- - By telephone
- - By web site
- - In person at the meeting
Please refer to the enclosed voting instruction card for the telephone number
and internet address.
Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about any of the issues described in the proxy statement
or about voting procedures, please call your financial advisor or call client
services toll free at (877) 256-6085.
<Page>
STATEMENT OF ADDITIONAL INFORMATION
DEC. 16, 2005
AXP(R) GROWTH SERIES, INC.
RIVERSOURCE LARGE CAP EQUITY FUND
This Statement of Additional Information ("SAI") consists of this cover page and
incorporates by reference the following described documents, each of which has
been previously filed and accompanies this Statement of Additional Information.
1. RiverSource Large Cap Equity Fund's most recent SAI, dated Oct. 3, 2005.
2. RiverSource Large Cap Equity Fund's most recent annual report, for the period
ended July 31, 2005.
3. RiverSource New Dimensions Fund's most recent SAI, dated Oct. 3, 2005.
4. RiverSource New Dimensions Fund's most recent annual report, for the period
ended July 31, 2005.
This SAI is not a prospectus. It should be read in conjunction with the proxy
statement/prospectus, dated the same date as this SAI, which may be obtained by
calling (877) 256-6085 or writing RiverSource Service Corporation, 70100
Ameriprise Financial Center, Minneapolis, MN 55474.
RIVERSOURCE LARGE CAP EQUITY FUND
RIVERSOURCE NEW DIMENSIONS FUND
INTRODUCTION TO PROPOSED FUND MERGER
July 31, 2005
The accompanying unaudited pro forma combining statement of assets and
liabilities and the statement of operations reflect the accounts of the two
funds at and for the 12-month period ending July 31, 2005. These statements have
been derived from financial statements prepared for RiverSource Large Cap Equity
Fund and RiverSource New Dimensions Fund as of July 31, 2005. RiverSource Large
Cap Equity Fund invests primarily in equity securities with a market
capitalization greater than $5 billion at the time of purchase. RiverSource New
Dimensions Fund invests all of its assets in Growth Trends Portfolio, a series
of Growth Trust, an open-end investment company that has the same objectives as
the Fund. The Portfolio invests primarily in common stocks showing potential for
significant growth and operating in areas where economic or technological
changes are occurring.
Under the proposed Agreement and Plan of Reorganization, Class A shares of the
RiverSource New Dimensions Fund would be exchanged for Class A shares of the
RiverSource Large Cap Equity Fund. Class B shares of the RiverSource New
Dimensions Fund would be exchanged for Class B shares of the RiverSource Large
Cap Equity Fund. Class C shares of the RiverSource New Dimensions Fund would be
exchanged for Class C shares of the RiverSource Large Cap Equity Fund. Class I
shares of the RiverSource New Dimensions Fund would be exchanged for Class I
shares of the RiverSource Large Cap Equity Fund. Class Y shares of the
RiverSource New Dimensions Fund would be exchanged for Class Y shares of the
RiverSource Large Cap Equity Fund.
The pro forma combining statements have been prepared to give effect to the
proposed transaction on the historical operations of the accounting survivor,
RiverSource Large Cap Equity Fund, as if the transaction had occurred at the
beginning of the fiscal year ending July 31, 2005.
2 - AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND
RIVERSOURCE LARGE CAP EQUITY FUND
RIVERSOURCE NEW DIMENSIONS FUND
PRO FORMA COMBINING
STATEMENT OF ASSETS AND LIABILITIES
RIVERSOURCE RIVERSOURCE
LARGE CAP NEW DIMENSIONS PRO FORMA PRO FORMA
JULY 31, 2005 (Unaudited) EQUITY FUND FUND ADJUSTMENTS COMBINED
- ---------------------------------------------------- --------------- ---------------- ---------------- -----------------
ASSETS
Investments in securities, at cost (Note 2) $ 1,496,044,828 $ -- $ 10,117,675,481 (a) $ 11,613,720,309
---------------------------------------------------------------------------
Investments in securities, at value* (Note 2) $ 1,593,969,074 $ -- $ 11,599,049,973 (a) $ 13,193,019,047
Investment in Portfolio (Note 2) -- 11,522,269,040 (11,522,269,040)(a) --
Foreign currency holdings (identified cost $5,524
for RiverSource New Dimensions Fund) (Note 2) -- -- 6,033 (a) 6,033
Capital shares receivable 183,393 936,935 -- 1,120,328
Expense reimbursement receivable from Ameriprise
Financial (Note 2) 854,035 -- (854,035)(b) --
Dividends and accrued interest receivable (Note 2) 1,474,567 -- 6,564,311 (a) 8,038,878
Receivable for investment securities sold (Note 2) 25,448,033 -- 134,153,505 (a) 159,601,538
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets 1,621,929,102 11,523,205,975 216,650,747 13,361,785,824
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash on demand deposit
(Note 2) 574,129 -- 3,209,619 (a) 3,783,748
Capital shares payable 233,627 975,810 -- 1,209,437
Payable for investment securities purchased (Note 2) 32,555,009 -- 139,724,399 (a) 172,279,408
Payable upon return of securities loaned (Note 2) 34,147,000 -- 64,419,582 (a) 98,566,582
Accrued investment management services fee (Note 2) 25,327 -- 3,779,086 (a), 3,804,413
(c)
Accrued distribution fee 20,384 104,227 -- 124,611
Accrued service fee 1 7,072 -- 7,073
Accrued transfer agency fee 5,066 7,488 -- 12,554
Accrued administrative services fee (Note 2) 2,066 11,218 3,249,409 (d) 3,262,693
Other accrued expenses (Note 2) 290,046 737,043 691,017 (a), 1,718,106
(b),
(e),
(f),
(g)
Options contracts written, at value (premiums
received $6,283,012 for RiverSource New Dimensions
Fund) (Note 2) -- -- 9,529,493 (a) 9,529,493
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities 67,852,655 1,842,858 224,602,605 294,298,118
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 1,554,076,447 $ 11,521,363,117 $ (7,951,858) $ 13,067,487,706
=================================================================================================================================
REPRESENTED BY
Capital stock -- $.01 par value (Note 3) $ 2,973,060 $ 4,847,114 $ 17,104,834 $ 24,925,008
Additional paid-in capital (Note 3) 2,430,766,764 9,354,954,421 (17,104,834) 11,768,616,351
Undistributed (excess of distributions over) net
investment income (Note 2) 4,353,601 19,084,775 (7,951,858) 15,486,518
Accumulated net realized gain (loss) (981,941,224) 664,348,286 -- (317,592,938)
Unrealized appreciation (depreciation) on
investments and on translation of assets and
liabilities in foreign currencies 97,924,246 1,478,128,521 -- 1,576,052,767
- ---------------------------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to
outstanding capital stock $ 1,554,076,447 $ 11,521,363,117 $ (7,951,858) $ 13,067,487,706
=================================================================================================================================
Net assets applicable to
outstanding shares: Class A $ 1,030,109,387 $ 6,845,241,780 $ (4,724,475) $ 7,870,626,692
Class B $ 471,864,336 $ 2,003,569,556 $ (1,382,831) $ 2,474,051,061
Class C $ 9,284,115 $ 45,662,322 $ (31,515) $ 54,914,922
Class I $ 42,610,172 $ 69,748,064 $ (48,139) $ 112,310,097
Class Y $ 208,437 $ 2,557,141,395 $ (1,764,898) $ 2,555,584,934
Shares outstanding (Note 3): Class A shares 195,824,050 285,315,473 -- 1,496,302,625
Class B shares 91,616,485 88,486,457 -- 480,390,606
Class C shares 1,799,299 2,019,120 -- 10,642,479
Class I shares 8,026,676 2,889,590 -- 21,152,839
Class Y shares 39,442 106,000,741 -- 484,012,263
Net asset value per share of
outstanding capital stock: Class A $ 5.26 $ 23.99 $ -- $ 5.26
Class B $ 5.15 $ 22.64 $ -- $ 5.15
Class C $ 5.16 $ 22.61 $ -- $ 5.16
Class I $ 5.31 $ 24.14 $ -- $ 5.31
Class Y $ 5.28 $ 24.12 $ -- $ 5.28
- ---------------------------------------------------------------------------------------------------------------------------------
* Including securities on loan, at value (Note 2) $ 32,867,866 $ -- $ 60,816,462(a) $ 93,684,328
- ---------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to pro forma financial statements.
AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND - 3
RIVERSOURCE LARGE CAP EQUITY FUND
RIVERSOURCE NEW DIMENSIONS FUND
PRO FORMA COMBINING
STATEMENT OF OPERATIONS
RIVERSOURCE RIVERSOURCE
LARGE CAP NEW DIMENSIONS PRO FORMA PRO FORMA
YEAR ENDED JULY 31, 2005 (Unaudited) EQUITY FUND FUND ADJUSTMENTS COMBINED
- ---------------------------------------------------- --------------- ---------------- ---------------- -----------------
INVESTMENT INCOME
Income:
Dividends $ 31,753,996 $ 233,044,387 $ -- $ 264,798,383
Interest 871,611 12,020,030 -- 12,891,641
Fee income from securities lending 227,206 320,444 -- 547,650
Less foreign taxes withheld (304,627) (442,235) -- (746,862)
- ---------------------------------------------------------------------------------------------------------------------------------
Total income 32,548,186 244,942,626 -- 277,490,812
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses:
Expenses allocated from Portfolio (Note 2) -- 62,533,534 (62,533,534)(a) --
Investment management services fee (Note 2) 9,680,873 -- 64,507,211 (a), 74,188,084
(c)
Distribution fee
Class A 2,866,767 20,565,923 -- 23,432,690
Class B 5,272,525 24,839,333 -- 30,111,858
Class C 101,520 559,396 -- 660,916
Transfer agency fee 3,572,606 22,354,541 -- 25,927,147
Incremental transfer agency fee
Class A 253,892 1,352,830 -- 1,606,722
Class B 214,592 1,005,784 -- 1,220,376
Class C 4,181 26,158 -- 30,339
Service fee -- Class Y 3,664 2,800,648 -- 2,804,312
Administrative services fees and expenses (Note 2) 860,387 4,756,123 3,249,409 (d) 8,865,919
Custodian fees (Note 2) 296,060 -- 803,940 (a), 1,100,000
(e)
Compensation of board members (Note 2) 17,545 32,620 39,835 (a), 90,000
(f)
Printing and postage 626,976 3,426,659 -- 4,053,635
Registration fees 42,760 92,530 -- 135,290
Audit fees (Note 2) 30,000 12,500 7,500 (a), 50,000
(g)
Other (Note 2) 67,503 233,261 499,085 (a) 799,849
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses 23,911,851 144,591,840 6,573,446 175,077,137
Expenses waived/reimbursed by RiverSource
Investments, LLC (Note 2) (859,581) (522,229) 1,381,810 (b) --
- ---------------------------------------------------------------------------------------------------------------------------------
23,052,270 144,069,611 7,955,256 175,077,137
Earnings credits on cash balances (Note 2) (59,729) -- (3,398)(a) (63,127)
- ---------------------------------------------------------------------------------------------------------------------------------
Total net expenses 22,992,541 144,069,611 7,951,858 175,014,010
- ---------------------------------------------------------------------------------------------------------------------------------
Investment income (loss)-- net 9,555,645 100,873,015 (7,951,858) 102,476,802
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)-- NET
Net realized gain (loss) on:
Security transactions 81,303,618 757,404,472 -- 838,708,090
Foreign currency transactions (8,433) (554,419) -- (562,852)
Futures contracts -- (1,726,839) -- (1,726,839)
Options contracts written -- (427,448) -- (427,448)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 81,295,185 754,695,766 -- 835,990,951
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies 128,747,672 158,658,167 -- 287,405,839
- ---------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 210,042,857 913,353,933 -- 1,123,396,790
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $ 219,598,502 $ 1,014,226,948 $ (7,951,858) $ 1,225,873,592
=================================================================================================================================
See accompanying notes to pro forma financial statements.
4 - AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND
RIVERSOURCE LARGE CAP EQUITY FUND
RIVERSOURCE NEW DIMENSIONS FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited as to July 31, 2005)
1. BASIS OF COMBINATION
The unaudited pro forma combining statement of assets and liabilities and the
statement of operations reflect the accounts of the two funds at and for the
12-month period ending July 31, 2005. These statements have been derived from
financial statements prepared for the RiverSource Large Cap Equity Fund and
RiverSource New Dimensions Fund as of July 31, 2005.
Each Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The primary investments
of each Fund are as follows:
RiverSource Large Cap Equity Fund invests primarily in equity securities with a
market capitalization greater than $5 billion at the time of purchase.
RiverSource New Dimensions Fund invests all of its assets in Growth Trends
Portfolio, a series of Growth Trust, an open-end investment company that has the
same objectives as the Fund. The Portfolio invests primarily in common stocks
showing potential for significant growth and operating in areas where economic
or technological changes are occurring.
The pro forma statements give effect to the proposed transfer of the assets and
liabilities of RiverSource New Dimensions Fund in exchange for Class A, B, C, I
and Y shares of RiverSource Large Cap Equity Fund under U.S. generally accepted
accounting principles. The pro forma statements also reflect changes needed
regarding the change in structure of RiverSource New Dimensions Fund. Finally,
the pro forma statements reflect estimates for the combined RiverSource Large
Cap Equity Fund based on the increased asset level of the merger and associated
economies of scale, adjusted to reflect current fees.
The pro forma combining statements should be read in conjunction with the
historical financial statements of the funds incorporated by reference in the
Statement of Additional Information.
The pro forma statement of operations give effect to the proposed transaction on
the historical operations of the accounting survivor, RiverSource Large Cap
Equity Fund, as if the transaction had occurred at the beginning of the year
presented.
2. PRO FORMA ADJUSTMENTS
(a) To reflect adjustments needed regarding the change in structure of
RiverSource New Dimensions Fund from a feeder fund presentation into a
reporting format comparable with the accounting survivor.
(b) To adjust for the termination of the agreement that RiverSource Investments
and its affiliates would waive certain fees and absorb certain expenses.
(c) To reflect the increase in investment management services fee due to the
Reorganization.
(d) To reflect the decrease in administrative services fees due to the
Reorganization and to include the increase due to the revised
administrative services agreement.
(e) To reflect the decrease in custodian fees due to the Reorganization.
(f) To adjust for the change in the compensation of board members due to the
Reorganization.
(g) To reflect the reduction in audit fees due to the Reorganization.
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional
Class A, Class B, Class C, Class I and Class Y shares of RiverSource Large Cap
Equity Fund if the reorganization were to have taken place on July 31, 2005. The
pro forma number of Class A shares outstanding of 1,496,302,625 consists of
1,300,478,575 shares assumed to be issued to Class A shareholders of the
RiverSource New Dimensions Fund, plus 195,824,050 Class A shares of the
RiverSource Large Cap Equity Fund outstanding as of July 31, 2005. The pro forma
number of Class B shares outstanding of 480,390,606 consists of 388,774,121
shares assumed to be issued to Class B shareholders of the RiverSource New
Dimensions Fund, plus 91,616,485 Class B shares of the RiverSource Large Cap
Equity Fund outstanding as of July 31, 2005. The pro forma number of Class C
shares outstanding of 10,642,479 consists of 8,843,180 shares assumed to be
issued to Class C shareholders of the RiverSource New Dimensions Fund, plus
1,799,299 Class C shares of the RiverSource Large Cap Equity Fund outstanding as
of July 31, 2005. The pro forma number of Class I shares outstanding of
21,152,839 consists of 13,126,163 shares assumed to be issued to Class I
shareholders of the RiverSource New Dimensions Fund, plus 8,026,676 Class I
shares of the RiverSource Large Cap Equity Fund outstanding as of July 31, 2005.
The pro forma number of Class Y shares outstanding of 484,012,263 consists of
483,972,821 shares assumed to be issued to Class Y shareholders of the
RiverSource New Dimensions Fund, plus 39,442 Class Y shares of the RiverSource
Large Cap Equity Fund outstanding as of July 31, 2005.
AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND - 5
COMBINED INVESTMENTS IN SECURITIES
RiverSource Large Cap Equity Fund
JULY 31, 2005 (Unaudited)
(Percentages represent value of investments compared to net assets)
COMMON STOCKS (97.5%)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a)
RIVERSOURCE GROWTH RIVER SOURCE GROWTH
LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA
EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------- ------------ ------------ ------------ ------------ ------------- -------------
AEROSPACE & DEFENSE (6.2%)
Boeing 132,630 5,439,893 5,572,523 $ 8,754,907 $ 359,087,337 $ 367,842,244
Empresa Brasileira de Aeronautica ADR 119,302 -- 119,302(c) 3,858,227 -- 3,858,227
General Dynamics 12,727 -- 12,727 1,466,023 -- 1,466,023
Goodrich 116,774 -- 116,774 5,166,082 -- 5,166,082
Honeywell Intl 210,201 -- 210,201 8,256,695 -- 8,256,695
Lockheed Martin 137,816 2,057,720 2,195,536 8,599,718 128,401,728 137,001,446
Northrop Grumman 80,844 1,000,000 1,080,844 4,482,800 55,450,000 59,932,800
United Technologies 158,889 4,368,984 4,527,873 8,055,672 221,507,489 229,563,161
------------------------------------------
Total 48,640,124 764,446,554 813,086,678
- -------------------------------------------------------------------------------------------------------------------------------
AUTO COMPONENTS (--%)
Johnson Controls 8,639 -- 8,639 496,224 -- 496,224
Lear 11,436 -- 11,436 489,118 -- 489,118
------------------------------------------
Total 985,342 -- 985,342
- -------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES (--%)
Ford Motor 85,134 -- 85,134 914,339 -- 914,339
General Motors 64,760 -- 64,760(e) 2,384,463 -- 2,384,463
Harley-Davidson 13,137 -- 13,137 698,757 -- 698,757
------------------------------------------
Total 3,997,559 -- 3,997,559
- -------------------------------------------------------------------------------------------------------------------------------
BEVERAGES (2.2%)
Coca-Cola 18,776 -- 18,776 821,638 -- 821,638
Coca-Cola Enterprises 42,291 -- 42,291 993,839 -- 993,839
PepsiCo 245,882 5,000,000 5,245,882 13,407,945 272,650,000 286,057,945
------------------------------------------
Total 15,223,422 272,650,000 287,873,422
- -------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY (4.5%)
Amgen 162,488 3,463,407 3,625,895(b) 12,958,418 276,206,708 289,165,126
Biogen Idec 68,514 800,000 868,514(b,d) 2,691,915 31,432,000 34,123,915
Genentech 65,830 1,000,000 1,065,830(b,d) 5,880,594 89,330,000 95,210,594
Genzyme -- 1,100,000 1,100,000(b) -- 81,851,000 81,851,000
Gilead Sciences 53,201 1,800,000 1,853,201(b) 2,383,937 80,658,000 83,041,937
------------------------------------------
Total 23,914,864 559,477,708 583,392,572
- -------------------------------------------------------------------------------------------------------------------------------
BUILDING PRODUCTS (0.1%)
American Standard Companies 27,504 361,948 389,452 1,217,877 16,027,057 17,244,934
Masco 44,839 -- 44,839 1,520,491 -- 1,520,491
------------------------------------------
Total 2,738,368 16,027,057 18,765,425
- -------------------------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS (2.1%)
Bank of New York 107,433 -- 107,433(b) 3,306,788 -- 3,306,788
Charles Schwab -- 17,272,001 17,272,001 -- 236,626,414 236,626,414
E*TRADE Financial 107,034 -- 107,034 1,660,097 -- 1,660,097
Franklin Resources 74,301 -- 74,301 6,005,007 -- 6,005,007
Investors Financial Services 207,410 -- 207,410 7,139,052 -- 7,139,052
Legg Mason 11,332 -- 11,332 1,157,564 -- 1,157,564
Lehman Brothers Holdings 50,518 -- 50,518 5,310,957 -- 5,310,957
Merrill Lynch & Co 52,867 -- 52,867 3,107,522 -- 3,107,522
Morgan Stanley 191,367 -- 191,367 10,152,019 -- 10,152,019
National Financial Partners 10,574 -- 10,574 478,474 -- 478,474
Nomura Holdings 97,200 -- 97,200(c) 1,150,616 -- 1,150,616
State Street 88,509 -- 88,509 4,402,438 -- 4,402,438
------------------------------------------
Total 43,870,534 236,626,414 280,496,948
- -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities.
6 - AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND
COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a)
RIVERSOURCE GROWTH RIVER SOURCE GROWTH
LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA
EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------- ------------ ------------ ------------ ------------ ------------- -------------
CHEMICALS (1.7%)
Dow Chemical 195,329 -- 195,329 $ 9,366,026 $ -- $ 9,366,026
Eastman Chemical 18,408 -- 18,408 1,019,619 -- 1,019,619
El du Pont de Nemours & Co 41,999 4,829,004 4,871,003 1,792,517 206,101,891 207,894,408
Lyondell Chemical 46,581 -- 46,581 1,301,473 -- 1,301,473
Monsanto 54,927 -- 54,927 3,700,432 -- 3,700,432
RPM Intl 27,333 -- 27,333 512,494 -- 512,494
------------------------------------------
Total 17,692,561 206,101,891 223,794,452
- -------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS (2.5%)
Bank of America 632,640 5,000,000 5,632,640 27,583,104 218,000,000 245,583,104
Commerce Bancorp 108,171 842,027 950,198(e) 3,670,242 28,569,976 32,240,218
Fifth Third Bancorp 26,291 -- 26,291 1,133,142 -- 1,133,142
ICICI Bank ADR 38,269 -- 38,269(c) 1,010,684 -- 1,010,684
PNC Financial Services Group 82,245 -- 82,245 4,508,671 -- 4,508,671
Regions Financial 23,288 -- 23,288 783,408 -- 783,408
US Bancorp 160,442 522,018 682,460 4,822,887 15,691,861 20,514,748
Wachovia 199,329 -- 199,329 10,042,195 -- 10,042,195
Wells Fargo & Co 230,404 -- 230,404 14,132,981 -- 14,132,981
Western Alliance Bancorp 304 -- 304(b) 9,394 -- 9,394
------------------------------------------
Total 67,696,708 262,261,837 329,958,545
- -------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.2%)
Avery Dennison 20,285 -- 20,285 1,149,551 -- 1,149,551
Career Education 15,200 -- 15,200(b) 589,608 -- 589,608
Cendant 693,946 -- 693,946 14,822,687 -- 14,822,687
Waste Management -- 424,994 424,994 -- 11,950,831 11,950,831
------------------------------------------
Total 16,561,846 11,950,831 28,512,677
- -------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (4.6%)
CIENA 658,925 -- 658,925(b) 1,475,992 -- 1,475,992
Cisco Systems 606,218 10,912,340 11,518,558(b) 11,609,075 208,971,311 220,580,386
Corning 94,665 -- 94,665(b) 1,803,368 -- 1,803,368
Motorola 291,050 15,843,471 16,134,521 6,164,439 335,564,715 341,729,154
Nokia ADR 1,064,288 756,166 1,820,454(c) 16,975,394 12,060,848 29,036,242
QUALCOMM 55,709 -- 55,709 2,199,948 -- 2,199,948
------------------------------------------
Total 40,228,216 556,596,874 596,825,090
- -------------------------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (7.6%)
Apple Computer -- 5,500,000 5,500,000(b,d) -- 234,575,000 234,575,000
Brocade Communications Systems 330,190 -- 330,190 1,479,251 -- 1,479,251
Dell 543,394 5,163,772 5,707,166(b) 21,991,156 208,977,853 230,969,009
EMC 626,589 21,116,129 21,742,718(b) 8,578,003 289,079,806 297,657,809
Hewlett-Packard 519,650 -- 519,650 12,793,783 -- 12,793,783
Intl Business Machines 151,477 -- 151,477 12,642,270 -- 12,642,270
NCR -- 5,371,843 5,371,843(b) -- 186,456,671 186,456,671
SanDisk -- 429,661 429,661(b) -- 14,531,135 14,531,135
------------------------------------------
Total 57,484,463 933,620,465 991,104,928
- -------------------------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE (0.1%)
Capital One Financial 98,291 -- 98,291 8,109,007 -- 8,109,007
First Marblehead 41,434 -- 41,434(b) 1,439,832 -- 1,439,832
MBNA 185,929 -- 185,929 4,677,974 -- 4,677,974
------------------------------------------
Total 14,226,813 -- 14,226,813
- -------------------------------------------------------------------------------------------------------------------------------
CONTAINERS & PACKAGING (--%)
Temple-Inland 57,494 -- 57,494 2,287,686 -- 2,287,686
- -------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTORS (--%)
Genuine Parts 8,142 -- 8,142 372,822 -- 372,822
- -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities.
AXP GROWTH SERIES, INC.-- RIVERSOURCE LARGE CAP EQUITY FUND - 7
COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a)
RIVERSOURCE GROWTH RIVER SOURCE GROWTH
LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA
EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------- ------------ ------------ ------------ ------------ ------------- -------------
DIVERSIFIED FINANCIAL SERVICES (2.5%)
CapitalSource -- 1,200,151 1,200,151(b,e) $ -- $ 23,498,957 $ 23,498,957
Citigroup 595,194 4,393,640 4,988,834 25,890,939 191,123,340 217,014,279
Consumer Discretionary Select
Sector SPDR Fund 148,564 -- 148,564 5,149,228 -- 5,149,228
Energy Select Sector SPDR Fund 285,008 -- 285,008(e) 13,566,381 -- 13,566,381
Health Care Select Sector SPDR Fund 276,173 -- 276,173 8,762,969 -- 8,762,969
Industrial Select Sector SPDR Fund 291,477 -- 291,477(e) 8,898,793 -- 8,898,793
iShares Dow Jones US Healthcare
Sector Index Fund 141,848 -- 141,848 8,916,565 -- 8,916,565
JPMorgan Chase & Co 414,710 -- 414,710 14,572,909 -- 14,572,909
Materials Select Sector SPDR Fund 332,618 -- 332,618(e) 9,526,180 -- 9,526,180
Utilities Select Sector SPDR Fund 348,316 -- 348,316(e) 11,240,157 -- 11,240,157
------------------------------------------
Total 106,524,121 214,622,297 321,146,418
- -------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION
SERVICES (1.7%)
ALLTEL 93,518 -- 93,518 6,218,947 -- 6,218,947
BellSouth 188,312 -- 188,312 5,197,411 -- 5,197,411
Citizens Communications 39,163 -- 39,163 514,602 -- 514,602
KT ADR 63,547 -- 63,547(c) 1,406,931 -- 1,406,931
MCI 138,857 -- 138,857 3,543,631 -- 3,543,631
SBC Communications 581,756 -- 581,756 14,223,934 -- 14,223,934
Sprint Nextel 2,659,750 4,000,000 6,659,750 71,547,274 107,600,000 179,147,274
Telewest Global 601,498 -- 601,498(b,c) 13,437,465 -- 13,437,465
Verizon Communications 107,110 -- 107,110 3,666,375 -- 3,666,375
------------------------------------------
Total 119,756,570 107,600,000 227,356,570
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.1%)
Entergy 42,775 -- 42,775 3,333,884 -- 3,333,884
Exelon 113,730 -- 113,730 6,086,830 -- 6,086,830
FPL Group 37,773 -- 37,773 1,628,772 -- 1,628,772
PPL 27,194 -- 27,194 1,674,607 -- 1,674,607
Southern 120,771 -- 120,771 4,225,777 -- 4,225,777
TXU 9,907 -- 9,907 858,342 -- 858,342
Xcel Energy 49,501 -- 49,501 960,814 -- 960,814
------------------------------------------
Total 18,769,026 -- 18,769,026
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (--%)
Emerson Electric 19,489 -- 19,489 1,282,376 -- 1,282,376
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT &
INSTRUMENTS (--%)
Flextronics Intl 177,295 -- 177,295(b,c) 2,400,575 -- 2,400,575
Solectron 418,329 -- 418,329(b) 1,606,383 -- 1,606,383
------------------------------------------
Total 4,006,958 -- 4,006,958
- -------------------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (3.1%)
Cooper Cameron 18,622 -- 18,622(b) 1,321,790 -- 1,321,790
GlobalSantaFe -- 295,746 295,746 -- 13,305,613 13,305,613
Halliburton 86,399 2,000,000 2,086,399 4,842,663 112,100,000 116,942,663
Schlumberger 48,563 1,500,000 1,548,563 4,066,666 125,610,000 129,676,666
Transocean 49,698 2,500,000 2,549,698(b) 2,804,458 141,075,000 143,879,458
Weatherford Intl 31,022 -- 31,022(b) 1,963,072 -- 1,963,072
------------------------------------------
Total 14,998,649 392,090,613 407,089,262
- -------------------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (1.5%)
CVS 121,638 -- 121,638 3,774,427 -- 3,774,427
Safeway -- 5,718,860 5,718,860 -- 138,968,298 138,968,298
Wal-Mart Stores 291,079 -- 291,079 14,364,749 -- 14,364,749
Whole Foods Market -- 300,000 300,000 -- 40,953,000 40,953,000
------------------------------------------
Total 18,139,176 179,921,298 198,060,474
- -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities.
8 - AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND
COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a)
RIVERSOURCE GROWTH RIVER SOURCE GROWTH
LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA
EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------- ------------ ------------ ------------ ------------ ------------- -------------
FOOD PRODUCTS (0.1%)
General Mills 50,591 -- 50,591 $ 2,398,013 $ -- $ 2,398,013
Kellogg 235,450 -- 235,450 10,668,240 -- 10,668,240
------------------------------------------
Total 13,066,253 -- 13,066,253
- -------------------------------------------------------------------------------------------------------------------------------
GAS UTILITIES (--%)
ONEOK 48,928 -- 48,928 1,710,034 -- 1,710,034
- -------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT &
SUPPLIES (2.3%)
Alcon 9,300 550,000 559,300(c,d) 1,065,315 63,002,500 64,067,815
Baxter Intl 189,390 -- 189,390 7,437,346 -- 7,437,346
Boston Scientific 84,706 -- 84,706(b) 2,452,239 -- 2,452,239
Guidant 99,243 -- 99,243 6,827,918 -- 6,827,918
Hospira 40,635 -- 40,635(b) 1,554,289 -- 1,554,289
Medtronic 102,643 2,809,717 2,912,360 5,536,563 151,556,135 157,092,698
St. Jude Medical -- 1,300,000 1,300,000(b) -- 61,633,000 61,633,000
------------------------------------------
Total 24,873,670 276,191,635 301,065,305
- -------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS &
SERVICES (4.1%)
Aetna 21,998 -- 21,998 1,702,645 -- 1,702,645
AmerisourceBergen 16,474 -- 16,474 1,182,668 -- 1,182,668
Cardinal Health 170,032 -- 170,032 10,130,507 -- 10,130,507
Caremark Rx -- 2,996,491 2,996,491(b) -- 133,583,569 133,583,569
CIGNA 16,885 -- 16,885 1,802,474 -- 1,802,474
HCA 242,155 1,037,600 1,279,755 11,926,134 51,101,800 63,027,934
HealthSouth 196,272 -- 196,272(b) 1,052,018 -- 1,052,018
Magellan Health Services 69,925 -- 69,925(b) 2,504,714 -- 2,504,714
McKesson 21,072 -- 21,072 948,240 -- 948,240
Medco Health Solutions 76,317 -- 76,317(b) 3,696,795 -- 3,696,795
UnitedHealth Group 157,393 5,866,983 6,024,376 8,231,654 306,843,211 315,074,865
WellPoint 6,526 -- 6,526(b) 461,649 -- 461,649
------------------------------------------
Total 43,639,498 491,528,580 535,168,078
- -------------------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (2.2%)
Applebee's Intl 64,208 -- 64,208 1,702,154 -- 1,702,154
Carnival Unit -- 3,600,000 3,600,000 -- 188,640,000 188,640,000
GTECH Holdings 32,726 -- 32,726 980,471 -- 980,471
Royal Caribbean Cruises -- 593,200 593,200 -- 26,960,940 26,960,940
Starbucks -- 1,200,000 1,200,000(b) -- 63,060,000 63,060,000
------------------------------------------
Total 2,682,625 278,660,940 281,343,565
- -------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (2.1%)
Centex 5,650 -- 5,650 417,987 -- 417,987
DR Horton -- 424,590 424,590 -- 17,442,157 17,442,157
Fortune Brands 6,614 -- 6,614 625,354 -- 625,354
Harman Intl Inds 1,881 -- 1,881 161,672 -- 161,672
Leggett & Platt 21,366 -- 21,366 540,346 -- 540,346
Pulte Homes 5,796 2,637,442 2,643,238 542,622 246,917,320 247,459,942
Sony 53,100 -- 53,100(c) 1,752,522 -- 1,752,522
Tempur-Pedic Intl 164,977 -- 164,977(b) 2,839,254 -- 2,839,254
------------------------------------------
Total 6,879,757 264,359,477 271,239,234
- -------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (3.2%)
Colgate-Palmolive 98,478 -- 98,478 5,213,425 -- 5,213,425
Procter & Gamble 360,305 6,771,048 7,131,353 20,043,767 376,673,400 396,717,167
Spectrum Brands 610,210 -- 610,210(b) 18,916,510 -- 18,916,510
------------------------------------------
Total 44,173,702 376,673,400 420,847,102
- -------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (3.1%)
3M 20,624 -- 20,624 1,546,800 -- 1,546,800
General Electric 578,112 10,698,829 11,276,941 19,944,864 369,109,601 389,054,465
Tyco Intl 554,264 -- 554,264(c) 16,888,424 -- 16,888,424
------------------------------------------
Total 38,380,088 369,109,601 407,489,689
- -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities.
AXP GROWTH SERIES, INC.-- RIVERSOURCE LARGE CAP EQUITY FUND - 9
COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a)
RIVERSOURCE GROWTH RIVER SOURCE GROWTH
LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA
EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------- ------------ ------------ ------------ ------------ ------------- -------------
INSURANCE (0.4%)
ACE 243,468 -- 243,468(c) $ 11,250,656 $ -- $ 11,250,656
AFLAC 47,433 -- 47,433 2,139,228 -- 2,139,228
Allstate 20,165 -- 20,165 1,235,308 -- 1,235,308
American Intl Group 455,744 -- 455,744 27,435,789 -- 27,435,789
Assurant 21,150 -- 21,150 781,493 -- 781,493
Chubb 64,770 -- 64,770 5,752,871 -- 5,752,871
Endurance Specialty Holdings 36,019 -- 36,019(c) 1,404,741 -- 1,404,741
First American 27,136 -- 27,136 1,192,627 -- 1,192,627
Hartford Financial Services Group 33,324 -- 33,324 2,684,915 -- 2,684,915
Montpelier Re Holdings 12,101 -- 12,101(c) 434,668 -- 434,668
State Auto Financial 77,788 -- 77,788 2,446,433 -- 2,446,433
United America Indemnity Cl A 9,883 -- 9,883(b,c) 181,155 -- 181,155
------------------------------------------
Total 56,939,884 -- 56,939,884
- -------------------------------------------------------------------------------------------------------------------------------
INTERNET & Catalog Retail (0.9%)
Amazon.com -- 300,000 300,000(b) -- 13,551,000 13,551,000
eBay 115,102 2,364,395 2,479,497(b) 4,808,962 98,784,423 103,593,385
------------------------------------------
Total 4,808,962 112,335,423 117,144,385
- -------------------------------------------------------------------------------------------------------------------------------
INTERNET SOFTWARE & Services (1.9%)
Google Cl A 34,413 331,914 366,327(b) 9,902,685 95,511,573 105,414,258
Yahoo! 64,892 4,183,556 4,248,448(b,e) 2,163,499 139,479,757 141,643,256
------------------------------------------
Total 12,066,184 234,991,330 247,057,514
- -------------------------------------------------------------------------------------------------------------------------------
IT SERVICES (0.9%)
Accenture Cl A 65,124 -- 65,124(b,c) 1,630,705 -- 1,630,705
Affiliated Computer Services Cl A 65,566 -- 65,566(b) 3,276,333 -- 3,276,333
Automatic Data Processing 21,183 -- 21,183 940,737 -- 940,737
First Data 7,613 500,000 507,613 313,199 20,570,000 20,883,199
Fiserv -- 239,216 239,216(b) -- 10,614,014 10,614,014
Infosys Technologies ADR 8,257 1,000,000 1,008,257(c,e) 587,733 71,180,000 71,767,733
Ness Technologies 42,993 -- 42,993(b,c) 429,930 -- 429,930
Paychex 36,092 -- 36,092 1,259,972 -- 1,259,972
Satyam Computer Services ADR 20,765 -- 20,765(c) 593,464 -- 593,464
------------------------------------------
Total 9,032,073 102,364,014 111,396,087
- -------------------------------------------------------------------------------------------------------------------------------
LEISURE EQUIPMENT & Products (--%)
Mattel 51,659 -- 51,659 963,440 -- 963,440
- -------------------------------------------------------------------------------------------------------------------------------
MACHINERY (0.1%)
Caterpillar 62,655 -- 62,655 3,377,731 -- 3,377,731
Illinois Tool Works 23,710 -- 23,710 2,030,762 -- 2,030,762
Ingersoll-Rand Cl A 11,944 -- 11,944(c) 933,662 -- 933,662
ITT Inds 8,804 -- 8,804 936,746 -- 936,746
------------------------------------------
Total 7,278,901 -- 7,278,901
- -------------------------------------------------------------------------------------------------------------------------------
MEDIA (2.7%)
Clear Channel Communications 25,453 -- 25,453 830,786 -- 830,786
Comcast Cl A 339,366 -- 339,366(b) 10,428,717 -- 10,428,717
Comcast Special Cl A 105,129 7,914,044 8,019,173(b) 3,153,870 237,421,320 240,575,190
DreamWorks Animation SKG Cl AF -- 538,415 538,415(b) -- 12,679,673 12,679,673
EchoStar Communications Cl A 32,363 -- 32,363 929,465 -- 929,465
Gannett 12,256 -- 12,256 894,198 -- 894,198
Liberty Global Cl A 46,713 -- 46,713(b) 2,216,065 -- 2,216,065
Liberty Media Cl A 482,881 -- 482,881(b) 4,244,524 -- 4,244,524
McGraw-Hill Companies 17,243 -- 17,243 793,350 -- 793,350
News Corp Cl A 120,527 -- 120,527 1,974,232 -- 1,974,232
NTL 712,427 -- 712,427(b) 47,469,011 -- 47,469,011
Omnicom Group 8,406 -- 8,406 713,417 -- 713,417
See accompanying notes to combined investments in securities.
10 - AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND
COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a)
RIVERSOURCE GROWTH RIVER SOURCE GROWTH
LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA
EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------- ------------ ------------ ------------ ------------ ------------- -------------
MEDIA (cont.)
Reader's Digest Assn 33,909 -- 33,909 $ 550,682 $ -- $ 550,682
Time Warner 361,370 -- 361,370(b) 6,150,517 -- 6,150,517
Tribune 72,919 -- 72,919 2,661,544 -- 2,661,544
Univision Communications Cl A 14,712 -- 14,712(b) 416,055 -- 416,055
Viacom Cl B 231,973 -- 231,973 7,768,776 -- 7,768,776
Vivendi Universal ADR 346,059 -- 346,059(c) 10,997,755 -- 10,997,755
Walt Disney 208,297 -- 208,297 5,340,735 -- 5,340,735
------------------------------------------
Total 107,533,699 250,100,993 357,634,692
- -------------------------------------------------------------------------------------------------------------------------------
METALS & MINING (0.1%)
Alcan 31,738 -- 31,738(c) 1,072,110 -- 1,072,110
Alcoa 79,085 -- 79,085 2,218,334 -- 2,218,334
Barrick Gold 3,921 -- 3,921(c) 96,065 -- 96,065
Coeur d'Alene Mines 804,721 -- 804,721(b) 2,856,760 -- 2,856,760
Glamis Gold 48,447 -- 48,447(b,c) 846,369 -- 846,369
Harmony Gold Mining ADR 72,268 -- 72,268(c) 592,598 -- 592,598
Kinross Gold 111,924 -- 111,924(b,c) 622,297 -- 622,297
Newmont Mining 168,531 -- 168,531 6,328,338 -- 6,328,338
PAN American Silver 6,200 -- 6,200(b,c) 98,270 -- 98,270
Stillwater Mining 48,183 -- 48,183(b) 393,173 -- 393,173
------------------------------------------
Total 15,124,314 -- 15,124,314
- -------------------------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES &
UNREGULATED POWER (1.8%)
Dominion Resources 77,642 3,100,000 3,177,642 5,734,638 228,966,000 234,700,638
Duke Energy 43,153 -- 43,153 1,274,740 -- 1,274,740
------------------------------------------
Total 7,009,378 228,966,000 235,975,378
- -------------------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL (5.0%)
Dollar General 30,530 -- 30,530 620,370 -- 620,370
Federated Dept Stores 39,067 1,319,845 1,358,912 2,964,013 100,136,640 103,100,653
JC Penney 83,224 -- 83,224 4,672,195 -- 4,672,195
Kohl's 96,668 -- 96,668(b) 5,447,242 -- 5,447,242
Nordstrom -- 4,800,000 4,800,000 -- 177,648,000 177,648,000
Target 98,138 6,000,000 6,098,138 5,765,608 352,500,000 358,265,608
------------------------------------------
Total 19,469,428 630,284,640 649,754,068
- -------------------------------------------------------------------------------------------------------------------------------
OFFICE ELECTRONICS (0.2%)
Xerox 103,982 1,517,773 1,621,755(b) 1,373,602 20,049,781 21,423,383
- -------------------------------------------------------------------------------------------------------------------------------
OIL & GAS (7.0%)
Anadarko Petroleum 108,326 -- 108,326 9,570,602 -- 9,570,602
Apache -- 3,151,001 3,151,001 -- 215,528,468 215,528,468
BP ADR 70,751 -- 70,751(c) 4,661,076 -- 4,661,076
Burlington Resources 10,437 400,000 410,437 669,116 25,644,000 26,313,116
Chesapeake Energy -- 1,020,682 1,020,682 -- 26,650,007 26,650,007
Chevron 293,190 -- 293,190 17,007,952 -- 17,007,952
ConocoPhillips 320,951 2,942,107 3,263,058 20,088,323 184,146,477 204,234,800
Devon Energy 38,197 -- 38,197 2,142,470 -- 2,142,470
Exxon Mobil 588,282 4,408,270 4,996,552 34,561,568 258,985,863 293,547,431
Marathon Oil 32,585 -- 32,585 1,901,661 -- 1,901,661
Murphy Oil -- 1,200,000 1,200,000 -- 63,648,000 63,648,000
Newfield Exploration 52,031 -- 52,031(b) 2,210,797 -- 2,210,797
Occidental Petroleum 16,023 -- 16,023 1,318,372 -- 1,318,372
Royal Dutch Shell Cl A ADR 21,960 -- 21,960(b,c) 1,345,709 -- 1,345,709
Suncor Energy -- 1,000,000 1,000,000(c) -- 48,900,000 48,900,000
Valero Energy 24,935 -- 24,935 2,064,119 -- 2,064,119
------------------------------------------
Total 97,541,765 823,502,815 921,044,580
- -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities.
AXP GROWTH SERIES, INC.-- RIVERSOURCE LARGE CAP EQUITY FUND - 11
COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a)
RIVERSOURCE GROWTH RIVER SOURCE GROWTH
LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA
EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------- ------------ ------------ ------------ ------------ ------------- -------------
PAPER & FOREST PRODUCTS (--%)
Bowater 50,701 -- 50,701 $ 1,714,201 $ -- $ 1,714,201
Intl Paper 75,200 -- 75,200 2,376,320 -- 2,376,320
Weyerhaeuser 24,409 -- 24,409 1,683,733 -- 1,683,733
------------------------------------------
Total 5,774,254 -- 5,774,254
- -------------------------------------------------------------------------------------------------------------------------------
PERSONAL PRODUCTS (0.2%)
Avon Products 189,783 -- 189,783 6,207,802 -- 6,207,802
Gillette 346,990 -- 346,990 18,622,953 -- 18,622,953
------------------------------------------
Total 24,830,755 -- 24,830,755
- -------------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS (7.1%)
Abbott Laboratories 156,775 2,500,000 2,656,775 7,310,418 116,575,000 123,885,418
AstraZeneca 19,021 -- 19,021(c) 859,585 -- 859,585
Bristol-Myers Squibb 268,789 -- 268,789 6,714,349 -- 6,714,349
Eli Lilly & Co 51,687 600,000 651,687 2,911,012 33,792,000 36,703,012
GlaxoSmithKline ADR 59,322 -- 59,322(c) 2,814,236 -- 2,814,236
IVAX 200 -- 200(b) 5,096 -- 5,096
Johnson & Johnson 281,978 4,544,890 4,826,868 18,035,313 290,691,164 308,726,477
Merck & Co 179,853 -- 179,853 5,586,234 -- 5,586,234
Novartis ADR 146,528 2,500,000 2,646,528(c) 7,137,379 121,775,000 128,912,379
Pfizer 1,128,684 5,394,772 6,523,456 29,910,125 142,961,458 172,871,583
Roche Holding ADR 32,920 -- 32,920(c) 4,464,695 -- 4,464,695
Schering-Plough 259,205 3,200,084 3,459,289 5,396,648 66,625,749 72,022,397
Sepracor -- 1,000,000 1,000,000(b) -- 52,350,000 52,350,000
Wyeth 141,770 -- 141,770 6,485,978 -- 6,485,978
------------------------------------------
Total 97,631,068 824,770,371 922,401,439
- -------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST (0.1%)
Apartment Investment
& Management Cl A 31,892 -- 31,892 1,403,248 -- 1,403,248
Equity Office Properties Trust 100,035 -- 100,035 3,546,240 -- 3,546,240
HomeBanc 360,044 -- 360,044 3,261,999 -- 3,261,999
Jer Investors Trust 30,271 -- 30,271(b) 559,408 -- 559,408
------------------------------------------
Total 8,770,895 -- 8,770,895
- -------------------------------------------------------------------------------------------------------------------------------
ROAD & RAIL (--%)
Norfolk Southern 24,962 -- 24,962 928,836 -- 928,836
- -------------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT (4.3%)
Analog Devices 72,157 -- 72,157 2,828,554 -- 2,828,554
Applied Materials 68,848 -- 68,848 1,270,934 -- 1,270,934
ASML Holding 31,984 -- 31,984(b,c) 562,918 -- 562,918
ATI Technologies 42,191 -- 42,191(b,c) 531,185 -- 531,185
Broadcom Cl A 108,532 -- 108,532(b) 4,641,914 -- 4,641,914
Credence Systems 69,912 -- 69,912(b) 761,342 -- 761,342
Cypress Semiconductor 157,828 -- 157,828(b) 2,266,410 -- 2,266,410
Freescale Semiconductor Cl A 292,496 -- 292,496(b) 7,464,498 -- 7,464,498
Freescale Semiconductor Cl B 143,448 -- 143,448(b) 3,693,786 -- 3,693,786
Intel 719,479 12,847,325 13,566,804 19,526,660 348,676,401 368,203,061
Linear Technology 47,007 -- 47,007 1,826,692 -- 1,826,692
Maxim Integrated Products 15,453 -- 15,453 647,017 -- 647,017
MEMC Electronic Materials 104,056 -- 104,056(b) 1,767,911 -- 1,767,911
Texas Instruments 228,088 5,000,000 5,228,088 7,244,075 158,800,000 166,044,075
------------------------------------------
Total 55,033,896 507,476,401 562,510,297
- -------------------------------------------------------------------------------------------------------------------------------
SOFTWARE (3.7%)
Adobe Systems 3,883 -- 3,883 115,092 -- 115,092
Amdocs -- 380,295 380,295(b,c) -- 11,290,959 11,290,959
Autodesk -- 2,500,000 2,500,000 -- 85,475,000 85,475,000
Cadence Design Systems 118,643 -- 118,643(b) 1,908,966 -- 1,908,966
See accompanying notes to combined investments in securities.
12 - AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND
COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a)
RIVERSOURCE
LARGE CAP GROWTH RIVER SOURCE GROWTH
EQUITY TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA
FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------ ----------- ------------ ---------- --------------- --------------- ---------------
SOFTWARE (cont.)
Citrix Systems 4,510 -- 4,510(b) $ 107,473 $ -- $ 107,473
Compuware 19,746 -- 19,746(b) 166,459 -- 166,459
Electronic Arts 39,090 -- 39,090(b) 2,251,584 -- 2,251,584
Macromedia 12,986 -- 12,986(b) 521,388 -- 521,388
Mercury Interactive 64,752 -- 64,752(b) 2,549,286 -- 2,549,286
Microsoft 755,127 11,239,975 11,995,102 19,338,802 287,855,759 307,194,561
Novell 43,447 -- 43,447(b) 264,158 -- 264,158
Oracle 471,834 -- 471,834(b) 6,407,506 -- 6,407,506
Siebel Systems 309,488 -- 309,488 2,599,699 -- 2,599,699
Symantec 147,649 2,880,000 3,027,649(b) 3,243,849 63,273,600 66,517,449
-------------------------------------------------
Total 39,474,262 447,895,318 487,369,580
- ----------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL (1.5%)
AutoZone 3,207 -- 3,207(b) 312,490 -- 312,490
Advance Auto Parts -- 561,009 561,009(b) -- 38,687,181 38,687,181
Bed Bath & Beyond 14,246 -- 14,246(b) 653,891 -- 653,891
Best Buy 29,035 -- 29,035 2,224,081 -- 2,224,081
Circuit City Stores 12,197 -- 12,197 222,595 -- 222,595
Gap 51,591 -- 51,591 1,089,086 -- 1,089,086
Home Depot 162,683 -- 162,683 7,078,338 -- 7,078,338
Lowe's Companies 34,159 2,218,498 2,252,657 2,262,009 146,908,937 149,170,946
PETCO Animal Supplies 61,558 -- 61,558(b) 1,715,621 -- 1,715,621
Staples 36,218 -- 36,218 824,684 -- 824,684
-------------------------------------------------
Total 16,382,795 185,596,118 201,978,913
- ----------------------------------------------------------------------------------------------------------------------------------
TEXTILES, APPAREL &
LUXURY GOODS (--%)
Coach 14,525 -- 14,525(b) 509,973 -- 509,973
Nike Cl B 12,580 -- 12,580 1,054,204 -- 1,054,204
-------------------------------------------------
Total 1,564,177 -- 1,564,177
- ----------------------------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.3%)
BankAtlantic Bancorp Cl A 23,957 -- 23,957 429,789 -- 429,789
Countrywide Financial 352,161 -- 352,161 12,677,796 -- 12,677,796
Fannie Mae 195,176 -- 195,176 10,902,531 -- 10,902,531
Freddie Mac 149,968 -- 149,968 9,489,975 -- 9,489,975
Washington Mutual 36,843 -- 36,843 1,565,091 -- 1,565,091
-------------------------------------------------
Total 35,065,182 -- 35,065,182
- ----------------------------------------------------------------------------------------------------------------------------------
TOBACCO (0.9%)
Altria Group 320,988 1,500,000 1,820,988 21,493,356 100,440,000 121,933,356
- ----------------------------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION
SERVICES (0.3%)
Hutchison Telecommunications Intl ADR 105,422 -- 105,422(b,c) 1,796,391 -- 1,796,391
Millicom Intl Cellular 63,718 -- 63,718(b,c) 1,353,370 -- 1,353,370
NeuStar Cl A 19,532 -- 19,532(b) 546,896 -- 546,896
Nextel Communications Cl A 778,974 -- 778,974(b) 27,108,296 -- 27,108,296
Orascom Telecom GDR 93,426 -- 93,426(c) 4,542,372 -- 4,542,372
Turkcell Iletisim Hizmetleri ADR 83,247 -- 83,247(c) 1,145,479 -- 1,145,479
Vodafone Group ADR 267,704 -- 267,704(c) 6,914,794 -- 6,914,794
-------------------------------------------------
Total 43,407,598 -- 43,407,598
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $11,164,245,420) $ 1,504,302,535 $11,239,290,676 $12,743,593,211
- ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities.
AXP GROWTH SERIES, INC.-- RIVERSOURCE LARGE CAP EQUITY FUND - 13
SHORT-TERM SECURITIES (3.4%)(f)
ISSUER EFFECTIVE AMOUNT AMOUNT VALUE(a) VALUE(a) VALUE(a)
YIELD PAYABLE PAYABLE AT
AT MATURITY MATURITY
RIVERSOURCE GROWTH RIVERSOURCE GROWTH
LARGE CAP TRENDS LARGE CAP TRENDS PRO FORMA
EQUITY FUND PORTFOLIO EQUITY FUND PORTFOLIO COMBINED
- ------------------------------------ ----------- ------------ ---------- --------------- --------------- ---------------
U.S. GOVERNMENT AGENCY (0.1%)
Federal Home Loan Bank Disc Nt
8/19/2005 3.21% $ 15,000,000 $ --(g) $ 14,972,001 $ -- $ 14,972,001
COMMERCIAL PAPER (3.3%)
Alpine Securitization
8/4/2005 3.27 -- 20,000,000(g) -- 19,989,100 19,989,100
Barton Capital
8/3/2005 3.27 -- 43,500,000(g) -- 43,480,243 43,480,243
8/10/2005 3.28 -- 30,000,000(g) -- 29,967,200 29,967,200
8/11/2005 3.28 -- 25,000,000(g) -- 24,970,389 24,970,389
Beta Finance
8/10/2005 3.28 -- 20,000,000 -- 19,978,133 19,978,133
CAFCO LLC
8/1/2005 3.30 -- 13,300,000(g) -- 13,296,343 13,296,343
Chariot Funding LLC
8/26/2005 3.45 15,000,000 -- 14,959,867 -- 14,959,867
Citibank Credit Card Dakota Nts
8/1/2005 3.30 -- 12,200,000(g) -- 12,196,645 12,196,645
Citigroup Funding
8/1/2005 3.31 19,800,000 24,500,000 19,794,538 24,493,242 44,287,780
FCAR Owner Trust I
8/4/2005 3.27 10,000,000 -- 9,994,550 -- 9,994,550
HSBC Finance
8/1/2005 3.31 -- 30,000,000 -- 29,991,724 29,991,724
Natl Australia Funding
8/08/2005 3.27 10,000,000 --(g) 9,990,917 -- 9,990,917
8/09/2005 3.26 -- 30,000,000(g) -- 29,970,116 29,970,116
Park Avenue Receivables
8/25/2005 3.42 -- 30,000,000(g) -- 29,923,275 29,923,275
Scaldis Capital LLC
8/15/2005 3.36 -- 25,000,000(g) -- 24,960,452 24,960,452
Sheffield Receivables
8/01/2005 3.30 -- 11,700,000(g) -- 11,696,783 11,696,783
8/22/2005 3.41 20,000,000 --(g) 19,954,666 -- 19,954,666
Societe Generale North America
8/12/2005 3.28 -- 25,000,000 -- 24,968,111 24,968,111
Windmill Funding
8/23/2005 3.41 -- 20,000,000(g) -- 19,952,778 19,952,778
-------------------------------------------------
74,694,538 359,834,534 434,529,072
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES
(Cost: $449,542,440) $ 89,666,539 359,834,534 $ 449,501,073
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(PRIOR TO PRO FORMA ADJUSTMENTS)
(Cost: $11,613,787,860)(h) $ 1,593,969,074 $11,599,125,210 $13,193,094,284
- ----------------------------------------------------------------------------------------------------------------------------------
Pro forma Adjustments(i) -- (75,237) (75,237)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(AFTER PRO FORMA ADJUSTMENTS)
(Cost: $11,613,720,309)(i) $ 1,593,969,074 $11,599,049,973 $13,193,019,047
- ----------------------------------------------------------------------------------------------------------------------------------
14 - AXP GROWTH SERIES, INC. -- RIVERSOURCE LARGE CAP EQUITY FUND
NOTES TO COMBINED INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in Note 1 to the financial
statements in the annual report.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2005, the
value of foreign securities represented 3.5% of net assets.
(d) At July 31, 2005, securities valued at $213,766,821 were held to cover open
call options written as follows:
ISSUER EXERCISE EXPIRATION
CONTRACTS PRICE DATE VALUE(a)
- -------------------------------- ---------- ------------ ---------- -----------
Alcon 3,000 120.00 Aug. 2005 $ 232,500
Apple Computer 13,750 47.50 Sept. 2005 687,500
Biogen Idec 7,999 35.00 Aug. 2005 3,559,555
Genentech 10,000 85.00 Aug. 2005 5,050,000
- -----------------------------------------------------------------------------------
Total value $ 9,529,555
- -----------------------------------------------------------------------------------
(e) At July 31, 2005, security was partially or fully on loan.
(f) Cash collateral received from security lending activity is invested in
short-term securities and represents 2.4% of net assets. 1.0% of net assets
is the Portfolio's cash equivalent position.
(g) 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 $305,320,908 or 2.3% of net assets.
(h) At July 31, 2005, the cost of securities for federal income tax purposes
and the aggregate gross unrealized appreciation and depreciation based on
that cost was:
RIVERSOURCE GROWTH
LARGE CAP TRENDS PRO FORMA PRO FORMA
EQUITY FUND PORTFOLIO ADJUSTMENTS COMBINED
--------------- ---------------- ----------- ----------------
Cost of securities for federal income tax purposes: $ 1,524,155,705 $ 10,140,479,002 $ (67,551) $ 11,664,567,156
Unrealized appreciation $ 98,862,905 $ 1,673,893,157 $ -- $ 1,772,756,062
Unrealized depreciation (29,049,536) (215,246,949) -- (244,296,485)
- -------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation $ 69,813,369 $ 1,458,646,208 $ -- $ 1,528,459,577
- -------------------------------------------------------------------------------------------------------------------------
(i) To reflect the portion of the Growth Trends Portfolio net assets not owned
by RiverSource New Dimensions Fund. (Cost decreased $67,551).
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
AXP GROWTH SERIES, INC.-- RIVERSOURCE LARGE CAP EQUITY FUND - 15
Statement of Additional Information
Dec. 16, 2005
AXP(R) Growth Series, Inc.
RiverSource(SM) Disciplined Equity Fund
This Statement of Additional Information ("SAI") consists of this cover page
and incorporates by reference the following described documents, each of which
has been previously filed and accompanies this SAI.
1. RiverSource Disciplined Equity Fund's most recent SAI, dated Oct. 3, 2005.
2. RiverSource Disciplined Equity Fund's most recent annual report, for the
period ended July 31, 2005.
3. RiverSource Stock Fund's most recent SAI, dated Oct. 3, 2005.
4. RiverSource Stock Fund's most recent annual report, for the period ended
Sept. 30, 2004.
5. RiverSource Stock Fund's most recent semiannual report, for the period ended
March 31, 2005.
This SAI is not a prospectus. It should be read in conjunction with the proxy
statement/prospectus, dated the same date as this SAI, which may be obtained by
calling (877) 256-6085 or writing RiverSource Service Corporation, 70100
Ameriprise Financial Center, Minneapolis, MN 55474.
RiverSource Disciplined Equity Fund
RiverSource Stock Fund
Introduction to Proposed Fund Merger
July 31, 2005
The accompanying unaudited pro forma combining statement of assets and
liabilities and the statement of operations reflect the accounts of the two
funds at and for the 12-month period ending July 31, 2005. These statements have
been derived from financial statements prepared for RiverSource Disciplined
Equity Fund and RiverSource Stock Fund as of July 31, 2005. RiverSource
Disciplined Equity Fund invests primarily in equity securities of companies
listed on U.S. exchanges with market capitalizations greater than $5 billion at
the time of purchase. RiverSource Stock Fund invests all of its assets in Equity
Portfolio, a series of Growth and Income Trust, an open-end investment company
that has the same objectives as the Fund. The Portfolio invests primarily in
income-producing equity securities (such as convertible securities and preferred
stocks) and short-term debt instruments (such as commercial paper).
Under the proposed Agreement and Plan of Reorganization, Class A shares of the
RiverSource Stock Fund would be exchanged for Class A shares of the RiverSource
Disciplined Equity Fund. Class B shares of the RiverSource Stock Fund would be
exchanged for Class B shares of the RiverSource Disciplined Equity Fund. Class C
shares of the RiverSource Stock Fund would be exchanged for Class C shares of
the RiverSource Disciplined Equity Fund. Class I shares of the RiverSource Stock
Fund would be exchanged for Class I shares of the RiverSource Disciplined Equity
Fund. Class Y shares of the RiverSource Stock Fund would be exchanged for Class
Y shares of the RiverSource Disciplined Equity Fund.
The pro forma combining statements have been prepared to give effect to the
proposed transaction on the historical operations of the accounting survivior,
RiverSource Disciplined Equity Fund, as if the transaction had occurred at the
beginning of the fiscal year ending July 31, 2005.
- --------------------------------------------------------------------------------
2 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
RiverSource Disciplined Equity Fund
RiverSource Stock Fund
Pro forma combining
Statement of assets and liabilities
RiverSource
Disciplined RiverSource Pro forma Pro forma
July 31, 2005 (Unaudited) Equity Fund Stock Fund Adjustments Combined
Assets
Investments in securities, at cost (Note 2) $119,896,748 $ -- $ 1,846,110,248(a) $1,966,006,996
------------ -------------- --------------- --------------
Investments in securities, at value* (Note 2) $126,040,421 $ -- $ 2,012,913,955(a) $2,138,954,376
Investment in Portfolio (Note 2) -- 1,992,779,515 (1,992,779,515)(a) --
Cash in bank on demand deposit 63,008 -- -- 63,008
Capital shares receivable 43,455 256,603 -- 300,058
Dividends and accrued interest receivable (Note 2) 194,530 -- 2,281,794(a) 2,476,324
Receivable for investment securities sold (Note 2) 5,782,959 -- 387,479,818(a) 393,262,777
Receivable from RiverSource Investments, LLC (Note 2) -- -- 895,413(g) 895,413
Reclaims receivable (Note 2) -- -- 116,418(a) 116,418
------------ -------------- --------------- --------------
Total assets 132,124,373 1,993,036,118 410,907,883 2,536,068,374
------------ -------------- --------------- --------------
Liabilities
Disbursements in excess of cash on demand
deposit (Note 2) -- -- 190,233(a) 190,233
Capital shares payable 10,711 46,713 -- 57,424
Payable for investment securities purchased (Note 2) 12,666,426 -- 395,292,092(a) 407,958,518
Payable upon return of securities loaned (Note 2) -- -- 14,399,570(a) 14,399,570
Accrued investment management services fee (Note 2) 1,976 -- 3,012,191(a),(b) 3,014,167
Accrued distribution fee 455 13,667 -- 14,122
Accrued service fee -- 981 -- 981
Accrued transfer agency fee 141 2,594 -- 2,735
Accrued administrative services fee (Note 2) 165 1,856 437,435(c) 439,456
Other accrued expenses (Note 2) 69,384 78,367 35,243(a),(d),(e),(f) 182,994
------------ -------------- --------------- --------------
Total liabilities 12,749,258 144,178 413,366,764 426,260,200
------------ -------------- --------------- --------------
Net assets applicable to outstanding capital stock $119,375,115 $1,992,891,940 $ (2,458,881) $2,109,808,174
============ ============== =============== ==============
Represented by
Capital stock -- $.01 par value (Note 3) $ 177,771 $ 1,005,753 $ 1,966,282 $ 3,149,806
Additional paid-in capital (Note 3) 109,222,972 1,898,118,891 (1,966,282) 2,005,375,581
Undistributed (excess of distributions over) net
investment income (Note 2) 505,318 1,395,678 (2,458,881) (557,885)
Accumulated net realized gain (loss) 3,325,381 (74,432,089) -- (71,106,708)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities
in foreign currencies 6,143,673 166,803,707 -- 172,947,380
------------ -------------- --------------- --------------
Total -- representing net assets applicable
to outstanding capital stock $119,375,115 $1,992,891,940 $ (2,458,881) $2,109,808,174
============ ============== =============== ==============
Net assets applicable to
outstanding shares: Class A $28,058,336 $1,486,995,734 $ (1,834,693) $1,513,219,377
Class B $ 9,287,787 $ 120,111,527 $ (148,197) $ 129,251,117
Class C $ 188,938 $ 2,635,680 $ (3,252) $ 2,821,366
Class I $81,805,703 $ 27,195,584 $ (33,555) $ 108,967,732
Class Y $ 34,351 $ 355,953,415 $ (439,184) $ 355,548,582
Shares outstanding (Note 3): Class A shares 4,189,337 75,000,985 -- 225,855,164
Class B shares 1,402,057 6,114,383 -- 19,523,406
Class C shares 28,519 134,706 -- 426,167
Class I shares 12,152,084 1,371,437 -- 16,188,047
Class Y shares 5,118 17,953,802 -- 52,987,865
Net asset value per share of
outstanding capital stock: Class A $ 6.70 $ 19.83 $ -- $ 6.70
Class B $ 6.62 $ 19.64 $ -- $ 6.62
Class C $ 6.62 $ 19.57 $ -- $ 6.62
Class I $ 6.73 $ 19.83 $ -- $ 6.73
Class Y $ 6.71 $ 19.83 $ -- $ 6.71
------------ -------------- --------------- --------------
* Including securities on loan, at value (Note 2) $ -- $ -- $ 13,841,900(a) $ 13,841,900
------------ -------------- --------------- --------------
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
3 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
RiverSource Disciplined Equity Fund
RiverSource Stock Fund
Pro forma combining
Statement of operations
RiverSource
Disciplined RiverSource Pro forma Pro forma
Year ended July 31, 2005 (Unaudited) Equity Fund Stock Fund Adjustments Combined
Investment income
Income:
Dividends $1,295,906 $ 46,394,768 $ -- $ 47,690,674
Interest 73,221 1,282,770 -- 1,355,991
Fee income from securities lending 90,203 -- 90,203
Less foreign taxes withheld -- (33,646) -- (33,646)
---------- ------------ ----------- -------------
Total income 1,369,127 47,734,095 -- 49,103,222
---------- ------------ ----------- -------------
Expenses:
Expenses allocated from Portfolio (Note 2) -- 10,304,529 (10,304,529)(a) --
Investment management services fee (Note 2) 408,720 -- 12,988,850(a),(b) 13,397,570
Distribution fee
Class A 44,025 3,890,578 -- 3,934,603
Class B 51,693 1,362,137 -- 1,413,830
Class C 1,420 29,438 -- 30,858
Transfer agency fee 40,155 2,294,097 -- 2,334,252
Incremental transfer agency fee
Class A 3,114 152,294 -- 155,408
Class B 2,060 48,873 -- 50,933
Class C 71 989 -- 1,060
Service fee -- Class Y 30 417,217 -- 417,247
Administrative services fees and expenses (Note 2) 29,441 721,402 437,435(c) 1,188,278
Custodian fees (Note 2) 27,540 -- 152,460(a),(d) 180,000
Compensation of board members (Note 2) 8,604 11,915 (2,519)(a),(e) 18,000
Printing and postage 37,795 310,306 -- 348,101
Registration fees 57,489 48,106 -- 105,595
Audit fees (Note 2) 20,500 10,750 3,750(a),(f) 35,000
Other (Note 2) 5,942 32,224 79,518(a) 117,684
---------- ------------ ----------- -------------
Total expenses 738,599 19,634,855 3,354,965 23,728,419
Expenses waived/reimbursed by RiverSource
Investments, LLC (Note 2) (23,127) -- (895,413)(g) (918,540)
---------- ------------ ----------- -------------
715,472 19,634,855 2,459,552 22,809,879
Earnings credits on cash balances (4,727) (73,177) (671)(a) (78,575)
---------- ------------ ----------- -------------
Total net expenses 710,745 19,561,678 2,458,881 22,731,304
---------- ------------ ----------- -------------
Investment income (loss) -- net 658,382 28,172,417 (2,458,881) 26,371,918
---------- ------------ ----------- -------------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions 3,680,690 209,199,006 -- 212,879,696
Futures contracts 115,625 877,992 -- 993,617
---------- ------------ ----------- -------------
Net realized gain (loss) on investments 3,796,315 210,076,998 -- 213,873,313
Net change in unrealized appreciation (depreciation)
on investments
and on translation of assets and liabilities
in foreign currencies 5,439,579 5,638,974 -- 11,078,553
---------- ------------ ----------- -------------
Net gain (loss) on investments and foreign currencies 9,235,894 215,715,972 -- 224,951,866
---------- ------------ ----------- -------------
Net increase (decrease) in net assets resulting from operations $9,894,276 $243,888,389 $(2,458,881) $ 251,323,784
========== ============ =========== =============
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
4 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
RiverSource Disciplined Equity Fund
RiverSource Stock Fund
Notes to Pro Forma Financial Statements
(Unaudited as to July 31, 2005)
1. BASIS OF COMBINATION
The unaudited pro forma combining statement of assets and liabilities and the
statement of operations reflect the accounts of the two funds at and for the
12-month period ending July 31, 2005. These statements have been derived from
financial statements prepared for the RiverSource Disciplined Equity Fund and
RiverSource Stock Fund as of July 31, 2005.
Each Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The primary investments
of each Fund are as follows:
RiverSource Disciplined Equity Fund invests primarily in equity securities of
companies listed on U.S. exchanges with market capitalizations greater than $5
billion at the time of purchase.
RiverSource Stock Fund invests all of its assets in Equity Portfolio, a series
of Growth and Income Trust, an open-end investment company that has the same
objectives as the Fund. The Portfolio invests primarily in income-producing
equity securities (such as convertible securities and preferred stocks) and
short-term debt instruments (such as commercial paper).
The pro forma statements give effect to the proposed transfer of the assets and
liabilities of RiverSource Stock Fund in exchange for Class A, B, C, I and Y
shares of RiverSource Disciplined Equity Fund under U.S. generally accepted
accounting principles. The pro forma statements also reflect changes needed
regarding the change in structure of RiverSource Stock Fund. Finally, the pro
forma statements reflect estimates for the combined RiverSource Disciplined
Equity Fund based on the increased asset level of the merger and associated
economies of scale, adjusted to reflect current fees.
The pro forma combining statements should be read in conjunction with the
historical financial statements of the funds incorporated by reference in the
Statement of Additional Information.
The pro forma statement of operations give effect to the proposed transaction on
the historical operations of the accounting survivor, RiverSource Disciplined
Equity Fund, as if the transaction had occurred at the beginning of the year
presented.
2. PRO FORMA ADJUSTMENTS
(a) To reflect adjustments needed regarding the change in structure of
RiverSource Stock Fund from a feeder fund presentation into a reporting
format comparable with the accounting survivor.
(b) To reflect the increase in investment management services fee due to the
Reorganization.
(c) To reflect the increase in administrative services fees due to the
Reorganization and to include the impact of the revised administrative
services agreement.
(d) To reflect the decrease in custodian fees due to the Reorganization.
(e) To adjust for the change in the compensation of board members due to the
Reorganization.
(f) To reflect the reduction in audit fees due to the Reorganization.
(g) To adjust the expense reimbursement to include the impact of the agreement
by RiverSource Investments, LLC and its affiliates to waive certain fees
and to absorb certain expenses following the merger.
3. CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of additional Class
A, Class B, Class C, Class I and Class Y shares of RiverSource Disciplined
Equity Fund if the reorganization were to have taken place on July 31, 2005. The
pro forma number of Class A shares outstanding of 225,855,164 consists of
221,665,827 shares assumed to be issued to Class A shareholders of the
RiverSource Stock Fund, plus 4,189,337 Class A shares of the RiverSource
Disciplined Equity Fund outstanding as of July 31, 2005. The pro forma number of
Class B shares outstanding of 19,523,406 consists of 18,121,349 shares assumed
to be issued to Class B shareholders of the RiverSource Stock Fund, plus
1,402,057 Class B shares of the RiverSource Disciplined Equity Fund outstanding
as of July 31, 2005. The pro forma number of Class C shares outstanding of
426,167 consists of 397,648 shares assumed to be issued to Class C shareholders
of the RiverSource Stock Fund, plus 28,519 Class C shares of the RiverSource
Disciplined Equity Fund outstanding as of July 31, 2005. The pro forma number of
Class I shares outstanding of 16,188,047 consists of 4,035,963 shares assumed to
be issued to Class I shareholders of the RiverSource Stock Fund, plus 12,152,084
Class I shares of the RiverSource Disciplined Equity Fund outstanding as of July
31, 2005. The pro forma number of Class Y shares outstanding of 52,987,865
consists of 52,982,747 shares assumed to be issued to Class Y shareholders of
the RiverSource Stock Fund, plus 5,118 Class Y shares of the RiverSource
Disciplined Equity Fund outstanding as of July 31, 2005.
- --------------------------------------------------------------------------------
5 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Combined Investments in Securities
RiverSource Disciplined Equity Fund
July 31, 2005 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common Stocks (98.6%)
Issuer Shares Shares Shares Value(a) Value(a) Value(a)
RiverSource RiverSource
Disciplined Equity Pro forma Disciplined Equity Pro forma
Equity Fund Portfolio Combined Equity Fund Portfolio Combined
Aerospace & Defense (2.6%)
Boeing -- 200,000 200,000 $-- $13,202,000 $13,202,000
General Dynamics -- 2,866 2,866 -- 330,135 330,135
Honeywell Intl -- 220,000 220,000 -- 8,641,600 8,641,600
Lockheed Martin 3,104 176,732 179,836 193,690 11,028,077 11,221,767
Rockwell Collins 6,474 55,762 62,236 315,931 2,721,186 3,037,117
United Technologies 17,742 361,500 379,242 899,519 18,328,049 19,227,568
Total 1,409,140 54,251,047 55,660,187
Air Freight & Logistics (0.3%)
FedEx 8,070 11,782 19,852 678,607 990,748 1,669,355
United Parcel Service Cl B 8,119 68,175 76,294 592,443 4,974,730 5,567,173
Total 1,271,050 5,965,478 7,236,528
Auto Components (0.1%)
Dana -- 30,576 30,576 -- 480,349 480,349
Delphi -- 111,477 111,477 -- 590,828 590,828
Johnson Controls 2,710 25,635 28,345 155,662 1,472,474 1,628,136
Total 155,662 2,543,651 2,699,313
Automobiles (0.7%)
Ford Motor 59,497 512,472 571,969 638,998 5,503,949 6,142,947
General Motors 19,047 151,189 170,236 701,310 5,566,779 6,268,089
Harley-Davidson 7,703 51,295 58,998 409,723 2,728,381 3,138,104
Total 1,750,031 13,799,109 15,549,140
Beverages (1.8%)
Coca-Cola 54,536 480,104 534,640 2,386,495 21,009,351 23,395,846
Constellation Brands Cl A -- 74,283 74,283(b) -- 2,035,354 2,035,354
PepsiCo -- 234,777 234,777 -- 12,802,390 12,802,390
Total 2,386,495 35,847,095 38,233,590
Biotechnology (0.6%)
Amgen -- 150,000 150,000(b) -- 11,962,500 11,962,500
Genzyme -- 9,841 9,841(b) -- 732,269 732,269
Gilead Sciences 8,252 -- 8,252(b) 369,772 -- 369,772
Total 369,772 12,694,769 13,064,541
Building Products (0.1%)
Masco 5,949 33,875 39,824 201,731 1,148,701 1,350,432
Capital Markets (1.8%)
Bear Stearns Companies 2,977 13,037 16,014 303,981 1,331,208 1,635,189
Franklin Resources 11,019 94,915 105,934 890,557 7,671,030 8,561,587
Goldman Sachs Group -- 150,000 150,000 -- 16,122,000 16,122,000
Janus Capital Group -- 64,951 64,951 -- 975,564 975,564
Lehman Brothers Holdings 6,573 61,553 68,126 691,019 6,471,067 7,162,086
Merrill Lynch & Co 3,855 34,591 38,446 226,597 2,033,259 2,259,856
Morgan Stanley 2,267 11,877 14,144 120,264 630,075 750,339
Total 2,232,418 35,234,203 37,466,621
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
6 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued)
Issuer Shares Shares Shares Value(a) Value(a) Value(a)
RiverSource RiverSource
Disciplined Equity Pro forma Disciplined Equity Pro forma
Equity Fund Portfolio Combined Equity Fund Portfolio Combined
Chemicals (0.5%)
Dow Chemical 11,766 118,658 130,424 $564,180 $5,689,651 $6,253,831
Monsanto 7,987 68,798 76,785 538,084 4,634,921 5,173,005
Total 1,102,264 10,324,572 11,426,836
Commercial Banks (2.4%)
Bank of America 15,071 292,510 307,581 657,096 12,753,436 13,410,532
Comerica 3,962 21,570 25,532 242,078 1,317,927 1,560,005
KeyCorp 5,983 43,553 49,536 204,858 1,491,255 1,696,113
Natl City 18,078 172,364 190,442 667,258 6,361,955 7,029,213
PNC Financial Services Group 10,111 98,614 108,725 554,285 5,406,019 5,960,304
Regions Financial 1,911 -- 1,911 64,286 -- 64,286
US Bancorp -- 220,000 220,000 -- 6,613,200 6,613,200
Wachovia 2,649 27,465 30,114 133,457 1,383,687 1,517,144
Wells Fargo & Co -- 220,000 220,000 -- 13,494,800 13,494,800
Total 2,523,318 48,822,279 51,345,597
Commercial Services & Supplies (--%)
Equifax -- 27,434 27,434 -- 998,598 998,598
Communications Equipment (1.4%)
Cisco Systems -- 1,000,000 1,000,000(b) -- 19,150,000 19,150,000
Comverse Technology 9,884 71,637 81,521(b) 249,966 1,811,700 2,061,666
Motorola -- 360,000 360,000 -- 7,624,800 7,624,800
Tellabs 11,862 102,379 114,241(b) 115,299 995,124 1,110,423
Total 365,265 29,581,624 29,946,889
Computers & Peripherals (3.6%)
Apple Computer 29,129 222,057 251,186(b) 1,242,353 9,470,731 10,713,084
Dell -- 360,000 360,000(b) -- 14,569,200 14,569,200
EMC -- 580,000 580,000(b) -- 7,940,200 7,940,200
Gateway 29,177 251,317 280,494(b) 116,124 1,000,242 1,116,366
Hewlett-Packard 21,708 700,000 721,708 534,451 17,233,999 17,768,450
Intl Business Machines -- 150,000 150,000 -- 12,519,000 12,519,000
Lexmark Intl Cl A 1,816 15,641 17,457(b) 113,863 980,691 1,094,554
NCR 10,017 72,884 82,901(b) 347,690 2,529,804 2,877,494
Network Appliance 12,591 107,784 120,375(b) 321,196 2,749,570 3,070,766
QLogic 19,572 145,178 164,750(b) 607,711 4,507,777 5,115,488
Total 3,283,388 73,501,214 76,784,602
Construction & Engineering (--%)
Fluor -- 13,516 13,516 -- 862,321 862,321
Consumer Finance (0.8%)
MBNA 14,538 79,188 93,726 365,776 1,992,370 2,358,146
Providian Financial 7,465 52,700 60,165(b) 141,089 996,030 1,137,119
SLM 2,933 245,259 248,192 151,020 12,628,386 12,779,406
Total 657,885 15,616,786 16,274,671
Distributors (0.1%)
Genuine Parts 4,854 28,762 33,616 222,265 1,317,012 1,539,277
Diversified Financial Services (2.7%)
CIT Group 4,009 34,530 38,539 176,957 1,524,154 1,701,111
Citigroup 65,559 784,686 850,245 2,851,817 34,133,841 36,985,658
iShares MSCI EAFE Index Fund 56,400 37,800 94,200 3,042,216 2,038,932 5,081,148
Moody's -- 20,581 20,581 -- 973,687 973,687
Technology Select Sector Index Fund 23,600 587,000 610,600 497,016 12,362,220 12,859,236
Total 6,568,006 51,032,834 57,600,840
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
7 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued)
Issuer Shares Shares Shares Value(a) Value(a) Value(a)
RiverSource RiverSource
Disciplined Equity Pro forma Disciplined Equity Pro forma
Equity Fund Portfolio Combined Equity Fund Portfolio Combined
Diversified Telecommunication Services (4.8%)
AT&T 40,392 386,118 426,510 $799,762 $7,645,136 $8,444,898
BellSouth 84,339 740,435 824,774 2,327,756 20,436,006 22,763,762
SBC Communications 118,859 1,023,783 1,142,642 2,906,102 25,031,494 27,937,596
Sprint 45,198 656,354 701,552 1,215,826 17,655,923 18,871,749
Verizon Communications 69,594 599,438 669,032 2,382,202 20,518,763 22,900,965
Total 9,631,648 91,287,322 100,918,970
Electric Utilities (3.6%)
Allegheny Energy 7,515 49,289 56,804(b) 214,178 1,404,737 1,618,915
American Electric Power 8,425 61,522 69,947(b) 326,048 2,380,901 2,706,949
CenterPoint Energy 9,851 81,337 91,188 135,353 1,117,570 1,252,923
DTE Energy -- 7,313 7,313 -- 343,711 343,711
Edison Intl 4,888 31,102 35,990 199,821 1,271,450 1,471,271
Exelon 29,458 253,735 283,193 1,576,591 13,579,897 15,156,488
FPL Group 5,382 51,979 57,361 232,072 2,241,334 2,473,406
PG&E 10,993 108,523 119,516 413,667 4,083,720 4,497,387
PPL -- 220,000 220,000 -- 13,547,600 13,547,600
Southern -- 360,000 360,000 -- 12,596,400 12,596,400
TECO Energy 9,536 99,311 108,847 180,803 1,882,937 2,063,740
TXU 11,741 181,955 193,696 1,017,240 15,764,582 16,781,822
Xcel Energy -- 51,961 51,961 -- 1,008,563 1,008,563
Total 4,295,773 71,223,402 75,519,175
Electrical Equipment (0.6%)
American Power Conversion 6,587 72,997 79,584 185,161 2,051,946 2,237,107
Rockwell Automation 7,068 195,320 202,388 364,072 10,060,933 10,425,005
Total 549,233 12,112,879 12,662,112
Electronic Equipment & Instruments (0.2%)
Jabil Circuit 3,704 31,906 35,610(b) 115,528 995,148 1,110,676
Sanminia-SCI -- 787,345 787,345(b) -- 3,763,509 3,763,509
Total 115,528 4,758,657 4,874,185
Energy Equipment & Services (2.2%)
Baker Hughes -- 290,000 290,000 -- 16,396,600 16,396,600
Halliburton 13,539 218,157 231,696 758,861 12,227,700 12,986,561
Noble 5,789 46,055 51,844 388,905 3,093,975 3,482,880
Schlumberger -- 70,000 70,000 -- 5,861,800 5,861,800
Transocean 13,356 123,396 136,752(b) 753,679 6,963,236 7,716,915
Total 1,901,445 44,543,311 46,444,756
Food & Staples Retailing (3.6%)
Albertson's 9,051 82,337 91,388 192,877 1,754,601 1,947,478
Costco Wholesale -- 290,000 290,000 -- 13,331,300 13,331,300
CVS -- 492,478 492,478 -- 15,281,592 15,281,592
Kroger 18,677 183,056 201,733(b) 370,738 3,633,662 4,004,400
Safeway 14,936 129,805 144,741 362,945 3,154,262 3,517,207
SYSCO 4,436 42,579 47,015 159,962 1,535,399 1,695,361
Wal-Mart Stores 58,504 653,918 712,422 2,887,173 32,270,853 35,158,026
Total 3,973,695 70,961,669 74,935,364
Food Products (1.4%)
Archer-Daniels-Midland 28,840 248,411 277,251 661,590 5,698,548 6,360,138
Hershey -- 23,734 23,734 -- 1,515,891 1,515,891
Kellogg -- 220,000 220,000 -- 9,968,200 9,968,200
WM Wrigley Jr -- 152,640 152,640 -- 10,858,810 10,858,810
Total 661,590 28,041,449 28,703,039
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
8 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued)
Issuer Shares Shares Shares Value(a) Value(a) Value(a)
RiverSource RiverSource
Disciplined Equity Pro forma Disciplined Equity Pro forma
Equity Fund Portfolio Combined Equity Fund Portfolio Combined
Health Care Equipment & Supplies (2.1%)
Becton, Dickinson & Co 3,982 24,737 28,719 $220,483 $1,369,688 $1,590,171
Biomet 2,427 -- 2,427 92,542 -- 92,542
Guidant -- 20,378 20,378 -- 1,402,006 1,402,006
Medtronic 10,087 461,088 471,175 544,093 24,871,087 25,415,180
Stryker -- 290,000 290,000 -- 15,686,100 15,686,100
Zimmer Holdings 2,417 -- 2,417(b) 199,064 -- 199,064
Total 1,056,182 43,328,881 44,385,063
Health Care Providers & Services (5.9%)
Aetna 10,729 245,058 255,787 830,425 18,967,489 19,797,914
Cardinal Health 9,078 78,195 87,273 540,867 4,658,858 5,199,725
Caremark Rx 6,863 59,112 65,975(b) 305,953 2,635,213 2,941,166
CIGNA 9,990 86,047 96,037 1,066,433 9,185,517 10,251,950
Express Scripts -- 20,594 20,594(b) -- 1,077,066 1,077,066
HCA 9,971 85,883 95,854 491,072 4,229,738 4,720,810
Humana 8,427 78,257 86,684(b) 335,816 3,118,541 3,454,357
McKesson -- 39,892 39,892 -- 1,795,140 1,795,140
Medco Health Solutions 2,805 24,159 26,964(b) 135,874 1,170,262 1,306,136
Quest Diagnostics -- 39,405 39,405 -- 2,023,053 2,023,053
Tenet Healthcare 11,188 69,745 80,933(b) 135,822 846,704 982,526
UnitedHealth Group 55,138 1,134,922 1,190,060 2,883,716 59,356,421 62,240,137
WellPoint 13,851 119,305 133,156(b) 979,820 8,439,636 9,419,456
Total 7,705,798 117,503,638 125,209,436
Hotels, Restaurants & Leisure (3.0%)
Carnival Unit -- 220,000 220,000 -- 11,528,000 11,528,000
Darden Restaurants 4,418 50,646 55,064 153,305 1,757,416 1,910,721
Harrrah's Entertainment 8,056 219,387 227,443 634,329 17,274,532 17,908,861
Marriott Intl Cl A 7,230 343,387 350,617 495,038 23,511,708 24,006,746
Starbucks 5,346 30,445 35,791(b) 280,932 1,599,885 1,880,817
Starwood Hotels & Resorts
Worldwide Unit 6,800 18,082 24,882 430,576 1,144,952 1,575,528
Wendy's Intl -- 22,198 22,198 -- 1,147,637 1,147,637
Yum! Brands 6,453 55,583 62,036 337,815 2,909,770 3,247,585
Total 2,331,995 60,873,900 63,205,895
Household Durables (1.2%)
Black & Decker 2,610 4,818 7,428 235,709 435,114 670,823
Centex 7,611 73,255 80,866 563,062 5,419,405 5,982,467
DR Horton 22,231 191,481 213,712 913,249 7,866,039 8,779,288
KB HOME 5,316 53,290 58,606 435,434 4,364,984 4,800,418
Pulte Homes 3,146 29,157 32,303 294,529 2,729,678 3,024,207
Stanley Works -- 4,742 4,742 -- 232,026 232,026
Whirlpool 1,247 21,968 23,215 99,735 1,757,001 1,856,736
Total 2,541,718 22,804,247 25,345,965
Household Products (1.6%)
Kimberly-Clark 3,802 38,134 41,936 242,416 2,431,424 2,673,840
Procter & Gamble -- 580,000 580,000 -- 32,265,400 32,265,400
Total 242,416 34,696,824 34,939,240
Industrial Conglomerates (2.7%)
3M 14,197 122,286 136,483 1,064,775 9,171,450 10,236,225
General Electric -- 1,000,000 1,000,000 -- 34,500,000 34,500,000
Textron 3,415 166,504 169,919 253,291 12,349,602 12,602,893
Total 1,318,066 56,021,052 57,339,118
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
9 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued)
Issuer Shares Shares Shares Value(a) Value(a) Value(a)
RiverSource RiverSource
Disciplined Equity Pro forma Disciplined Equity Pro forma
Equity Fund Portfolio Combined Equity Fund Portfolio Combined
Insurance (3.3%)
ACE -- 12,982 12,982(c) $-- $599,898 $599,898
Allstate 15,708 354,851 370,559 962,272 21,738,172 22,700,444
Ambac Financial Group 4,537 43,792 48,329 325,938 3,146,017 3,471,955
Aon 11,958 88,882 100,840 304,212 2,261,158 2,565,370
Chubb -- 74,009 74,009 -- 6,573,479 6,573,479
Jefferson-Pilot 2,029 14,239 16,268 101,795 714,371 816,166
Lincoln Natl 6,281 62,101 68,382 303,372 2,999,478 3,302,850
Loews 4,520 38,931 43,451 378,008 3,255,800 3,633,808
Marsh & McLennan Companies 9,979 95,414 105,393 289,092 2,764,144 3,053,236
MBIA 5,309 53,750 59,059 322,469 3,264,775 3,587,244
Prudential Financial 11,757 106,840 118,597 786,543 7,147,596 7,934,139
Safeco 1,299 18,055 19,354 71,367 991,942 1,063,309
St. Paul Travelers Companies -- 150,000 150,000 -- 6,603,000 6,603,000
Torchmark 3,597 22,084 25,681 188,015 1,154,331 1,342,346
UnumProvident 9,896 76,942 86,838 189,508 1,473,439 1,662,947
Total 4,222,591 64,687,600 68,910,191
Internet & Catalog Retail (0.6%)
eBay 12,445 315,571 328,016(b) 519,952 13,184,556 13,704,508
Internet Software & Services (0.6%)
Google Cl A -- 25,000 25,000(b) -- 7,194,000 7,194,000
Yahoo! -- 140,000 140,000(b) -- 4,667,600 4,667,600
Total -- 11,861,600 11,861,600
IT Services (0.6%)
Affiliated Computer Services Cl A 2,305 19,858 22,163(b) 115,181 992,304 1,107,485
Automatic Data Processing 5,141 45,453 50,594 228,311 2,018,568 2,246,879
Computer Sciences 2,552 21,983 24,535(b) 116,831 1,006,382 1,123,213
Convergys 11,645 108,755 120,400(b) 169,435 1,582,385 1,751,820
Electronic Data Systems 19,225 139,532 158,757 395,457 2,870,173 3,265,630
Sabre Holdings Cl A 6,183 53,261 59,444 118,714 1,022,611 1,141,325
SunGard 3,167 27,877 31,044(b) 113,664 1,000,506 1,114,170
Unisys 17,838 153,647 171,485(b) 115,412 994,096 1,109,508
Total 1,373,005 11,487,025 12,860,030
Leisure Equipment & Products (0.3%)
Eastman Kodak 15,799 115,450 131,249 422,466 3,087,133 3,509,599
Mattel 8,419 120,252 128,671 157,014 2,242,700 2,399,714
Total 579,480 5,329,833 5,909,313
Machinery (2.2%)
Caterpillar 13,374 663,574 676,948 720,993 35,773,274 36,494,267
Ingersoll-Rand Cl A -- 12,923 12,923(c) -- 1,010,191 1,010,191
ITT Inds -- 71,487 71,487 -- 7,606,217 7,606,217
PACCAR 4,329 14,299 18,628 312,640 1,032,674 1,345,314
Total 1,033,633 45,422,356 46,455,989
Media (0.8%)
Comcast Special Cl A -- 290,000 290,000(b) -- 8,700,000 8,700,000
Walt Disney 13,238 341,048 354,286 339,422 8,744,471 9,083,893
Total 339,422 17,444,471 17,783,893
Metals & Mining (1.1%)
Freeport-McMoRan Copper & Gold Cl B 4,687 22,697 27,384 188,792 914,235 1,103,027
Nucor 4,197 10,550 14,747 232,724 584,998 817,722
Peabody Energy -- 150,000 150,000 -- 9,861,000 9,861,000
Phelps Dodge 3,550 94,853 98,403 377,898 10,097,102 10,475,000
Total 799,414 21,457,335 22,256,749
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
10 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued)
Issuer Shares Shares Shares Value(a) Value(a) Value(a)
RiverSource RiverSource
Disciplined Equity Pro forma Disciplined Equity Pro forma
Equity Fund Portfolio Combined Equity Fund Portfolio Combined
Multi-Utilities & Unregulated Power (1.3%)
AES 31,821 316,844 348,665(b) $510,727 $5,085,346 $5,596,073
CMS Energy 10,719 111,348 122,067(b) 169,789 1,763,752 1,933,541
Constellation Energy Group -- 23,442 23,442 -- 1,411,443 1,411,443
Dominion Resources -- 22,059 22,059 -- 1,629,278 1,629,278
Duke Energy 24,072 286,053 310,125 711,087 8,450,006 9,161,093
Public Service Enterprise Group 7,731 82,300 90,031 497,103 5,291,890 5,788,993
Sempra Energy 2,652 35,742 38,394 112,710 1,519,035 1,631,745
Total 2,001,416 25,150,750 27,152,166
Multiline Retail (3.2%)
Dollar General 7,198 81,264 88,462 146,263 1,651,284 1,797,547
Family Dollar Stores -- 38,890 38,890 -- 1,003,362 1,003,362
Federated Dept Stores 5,958 51,315 57,273 452,033 3,893,269 4,345,302
Kohl's -- 150,000 150,000(b) -- 8,452,500 8,452,500
May Dept Stores 12,818 124,726 137,544 526,179 5,120,002 5,646,181
Nordstrom 9,150 376,390 385,540 338,642 13,930,194 14,268,836
Sears Holdings 4,466 9,929 14,395(b) 688,791 1,531,411 2,220,202
Target -- 510,000 510,000 -- 29,962,501 29,962,501
Total 2,151,908 65,544,523 67,696,431
Oil & Gas (9.6%)
Amerada Hess 2,404 9,921 12,325 283,335 1,169,289 1,452,624
Anadarko Petroleum 5,403 28,997 34,400 477,355 2,561,885 3,039,240
Apache 2,021 20,376 22,397 138,236 1,393,718 1,531,954
BG Group ADR -- 290,000 290,000(c) -- 12,084,300 12,084,300
Chevron 60,101 517,671 577,772 3,486,459 30,030,095 33,516,554
ConocoPhillips 7,228 200,211 207,439 452,401 12,531,206 12,983,607
Devon Energy 19,319 147,924 167,243 1,083,603 8,297,057 9,380,660
El Paso 37,470 227,662 265,132 449,640 2,731,944 3,181,584
EnCana -- 600,000 600,000(c) -- 24,810,000 24,810,000
EOG Resources 7,649 29,258 36,907 467,354 1,787,664 2,255,018
Exxon Mobil 92,215 1,234,287 1,326,502 5,417,630 72,514,361 77,931,991
Kerr-McGee -- 14,959 14,959 -- 1,199,861 1,199,861
Kinder Morgan 4,504 38,796 43,300 400,225 3,447,413 3,847,638
Marathon Oil 2,863 31,607 34,470 167,085 1,844,585 2,011,670
Occidental Petroleum -- 25,800 25,800 -- 2,122,824 2,122,824
Sunoco -- 13,301 13,301 -- 1,672,335 1,672,335
Unocal 8,370 72,091 80,461 542,795 4,675,101 5,217,896
Valero Energy 6,815 47,307 54,122 564,146 3,916,073 4,480,219
Total 13,930,264 188,789,711 202,719,975
Pharmaceuticals (7.4%)
Abbott Laboratories 6,212 72,778 78,990 289,666 3,393,638 3,683,304
Bristo-Myers Squibb 65,709 565,979 631,688 1,641,411 14,138,155 15,779,566
Johnson & Johnson 62,672 1,119,822 1,182,494 4,008,500 71,623,815 75,632,315
Merck & Co 81,218 699,563 780,781 2,522,631 21,728,427 24,251,058
Pfizer -- 642,764 642,764 -- 17,033,246 17,033,246
Roche Holding ADR -- 220,000 220,000(c) -- 14,995,904 14,995,904
Wyeth 10,467 82,097 92,564 478,865 3,755,938 4,234,803
Total 8,941,073 146,669,123 155,610,196
Real Estate Investment Trust (0.2%)
Apartment Investment & Management Cl A -- 18,334 18,334 -- 806,696 806,696
Archstone-Smith Trust 3,635 24,478 28,113 154,488 1,040,315 1,194,803
EquityResidential -- 25,291 25,291 -- 1,021,756 1,021,756
ProLogis 3,989 22,920 26,909 181,738 1,044,236 1,225,974
Total 336,226 3,913,003 4,249,229
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
11 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued)
Issuer Shares Shares Shares Value(a) Value(a) Value(a)
RiverSource RiverSource
Disciplined Equity Pro forma Disciplined Equity Pro forma
Equity Fund Portfolio Combined Equity Fund Portfolio Combined
Road & Rail (1.4%)
Burlington Northern Santa Fe 16,941 130,240 147,181 $919,049 $7,065,520 $7,984,569
CSX 6,339 357,916 364,255 288,678 16,299,495 16,588,173
Norfolk Southern 15,036 74,244 89,280 559,490 2,762,619 3,322,109
Union Pacific -- 10,324 10,324 -- 725,880 725,880
Total 1,767,217 26,853,514 28,620,731
Semiconductors & Semiconductor Equipment (1.1%)
Advanced Micro Devices 13,354 96,742 110,096(b) 268,148 1,942,579 2,210,727
Applied Micro Circuits -- 361,162 361,162(b) -- 1,087,098 1,087,098
Intel -- 614,449 614,449 -- 16,676,145 16,676,145
LSI Logic 11,706 100,831 112,537(b) 114,251 984,111 1,098,362
NVIDIA 11,473 82,546 94,019(b) 310,459 2,233,695 2,544,154
Total 692,858 22,923,628 23,616,486
Software (3.4%)
Adobe Systems 17,128 96,834 113,962 507,674 2,870,160 3,377,834
Autodesk 9,357 41,982 51,339 319,916 1,435,365 1,755,281
Citrix Systems -- 41,974 41,974(b) -- 1,000,240 1,000,240
Compuware 28,997 301,837 330,834(b) 244,445 2,544,486 2,788,931
Microsoft 69,193 1,470,039 1,539,232 1,772,033 37,647,699 39,419,732
Oracle 113,833 867,629 981,462(b) 1,545,852 11,782,402 13,328,254
SAP ADR -- 200,000 200,000(c) -- 8,564,000 8,564,000
Symantec 11,891 71,785 83,676(b) 261,245 1,577,116 1,838,361
Total 4,651,165 67,421,468 72,072,633
Specialty Retail (2.8%)
AutoNation -- 46,675 46,675(b) -- 1,007,713 1,007,713
Best Buy 4,212 130,053 134,265 322,639 9,962,060 10,284,699
Home Depot 46,869 743,978 790,847 2,039,271 32,370,483 34,409,754
Lowe's Companies -- 150,000 150,000 -- 9,933,000 9,933,000
Office Depot -- 46,048 46,048(b) -- 1,306,842 1,306,842
Staples 12,394 87,982 100,376 282,211 2,003,350 2,285,561
Total 2,644,121 56,583,448 59,227,569
Textiles, Apparel & Luxury Goods (0.3%)
Coach -- 28,636 28,636(b) -- 1,005,410 1,005,410
Liz Claiborne -- 15,157 15,157 -- 630,683 630,683
Nike Cl B 4,448 47,341 51,789 372,742 3,967,175 4,339,917
VF -- 16,538 16,538 -- 976,404 976,404
Total 372,742 6,579,672 6,952,414
Thrifts & Mortgage Finance (1.8%)
Countrywide Financial 6,048 55,068 61,116 217,728 1,982,448 2,200,176
Fannie Mae 31,160 268,396 299,556 1,740,598 14,992,601 16,733,199
Freddie Mac 10,326 88,943 99,269 653,429 5,628,313 6,281,742
MGIC Investment 3,110 28,521 31,631 213,284 1,955,970 2,169,254
Washington Mutual 24,008 206,790 230,798 1,019,860 8,784,439 9,804,299
Total 3,844,899 33,343,771 37,188,670
Tobacco (3.6%)
Altria Group 104,032 971,495 1,075,527 6,965,982 65,051,305 72,017,287
Reynolds American -- 2,388 2,388 -- 198,944 198,944
UST 6,330 66,297 72,627 291,307 3,050,988 3,342,295
Total 7,257,289 68,301,237 75,558,526
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
12 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued)
Issuer Shares Shares Shares Value(a) Value(a) Value(a)
RiverSource RiverSource
Disciplined Equity Pro forma Disciplined Equity Pro forma
Equity Fund Portfolio Combined Equity Fund Portfolio Combined
Trading Companies & Distributors (--%)
WW Grainger 2,096 -- 2,096 $130,623 $-- $130,623
Wireless Telecommunication Services (0.4%)
Nextel Communications Cl A 21,414 203,961 225,375(b) 745,207 7,097,843 7,843,050
Total Common Stocks
(Cost: $1,907,986,283) $119,158,282 $1,961,744,991 $2,080,903,273
Short-Term Securities (2.8%)
Issuer Effective Amount payable Amount payable Value(a) Value(a) Value(a)
yield at maturity at maturity
RiverSource RiverSource
Disciplined Equity Disciplined Equity Pro forma
Equity Fund Portfolio Equity Fund Portfolio Combined
U.S. Government Agencies (0.8%)
Federal Home Loan Bank Disc Nt
8/12/2005 3.22% $-- $10,000,000 $-- $9,987,478 $9,987,478
Federal Natl Mtge Assn Disc Nt
8/22/2005 3.28 2,600,000 -- 2,594,332 -- 2,594,332
9/7/2005 3.26 3,300,000 -- 3,288,083 -- 3,288,083
Total 5,882,415 9,987,478 15,869,893
Commercial Paper (2.0%)
Amsterdam Funding
8/1/2005 3.30 -- 13,200,000 -- 13,196,370 13,196,370
CAFCO
8/1/2005 3.30 -- 13,100,000 -- 13,096,398 13,096,398
HSBC Finance
8/1/2005 3.31 1,000,000 -- 999,724 -- 999,724
Morgan Stanley
8/12/2005 3.33 -- 5,000,000 -- 4,993,525 4,993,525
Ranger Funding
8/16/2005 3.36 -- 10,000,000 -- 9,983,250 9,983,250
Total 999,724 41,269,543 42,269,267
Total Short-Term Securities
(Cost: $58,144,483) $6,882,139 $51,257,021 $58,139,160
Total Investments in Securities (prior to pro forma adjustments)
(Cost: $1,966,130,766)(d) $126,040,421 $2,013,002,012 $2,139,042,433
Pro forma Adjustments(e) -- (88,057) (88,057)
Total Investments in Securities (after pro forma adjustments)
(Cost: $1,966,006,996)(e) $126,040,421 $2,012,913,955 $2,138,954,376
See accompanying notes to combined investments in securities.
- --------------------------------------------------------------------------------
13 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Notes To Combined Investments in Securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements in the annual report.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2005, the
value of foreign securities represented 2.9% of net assets.
(d) At July 31, 2005, the approximate cost of securities for federal income
tax purposes and the approximate aggregate gross unrealized appreciation
and depreciation based on that cost was:
RiverSource
Disciplined Equity Pro forma Pro forma
Equity Fund Portfolio Adjustments Combined
Cost of securities for federal income tax purposes: $119,897,000 $1,846,234,000 $(124,000) $1,966,007,000
Unrealized appreciation $ 7,961,000 $ 192,545,000 $ 36,000 $ 200,542,000
Unrealized depreciation (1,818,000) (25,777,000) -- (27,595,000)
------------ -------------- --------- --------------
Net unrealized appreciation $ 6,143,000 $ 166,768,000 $ 36,000 $ 172,947,000
------------ -------------- --------- --------------
(e) To reflect the portion of the Equity Portfolio net assets not owned by
RiverSource Stock Fund. (Cost decreased $123,770).
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
14 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
S-6389-20 A (12/05)
PART C. OTHER INFORMATION
Item 15. Indemnification
The Articles of Incorporation of the registrant provide that the Fund shall
indemnify any person who was or is a party or is threatened to be made a party,
by reason of the fact that she or he is or was a director, officer, employee or
agent of the Fund, or is or was serving at the request of the Fund as a
director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, to any threatened, pending or completed
action, suit or proceeding, wherever brought, and the Fund may purchase
liability insurance and advance legal expenses, all to the fullest extent
permitted by the laws of the State of Minnesota, as now existing or hereafter
amended. The By-laws of the registrant provide that present or former directors
or officers of the Fund made or threatened to be made a party to or involved
(including as a witness) in an actual or threatened action, suit or proceeding
shall be indemnified by the Fund to the full extent authorized by the Minnesota
Business Corporation Act, all as more fully set forth in the By-laws filed as an
exhibit to this registration statement.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Any indemnification hereunder shall not be exclusive of any other rights of
indemnification to which the directors, officers, employees or agents might
otherwise be entitled. No indemnification shall be made in violation of the
Investment Company Act of 1940.
Item 16. Exhibits
(1)(a) Articles of Incorporation, as amended November 10, 1988, filed as
Exhibit 1 to Post-Effective Amendment No. 38 to Registration Statement
No. 2-38355, are incorporated by reference.
(1)(b) Articles of Amendment, dated June 16, 1999, filed electronically as
Exhibit (a)(2) to Post-Effective Amendment No. 67 to Registration
Statement No. 2-38355, are incorporated by reference.
(1)(c) Articles of Amendment, dated November 14, 2002, filed electronically
as Exhibit (a)(3) to Registrant's Post-Effective Amendment No. 74 to
Registration Statement No. 2-38355, are incorporated by reference.
(2) By-laws, as amended January 11, 2001 filed electronically as
Exhibit (b) to Post-Effective Amendment No. 67 to Registration
Statement No. 2-38355, are incorporated by reference.
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization is included herein as
Exhibit A to Part A of this Registration Statement.
(5) Not applicable.
(6)(a) Investment Management Services Agreement, dated December 1, 2002,
between Registrant, on behalf of AXP Large Cap Equity Fund and AXP
Large Cap Value Fund, and American Express Financial Corporation,
filed electronically as Exhibit (d)(11) to Registrant's Post-Effective
Amendment No. 74 to Registration Statement No. 2-38355, is
incorporated by reference.
(6)(b) Investment Management Services Agreement, dated January 9, 2003,
between Registrant, on behalf of AXP Quantitative Large Cap Equity
Fund, and American Express Financial Corporation filed electronically
as Exhibit (d)(9) to Registrant's Post-Effective Amendment No. 74 to
Registration Statement No. 2-38355, is incorporated by reference.
(7)(a) Distribution Agreement dated January 10, 2002 between Registrant,
on behalf of AXP Large Cap Equity Fund, and American Express Financial
Advisors Inc. filed electronically as Exhibit (e)(2) to Registrant's
Post-Effective Amendment No. 69 filed on or about March 21, 2002 is
incorporated by reference.
(7)(b) Distribution Agreement dated January 9, 2003, between Registrant, on
behalf of AXP Quantitative Large Cap Equity Fund, and American Express
Financial Advisors Inc. filed electronically as Exhibit (e)(4) to
Registrant's Post-Effective Amendment No. 74 to Registration Statement
No. 2-38355, is incorporated by reference.
(8) All employees are eligible to participate in a profit sharing plan.
Entry into the plan is Jan. 1 or July 1. The Registrant contributes
each year an amount up to 15 percent of their annual salaries, the
maximum deductible amount permitted under Section 404(a) of the
Internal Revenue Code.
(9)(a) Custodian Agreement dated January 10, 2002, between Registrant, on
behalf of AXP Large Cap Equity Fund, and American Express Trust
Company filed electronically as Exhibit (g)(7) to Registrant's
Post-Effective Amendment No. 69 filed on or about March 21, 2002 is
incorporated by reference.
(9)(b) Custodian Agreement dated January 9, 2003 between Registrant, on
behalf of AXP Quantitative Large Cap Equity Fund, and American Express
Trust Company filed electronically as Exhibit (g)(8) to Registrant's
Post-Effective Amendment No. 74 to Registration Statement No. 2-38355,
is incorporated by reference.
(9)(c) Custodian Agreement between American Express Trust Company and The Bank
of New York dated May 13, 1999, filed electronically as Exhibit (g)(3)
to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 33 to
Registration Statement No. 2-93745, filed on or about May 28, 1999 is
incorporated by reference.
(9)(d) Custodian Agreement First Amendment between American Express Trust
Company and The Bank of New York, dated December 1, 2000, filed
electronically as Exhibit (g)(4) to AXP Precious Metals Fund, Inc.
Post-Effective Amendment No. 37 to Registration Statement No. 2-93745,
filed on or about May 28, 2002 is incorporated by reference.
(9)(e) Custodian Agreement Second Amendment between American Express Trust
Company and The Bank of New York, dated June 7, 2001, filed
electronically as Exhibit (g)(5) to AXP Precious Metals Fund, Inc.
Post-Effective Amendment No. 37 to Registration Statement No. 2-93745,
filed on or about May 28, 2002 is incorporated by reference.
(9)(f) Custodian Agreement Amendment between American Express Trust Company
and The Bank of New York, dated January 31, 2002, filed electronically
as Exhibit (g)(6) to AXP Precious Metals Fund, Inc. Post-Effective
Amendment No. 37 to Registration Statement No. 2-93745, filed on or
about May 28, 2002 is incorporated by reference.
(9)(g) Custodian Agreement Amendment between American Express Trust Company
and The Bank of New York, dated April 29, 2003, filed electronically as
Exhibit (g)(8) to Registrant's Post-Effective Amendment No. 7 to
Registration Statement No. 333-57852, filed on or about May 22, 2003,
is incorporated by reference.
(10)(a) Plan and Agreement of Distribution dated January 10, 2002, between
Registrant, on behalf of AXP Large Cap Equity Fund, and American
Express Financial Advisors Inc. filed electronically as Exhibit (m)(3)
to Registrant's Post-Effective Amendment No. 69 filed on or about
March 21, 2002 is incorporated by reference.
(10)(b) Plan and Agreement of Distribution dated January 9, 2003, between
Registrant, on behalf of AXP Quantitative Large Cap Equity Fund, and
American Express Financial Advisors Inc. filed electronically
as Exhibit (m)(4) to Registrant's Post-Effective Amendment No. 74 to
Registration Statement No. 2-38355, is incorporated by reference.
(10)(c) Amendment to Plan and Agreement of Distribution (Class A and B), dated
April 14, 2005, between the Registrant and American Express Financial
Advisors Inc., filed electronically on or about July 28, 2005 as
Exhibit (m)(3) to AXP Government Income Series, Inc.'s Post-Effective
Amendment No. 41 to Registration Statement No. 2-96512 is incorporated
by reference.
(10)(d) Plan and Agreement of Distribution For Class C Shares dated January
10, 2002, between Registrant, on behalf of AXP Large Cap Equity Fund,
and American Express Financial Advisors Inc. filed electronically as
Exhibit (m)(4) to Registrant's Post-Effective Amendment No. 69 filed
on or about March 21, 2002 is incorporated by reference.
(10)(e) Plan and Agreement of Distribution For Class C Shares dated January 9,
2003, between Registrant, on behalf of AXP Quantitative Large Cap
Equity Fund, and American Express Financial Advisors Inc. filed
electronically as Exhibit (m)(8) to Registrant's Post-Effective
Amendment No. 74 to Registration Statement No. 2-38355, is
incorporated by reference.
(10)(f) Amendment to Plan and Agreement of Distribution (Class C), dated April
14, 2005, between the Registrant and American Express Financial
Advisors Inc., filed electronically on or about July 28, 2005 as
Exhibit (m)(6) to AXP Government Income Series, Inc.'s Post-Effective
Amendment No. 41 to Registration Statement No. 2-96512 is incorporated
by reference.
(10)(g) Amended 18f-3 Plan, dated as of May 26, 2004, filed electronically on
or about July 29, 2004 as Exhibit (n) to AXP Discovery Series, Inc.
Post-Effective Amendment No. 49 to Registration Statement No. 2-72174
is incorporated by reference.
(11) Opinion and consent of counsel as to the legality of the securities
being registered is filed electronically herewith.
(12) Tax opinion to be filed by amendment.
(13)(a) Administrative Services Agreement dated January 10, 2002, between
Registrant, on behalf of AXP Large Cap Equity Fund, and American
Express Financial Corporation filed electronically as Exhibit (h)(12)
to Registrant's Post-Effective Amendment No. 69 filed on or about March
21, 2002 is incorporated by reference.
(13)(b) Amendment to Administrative Services Agreement dated June 3, 2002,
between AXP Growth Series, Inc. on behalf of AXP Large Cap Equity Fund
and American Express Financial Corporation filed electronically as
Exhibit (h)(7) to Registrant's Post-Effective Amendment No. 71 to
Registration Statement No. 2-38355, is incorporated by reference.
(13)(c) Administrative Services Agreement dated January 9, 2003, between
Registrant, on behalf of AXP Quantitative Large Cap Equity Fund, and
American Express Financial Corporation filed electronically as Exhibit
(h)(9) to Registrant's Post-Effective Amendment No. 74 to Registration
Statement No. 2-38355, is incorporated by reference.
(13)(d) Class Y Shareholder Service Agreement dated January 10, 2002, between
Registrant, on behalf of AXP Large Cap Equity Fund, and American
Express Financial Advisors Inc. filed electronically as Exhibit (h)(13)
to Registrant's Post-Effective Amendment No. 69 filed on or about March
21, 2002 is incorporated by reference.
(13)(e) Class Y Shareholder Service Agreement dated January 9, 2003, between
Registrant, on behalf of AXP Quantitative Large Cap Equity Fund, and
American Express Financial Advisors Inc. filed electronically as
Exhibit (h)(19) to Registrant's Post-Effective Amendment No. 74 to
Registration Statement No. 2-38355, is incorporated by reference.
(13)(f) Transfer Agency Agreement, dated May 1, 2003 between Registrant on
behalf of AXP Growth Fund, AXP Large Cap Equity Fund, AXP Large Cap
Value Fund and AXP Quantitative Large Cap Equity Fund and American
Express Client Service Corporation, filed electronically as Exhibit
(h)(20) to Registrant's Post-Effective Amendment No. 75 to Registration
Statement No. 2-38355, is incorporated by reference.
(13)(g) Amended Class I Transfer Agency Agreement between the American Express
Funds and American Express Client Service Corporation, dated November
13, 2003 (amended June 1, 2004), filed electronically on or about Sept.
27, 2004 as Exhibit (h)(10) to AXP Dimensions Series, Inc.
Post-Effective Amendment No. 70 to Registration Statement No. 2-28529
is incorporated by reference.
(13)(h) License Agreement, dated June 17, 1999, between American Express Funds
and American Express Company filed electronically on or about Sept.
23, 1999 as Exhibit (h)(4) to AXP Stock Fund, Inc.'s Post-Effective
Amendment No. 98 to Registration Statement No. 2-11358, is
incorporated by reference.
(13)(i) Addendum to Schedule A and Schedule B of the License Agreement between
the American Express Funds and American Express Company, dated June 23,
2004, filed electronically on or about June 28, 2004 as Exhibit (h)(2)
to AXP Variable Portfolio - Select Series, Inc. Pre-Effective Amendment
No. 1 to Registration Statement No. 333-113780 is incorporated by
reference.
(13)(j) Master Fee Waiver Agreement, dated Oct. 1, 2005, between Ameriprise
Financial, Inc., RiverSource Investments, LLC, Ameriprise Financial
Services, Inc. and RiverSource Funds filed electronically on or about
Sept. 30, 2005 as Exhibit (h)(9) to AXP Discovery Series, Inc.
Post-Effective Amendment No. 52 to Registration Statement No. 2-72174
is incorporated by reference.
(14) Consent of Independent Registered Public Accounting Firm to be filed
by amendment.
(15) Financial Statements: Not applicable.
(16)(a) Directors'/Trustees' Power of Attorney to sign this Registration
Statement and its amendments, dated Nov. 11, 2004, is filed
electronically herewith as Exhibit (16)(a).
(16)(b) Trustees' Power of Attorney to sign to this Registration Statement and
its amendments, dated Nov. 11, 2004, is filed electronically herewith
as Exhibit (16)(b).
(17)(a) Code of Ethics adopted under Rule 17j-1 for Registrant filed
electronically on or about March 28, 2005 as Exhibit (p)(1) to AXP
Selected Series, Inc.'s Post-Effective Amendment No. 42 to
Registration Statement No. 2-93745 is incorporated by reference.
(17)(b) Code of Ethics adopted under Rule 17j-1 for Registrant's investment
adviser and principal underwriter, dated January 2005, filed
electronically on or about January 27, 2005 as Exhibit (p)(2) to AXP
Equity Series, Inc. Post-Effective Amendment No. 99 to Registration
Statement No. 2-13188 is incorporated by reference.
(17)(c) Prospectus, dated Oct. 17, 2005, for RiverSource New Dimensions Fund is
filed electronically herewith.
(17)(d) Prospectus, dated Nov. 29, 2004, for RiverSource Stock Fund is filed
electronically herewith.
(17)(e) Prospectus, dated Oct. 3, 2005, for RiverSource Large Cap Equity Fund
is filed electronically herewith.
(17)(f) Prospectus, dated Oct. 3, 2005, for RiverSource Disciplined Equity Fund
is filed electronically herewith.
(17)(g) Statement of Additional Information, dated Oct. 3, 2005, for
RiverSource New Dimensions Fund, for RiverSource Stock Fund, for
RiverSource Large Cap Equity Fund and for RiverSource Disciplined
Equity Fund is filed electronically herewith.
(17)(h) Annual Report for the period ended July 31, 2005 for RiverSource New
Dimensions Fund to be filed by amendment.
(17)(i) Annual Report for the period ended July 31, 2005 for RiverSource Large
Cap Equity Fund to be filed by amendment.
(17)(j) Annual Report for the period ended July 31, 2005 for RiverSource
Disciplined Equity Fund to be filed by amendment.
(17)(k) Annual Report for the period ended Sept. 30, 2004 for RiverSource Stock
Fund to be filed by amendment.
(17)(l) Semiannual Report for the period ended March 30, 2005 for RiverSource
Stock Fund to be filed by amendment.
(17)(m) Prospectus Supplement, dated Feb. 2, 2005, for RiverSource Stock Fund
is filed electronically herewith.
(17)(n) Prospectus Supplement, dated May 23, 2005, for RiverSource Stock Fund
is filed electronically herewith.
(17)(o) Prospectus Supplement, dated July 27, 2005, for RiverSource Stock Fund
is filed electronically herewith.
(17)(p) Prospectus Supplement, dated Aug. 1, 2005, for RiverSource Stock Fund
is filed electronically herewith.
(17)(q) Prospectus Supplement, dated Oct. 3, 2005, for RiverSource Stock Fund
is filed electronically herewith.
Item 17. Undertakings.
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act, the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The Registrant undertakes to file by Post-Effective Amendment an
Opinion of Counsel supporting the tax consequences of the proposed
reorganization within a reasonable time after receipt of such opinion.
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the city of
Minneapolis, and State of Minnesota on the 14th day of October, 2005.
AXP GROWTH SERIES, INC.
By /s/ Paula R. Meyer
---------------------
Paula R. Meyer, President
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox, Treasurer
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in the capacities indicated on the 14th
day of October, 2005.
Signature Capacity
/s/ Arne H. Carlson* Chair of the Board
- ---------------------
Arne H. Carlson
/s/ Philip J. Carroll, Jr.* Director
- ---------------------------
Philip J. Carroll, Jr.
/s/ Patricia M. Flynn* Director
- ------------------------
Patricia M. Flynn
/s/ Anne P. Jones* Director
- -------------------
Anne P. Jones
/s/ Stephen R. Lewis, Jr.* Director
- -----------------------------
Stephen R. Lewis, Jr.
/s/ Catherine James Paglia* Director
- -----------------------------
Catherine James Paglia
/s/ Alan K. Simpson* Director
- ---------------------
Alan K. Simpson
/s/ Alison Taunton-Rigby* Director
- ---------------------------
Alison Taunton-Rigby
/s/ William F. Truscott* Director
- -------------------------
William F. Truscott
* Signed pursuant to Directors' Power of Attorney dated Nov. 11, 2004, filed
electronically as Exhibit (16)(a) to this Registration Statement, by:
/s/ Leslie L. Ogg
- ---------------------
Leslie L. Ogg
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the city of
Minneapolis, and State of Minnesota on the 14th day of October, 2005.
GROWTH TRUST
By /s/ Paula R. Meyer
---------------------
Paula R. Meyer, President
By /s/ Jeffrey P. Fox
------------------
Jeffrey P. Fox, Treasurer
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in the capacities indicated on the 14th
day of October, 2005.
Signature Capacity
/s/ Arne H. Carlson* Chair of the Board
- ---------------------
Arne H. Carlson
/s/ Philip J. Carroll, Jr.* Director
- ---------------------------
Philip J. Carroll, Jr.
/s/ Patricia M. Flynn* Director
- ------------------------
Patricia M. Flynn
/s/ Anne P. Jones* Director
- -------------------
Anne P. Jones
/s/ Stephen R. Lewis, Jr.* Director
- -----------------------------
Stephen R. Lewis, Jr.
/s/ Catherine James Paglia* Director
- -----------------------------
Catherine James Paglia
/s/ Alan K. Simpson* Director
- ---------------------
Alan K. Simpson
/s/ Alison Taunton-Rigby* Director
- ---------------------------
Alison Taunton-Rigby
/s/ William F. Truscott* Director
- -------------------------
William F. Truscott
* Signed pursuant to Trustees' Power of Attorney dated Nov. 11, 2004, filed
electronically as Exhibit (16)(b) to this Registration Statement, by:
/s/ Leslie L. Ogg
- ---------------------
Leslie L. Ogg