SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Under Section 240.14a-12
AXP California Tax-Exempt Trust
AXP Discovery Series, Inc.
AXP Equity Series, Inc.
AXP Fixed Income Series, Inc.
AXP Global Series, Inc.
AXP Government Income Series, Inc.
AXP Growth Series, Inc.
AXP High Yield Income Series, Inc.
AXP High Yield Tax-Exempt Series, Inc.
AXP International Series, Inc.
AXP Investment Series, Inc.
AXP Managed Series, Inc.
AXP Market Advantage Series, Inc.
AXP Money Market Series, Inc.
AXP Partners International Series, Inc.
AXP Partners Series, Inc.
AXP Sector Series, Inc.
AXP Selected Series, Inc.
AXP Special Tax-Exempt Series Trust
AXP Strategy Series, Inc.
AXP Tax-Exempt Series, Inc.
AXP Tax-Free Money Series, Inc.
AXP Variable Portfolio - Income Series, Inc.
AXP Variable Portfolio - Investment Series, Inc.
AXP Variable Portfolio - Managed Series, Inc.
AXP Variable Portfolio - Money Market Series, Inc.
AXP Variable Portfolio - Partners Series, Inc.
AXP Variable Portfolio - Select Series, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name(s) of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined);
----------------------------------------------------------------------
(4) Proposed maximum aggregated value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
RiverSource Funds
(formerly known as American Express Funds)
Principal Executive Office
901 Marquette Avenue South, Suite 2810
Minneapolis, MN 55402-3268
NOTICE OF REGULAR MEETING OF SHAREHOLDERS
To be held Feb. 15, 2006
Retail Funds:
AXP California Tax-Exempt Trust
- RiverSource California Tax-Exempt Fund
AXP Discovery Series, Inc.
- RiverSource Core Bond Fund
- RiverSource Income Opportunities Fund
- RiverSource Inflation Protected Securities Fund
- RiverSource Limited Duration Bond Fund
AXP Equity Series, Inc.
- RiverSource Mid Cap Growth Fund
AXP Fixed Income Series, Inc.
- RiverSource Diversified Bond Fund
AXP Global Series, Inc.
- RiverSource Emerging Markets Fund
- RiverSource Global Bond Fund
- RiverSource Global Equity Fund
- RiverSource Global Technology Fund
AXP Government Income Series, Inc.
- RiverSource Short Duration U.S. Government Fund
- RiverSource U.S. Government Mortgage Fund
AXP Growth Series, Inc.
- RiverSource Disciplined Equity Fund
- RiverSource Growth Fund
- RiverSource Large Cap Equity Fund
- RiverSource Large Cap Value Fund
AXP High Yield Income Series, Inc.
- RiverSource High Yield Bond Fund
AXP High Yield Tax-Exempt Series, Inc.
- RiverSource Tax-Exempt High Income Fund
Retail Funds: (continued)
AXP International Series, Inc.
- RiverSource European Equity Fund
- RiverSource International Opportunity Fund
AXP Investment Series, Inc.
- RiverSource Balanced Fund
- RiverSource Diversified Equity Income Fund
- RiverSource Mid Cap Value Fund
AXP Managed Series, Inc.
- RiverSource Strategic Allocation Fund
AXP Market Advantage Series, Inc.
- RiverSource Portfolio Builder Aggressive Fund
- RiverSource Portfolio Builder Conservative Fund
- RiverSource Portfolio Builder Moderate Fund
- RiverSource Portfolio Builder Moderate Aggressive Fund
- RiverSource Portfolio Builder Moderate Conservative Fund
- RiverSource Portfolio Builder Total Equity Fund
- RiverSource S&P 500 Index Fund
- RiverSource Small Company Index Fund
AXP Money Market Series, Inc.
- RiverSource Cash Management Fund
AXP Partners International Series, Inc.
- RiverSource International Aggressive
Growth Fund
- RiverSource International Equity Fund
- RiverSource International Select Value Fund
- RiverSource International Small Cap Fund
- --------------------------------------------------------------------------------
1 RIVERSOURCE FUNDS -- PROXY STATEMENT
NOTICE OF REGULAR MEETING OF SHAREHOLDERS (CONTINUED)
Retail Funds: (continued)
AXP Partners Series, Inc.
- RiverSource Aggressive Growth Fund
- RiverSource Fundamental Growth Fund
- RiverSource Fundamental Value Fund
- RiverSource Select Value Fund
- RiverSource Small Cap Equity Fund
- RiverSource Small Cap Value Fund
- RiverSource Value Fund
AXP Sector Series, Inc.
- RiverSource Dividend Opportunity Fund
- RiverSource Real Estate Fund
AXP Selected Series, Inc.
- RiverSource Precious Metals Fund
AXP Special Tax-Exempt Series Trust
- RiverSource Massachusetts Tax-Exempt Fund
- RiverSource Michigan Tax-Exempt Fund
- RiverSource Minnesota Tax-Exempt Fund
- RiverSource New York Tax-Exempt Fund
- RiverSource Ohio Tax-Exempt Fund
AXP Strategy Series, Inc.
- RiverSource Equity Value Fund
- RiverSource Small Cap Advantage Fund
- RiverSource Small Cap Growth Fund
AXP Tax-Exempt Series, Inc.
- RiverSource Intermediate Tax-Exempt Fund
- RiverSource Tax-Exempt Bond Fund
AXP Tax-Free Money Series, Inc.
- RiverSource Tax-Exempt Money Market Fund
Variable Portfolio Funds:
AXP Variable Portfolio Income Series, Inc.
- RiverSource Variable Portfolio Core Bond Fund
- RiverSource Variable Portfolio Diversified Bond Fund
- RiverSource Variable Portfolio Global Bond Fund
- RiverSource Variable Portfolio Global Inflation Protected Securities Fund
- RiverSource Variable Portfolio High Yield Bond Fund
- RiverSource Variable Portfolio Income Opportunities Fund
Variable Portfolio Funds: (continued)
AXP Variable Portfolio Income Series, Inc. (cont.)
- RiverSource Variable Portfolio Short Duration U.S. Government Fund
AXP Variable Portfolio Investment Series, Inc.
- RiverSource Variable Portfolio Emerging Markets Fund
- RiverSource Variable Portfolio Growth Fund
- RiverSource Variable Portfolio International Opportunity Fund
- RiverSource Variable Portfolio Large Cap Equity Fund
- RiverSource Variable Portfolio Large Cap Value Fund
- RiverSource Variable Portfolio Mid Cap Growth Fund
- RiverSource Variable Portfolio Mid Cap Value Fund
- RiverSource Variable Portfolio S&P 500 Index Fund
- RiverSource Variable Portfolio Small Cap Advantage Fund
AXP Variable Portfolio Managed Series, Inc.
- RiverSource Variable Portfolio Balanced Fund
- RiverSource Variable Portfolio Diversified Equity Income Fund
AXP Variable Portfolio Money Market Series, Inc.
- RiverSource Variable Portfolio Cash Management Fund
AXP Variable Portfolio Partners Series, Inc.
- RiverSource Variable Portfolio Select Value Fund
- RiverSource Variable Portfolio Small Cap Value Fund
AXP Variable Portfolio Select Series, Inc.
- RiverSource Variable Portfolio Core Equity Fund
- --------------------------------------------------------------------------------
2 RIVERSOURCE FUNDS -- PROXY STATEMENT
At the end of this proxy statement is a table that shows former AXP fund names
and the corresponding new RiverSource fund names.
Your fund will hold a shareholders' meeting at 10:00 a.m. on Feb. 15, 2006, at
the IDS Center, 80 South Eighth St., Minneapolis, MN in the Galaxy Room on the
50th floor. This will be a joint meeting of the funds listed above. If you plan
to attend the meeting in person and need special arrangements, please contact
Leslie L. Ogg. The purpose of the meeting is to consider the issues described in
the following pages. You are entitled to vote at the meeting if you were a
shareholder on Dec. 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 the enclosed proxy card. You must vote
for each fund you own. The Board of Directors/Trustees recommends that you vote
FOR each proposal.
By Order of the Board of Directors/Trustees
Leslie L. Ogg, Secretary
Dec. 16, 2005
- --------------------------------------------------------------------------------
3 RIVERSOURCE FUNDS-- PROXY STATEMENT
PROXY STATEMENT
This is a combined proxy statement for the funds listed on the previous pages.
There are five sections to this proxy statement:
Section Page
A -- Overview 5
B -- Fund Proposals 7
C -- Proxy Voting and Shareholder Meeting Information 56
D -- Fund Information 59
E -- Board Member Information 136
Under each Proposal the terms "fund" or "funds" are used, as context requires,
to refer to the funds subject to the Proposal.
Please be sure to read the proxy statement before you vote. Enclosed is a proxy
voting card covering all of the proposals described in this proxy statement. It
is important that you vote for each fund. If you have questions, please call
your advisor or (877) 256-6085. This proxy statement was first mailed to
shareholders the week of Dec. 16, 2005.
PLEASE VOTE IMMEDIATELY.
Your vote is important no matter how many shares you own.
- --------------------------------------------------------------------------------
4 RIVERSOURCE FUNDS -- PROXY STATEMENT
SECTION A - OVERVIEW
The Boards of Directors/Trustees (the "Board") of the RiverSource Funds are
asking you to vote on the following proposals. The proposals are described in
detail in Section B.
PROPOSAL FUNDS AFFECTED
- ------------------------------------------- ---------------------------------
1. Elect Board members All Funds
- ------------------------------------------- ---------------------------------
2. Amend the Articles of Incorporation to All Funds except California
permit the Board to establish the Tax-Exempt, Massachusetts
minimum account value and to change Tax-Exempt, Michigan
the name of the corporation Tax-Exempt, Minnesota
Tax-Exempt, New York
Tax-Exempt and Ohio Tax-Exempt
- ------------------------------------------- ---------------------------------
3. Approve an Investment Management All Funds
Services Agreement with RiverSource
Investments, LLC ("RiverSource
Investments")
- ------------------------------------------- ---------------------------------
4. Approve a Subadvisory Agreement Small Cap Advantage, VP Small
between RiverSource Investments and Cap Advantage
Kenwood Capital Management LLC
- ------------------------------------------- ---------------------------------
5. Approve a Subadvisory Agreement Emerging Markets, European
between RiverSource Investments and Equity, Global Equity,
Threadneedle International Limited International Opportunity, VP
Emerging Markets, VP
International Opportunity
- ------------------------------------------- ---------------------------------
6. Approve a Subadvisory Agreement Fundamental Value
between RiverSource Investments and
Davis Selected Advisers, L.P.
- ------------------------------------------- ---------------------------------
- --------------------------------------------------------------------------------
5 RIVERSOURCE FUNDS -- PROXY STATEMENT
PROPOSAL FUNDS AFFECTED
- ------------------------------------------- -----------------------------------------
7. Approve changes in fundamental A. All Funds except California
policies Tax-Exempt, European Equity, Global
Bond, Global Technology, Inflation
A. Diversification Protected Securities, Massachusetts
Tax-Exempt, Michigan Tax-Exempt,
Minnesota Tax-Exempt, New York
Tax-Exempt, Ohio Tax-Exempt,
Portfolio Builder Aggressive,
Portfolio Builder Conservative,
Portfolio Builder Moderate,
Portfolio Builder Moderate
Aggressive, Portfolio Builder
Moderate Conservative, Portfolio
Builder Total Equity, Precious
Metals, Real Estate, S&P 500 Index,
Small Cap Value, VP Global Bond, VP
Global Inflation Protected
Securities, VP S&P 500 Index, VP
Small Cap Value
- ------------------------------------------- -----------------------------------------
B. Ten Percent Limitation in Single B. Balanced, Cash Management,
Issuer Diversified Bond, Diversified
Equity Income, Dividend
Opportunity, Emerging Markets,
Equity Value, Global Bond, Global
Equity, Growth, High Yield Bond,
Intermediate Tax-Exempt,
International Opportunity, Mid Cap
Growth, Select Value, Short
Duration U.S. Gov't, Small Cap
Advantage, Small Cap Growth, Small
Company Index, Strategic
Allocation, Tax-Exempt Bond,
Tax-Exempt High Income, Tax-Exempt
Money Market, VP Balanced, VP Cash
Management, VP Diversified Bond, VP
Diversified Equity Income, VP
Emerging Markets, VP Global Bond,
VP Growth, VP High Yield Bond, VP
International Opportunity, VP Large
Cap Equity, VP Mid Cap Growth, VP
Short Duration U.S. Gov't, VP Small
Cap Advantage
- ------------------------------------------- -----------------------------------------
C. Lending C. All Funds
- ------------------------------------------- -----------------------------------------
D. Borrowing D. All Funds
- ------------------------------------------- -----------------------------------------
8. Transact other business All Funds
- ------------------------------------------- -----------------------------------------
- --------------------------------------------------------------------------------
6 RIVERSOURCE FUNDS -- PROXY STATEMENT
SECTION B - FUND PROPOSALS
PROPOSAL 1: ELECTION OF BOARD MEMBERS
(Applies to: All Funds)
Nominees for the Board. Nominees are listed in the following table. Each
person is a nominee for each of the 90 RiverSource Funds. The following
nominees were elected as members of the Board at the last regular shareholders'
meeting: Mr. Arne H. Carlson, Ms. Anne P. Jones, Mr. Stephen R. Lewis, Jr.,
Mr. Alan K. Simpson, Ms. Alison Taunton-Rigby and Mr. William F. Truscott.
The following nominees are recommended for the position of Board member by the
independent Board members: Ms. Kathleen Blatz, Ms. Patricia M. Flynn, Mr.
Jeffrey Laikind, Ms. Catherine James Paglia and Ms. Vikki L. Pryor.
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. This policy
does not apply to Ms. Jones who may retire after her 75th birthday.
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 B-1. Independent Nominees
Name, Position held with Principal Other Committee memberships
address, fund and length of occupation directorships
age service during past
five years
- ------------------------------------ ---------------------- ---------------- ------------------- ----------------------
Kathleen Blatz Board member Chief Justice,
901 S. Marquette Ave. since January 2006 Minnesota
Minneapolis, MN 55402 Supreme Court,
Age 51 1998-2005
- ------------------------------------ ---------------------- ---------------- ------------------- ----------------------
- --------------------------------------------------------------------------------
7 RIVERSOURCE FUNDS -- PROXY STATEMENT
Independent Nominees (continued)
Name, Position held with Principal Other Committee memberships
address, fund and length of occupation directorships
age service during past
five years
- ------------------------------------ ---------------------- ---------------- ------------------- ----------------------
Arne H. Carlson Board member Chair, Board Contracts,
901 S. Marquette Ave. since 1999 Services Executive,
Minneapolis, MN 55402 Corporation Investment Review,
Age 71 (provides Board Effectiveness
administrative
services to
boards);
former
Governor of
Minnesota
- ------------------------------------ ---------------------- ---------------- ------------------- ----------------------
Patricia M. Flynn Board member Trustee Investment Review,
901 S. Marquette Ave. since 2004 Professor of Joint Audit
Minneapolis, MN 55402 Economics and
Age 54 Management,
Bentley
College;
former Dean,
McCallum
Graduate
School of
Business,
Bentley
College
- ------------------------------------ ---------------------- ---------------- ------------------- ----------------------
Anne P. Jones Board member Attorney and Joint Audit, Board
901 S. Marquette Ave. since 1985 consultant Effectiveness,
Minneapolis, MN 55402 Executive,
Age 70 Investment Review
- ------------------------------------ ---------------------- ---------------- ------------------- ----------------------
Jeffrey Laikind Board member Former American
901 S. Marquette Ave. since 2005 Managing Progressive
Minneapolis, MN 55402 Director, Insurance
Age 70 Shikiar Asset
Management
- ------------------------------------ ---------------------- ---------------- ------------------- ----------------------
Stephen R. Lewis, Jr. Board member President Valmont Contracts,
901 S. Marquette Ave. since 2002 Emeritus and Industries, Inc. Investment Review,
Minneapolis, MN 55402 Professor of (manufactures Executive, Board
Age 65 Economics, irrigation Effectiveness
Carleton systems)
College
- ------------------------------------ ---------------------- ---------------- ------------------- ----------------------
- --------------------------------------------------------------------------------
8 RIVERSOURCE FUNDS -- PROXY STATEMENT
Independent Nominees (continued)
Name, Position held with Principal Other Committee memberships
address, fund and length of occupation directorships
age service during past five
years
- ----------------------------------- ---------------------- ------------------ ------------------ ----------------------
Catherine James Paglia Board member Director, Strategic Contracts,
901 S. Marquette Ave. since 2004 Enterprise Asset Distribution, Investment Review
Minneapolis, MN 55402 Management, Inc. Inc.
Age 53 (private real (transportation,
estate and asset distribution and
management logistics
company) consultants)
- ----------------------------------- ---------------------- ------------------ ------------------ ----------------------
Vikki L. Pryor President and
901 S. Marquette Ave. Chief Executive
Minneapolis, MN 55402 Officer, SBLI
Age 52 USA Mutual Life
Insurance
Company, Inc.
since 1999
- ----------------------------------- ---------------------- ------------------ ------------------ ----------------------
Alan K. Simpson Board member Former Investment Review,
1201 Sunshine Ave. since 1997 three-term Board Effectiveness
Cody, Wyoming 82414 United States
Age 74 Senator for
Wyoming
- ----------------------------------- ---------------------- ------------------ ------------------ ----------------------
Alison Taunton-Rigby Board member Chief Executive Hybridon, Inc. Investment Review,
901 S. Marquette Ave. since 2002 Officer, (biotechnology) Contracts
Minneapolis, MN 55402 RiboNovix, Inc.
Age 61 since 2003
(biotechnology);
former
President,
Forester Biotech
- ----------------------------------- ---------------------- ------------------ ------------------ ----------------------
- --------------------------------------------------------------------------------
9 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-2. Nominee Affiliated with RiverSource Investments
- ----------------------------------------- ---------------------- ---------------------------------- ---------------- --------------
Name, Position held with Principal occupation Other Committee
address, fund and length of during past five years directorships memberships
age service
- ----------------------------------------- ---------------------- ---------------------------------- ---------------- --------------
William F. Truscott* Board member President - U.S Asset Management
53600 Ameriprise Financial Center since 2001, and Chief Investment Officer,
Minneapolis, MN 55474 Vice President Ameriprise Financial, Inc. and
Age 45 since 2002 President, Chairman of the Board
and Chief Investment Officer,
RiverSource Investments, LLC
since 2005; Senior Vice
President - Chief Investment
Officer, Ameriprise Financial,
Inc. and Chairman of the Board
and Chief Investment Officer,
RiverSource Investments, LLC,
2001-2005; former Chief
Investment Officer and Managing
Director, Zurich Scudder
Investments
- ----------------------------------------- ---------------------- ---------------------------------- ---------------- --------------
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
- --------------------------------------------------------------------------------
10 RIVERSOURCE FUNDS -- 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 A, 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 Chair 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 B. 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 D.
- --------------------------------------------------------------------------------
11 RIVERSOURCE FUNDS -- PROXY STATEMENT
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.
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. Information on
compensation paid to Board members by individual funds is shown in Section E.
Table B-3. Board Member Compensation
from all RiverSource Funds*
(for the year ended Sept. 30, 2005)
Nominee Aggregate Compensation from all
RiverSource Funds
Flynn $143,675(1)
Jones 185,892
Lewis 204,670(2)
Paglia 157,708
Simpson 138,842
Taunton-Rigby 166,842
* 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, Each Board member was paid
$23,500 to cover those additional meetings. That cost was borne by
Ameriprise Financial. Ms. Blatz, Mr. Laikind and Ms. Pryor were not
Board members prior to Sept. 30, 2005 and therefore are not included in
the table.
(1) Includes the portion of compensation deferred in the amount of $60,371 from
the Funds.
(2) Includes the portion of compensation deferred in the amount of $59,839 from
the Funds.
- --------------------------------------------------------------------------------
12 RIVERSOURCE FUNDS -- PROXY STATEMENT
The dollar range of equity securities beneficially owned by each Board member is
shown in Section E.
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 - Mutual
Funds, RiverSource Investments.
Beth E. Weimer, age 52. Chief Compliance Officer since 2004. Vice President and
Chief Compliance Officer, Ameriprise Financial and Chief Compliance Officer,
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.
PROPOSAL 2: APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES OF INCORPORATION
(Applies to: All Funds except California Tax-Exempt, Massachusetts
Tax-Exempt, Michigan Tax-Exempt, Minnesota Tax-Exempt, New York Tax-Exempt and
Ohio Tax-Exempt)
Every fund is organized under state law. Each RiverSource fund, except those
listed under the heading above, 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
- --------------------------------------------------------------------------------
13 RIVERSOURCE FUNDS -- PROXY STATEMENT
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 [underlined]
(additions are underlined [/underlined], [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] [underlined]
an amount determined by the Board of Directors and set forth in the current
Fund prospectus. [/underlined]
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. For certain funds, the Board also made other
clarifying changes in the name of the fund. The fund is part of a corporation
made up of one or more funds. 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. In addition, the
Boards recommend that other portions of the names of some of the corporations be
changed to more clearly identify the types of funds included in that
corporation. The changes to the names of the corporations 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. You can determine which corporation your fund is part of by
referring to page 1 of this proxy statement. Similar name changes will be made
for the Massachusetts business trusts by action of the Board as permitted by the
Declaration of Trust.
- --------------------------------------------------------------------------------
14 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-4. Proposed Name of Corporation
Current Name of Corporation Proposed Name of Corporation
AXP Discovery Series, Inc. RiverSource Bond Series, Inc.
AXP Equity Series, Inc. RiverSource Equity Series, Inc.
AXP Fixed Income Series, Inc. RiverSource Diversified Income Series, Inc.
AXP Global Series, Inc. RiverSource Global Series, Inc
AXP Government Income Series, Inc. RiverSource Government Income Series, Inc.
AXP Growth Series, Inc. RiverSource Large Cap Series, Inc.
AXP High Yield Income Series, Inc. RiverSource High Yield Income Series, Inc.
AXP High Yield Tax-Exempt Series, Inc. RiverSource Tax-Exempt Income Series, Inc.
AXP International Series, Inc. RiverSource International Series, Inc.
AXP Investment Series, Inc. RiverSource Investment Series, Inc.
AXP Managed Series, Inc. RiverSource Strategic Allocation Series, Inc.
AXP Market Advantage Series, Inc. RiverSource Market Advantage Series, Inc.
AXP Money Market Series, Inc. RiverSource Money Market Series, Inc.
AXP Partners International Series, Inc. RiverSource International Managers Series, Inc.
AXP Partners Series, Inc. RiverSource Managers Series, Inc.
AXP Sector Series, Inc. RiverSource Sector Series, Inc.
AXP Selected Series, Inc. RiverSource Selected Series, Inc.
AXP Strategy Series, Inc. RiverSource Strategy Series, Inc.
AXP Tax-Exempt Series, Inc. RiverSource Tax-Exempt Series, Inc.
AXP Tax-Free Money Series, Inc. RiverSource Tax-Exempt Money Market Series, Inc.
AXP VP Income Series, Inc. RiverSource VP Income Series, Inc.
AXP VP Investment Series, Inc. RiverSource VP Investment Series, Inc.
AXP VP Managed Series, Inc. RiverSource VP Managed Series, Inc.
AXP VP Money Market Series, Inc. RiverSource VP Money Market Series, Inc.
AXP VP Partners Series, Inc. RiverSource VP Managers Series, Inc.
AXP VP Select Series, Inc. RiverSource VP Select 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.
- --------------------------------------------------------------------------------
15 RIVERSOURCE FUNDS -- PROXY STATEMENT
PROPOSAL 3: APPROVE OR REJECT AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH
RIVERSOURCE INVESTMENTS, LLC
(Applies to: All Funds)
The fund pays fees to RiverSource Investments under an investment management
services agreement (the "IMS Agreement") for investment management services.
These services include providing the personnel, equipment and office facilities
necessary for the management of the fund's assets. Subject to the oversight of
the Board and consistent with the fund's investment policies, the investment
manager decides which 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. For some of the funds, RiverSource
Investments hires, pays and oversees a subadviser to perform the day-to-day
management functions. Some of the retail funds are part of master/feeder
structures. In these structures, the funds invest all of their assets in master
funds (the "portfolio") with the same investment policies as the respective
funds. For purposes of this discussion, the portfolio is referred to as a
"fund".
On Sept. 30, 2005, Ameriprise Financial became a publicly traded company and on
Oct. 1, 2005 transferred its investment management functions and IMS Agreement
to RiverSource Investments, a wholly-owned subsidiary. While these transfers did
not cause a termination of the IMS Agreement, the Board determined that it would
be prudent to give shareholders an opportunity to review and vote on the
proposed IMS Agreement and the changes discussed below.
Summary of key changes
A. Performance Incentive Adjustment ("PIA"). The management fee for the equity
and balanced funds includes a PIA as part of the fee calculation. The PIA
calculation is based on the performance of the fund compared to the
performance index of a group of comparable mutual funds compiled by Lipper,
Inc. ("Lipper"). The proposed change clarifies the circumstances under which
the Board may change an index for purposes of calculating the PIA.
B. Variable Portfolio Funds. For each of the variable portfolio funds, the
current IMS Agreement includes the provision of transfer agent services. For
all variable portfolio funds except VP Core Equity, these services will be
provided under a new transfer agency agreement if the proposed IMS Agreement
is approved. In addition, the proposed IMS Agreement clarifies the
description of allocation of expenses. For VP Core Equity, the proposed IMS
Agreement includes a new provision authorizing the investment manager to
subcontract for administrative or transfer agent services.
- --------------------------------------------------------------------------------
16 RIVERSOURCE FUNDS -- PROXY STATEMENT
C. Fee schedule. For certain funds only, the investment manager has proposed
changes in the fee schedules. Please see Table B-5 to examine the fees for
each fund. For other funds, the fee schedules are unchanged.
D. Standard of Care. For all funds, the investment manager will be held to a
higher standard of care than under the current IMS Agreement.
E. Confidentiality. The proposed IMS Agreement contains an explicit
acknowledgement from the fund that the investment manager may be prevented
from divulging or acting upon certain confidential information learned in
connection with its activities, including the provision of investment advice
to clients other than the fund. In addition, the proposed IMS Agreement
contains additional confidentiality provisions prohibiting the fund from
disclosing to third parties any information or advice furnished by the
investment manager to the fund, unless required by law or necessary to
provide services to the fund.
F. Amendments. The proposed IMS Agreement clarifies that, as permitted under
applicable law, the parties may make non-material amendments or
modifications without obtaining shareholder approval.
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 D. 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 D 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.
- --------------------------------------------------------------------------------
17 RIVERSOURCE FUNDS -- PROXY STATEMENT
A. PIA Calculation.
The management fee for the equity and balanced funds includes a PIA as part of
the fee. The adjustment is based on the performance of the fund compared to the
performance of a Lipper Index. The proposed modification does not change the
agreement, but clarifies the circumstances where the Board may change the index.
The provision in the current IMS Agreement will be modified to read as follows
[underlined](additions are underlined, [/underlined] [strike through]deletions
are lined through) [/strike through]:
If an Index ceases to be published for a period of more than 90 days,
changes in any material respect, otherwise becomes impracticable
[underlined]or, in the discretion of the Board, is no longer appropriate
[/underlined] to use for purposes of a performance incentive adjustment,
[underlined] 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. [/underlined] [strike through] [strike through] no
adjustment will be made until such time as the Board approves a substitute
index. [/strike through]
The PIA is determined by measuring the difference in a fund's performance from
an appropriate Lipper Index over a rolling 12-month period. Should the Board
approve the use of a substitute index, it may transition to the substitute index
by introducing it gradually over time, to avoid unintended swings in the PIA.
B. Variable Portfolio Funds.
o For all VP funds except VP Core Equity
The current IMS Agreement for the variable portfolio funds includes both
investment management services and transfer agent services. RiverSource
Investments recommended to the Board that the transfer agent services be
eliminated from the IMS agreement and moved to a separate agreement. This
structure is consistent with how services are provided to the retail funds
and will facilitate consistency in the management fee structure between
similar retail and variable portfolio funds. The fee under the proposed IMS
agreement will be reduced, in amounts that vary by fund, to reflect the
elimination of the transfer agent services. If shareholders approve the
proposal, the fund will then enter into a separate transfer agent agreement
with RiverSource Service Corporation. The fee under that agreement will be
uniform for all variable portfolio funds at an annual rate of 0.06% of
average daily net assets.
In addition to eliminating transfer agent services, the proposed IMS
Agreement clarifies the description of the allocation of expenses between
the fund and the investment manager. The change will not affect the
allocation of expenses, but rather will eliminate an ambiguity in the
current IMS Agreement.
- --------------------------------------------------------------------------------
18 RIVERSOURCE FUNDS -- PROXY STATEMENT
Part One of the current IMS Agreement states that the investment manager will
"pay or reimburse such expenses of the Fund as may be provided for in Part
Three". However, there are no expenses delineated in Part Three for the
investment manager to pay. Instead, Part Three identifies the expenses the fund
will pay. For that reason, the statement that the investment manager will "pay
or reimburse such expenses of the Fund as may be provided for in Part Three,"
has been eliminated from the proposed IMS Agreement.
o For VP Core Equity
Unlike the other variable portfolio funds, VP Core Equity is available as an
investment option only under certain variable annuity contracts that are no
longer offered for sale. The current IMS Agreement for VP Core Equity
includes the provision of administrative and transfer agent services, in
addition to investment management services. The proposed IMS Agreement for
VP Core Equity will continue to cover those services. However, the proposed
IMS Agreement includes a new provision authorizing RiverSource Investments,
at its own expense, to delegate the provision of administrative or transfer
agent services to an affiliate or, subject to the Board's prior approval, to
enter into agreements with unaffiliated companies to assist the investment
manager in performing any of the administrative or transfer agent services.
C. Fee schedule.
RiverSource Investments recommended to the Board that the management fees under
the current IMS Agreement be changed consistent with its broader effort to
establish competitive pricing for the funds, while at the same time providing
fair compensation in light of increased costs resulting from changing regulatory
demands and intensified competition for professional talent. RiverSource
Investments proposed management fees which would result in lower management fees
for nineteen retail funds and eighteen variable portfolio funds, higher
management fees for four retail funds and two variable portfolio funds, and no
change to management fees for thirty-six retail funds and two variable portfolio
funds. RiverSource Investments believes that these changes will allow it to
maintain a high level of service to each fund and to hire and retain high
quality investment management and research personnel for each fund. In addition
to impacting current management fees, RiverSource Investments recommended
changes to certain funds' breakpoint schedules. Table B-5 shows how these
recommended changes affect your fund.
Changes to the variable portfolio funds include reduction in the management fee
for transfer agency services, which will be offset in part or in whole by a
0.06% transfer agency fee in a separate transfer agency agreement should
shareholders approve the IMS Agreement.
- --------------------------------------------------------------------------------
19 RIVERSOURCE FUNDS -- PROXY STATEMENT
Management fees are a significant component of the expenses you incur as a
shareholder. You should review your fund's prospectus for your fund's total
expenses to understand the costs you can expect to incur as a shareholder. See
"How the Proposed Fee Schedule Will Affect Total Fund Expenses" for how these
recommendations, if approved, may affect the costs you will incur as a
shareholder.
D. Standard of Care. The proposed IMS Agreement revises the standard of care to
provide that, except for bad faith, intentional misconduct or negligence in
regard to the performance of its duties pursuant to the agreement, neither the
investment manager, nor any of its respective directors, officers, partners,
principals, employees, or agents shall be liable for any acts or omissions or
for any loss suffered by the fund or its shareholders or creditors. This means
that the investment manager is held to a higher standard of care. The current
IMS Agreement provides that, except for bad faith, intentional misconduct or
gross negligence in regard to the performance of its duties pursuant to the
agreement, neither the investment manager, nor any of its respective directors,
officers, partners, principals, employees, or agents shall be liable for any
acts or omissions or for any loss suffered by the fund or its shareholders or
creditors.
E. Confidentiality. The current IMS Agreement contains an acknowledgement by the
fund that the investment manager renders investment advice and other services to
other investment companies and persons which may or may not have investment
policies and investments similar to those of the fund. The proposed IMS
Agreement adds an explicit acknowledgement from the fund that the investment
manager may not be free to divulge to the fund or act, for the benefit of the
fund, upon confidential information learned in connection with its activities,
including the provision of investment advice to clients other than the fund.
The current IMS Agreement is silent on the fund's obligation to refrain from
divulging confidential information. The proposed IMS Agreement includes a new
provision that prohibits the fund from disclosing to third parties any
information or advice furnished to the fund by the investment manager, except
under limited circumstances.
F. Amendments. The current IMS Agreement does not address whether shareholder
approval must be obtained before non-material amendments or modifications may be
made. The proposed IMS Agreement includes a new provision clarifying that the
parties may make non-material amendments or modifications without obtaining
shareholder approval, as permitted under applicable law.
- --------------------------------------------------------------------------------
20 RIVERSOURCE FUNDS -- PROXY STATEMENT
Why RiverSource Investments is Seeking to Restructure Fund Management Fees.
RiverSource Investments believes that each fund generally should have a total
expense ratio at or below the median of a peer group of comparable funds sold
through investment advisers. Working with the Board, RiverSource Investments
developed an approach for carrying out this pricing philosophy whereby it would
use the fee structures that are set forth below, together with expense caps or
waivers to keep each fund at or below the median of the peer group, prior to
giving effect to any performance incentive adjustment. See "Comparison with
Other Mutual Funds" for how this pricing philosophy will be implemented.
RiverSource Investments represented to the Board that the implementation of this
pricing philosophy will enable it to continue to provide high quality services
and to continue its efforts to improve investment performance.
Details of recommended changes are fully set forth under Table B-5. Note that
"Fee decreases" and "Fee increases" are only with respect to the management fee
schedule. See discussion under "How the Proposed Fee Schedule Will Affect Total
Fund Expenses" for more information on other changes to fund fees and expenses.
The factors considered by the Board in determining the reasonableness and
fairness of the fee schedules recommended by the investment manager are
described under "Basis for Recommendation of the Board."
- --------------------------------------------------------------------------------
21 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. Current and Proposed Management Fee Changes
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Retail Fund:
Aggressive Growth No change First $.5 - .89%; next $.5 - First $.5 - .89%; next $.5 - .865%; next
.865%; next $1 - .84%; next $1 - $1 - .84%; next $1 - .815%; next $3 -
.815%; next $3 - .79%; over $6 - .79%; over $6 - .765%
.765%
Balanced No change First $1 - .53%; next $1 - First $1 - .53%; next $1 - .505%; next
.505%; next $1 - .48%; next $3 - $1 - .48%; next $3 - .455%; next $1.5 -
.455%; over $6 - .43% 0.43%; next $2.5 - .41%; next $5 - .39%;
next $9 - 0.37%; over $24 - 0.35%
California Fee decrease First $.25 - .47%; next $.25 - First $.25 - .41%; next $.25 - .385%;
Tax-Exempt .445%; next $.25 - .42%; next next $.25 - .36%; next $.25 - .345%;
$.25 - .405%; over $1 - .38% next $6.5 - .32%; next $2.5 - .31%; next
$5 - .30%; next $9 - .29%; next $26 -
.27; over $50 - .25%
Cash Management Fee decrease First $1 - .36%; next $.5 - First $1.0 - .33%; next $.5 - .313%;
.343%; next $.5 - .325%; next $.5 next $.5 - .295%; next $.5 - .278%; next
- .308%; next $1 - .29%; next $3 $2.5 - .26%; next $1 - .24%; next $1.5 -
- .27%; over $6.5 - .25% .22; next $1.5 - .215%; next $1 - .19%;
next $5 - .18%; next $5 - .17%; next $4
- .16%; over $24 - .15%
Core Bond Fee decrease First $1 - .54%; next $1 - First $1 - .48%; next $1 - .455%; next
.515%; next $1 - .49%; next $3 - $1 - .43%; next $3 - .405%; next $1.5 -
.465%; next $3 - .44%; over $9 - .38%; next $1.5 - .365%; next $1 - .36%;
.415% next $5 - .35%; next $5 - .34%; next $4 -
.33%; next $26 - .31; over $50 - .29%
</Table>
- --------------------------------------------------------------------------------
22 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Disciplined Equity No change First $1 - .60%; next $1 - First $1 - .60%; next $1 - .575%; next
.575%; next $1 - .55%; next $3 - $1 - .55%; next $3 - .525%; next $1.5 -
.525%; next $6 - .50%; next $12 .50%; next $2.5 - .485%; next $5 - .47%;
- .49%; over $24 - .48% next $5 - .45%; next $4 - .425%; next $26
- .40%; over $50 - .375%
Diversified Bond Fee decrease First $1 - .52%; next - .495%; First $1 - .48%; next $1 - .455%; next
next $1 - .47%; next $3 - .445%; $1 - .43%; next $3 - .405%; next $1.5 -
next $3 - .42%; over $9 - .395% .38%; next $1.5 - .365%; next $1 - .36%;
next $5 - .35%; next $5 - .34%; next $4 -
.33%; next $26 - .31%; over $50 - .29%
Diversified Equity Fee increase First $.5 - .53%; next $.5 - First $1 - .60%; next $1 - .575%; next
Income .505%; next $1 - .48%; next $1 - $1 - .55%; next $3 - .525%; next $1.5 -
.455%; next $3 - .43%; over $6 - .50%; next $2.5 - .485%; next $5 - .47%;
.40% next $5 - .45%; next $4 - .425%; next $26
- .40%; over $50 - .375%
Dividend No change First $.5 - .61%; next $.5 - First $.5 - .61%; next $.5 - .585%; next
Opportunity .585%; next $1 - .56%; next $1 - $1 - .56%; next $1 - .535%; next $3 -
.535%; next $3 - .51%; over $6 - .51%; next $4 - .48%; next $5 - .47%;
.48% next $5 - .45%; next $4 - .425%; next
$26 - .40%; over $50 - .375%
Emerging Markets No change First $.25 - 1.10%; next $.25 - First $.25 - 1.10%; next $.25 - 1.08%;
1.08%; next $.25 - 1.06%; next next $.25 - 1.06%; next $.25 - 1.04%;
$.25 - 1.04%; next $1 - 1.02%; next $1 - 1.02%; next $5.5 - 1.0%; next
over $2 - 1.0% $2.5 - .985%; next $5 - .97%; next $5 -
.96%; next $4 - .935%; next $26 - .92%;
over $50 - .90%
</Table>
- --------------------------------------------------------------------------------
23 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Equity Value No change First $.5 - .53%; next $.5 - First $.5 - .53%; next $.5 - .505%; next
.505%; next $1 - .48%; next $1 - $1 - .48%; next $1 - .455%; next $3 -
.455%; next $3 - .43%; over $6 - .43%; over $6 - .40%
.40%
European Equity No change First $.25 - .80%; next $.25 - First $.25 - .80%; next $.25 - .775%;
.775%; next $.25 - .75%; next next $.25 - .75%; next $.25 - .725%; next
$.25 - .725%; next $1 - .70%; $1 - .70%; next $5.5 - .675%; next $2.5
over $2 - .675% - .66%; next $5 - .645%; next $5 - .635%;
next $4 - .61%; next $26 - .60%; over
$50 - .57%
Fundamental Growth No change First $1 - .78%; next $1 - First $1 - .78%; next $1 - .755%; next
.755%; next $1 - .73%; next $3 - $1 - .73%; next $3 - .705%; over $6 -
.705%; over $6 - .68% .68%
Fundamental Value No change First $.5 - .73%; next $.5 - First $.5 - .73%; next $.5 - .705%; next
.705%; next $1 - .68%; next $1 - $1 - .68%; next $1 - .655%; next $3 -
.655%; next $3 - .63%; over $6 - .63%; over $6 - .60%
.60%
Global Bond Fee decrease First $.25 - .77%; next $.25 - First $.25 - .72%; next $.25 - .695%;
.745%; next $.25 - .72%; next next $.25 - .67%; next $.25 - .645%;
$.25 - .695%; over $1 - .67% next $6.5 - .62%; next $2.5 - .605%;
next $5 - .59%; next $5 - .58%; next
$4 - .56%; next $26 - .54%; over $50 -
.52%
Global Equity No change First $.25 - .80%; next $.25 - First $.25 - .80%; next $.25 - .775%;
.775%; next $.25 - .75%; next next $.25 - .75%; next $.25 - .725%;
$.25 - .725%; next $1 - .70%; next $1 - .70%; next $5.5 - .675%; next
over $2 - .675% $2.5 - .66%; next $5 - .645%; next $5 -
.635%; next $4 - .61%; next $26 - .60%;
over $50 - .57%
</Table>
- --------------------------------------------------------------------------------
24 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Global Technology No change First $.25 - .72%; next $.25 - First $.25 - .72%; next $.25 - .695%;
.695%; next $.25 - .67%; next next $.25 - .67%; next $.25 - .645%; next
$.25 - .645%; next $1 - .62%; $1 - .62%; over $2 - .595%
over $2 - .595%
Growth No change First $1 - .60%; next $1 - First $1 - .60%; next $1 - .575%; next
.575%; next $1 - .55%; next $3 - $1 - .55%; next $3 - .525%; next $1.5 -
.525%; next $6 - .50%; next $12 .50%; next $2.5 - .485%; next $5 - .47%;
- .49%; over $24 - .48% next $5 - .45%; next $4 - .425%; next
$26 - .40%; over $50 - .375%
High Yield Bond No change First $1 - .59%; next $1 - First $1 - .59%; next $1 - .565%; next
.565%; next $1 - .54%; next $3 - $1 - .54%; next $3 - .515%; next $1.5 -
.515%; next $3 - .49%; over $9 - .49%; next $1.5 - .475%; next $1 - .45%;
.465% next $5 - .435%; next $5 - .425%; next
$4 - .40%; next $26 - .385%; over $50 -
.36%
Income No change First $1 - .61%; next $1 - First $1 - .61%; next $1 - .585%; next
Opportunities .585%; next $1 - .56%; next $3 - $1 - .56%; next $3 - .535%; next $1.5 -
.535%; next $3 - .51%; over $9 - .51%; next $1.5 - .495%; next $1 - .47%;
.485% next $5 - .455%; next $5 - .445%; next $4
- .42%; next $26 - .405%; over $50 - .38%
Inflation No change First $1 - .44%; next $1 - First $1 - .44%; next $1 - .415%; next
Protected .415%; next $1 - .39%; next $3 - $1 - .39%; next $3 - .365%; next $1.5 -
Securities .365%; next $3 - .34%; over $9 - .34%; next $1.5 - .325%; next $1 - .32%;
.315% next $5 - .31%; next $5 - .30%; next $4 -
.29%; next $26 - .27%; over $50 - .25%
</Table>
- --------------------------------------------------------------------------------
25 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Intermediate Fee decrease First $1 - .45%; next $1 - First $1 - .39%; next $1 - .365%; next
Tax-Exempt .425%; next $1 - .4%; next $3 - $1 - .34%; next $3 - .315%; next $1.5 -
.375%; over $6 - .35% .29%; next $2.5 - .28%; next $5 - .27% ;
next $35 - .26%; over $50 - .25%
International No change First $.25 - 1.00%; next $.25 - First $.25 - 1.00%; next $.25 - .975%;
Aggressive Growth .975%; next $.25 - .95%; next next $.25 - .95%; next $.25 - .925%;
$.25 - .925%; next $1 - .90%; next $1 - .90%; over $2 - .875%
over $2 - .875%
International No change First $.25 - .97%; next $.25 - First $.25 - .97%; next $.25 - .945%;
Equity .945%; next $.25 - .92%; next next $.25 - .92%; next $.25 - .895%; next
$.25 - .895%; next $1 - .87%; $1 - .87%; over $2 - .845%
over $2 - .845%
International No change First $.25 - .80%; next $.25 - First $.25 - .80%; next $.25 - .775%;
Opportunity .775%; next $.25 - .75%; next next $.25 - .75%; next $.25 - .725%; next
$.25 - .725%; next $1 - .70%; $1 - .70%; next $5.5 - .675%; next $2.5 -
over $2 - .675% .66%; next $5 - .645%; next $5 - .635%;
next $4 - .61%; next $26 - .60%; over
$50 - .57%
International No change First $.25 - .90%; next $.25 - First $.25 - .90%; next $.25 - .875%;
Select Value .875%; next $.25 - .85%; next next $.25 - .85%; next $.25 - .825%;
$.25 - .825%; next $1 - .80%; next $1 - .80%; over $2 - .775%
over $2 - .775%
International No change First $.25 - 1.12%; next $.25 - First $.25 - 1.12%; next $.25 - 1.095%;
Small Cap 1.095%; next $.25 - 1.07%; next next $.25 - 1.07%; next $.25 - 1.045%;
$.25 - 1.045%; next $1 - 1.02%; next $1 - 1.02%; over $2 - .995%
over $2 - .995%
Large Cap Equity No change First $1 - .60%; next $1 - First $1 - .60%; next $1 - .575%; next
.575%; next $1 - .55%; next $3 - $1 - .55%; next $3 - .525%; next $1.5 -
.525%; next $6 - .50%; next $12 .50%; next $2.5 - .485%; next $5 - .47%;
- .49%; over $24 - .48% next $5 - .45%; next $4 - .425%; next
$26 - .40%; over $50 - .375%
</Table>
- --------------------------------------------------------------------------------
26 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Large Cap Value No change First $1 - .60%; next $1 - First $1 - .60%; next $1 - .575%; next
.575%; next $1 - .55%; next $3 - $1 - .55%; next $3 - .525%; next $1.5 -
.525%; next $6 - .50%; next $12 .50%; next $2.5 - .485%; next $5 - .47%;
- .49%; over $24 - .48% next $5 - .45%; next $4 - .425%; next
$26 - .40%; over $50 - .375%
Limited Duration Fee decrease First $1 - .54%; next $1 - First $1 - .48%; next $1 - .455%; next
Bond .515%; next $1 - .49%; next $3 - $1 - .43%; next $3 - .405%; next $1.5 -
.465%; next $3 - .44%; over $9 - .38%; next $1.5 - .365%; next $1 - .36%;
.415% next $5 - .35%; next $5 - .34%; next $4
- .33%; next $26 - .31%; over $50 - .29%
Massachusetts Fee decrease First $.25 - .47%; next $.25 - First $.25 - .41%; next $.25 - .385%;
Tax-Exempt .445%; next $.25 - .42%; next next $.25 - .36%; next $.25 - .345%;
$.25 - .405%; over $1 - .38% next $6.5 - .32%; next $2.5 - .31%; next
$5 - .30%; next $9 - .29%; next $26 -
.27%; over $50 - .25%
Michigan Tax-Exempt Fee decrease First $.25 - .47%; next $.25 - First $.25 - .41%; next $.25 - .385%;
.445%; next $.25 - .42%; next next $.25 - .36%; next $.25 - .345%;
$.25 - .405%; over $1 - .38% next $6.5 - .32%; next $2.5 - .31%; next
$5 - .30%; next $9 - .29%; next $26 -
.27; over $50 - .25
Mid Cap Growth Fee increase First $1 - .60%; next $1 - .575%; First $1 - .70%; next $1 - .675%; next $1
next $1 - .55%; next $3 - .525%; - .65%; next $3 - .625%; next $1.5 -
next $6 - .50%; next $12 - .49%; .60%; next $2.5 - .575%; next $5 - .55%;
over $24 - .48% next $9 - .525%; next $26 - .50%; over
$50 - .475%
</Table>
- --------------------------------------------------------------------------------
27 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Mid Cap Value No change First $1 - .70%; next $1 - First $1 - .70%; next $1 - .675%; next
.675%; next $1 - .65%; next $3 - $1 - .65%; next $3 - .625%; next $1.5 -
.625%; next $6 - .60%; next $12 .60%; next $2.5 - .575%; next $5 - .55%;
- .59%; over $24 - .58% next $9 - .525%; next $26 - .50%; over
$50 - .475%
Minnesota Fee decrease First $.25 - .47%; next $.25 - First $.25 - .41%; next $.25 - .385%;
Tax-Exempt .445%; next t $.25 - .42%; next next $.25 - .36%; next $.25 - .345%;
$.25 - .405%; over $1 - .38% next $6.5 - .32%; next $2.5 - .31%; next
$5 - .30%; next $9 - .29%; next $26 -
.27%; over $50 - .25%
New York Tax-Exempt Fee decrease First $.25 - .47%; next $.25 - First $.25 - .41%; next $.25 - .385%;
.445%; next $.25 - .42%; next next $.25 - .36%; next $.25 - .345%; next
$.25 - .405%; over $1 - .38% $6.5 - .32%; next $2.5 - .31%; next $5 -
.30%; next $9 - .29%; next $26 - .27%;
over $50 - .25%
Ohio Tax-Exempt Fee decrease First $.25 - .47%; next $.25 - First $.25 - .41%; next $.25 - .385%;
.445%; next $.25 - .42%; next next $.25 - .36%; next $.25 - .345%;
$.25 - .405%; over $1 - .38% next $6.5 - .32%; next $2.5 - .31%; next
$5 - .30%; next $9 - .29%; next $26 -
.27%; over $50 - .25%
Portfolio Builder No change All assets - .08% All assets - .08%
Aggressive
</Table>
- --------------------------------------------------------------------------------
28 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio Builder No change All assets - .08% All assets - .08%
Conservative
Portfolio Builder No change All assets - .08% All assets - .08%
Moderate
Portfolio Builder No change All assets - .08% All assets - .08%
Moderate Aggressive
Portfolio Builder No change All assets - .08% All assets - .08%
Moderate
Conservative
Portfolio Builder No change All assets - .08% All assets - .08%
Total Equity
Precious Metals No change First $.25 - .80%; next $.25 - First $.25 - .80%; next $.25 - .775%;
.775%; next $.25 - .75%; next next $.25 - .75%; next $.25 - .725%;
$.25 - .725%; next $1 - .70%; next $1 - .70%; over $2 - .675%
over $2 - .675%
Real Estate No change First $1 - .84%; next $1 - First $1 - .84%; next $1 - .815%; next
.815%; next $1 - .79%; next $3 - $1 - .79%; next $3 - .765%; next $6 -
.765%; next $6 - .74%; next $12 .74%; next $12 - .73%; over $24 - .72%
- .73%; over $24 - .72%
S&P 500 Index Fee decrease First $1 - .24; next $1 - .23%; First $1 - .22%; next $1 - .21%; next $1
next $3 - .22%; over $5 - .21% - .20%; next $4.5 - .19%; next $2.5 -
.18%; next $5 - .17%; next $9 - .16%;
next $26 - .14%; over $50 - .12%
Select Value No change First $.5 - .78%; next $.5 - First $.5 - .78%; next $.5 - .755%; next
.755%; next $1 - .73%; next $1 - $1 - .73%; next $1 - .705%; next $3 -
.705%; next $3 - .68%; over $6 - .68%; over $6 - .65%
.65%
Short Duration Fee decrease First $1 - .52%; next $1 - First $1 - .48%; next $1 - .455%; next
U.S. Gov't .495%; next $1 - .47%; next $3 - $1 - .43%; next $3 - .405%; next $1.5 -
.445%; next $3 - .42%; over $9 - .38%; next $1.5 - .365%; next $1 - .34%;
.395% next $5 - .325%; next $5 - .315%; next
$4 - .29%; next $26 - .275%; over $50 -
.25%
</Table>
- --------------------------------------------------------------------------------
29 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Small Cap Advantage Fee increase First $.25 - .74%; next $.25 - First $.25 - .79%; next $.25 - .765%;
.715%; next $.25 - .69%; next next $.25 - .74%; next $.25 - .715%;
$.25 - .665%; next $1 - .64%; next $1 - .69%; over $2 - .665%
over $2 - .615%
Small Cap Equity No change First $.25 - .97%; next $.25 - First $.25 - .97%; next $.25 - .945%;
.945%; next $.25 - .92%; next next $.25 - .92%; next $.25 - .895%;
$.25 - .895%; over $1 - .87% over $1 - .87%
Small Cap Growth No change First $.25 - .92%; next $.25 - First $.25 - .92%; next $.25 - .895%;
.895%; next $.25 - .87%; next next $.25 - .87%; next $.25 - .845%;
$.25 - .845%; next $1 - .82%; next $1 - .82%; over $2 - .795%
over $2 - .795%
Small Cap Value No change First $.25 - .97%; next $.25 - First $.25 - .97%; next $.25 - .945%;
.945%; next $.25 - .92%; next next $.25 - .92%; next $.25 - .895%;
$.25 - .895%; over $1 - .87% over $1 - .87%
Small Company Index Fee decrease First $.25 - .38%; next $.25 - First $.25 - .36%; next $.25 - .35%;
.37%; next $.25 - .36%; next $.25 next $.25 - .34%; next $.25 - .33%; next
- .35%; over $1 - .34% $6.5 - .32%; next $7.5 - .30%; next $9 -
.28%; next $26 - .26%; over $50 - .24%
Strategic Fee increase First $.5 - .53%; next $.5 - First $1 - .57%; next $1 - .545%; next
Allocation .505%; next $1 - .48%; next $1 - $1 - .52%; next $3 - .495%; next $1.5 -
.455%; next $3 - .43%; over $6 - 0.47%; next $2.5 - .45%; next $5 - .43%;
0.40% next $9 - 0.41%; over $24 - 0.39%
Tax-Exempt Bond Fee decrease First $1 - .45%; next $1 - First $1 - .41%; next $1 - .385%; next
.425%; next $1 - .4%; next $3 - $1 - .36%; next $3 - .335%; next $1.5 -
.375%; over $6 - .35% .31%; next $2.5 - .30%; next $5 - .29%;
next $9 - .28%; next $26 - .26%; over
$50 - .25%
</Table>
- --------------------------------------------------------------------------------
30 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Tax-Exempt High Fee decrease First $1 - .49%; next $1 - First $1 - .47%; next $1 - .445%; next
Income .465%; next $1 - .44%; next $3 - $1 - .42%; next $3 - .395%; next $1.5 -
.415%; next $3 - .39%; over $9 - .37%; next $2.5 - .36%; next $5 - .35%;
.36% next $9 - .34%; next $26 - .32%; over
$50 - .30%
Tax-Exempt Money Fee decrease First $1.0 - .36%; next $.5 - First $1.0 - .33%; next $.5 - .313%;
Market .343%; next $.5 - .325%; next next $.5 - .295%; next $.5 - .278%;
$.5 - .308%; next $1 - .29%; next next $2.5 - .26%; next $1 - .24%; next
$3 - .27%; over $6.5 - .25% $1.5 - .22; next $1.5 - .215%; next $1
- .19%; next $5 - .18%; next $5 - .17%;
next $4 - .16%; over $24 - .15%
U.S. Gov't Mortgage Fee decrease First $1 - .52%; next $1 - First $1 - .48%; next $1 - .455%; next
.495%; next $1 - .47%; next $3 - $1 - .43%; next $3 - .405%; next $1.5 -
.445%; next $3 - .42%; over $9 - .38%; next $1.5 - .365%; next $1 -
.395% .36%; next $5 - .35%; next $5 - .34%;
next $4 - .33%; next $26 - .31; over $50
- .29%
Value No change First $.5 - .73%; next $.5 - First $.5 - .73%; next $.5 - .705%; next
.705%; next $1 - .68%; next $1 - $1 - .68%; next $1 - .655%; next $3 -
.655%; next $3 - .63%; over $6 - .63%; over $6 - .60%
.60%
</Table>
- --------------------------------------------------------------------------------
31 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
Variable Portfolio Fund:
VP Balanced Remove fees for First $.5 - .63%; next $.5 - First $1 - .53%; next $1 - .505%; next
Transfer Agent (TA) .615%; next $1 - .60%; next $1 - $1 - .48%; next $3 - .455%; next $1.5 -
services; Fee decrease .585%; next $3 - .57%; over $6 - 0.43%; next $2.5 - .41%; next $5 - .39%;
.55% next $9 - 0.37%; over $24 - 0.35%
VP Cash Management Remove fees for TA First $1 - .51%; next $.5 - First $1 - .33%; next $.5 - .313%; next
services; Fee decrease .493%; next $.5 - .475%; next $.5 $.5 - .295%; next $.5 - .278%; next
- .458%; next $1 - .44%; next $3 $2.5 - .26%; next $1 - .24%; next $1.5 -
- .44%; over $7.5 - .44% .22%; next $1.5 - .215%; next $1 -
.19%; next $5 - .18%; next $5 - .17%;
next $4 - .16%; over $24 - .15%
VP Core Bond Remove fees for TA First $1 - .63%; next $1 - First $1 - .48%; next $1 - .455%; next
services; Fee decrease .615%; next $1 - .60%; next $3 - $1 - .43%; next $3 - .405%; next $1.5 -
.585%; next $3 - .57%; over $9 - .38%; next $1.5 - .365%; next $1 -
.555% .36%; next $5 - .35%; next $5 - .34%;
next $4 - .33%; next $26 - .31%; over
$50 - .29%
VP Core Equity No change All assets - .40% All assets - .40%
VP Diversified Bond Remove fees for TA First $1 - .61%; next $1 - First $1 - .48%; next $1 - .455%; next
services; Fee decrease .595%; next $1 - .58%; next $3 - $1 - .43%; next $3 - .405%; next $1.5 -
.565%; next $3 - .55%; over $9 - .38%; next $1.5 - .365%; next $1 -
.535% .36%; next $5 - .35%; next $5 - .34%;
next $4 - .33%; next $26 - .31%; over
$50 - .29%
</Table>
- --------------------------------------------------------------------------------
32 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
VP Diversified Remove fees for TA First $.5 - .56%; next $.5 - First $1 - .60%; next $1 - .575%; next
Equity Income services; Fee decrease .545%; next $1 - .53%; next $1 - $1 - .55%; next $3 - .525%; next $1.5 -
.515%; next $3 - .50%; over $6 - .50%; next $2.5 - .485%; next $5 -
.47% .47%; next $5 - .45%; next $4 - .425%;
next $26 - .40%; over $50 - .375%
VP Emerging Markets Remove fees for TA First $.25 - 1.17%; next $.25 - First $.25 - 1.10%; next $.25 - 1.08%;
services; Fee decrease 1.155%; next $.25 - 1.14%; next next $.25 - 1.06%; next $.25 - 1.04%;
$.25 - 1.125%; next $1 - 1.110%; next $1 - 1.02%; next $5.5 - 1.0%; next
over $2 - 1.095% $2.5 - .985%; next $5 - .97%; next $5 -
.96%; next $4 - .935%; next $26 - .92%;
over $50 - .90%
VP Global Bond Remove fees for TA First $.25 - .84%; next $.25 - First $.25 - .72%; next $.25 - .695%;
services; Fee decrease .825%; next $.25 - .81%; next next $.25 - .67%; next $.25 - .645%;
$.25 - .795%; over $1 - .78%; next $6.5 - .62%; next $2.5 - .605%;
next $5 - .59%; next $5 - .58%; next $4
- .56%; next $26 - .54%; over $50 - .52%
VP Global Remove fees for TA First $1 - .49%; next $1 - First $1 - .44%; next $1 - .415%; next
Inflation services; Fee decrease .475%; next $1 - .46%; next $3 - $1 - .39%; next $3 - .365%; next $1.5 -
Protected .445%; next $3 - .43%; over $9 - .34%; next $1.5 - .325%; next $1 - .32%;
Securities .415% next $5 - .31%; next $5 - .30%; next $4
- .29%; next $26 - .27%; over $50 - .25%
VP Growth Remove fees for TA First $1 - .63%; next $1 - First $1 - .60%; next $1 - .575%; next
services; Fee decrease .615%; next $1 - .600%; next $3 - $1 - .55%; next $3 - .525%; next $1.5 -
.585%; next $6 - .57%; next $12 .50%; next $2.5 - .485%; next $5 - .47%;
- .57%; over $24 - .57% next $5 - .45%; next $4 - .425%; next
$26 - .40%; over $50 - .375%
- --------------------------------------------------------------------------------
33 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
VP High Yield Bond Remove fees for TA First $1 - .62%; next $1 - First $1 - .59%; next $1 - .565%; next
services; Fee decrease .605%; next $1 - .59%; next $3 - $1 - .54%; next $3 - .515%; next $1.5 -
.575%; next $3 - .56%; over $9 - .49%; next $1.5 - .475%; next $1 - .45%;
.545% next $5 - .435%; next $5 - .425%; next
$4 - .40%; next $26 - .385%; over $50 -
.36%
VP Income Remove fees for TA First $1 - .64%; next $1 - First $1 - .61%; next $1 - .585%; next
Opportunities services; Fee decrease .625%; next $1 - .61%; next $3 - $1 - .56%; next $3 - .535%; next $1.5 -
.595%; next $3 - .58%; over $9 - .51%; next $1.5 - .495%; next $1 - .47%;
.565% next $5 - .455%; next $5 - .445%; next
$4 - .42%; next $26 - .405%; over $50 -
.38%
VP International Remove fees for TA First $.25 - .87%; next $.25 - First $.25 - .80%; next $.25 - .775%;
Opportunity services; Fee decrease .855%; next $.25 - .84%; next next $.25 - .75%; next $.25 - .725%;
$.25 - .825%; next $1 - .81%; next $1 - .70%; next $5.5 - .675%; next
over $2 - .795% $2.5 - .66%; next $5 - .645%; next $5 -
.635%; next $4 - .61%; next $26 - .60%;
over $50 - .57%
VP Large Cap Equity Remove fees for TA First $1 - .63%; next $1 - First $1 - .60%; next $1 - .575%; next
services; Fee decrease .615%; next $1 - .600%; next $3 - $1 - .55%; next $3 - .525%; next $1.5 -
.585%; next $6 - .57%; next $12 .50%; next $2.5 - .485%; next $5 - .47%;
- .57%; over $24 - .57% next $5 - .45%; next $4 - .425%; next
$26 - .40%; over $50 - .375%
VP Large Cap Value Remove fees for TA First $1 - .63%; next $1 - First $1 - .60%; next $1 - .575%; next
services; Fee decrease .615%; next $1 - .600%; next $3 - $1 - .55%; next $3 - .525%; next $1.5 -
.585%; next $6 - .57%; next $12 .50%; next $2.5 - .485%; next $5 - .47%;
- .57%; over $24 - .57% next $5 - .45%; next $4 - .425%; next
$26 - .40%; over $50 - .375%
</Table>
- --------------------------------------------------------------------------------
34 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
VP Mid Cap Growth Remove fees for TA First $.25 - .65%; next $.25 - First $1 - .70%; next $1 - .675%; next
services; Fee decrease .635%; next $.25 - .62%; next $1 - .65%; next $3 - .625%; next $1.5 -
$.25 - .605%; next $1 - .59%; .60%; next $2.5 - .575%; next $5 - .55%;
next $1 - .575%; over $3 - .56% next $9 - .525%; next $26 - .50%; over
$50 - .475%
VP Mid Cap Value Remove fees for TA First $1 - .73%; next $1 - First $1 - .70%; next $1 - .675%; next
services; Fee decrease .705%; next $1 - .68%; next $3 - $1 - .65%; next $3 - .625%; next $1.5 -
.655%; next $6 - .63%; next $12 .60%; next $2.5 - .575%; next $5 - .55%;
- .62%; over $24 - .61% next $9 - .525%; next $26 - .50%; over
$50 - .475%
VP S&P 500 Index Remove fees for TA First $1 - .29%; next $1 - .28%; First $1 - .22%; next $1 - .21%; next $1
services; Fee decrease next $3 - .27%; over $5 - .26% - .20%; next $4.5 - .19%; next $2.5 -
.18%; next $5 - .17%; next $9 - .16%;
next $26 - .14%; over $50 - .12%
VP Select Value Remove fees for TA First $.5 - .81%; next $.5 - First $.5 - .78%; next $.5 - .755%; next
services; Fee decrease .795%; next $1 - .78%; next $1 - $1 - .73%; next $1 - .705%; next $3 -
.765%; next $3 - .75%; over $6 - .68%; over $6 - .65%
.72%
</Table>
- --------------------------------------------------------------------------------
35 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table B-5. (continued)
<Table>
<Caption>
Fee
Change to (annual rate; in billions)
Current Effective -------------------------------------------------------------------------------
Fund Management Fee Current Proposed
- ----------------------------------------------------------------------------------------------------------------------------
VP Short Duration Remove fees for TA First $1 - .61%; next $1 - First $1 - .48%; next $1 - .455%; next
U.S. Gov't services; Fee decrease .595%; next $1 - .58%; next $3 - $1 - .43%; next $3 - .405%; next $1.5 -
.565%; next $3 - .55%; over $9 - .38%; next $1.5 - .365%; next $1 -
.535% .34%; next $5 - .325%; next $5 - .315%;
next $4 - .29%; next $26 - .275%; over
$50 - .25%
VP Small Cap Remove fees for TA First $.25 - .79%; next $.25 - First $.25 - .79%; next $.25 - .765%;
Advantage services; Fee decrease .77%; next $.25 - .75%; next next $.25 - .74%; next $.25 - .715%;
$.25 - .73%; next $1 - .71%; over next $1 - .69%; over $2 - .665%
$2 - .65%
VP Small Cap Value Remove fees for TA First $.25 - 1.02%; next $.25 - First $.25 - .97%; next $.25 - .945%;
services; Fee decrease 1.00%; next $.25 - .98%; next next $.25 - .92%; next $.25 - .895%;
$.25 - .96%; next $1 - .94%; over over $1 - .87%
$2 - .92%
</Table>
Fund Expenses. Total fees and expenses the fund actually paid as well as the
fees and expenses the fund would have paid if the proposed IMS Agreement had
been in effect for the last fiscal year are shown in Table D-6.
How the Proposed Fee Schedule Will Affect Total Fund Expenses. It has become
increasingly expensive to operate mutual funds due to changing regulatory
demands and intensified competition for professional talent. RiverSource
Investments is seeking to establish a pricing philosophy with a goal of
maintaining competitive pricing for all the RiverSource funds for which
RiverSource Investments and its affiliates provide investment management, fund
administration, transfer agency, distribution and other services. Certain
changes already have been made in contracts with affiliates of RiverSource
Investments, as discussed below.
In September 2005, the Board approved changes to the administrative service fee
schedules bringing into line different pricing methodologies that had developed
among the funds. This resulted in decreased administrative services fees for a
few funds and a modest increase for most funds. The Board determined these
changes were necessary to support increased costs. However, the effect of these
increased administrative services fees for certain funds was limited, in part or
in whole by expense caps or waivers. For the variable portfolio funds,
RiverSource Investments has proposed moving transfer agent services from the IMS
Agreement to a new transfer agent agreement.
- --------------------------------------------------------------------------------
36 RIVERSOURCE FUNDS -- PROXY STATEMENT
The impact of moving transfer agent fees from the IMS Agreement fee schedules
varies by fund and decreases the rate between 0.03% and 0.15% of average daily
net assets. If the recommended variable portfolio fund IMS Agreement is
approved, the Board has approved a new transfer agent agreement with a uniform
0.06% transfer agent fee to be established for each variable portfolio fund,
which RiverSource Service Corporation has determined is consistent with the cost
of providing those services.
The net impact of these fee and expense changes, if shareholders approve the
recommendations, as well as fees and expenses the fund would have paid if the
proposed IMS Agreement and all other changes had been in effect for the last
fiscal year are shown in Table D-7.
With the proposed changes to the management fees, and the other changes that
have been approved by the Board, RiverSource Investments and its affiliates
represent that they will be able to:
o Continue efforts to improve investment performance.
o Continue to manage the day-to-day business affairs of the funds.
o Continue to make required investments to cover the increased costs of
operating the funds.
o Retain and attract highly qualified investment professionals.
o Retain and attract additional operations and compliance personnel, and
continue to develop technology solutions to operate in the current
regulatory environment.
o Maintain and improve the competitiveness of the funds by implementing a
pricing philosophy that generally establishes median net expenses for the
fund at or below each fund's peer group median net expenses as reviewed by
the Board on an annual basis.
o Continue to offer a high level of service to fund shareholders and take
steps to enhance those services.
o Seek to earn an appropriate return on investments.
- --------------------------------------------------------------------------------
37 RIVERSOURCE FUNDS -- PROXY STATEMENT
Comparison with Other Mutual Funds. One important factor in determining the
proposed management fee scale for each RiverSource fund involves comparisons
with other mutual funds from across the industry which are sold through
investment advisers and have similar investment objectives, asset size, and
services. At least annually, Lipper Inc. or another independent analytical firm
prepares an analysis for each fund comparing total expenses (Lipper Comparison
Group). The pricing philosophy that has been agreed to between the Board and
RiverSource is to maintain the total expense ratios for most funds at or below
the median of their Lipper Comparison Group, excluding the impact of the
performance incentive adjustments for equity funds and the balanced funds. The
pricing philosophy will be administered through an annual review. If at the time
of the annual review a fund's total expense ratio exceeds the median of its
Lipper Comparison Group by 0.03%, RiverSource Investments and its affiliates
will contractually agree to an expense cap or waiver. For the other funds, such
as those managed by sub-advisers investing in small companies or those that
invest in specific market segments, RiverSource Investments has agreed to
provide services at competitive rates.
If shareholders approve the recommended management fee changes, each RiverSource
fund, with certain limited exceptions, for the upcoming year will be at or below
the median expense ratio of its Lipper Comparison Group (after giving effect to
expense caps and fee waivers contractually agreed to by the investment manager
and its affiliates, but before giving effect to any performance incentive
adjustment).
For RiverSource variable portfolio funds, under the proposed schedules,
management and administration fees are set equal to comparable retail funds,
thereby achieving full consistency in comparison to retail RiverSource funds,
for similar services provided. Servicing and distribution fees for variable
portfolio funds are set in recognition of the services provided and the cost of
providing those services. While the RiverSource variable portfolio funds are
compared to other variable portfolio funds offered in insurance and annuity
contracts, less reliance is placed on these comparisons because other variable
portfolio funds are often priced based on separate insurance and annuity
contract pricing, which limits the usefulness of the comparison on a
fund-to-fund basis. The Board will include this in its analysis, as well as
considering unique circumstances for each specific variable portfolio fund, as
it considers possible exceptions to its pricing philosophy.
- --------------------------------------------------------------------------------
38 RIVERSOURCE FUNDS -- PROXY STATEMENT
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 Financial 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 work, 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 all 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 later of (i) the effective date of the spin-off; or (ii) the approval of a
new investment management services agreement with Ameriprise Financial (or its
subsidiary) 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
(the "1940 Act") and, therefore, would not cause the termination of the IMS
Agreement according to its terms, Schulte Roth & Zabel LLP, 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 evaluated whether to approve a proposed IMS Agreement for each fund
with post-spin Ameriprise Financial. Schulte Roth & Zabel LLP 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
- --------------------------------------------------------------------------------
39 RIVERSOURCE FUNDS -- PROXY STATEMENT
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 October 1, 2005, pursuant to an agreement between the Fund and Ameriprise
Financial, the IMS Agreement was transferred to RiverSource Investments, 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.
The Board's Specific Considerations Relating to the Proposed IMS Agreement. 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.
- --------------------------------------------------------------------------------
40 RIVERSOURCE FUNDS -- PROXY STATEMENT
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
Company) should enable RiverSource Investments to continue to provide a high
quality 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 and RiverSource
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
(including RiverSource) would be in a position to continue to provide a high
quality of investment management services to the funds.
- --------------------------------------------------------------------------------
41 RIVERSOURCE FUNDS -- PROXY STATEMENT
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 Sept. 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 Ameriprise Financial (including RiverSource and other
subsidiaries) to its institutional clients and paid to subadvisers. The Board
studied RiverSource Investments' effort (its "pricing philosophy") to set most
funds' total expense ratios at or below the median expense ratio of their peer
groups. 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 enter into contractual expense
caps or waivers to achieve this pricing objective whenever at the annual review
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
Diversified Equity Income, Mid Cap Growth, Small Cap Advantage, Strategic
Allocation, Variable Portfolio Diversified Equity Income and Variable Portfolio
Mid Cap Growth, fees under the proposed IMS Agreements would stay the same or
decrease and that, with respect to Diversified Equity Income, Mid Cap Growth,
Small Cap Advantage, VP Diversified Equity Income and VP Mid Cap Growth fees,
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 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 appropriate index for each fund for the comparison of performance; (ii) the
methodology for determining when the Board may change an index used to
- --------------------------------------------------------------------------------
42 RIVERSOURCE FUNDS -- PROXY STATEMENT
calculate the performance incentive adjustment; (iii) the periods used for
averaging the fund's 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 subadvised 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 their relationship with the funds, 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
subadvisers, 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.
- --------------------------------------------------------------------------------
43 RIVERSOURCE FUNDS -- PROXY STATEMENT
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 a 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 by a Fund,
the Board will consider appropriate steps to take for that fund.
- --------------------------------------------------------------------------------
44 RIVERSOURCE FUNDS -- PROXY STATEMENT
PROPOSAL 4: APPROVE OR REJECT CHANGES IN THE SUBADVISORY AGREEMENT WITH
KENWOOD CAPITAL MANAGEMENT LLC
(Applies to: Small Cap Advantage, VP Small Cap Advantage)
Kenwood Capital Management LLC ("Kenwood") is a registered investment adviser
with particular expertise in investments in small capitalization companies.
Kenwood is an affiliate of Ameriprise Financial that acts as subadviser for the
fund under a subadvisory agreement between Kenwood and RiverSource Investments
(the "Kenwood Agreement"). RiverSource Investments recommended to the Board that
the fee schedule for the Kenwood Agreement be changed to help ensure that
Kenwood receives fees for its services that will allow it to attract and retain
high quality investment management and research personnel and to continue
efforts to improve performance for the benefit of shareholders in the future.
The proposed change in the Kenwood Agreement includes an increase in the fee as
well as the addition of a performance incentive adjustment. The fee is paid to
Kenwood by RiverSource Investments, not by the fund. This change will not affect
the cost to shareholders. A separate proposal to increase fees paid by the fund
to RiverSource Investments is discussed in Proposal 3.
Terms of the Current Kenwood Agreement. The current fee paid by RiverSource
Investments to Kenwood for managing fund assets is 0.35% of average daily net
assets. The complete fee schedule for the fund and other funds managed by
RiverSource Investments is found in Section D. The initial approval of the
Kenwood Agreement by shareholders was on June 16, 1999.
Proposed Kenwood Agreement Compared to the Current Kenwood Agreement. The terms
of the proposed Kenwood Agreement are the same as the current Kenwood Agreement
except for (1) the change in the fee schedule and (2) the addition of a
performance incentive adjustment. The proposed fee schedule is as follows:
Proposed Subadvisory Fee*
(annual rate, in millions)
First $100 0.600%
Next 100 0.550%
Next 100 0.525%
Next 100 0.500%
Next 100 0.475%
Over 500 0.450%
* For the combined assets of Small Cap Advantage and VP Small Cap Advantage.
- --------------------------------------------------------------------------------
45 RIVERSOURCE FUNDS -- PROXY STATEMENT
In addition, the proposed Kenwood Agreement includes a performance incentive
adjustment. Under the performance incentive adjustment, the base fee will
increase or decrease based on the performance of Kenwood's portion of the fund
compared to the performance of the Russell 2000 Index. The fee paid to Kenwood
by RiverSource Investments will increase or decrease 3 basis points (0.03%) for
each 1% difference between the return of Class A shares of the fund and the
return of the Index up to a maximum adjustment of 12 basis points (0.12%). The
fee will be calculated monthly over a rolling 12-month period.
Principals and Management Board of Kenwood. Jacob E. Hurwitz and Kent A.
Kelley are the principals of Kenwood, located at 333 South 7th Street, Suite
2330, Minneapolis, MN. The following individuals are directors of Kenwood:
Jacob E. Hurwitz, Kent A. Kelley, Ward D. Armstrong, William F. Truscott,
Peter A. Gallus and Michelle M. Keeley. Mr. Armstrong, Mr. Truscott, Mr.
Gallus and Ms. Keeley are officers of RiverSource Investments, 200 Ameriprise
Financial Center, Minneapolis, MN. RiverSource Investments, a wholly-owned
subsidiary of Ameriprise Financial, owns 48.6% of Kenwood. Mr. Hurwitz and Mr.
Kelley each own a minority interest in Kenwood totaling 48.4%. Associate
portfolio managers employed by Kenwood hold the remainder of the firm's stock.
Board Considerations and Conclusions.
At its meeting held on Sept. 8, 2005, the Board, including a majority of its
independent members, approved the proposed Kenwood Agreement and recommended its
approval by shareholders. In making this determination, the Board evaluated the
nature, extent and quality of services provided by Kenwood. This evaluation
included an analysis of the resources of Kenwood as well as those of its
affiliate, Ameriprise Financial (including those considerations discussed in
Proposal 3 under "Basis for Recommendation of the Board - Nature, Extent and
Quality of Services to be Provided by Post-Spin Ameriprise Financial (and its
subsidiaries)"). The Board also examined the investment performance of the fund
(see discussion in Proposal 3 under "Basis for Recommendation of the Board -
Investment Performance"). The Board observed that Kenwood has delivered solid
and consistent performance for the past three years. Based on the foregoing, the
Board determined that the nature, extent and quality of advisory services
provided by Kenwood were satisfactory. The Board also analyzed the cost of
services to the fund as well as to Kenwood. In this regard, the Board observed
that the fees paid to Kenwood under the proposed Kenwood Agreement would
increase. But, the Board accorded weight to the fact that the fees under the
current Kenwood Agreement are well below market rate for similar services. The
Board also considered the total expense ratio of the fund (see discussion in
Proposal 3 under "Basis for Recommendation of the Board - Cost of Services
Provided" for detail regarding
- --------------------------------------------------------------------------------
46 RIVERSOURCE FUNDS -- PROXY STATEMENT
these considerations). Additionally, the Board took into account that the fee
schedule in the proposed Kenwood Agreement includes breakpoints that would be
triggered as fund asset levels grow. Based on the foregoing, the Board
determined that the fees to be paid under the proposed Kenwood Agreement would
be fair and reasonable in light of the quality of services provided.
Recommendation and Vote Required. The Board recommends that shareholders approve
the proposed change in the Kenwood Agreement. The change 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 change is approved, the proposed Kenwood Agreement will go into
effect as soon as practicable after the shareholder meeting. If the proposed
Kenwood Agreement is not approved, the Board will consider what steps to take.
PROPOSAL 5: APPROVE OR REJECT A SUBADVISORY AGREEMENT WITH THREADNEEDLE
INTERNATIONAL LIMITED
(Applies to: Emerging Markets, European Equity, Global Equity, International
Opportunity, VP Emerging Markets, VP International Opportunity)
Threadneedle International Limited ("Threadneedle"), a direct wholly-owned
subsidiary of Ameriprise Financial, acts as subadviser for the fund under a
subadvisory agreement between Threadneedle and RiverSource Investments (the
"Threadneedle Agreement"). In connection with the transfer of investment
management functions described in Proposal 3, independent counsel advised the
Board that it would be prudent to seek shareholder approval of the Threadneedle
Agreement as well. The transfer does not affect the terms and conditions of the
Threadneedle Agreement. The subadvisory fee, which would not change, would
continue to be paid to Threadneedle by RiverSource Investments, not by the fund.
Terms of the Current Threadneedle Agreement. The fee paid by RiverSource
Investments to Threadneedle for managing fund assets is shown in the table
below. The complete fee schedule for the funds subadvised by Threadneedle is
found in Section D.
- --------------------------------------------------------------------------------
47 RIVERSOURCE FUNDS -- PROXY STATEMENT
Assets under management(a)
Aggregate fee
$1-150 Next $500 Next $500 paid in last
Fund million million million Thereafter fiscal year(b)
Emerging Markets 0.45% 0.40% 0.35% 0.30% $ 361,626(c)
European Equity 0.35% 0.30% 0.25% 0.20% $ 96,408(c)
Global Equity 0.35% 0.30% 0.25% 0.20% $ 449,149(c)
International Opportunity 0.35% 0.30% 0.25% 0.20% $ 434,968(c)
VP Emerging Markets 0.45% 0.40% 0.35% 0.30% $ 429,646(d)
VP International Opportunity 0.35% 0.30% 0.25% 0.20% $3,057,193(d)
(a) The rates shown apply to the corresponding portion of the respective
portfolio. For example, if the average daily net assets for Emerging
Markets for a given month are $650 million, then the applicable rate is
0.45% on $150 million and 0.40% on the remaining $500 million.
(b) The fee is subject to a performance incentive adjustment based on the
performance of one Class A share of the fund compared to the performance of
a Lipper index of comparable funds. The amount of the adjustment to
Threadneedle's fee, whether positive or negative, is equal to one-half of
the performance incentive adjustment made to the investment management fee
payable to the investment manager under the terms of the IMS Agreement.
(c) These fees reflect what was paid to Threadneedle as of fiscal year end
October 2004. Threadneedle became the subadvisor of these funds starting in
July 2004. Prior to this, these funds were subadvised by American Express
Asset Management International, Inc. (AEAMI). The total amount paid by
Ameriprise Financial to AEAMI for fiscal year end October 2004 was $942,983
for Emerging Markets, $151,173 for Global Balanced, $484,676 for Global
Equity and $1,000,707 for International Opportunity.
(d) These fees reflect what was paid to Threadneedle as of fiscal year end
August 2005.
Proposed Threadneedle Agreement Compared to the Current Threadneedle Agreement.
The terms of the proposed Threadneedle Agreement are the same as the current
Threadneedle Agreement.
Chief Executive Officer and Board of Directors of Threadneedle. Simon H. Davies
is Director and Chief Executive Officer of Threadneedle. In addition to Mr.
Davies, the following individuals are also directors of Threadneedle: Thomas W.
Challenor, Strategy and Risk Officer; Timothy N. Gillbanks, Chief Finance
Officer; Crispin J. Henderson, Chief Operating Officer; William D. Lowndes,
Director-Legal Compliance and Audit, Chief Compliance Officer and Company
Secretary; and David F. Sachon, Managing Director of Distribution. All directors
are also employees of Threadneedle Management Services Limited and may be
reached at the offices of Threadneedle International Limited, 60 St. Mary Axe,
London, UK EC3A 8JQ. Threadneedle is a wholly-owned subsidiary of Threadneedle
Asset Management Holdings Limited, 60 St. Mary Axe, London, UK EC3A 8JQ, which
in turn is a direct wholly-owned subsidiary of Ameriprise Financial, 200
Ameriprise Financial Center, Minneapolis, MN 55474.
- --------------------------------------------------------------------------------
48 RIVERSOURCE FUNDS -- PROXY STATEMENT
Board Considerations and Conclusions.
At its meeting held on Sept. 8, 2005, the Board, including a majority of its
independent members, approved the proposed Threadneedle Agreement and
recommended its approval by shareholders. In making this determination, the
Board evaluated the nature, extent and quality of services provided by
Threadneedle. This evaluation included an analysis of the resources of
Threadneedle as well as those of its parent, Ameriprise Financial (including
those considerations discussed in Proposal 3 under "Basis for Recommendation of
the Board - Nature, Extent and Quality of Services to be Provided by Post-Spin
Ameriprise Financial (and its subsidiaries)"). The Board noted the ability of
Threadneedle to manage assets in foreign markets. The Board also examined the
investment performance of the fund (see discussion in Proposal 3 under "Basis
for Recommendation of the Board - Investment Performance"). Based on the
foregoing, the Board determined that the nature, extent and quality of advisory
services provided by Threadneedle were satisfactory. The Board also analyzed the
cost of services to the fund as well as to Threadneedle. In this regard, the
Board observed that the fees paid to Threadneedle under the proposed
Threadneedle Agreement would be the same as they are now. The Board also
considered the total expense ratio of the fund (see discussion in Proposal 3
under "Basis for Recommendation of the Board - Cost of Services Provided" for
detail regarding these considerations). Additionally, the Board took into
account that the fee schedule in the proposed Threadneedle Agreement includes
breakpoints that would be triggered as fund asset levels grow. Based on the
foregoing, the Board determined that the fees to be paid under the proposed
Threadneedle Agreement the fund would be fair and reasonable in light of the
quality of services provided.
Recommendation and Vote Required. The Board recommends that shareholders approve
the Threadneedle Agreement. The change 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 proposed
Threadneedle Agreement is not approved, the Board will consider what steps to
take.
- --------------------------------------------------------------------------------
49 RIVERSOURCE FUNDS -- PROXY STATEMENT
PROPOSAL 6: APPROVE OR REJECT A SUBADVISORY AGREEMENT WITH DAVIS SELECTED
ADVISERS, L.P.
(Applies to: Fundamental Value)
Davis Selected Advisers, L.P. ("Davis") acts as subadviser for the fund under a
subadvisory agreement with RiverSource Investments (the "Davis Agreement").
Davis invests money for many clients and, from time to time, has held more than
5% of the voting securities of American Express Company. Immediately after the
spin off and from time to time thereafter, Davis may hold more than 5% of the
voting securities of Ameriprise Financial. Davis therefore may be considered an
affiliate of the fund. In connection with the transfer of investment management
functions described in Proposal 3, shareholders are being asked to approve the
Davis Agreement as well. The subadvisory fee is paid to Davis by RiverSource
Investments, not by the fund. A change in the fee paid to Davis will not affect
the fee paid by the fund to RiverSource Investments. The proposed change in the
Davis Agreement will not affect the expenses of the fund or the cost to
shareholders.
Terms of the Current Davis Agreement. The fee paid by RiverSource Investments to
Davis for managing fund assets is 0.45% on average daily net assets up to $100
million, 0.40% on assets from $100 million to $500 million, and 0.35 on assets
over $500 million. The complete fee schedule for the fund is found in Section D.
The Davis Agreement was approved by AEFC as sole shareholder on June 7, 2001.
Davis also manages a similar fund, Davis New York Venture Fund, which is not
part of the RiverSource funds for which it is paid at an annual rate based on
average net assets as follows: 0.75% on the first $250 million of average net
assets, gradually reducing to 0.47% on average net assets in excess of $18
billion.
Proposed Davis Agreement Compared to the Current Davis Agreement. The terms of
the proposed Davis Agreement are the same as the current Davis Agreement except
for the change in the fee schedule. The proposed fee schedule is as follows:
Proposed Subadvisory Fee
(annual rate, in millions)
First $100 million 0.45%
$100 million - $500 million 0.40%
$500 million - $1 billion 0.30%
Over $1 billion 0.25%
- --------------------------------------------------------------------------------
50 RIVERSOURCE FUNDS -- PROXY STATEMENT
President and Board of Directors of Davis. Andrew A. Davis is President and
Director of Davis. In addition to Mr. Davis, the following individuals are
also directors of Davis: Wesley E. Bass, Jr., Marc P. Blum, Jeremy H. Biggs,
Christopher C. Davis, Thomas Gayner, Jerry D. Geist, D. James Guzy, G. Bernard
Hamilton, Robert P. Morgenthau, Theodore B. Smith, Jr., Christian R. Sonne and
Marsha Williams. All directors may be reached at the offices of the Davis
Funds, 2949 E. Elvira Road, Suite 101, Tucson, AZ 85706.
Board Considerations and Conclusions.
At its meeting held on Sept. 8, 2005, the Board, including a majority of its
independent members, approved the proposed Davis Agreement and recommended its
approval by shareholders. In making this determination, the Board evaluated the
nature, extent and quality of services provided by Davis. This evaluation
included an analysis of the resources of Davis. The Board also examined the
investment performance of the fund (see discussion in Proposal 3 under "Basis
for Recommendation of the Board - Investment Performance"). Based on the
foregoing, the Board determined that the nature, extent and quality of advisory
services provided by Davis were satisfactory. The Board also analyzed the cost
of services to the fund as well as to Davis. In this regard, the Board observed
that the fees earned by Davis for providing investment management services under
the proposed Davis Agreement would be the same as they are now. The Board also
considered the total expense ratio of the fund (see discussion in Proposal 3
under "Basis for Recommendation of the Board - Cost of Services Provided" for
detail regarding these considerations). Additionally, the Board took into
account that the fee schedule in the proposed Davis Agreement includes
breakpoints that would be triggered as fund asset levels grow. Based on the
foregoing, the Board determined that the fees to be paid under the proposed
Davis Agreement for the fund would be fair and reasonable in light of the
quality of services provided.
Recommendation and Vote Required. The Board recommends that shareholders approve
the proposed Davis Agreement. The change 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 proposed
Davis Agreement is not approved, the Board will consider what steps to take.
- --------------------------------------------------------------------------------
51 RIVERSOURCE FUNDS -- PROXY STATEMENT
PROPOSAL 7: APPROVE OR REJECT CHANGES IN FUNDAMENTAL INVESTMENT POLICIES
(Applies to: All Funds)
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 (Applies to: All Funds except California Tax-Exempt, European
Equity, Global Bond, Global Technology, Inflation Protected Securities,
Massachusetts Tax-Exempt, Michigan Tax-Exempt, Minnesota Tax-Exempt, New York
Tax-Exempt, Ohio Tax-Exempt, Portfolio Builder Aggressive, Portfolio Builder
Conservative, Portfolio Builder Moderate Fund, Portfolio Builder Moderate
Aggressive, Portfolio Builder Moderate Conservative, Portfolio Builder Total
Equity, Precious Metals, Real Estate, S&P 500 Index, Small Cap Value, VP Global
Bond, VP Global Inflation Protected Securities, VP S&P 500 Index, VP Small Cap
Value)
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] underlined) [/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 [underlined] or
other investment companies, [/underlined] 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
- --------------------------------------------------------------------------------
52 RIVERSOURCE FUNDS -- PROXY STATEMENT
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. Ten Percent Limitation in Single Issuer (Applies to: Balanced, Cash
Management, Diversified Bond, Diversified Equity Income, Dividend
Opportunity, Emerging Markets, Equity Value, Global Bond, Global Equity,
Growth, High Yield Bond, Intermediate Tax-Exempt, International
Opportunity, Mid Cap Growth, Select Value, Short Duration U.S. Gov't,
Small Cap Advantage, Small Cap Growth, Small Company Index, Strategic
Allocation, Tax-Exempt Bond, Tax-Exempt High Income, Tax-Exempt Money
Market, VP Balanced, VP Cash Management, VP Diversified Bond, VP
Diversified Equity Income, VP Emerging Markets, VP Global Bond, VP
Growth, VP High Yield Bond, VP International Opportunity, VP Large Cap
Equity, VP Mid Cap Growth, VP Short Duration U.S. Gov't, VP Small Cap
Advantage)
The Board recommends that the fund's fundamental policy with respect to
investment in a single issuer be revised to permit 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 language is underlined):
The Fund will not purchase more than 10% of the outstanding voting
securities of an issuer, [underlined] except that up to 25% of the Fund's
assets may be invested without regard to this 10% limitation. [/underlined]
The 10% percent limit in the proposed policy is required under the 1940 Act.
Under the 1940 Act, a fund is permitted to invest up to 25% of its assets
without regard to the 10% limitation. The Board recommends that shareholders
amend the policy so that it reflects the terms of the 1940 Act. The proposal is
not expected to materially affect the operation of the fund. However, the
adoption of the proposed investment policy will standardize investment policies.
- --------------------------------------------------------------------------------
53 RIVERSOURCE FUNDS -- PROXY STATEMENT
C. Lending (Applies to: All Funds)
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 331/3% of the Fund's
total assets except this fundamental investment policy shall not prohibit
the Fund from purchasing money market securities, loans, 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 may not borrow for leverage or investment purposes.
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.
- --------------------------------------------------------------------------------
54 RIVERSOURCE FUNDS -- PROXY STATEMENT
D. Borrowing (Applies to: All Funds)
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 that this prohibition 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.
- --------------------------------------------------------------------------------
55 RIVERSOURCE FUNDS -- PROXY STATEMENT
SECTION C - PROXY VOTING AND SHAREHOLDER MEETING INFORMATION
This section includes information about proxy voting and the shareholder
meetings.
Voting. You are entitled to vote based on your total dollar interest in a 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.
Each corporation or trust issues one or more series of shares. 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 same corporation or trust. On the
Investment Management Services Agreement, Subadvisory Agreement, and changes in
fundamental policies, 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 decide 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. If your investments include any
of the variable portfolio funds, you have the right to instruct IDS Life
Insurance Company ("IDS Life") or IDS Life Insurance Company of New York ("IDS
Life of New York") how to vote the variable portfolio fund shares held under
your annuity contract or life insurance
- --------------------------------------------------------------------------------
56 RIVERSOURCE FUNDS -- PROXY STATEMENT
policy. You do this by voting yourself. IDS Life and IDS Life of New York will
vote any fund shares for which they do not receive voting instructions in
proportionately the same manner - either For, Against or Abstain - as shares for
which they do receive instructions.
Master/Feeder Funds. Some funds are part of a master/feeder structure. The
feeder funds seek their investment objectives by investing their assets in
master funds with the same policies. Master funds invest in and manage the
securities. Proposals 3, 5 and 7 affect certain master funds. Feeder funds, as
the sole shareholders of the master fund, will vote for or against each of those
proposals in proportion to the vote received from feeder fund shareholders.
The Board of each feeder fund has determined that it is in the best interests of
shareholders to withdraw the fund's assets from the master/feeder structure. The
necessary steps to finalize the withdrawal are expected to be completed in late
2005 or early 2006. After that date, each feeder fund will invest directly in
and manage its own portfolio of securities rather than investing in a master
portfolio. RiverSource Investments is the investment adviser to the master
portfolio and will continue to serve as the feeder fund's investment adviser
under the terms and conditions in the IMS Agreement described in Proposal 3. If
the withdrawal from the master fund is completed prior to the date of the
shareholder meeting, shareholders of the former feeder fund will vote directly
on all issues.
Revoking Your Proxy. If your plans change after you vote your proxy and you
would like to vote in person at 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, you may change your vote or revoke it by mail, telephone or
internet.
Joint Proxy Statement/Simultaneous Meetings. This joint proxy statement reduces
the preparation, printing and mailing costs of sending separate proxy statements
for each fund. The meetings will be held simultaneously with each proposal being
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.
- --------------------------------------------------------------------------------
57 RIVERSOURCE FUNDS -- PROXY STATEMENT
Solicitation of Proxies. The Board is asking for your vote and for you to vote
as promptly as possible. Ameriprise Financial will pay the expenses for the
proxy material, postage and any supplementary solicitations, which may be made
by mail, telephone, electronic means or personal contact by financial advisors.
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. Any proposal that a
shareholder intends to present at a future shareholder meeting must be submitted
to the funds in writing in reasonable time prior to the solicitation of proxies
for the meeting
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 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 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 any of the proposals. 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.
Annual Report. The latest annual report was previously mailed to you. If you
would like another copy of the annual report and any subsequent semi-annual
report, without charge, please write RiverSource Funds, 70100 Ameriprise
Financial Center, Minneapolis, MN 55474 or call (800) 862-7919.
- --------------------------------------------------------------------------------
58 RIVERSOURCE FUNDS -- PROXY STATEMENT
SECTION D - FUND INFORMATION
This section contains the following information about your fund, its investment
adviser and the independent auditors:
Table Content
(all information is shown for the last fiscal period* unless noted otherwise)
- ------------- -----------------------------------------------------------------------------------
D-1 The fund's current fee schedule under its management agreement
- ------------- -----------------------------------------------------------------------------------
D-2 The fund's size, number of outstanding shares and 5% owners
- ------------- -----------------------------------------------------------------------------------
D-3 Payments the fund made to the investment manager and its affiliates
- ------------- -----------------------------------------------------------------------------------
D-4 Brokerage commissions the fund paid to a broker-dealer affiliate
- ------------- -----------------------------------------------------------------------------------
D-5 Information about shareholder approval of current management agreements
- ------------- -----------------------------------------------------------------------------------
D-6 Actual and pro forma Investment Management Services Agreement fees
- ------------- -----------------------------------------------------------------------------------
D-7A Actual and pro forma expenses for Class A
- ------------- -----------------------------------------------------------------------------------
D-7B Actual and pro forma expenses for Class B
- ------------- -----------------------------------------------------------------------------------
D-7C Actual and pro forma expenses for Class C
- ------------- -----------------------------------------------------------------------------------
D-7D Actual and pro forma expenses for Class D
- ------------- -----------------------------------------------------------------------------------
D-7E Actual and pro forma expenses for Class E
- ------------- -----------------------------------------------------------------------------------
D-7I Actual and pro forma expenses for Class I
- ------------- -----------------------------------------------------------------------------------
D-7Y Actual and pro forma expenses for Class Y
- ------------- -----------------------------------------------------------------------------------
D-8A Audit fees
- ------------- -----------------------------------------------------------------------------------
D-8B Audit-related, tax and other fees
- ------------- -----------------------------------------------------------------------------------
* Last fiscal period prior to Oct. 1, 2005
The Fund's Investment Adviser and Distributor. RiverSource Investments is the
investment adviser for each of the funds. Ameriprise Financial Services, Inc.,
a wholly owned subsidiary of Ameriprise Financial, is the distributor for each
of the retail funds. IDS Life, a wholly owned subsidiary of Ameriprise
Financial, is the distributor for each of the variable portfolio funds. The
address for RiverSource Investments, Ameriprise Financial Services, Inc. and
IDS Life is 200 Ameriprise Financial Center, Minneapolis, MN 55474.
President and Board of Directors of RiverSource Investments. William F.
Truscott is President of RiverSource Investments, 200 Ameriprise Financial
Center, Minneapolis, MN 55474. The following individuals are directors of
RiverSource Investments. Each director is an officer of RiverSource
Investments. Directors: William F. Truscott, Ward D. Armstrong and Michelle M.
Keeley.
President and Board of Directors of IDS Life. Timothy V. Bechtold is President
of IDS Life. The following individuals are directors of IDS Life. Each
director is an officer of Ameriprise Financial, 200 Ameriprise Financial
Center, Minneapolis, MN 55474. Directors: Gumer C. Alvero, Timothy V. Bechtold,
Arthur H. Berman, Kevin E. Palmer and Mark E. Schwarzmann.
- --------------------------------------------------------------------------------
59 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-1. Fund Management Fee Schedule
- -------------------------------------- ------------------------------------------------------- --------------------------
Retail Funds Current 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%; 1.44% until 5/31/06
next $1 - .815%; next $3 - .79%; over $6 - .765%
- -------------------------------------- ------------------------------------------------------- --------------------------
Balanced(2),(3) First $1 - .53%; next $1 - .505%; next $1 - .48%;
next $3 - .455%; over $6 - .43%
- -------------------------------------- ------------------------------------------------------- --------------------------
California Tax-Exempt, First $.25 - .47%; next $.25 - .445%; next $.25 - 0.79% until 6/30/06
Massachusetts Tax-Exempt, .42%; next $.25 - .405%; over $1 - .38%
Michigan Tax-Exempt,
Minnesota Tax-Exempt,
New York Tax-Exempt,
Ohio Tax-Exempt
- -------------------------------------- ------------------------------------------------------- --------------------------
Cash Management First $1.0 - .36%; next $.5 - .343%; next $.5 - Cash Management: 0.73%
Tax-Exempt Money .325%; next $.5 - .308%; next $1 - .29%; next $3 - until 7/31/06
Market .27%; over $6.5 - .25%
- -------------------------------------- ------------------------------------------------------- --------------------------
Core Bond Limited Duration First $1 - .54%; next $1 - .515%; next $1 - .49%; 0.89% until 7/31/06
next $3 - .465%; next $3 - .44%; over $9 - .415%
- -------------------------------------- ------------------------------------------------------- --------------------------
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: 1.29%
Large Cap Value(2) until 7/31/06
Mid Cap Growth(2)
New Dimensions(2),(3)
- -------------------------------------- ------------------------------------------------------- --------------------------
Discovery (2),(15) First $.25 - .64%; next $.25 - .615%; next $.25 - 1.49% until 7/31/06
.59%; next $.25 - .565%; next $1 - .54%; over $2 -
.515%
- -------------------------------------- ------------------------------------------------------- --------------------------
Diversified Bond First $1 - .52%; next $1 - .495%; next $1 - .47%; Diversified Bond: 0.89%
Selective(3) next $3 - .445%; next $3 - .42%; over $9 - .395% until 8/31/06
Short Duration U.S. Gov't Selective, Short
U.S. Gov't Mortgage Duration U.S. Gov't and
U.S. Gov't Mortgage 0.89%
until 5/31/06
- -------------------------------------- ------------------------------------------------------- --------------------------
Diversified Equity Income(2),(3) First $.5 - .53%; next $.5 - .505%; next $1 - .48%;
Equity Value(2) next $1 - .455%; next $3 - .43%; over $6 - .40%
Stock(2),(3)
Strategic Allocation(2),(3)
- -------------------------------------- ------------------------------------------------------- --------------------------
- --------------------------------------------------------------------------------
60 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-1. (continued)
- ------------------------------ ------------------------------------------------------- --------------------------------
Retail Funds Current Management Fee Fee Cap or Waivers(1)
(annual rate; in billions) (if applicable)
- ------------------------------ ------------------------------------------------------- --------------------------------
Dividend Opportunity(2) First $.5 - .61%; next $.5 - .585%; next $1 - .56%;
next $1 - .535%; next $3 - .51%; over $6 - .48%
- ------------------------------ ------------------------------------------------------- --------------------------------
Emerging Markets(2),(3),(5) First $.25 - 1.10%; next $.25 - 1.08%; next $.25 - 1.99% until 10/31/06
1.06%; next $.25 - 1.04%; next $1 - 1.02%; over $2 -
1.0%
- ------------------------------ ------------------------------------------------------- --------------------------------
European Equity(2),(5) First $.25 - .80%; next $.25 - .775%; next $.25 - International Opportunity:
Global Equity(2),(3),(5) .75%; next $.25 - .725%; next $1 - .70%; over $2 - 1.55% until 10/31/06
International .675%
Opportunity(2),(5)
Precious Metals(2)
- ------------------------------ ------------------------------------------------------- --------------------------------
Fundamental Growth(2),(6) First $1 - .78%; next $1 - .755%; next $1 - .73%; 1.40% until 5/31/06
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%
- ------------------------------ ------------------------------------------------------- --------------------------------
Global Balanced(2),(5) First $.25 - .79%; next $.25 - .765%; next $.25 -
.74%; next $.25 - .715%; next $1 - .69%; over $2 -
.665%
- ------------------------------ ------------------------------------------------------- --------------------------------
Global Bond(3) First $.25 - .77%; next $.25 - .745%; next $.25 - 1.25% until 10/31/06
.72%; next $.25 - .695%; over $1 - .67%
- ------------------------------ ------------------------------------------------------- --------------------------------
Global Technology(2),(3) First $.25 - .72%; next $.25 - .695%; next $.25 - 1.82% until 10/31/06
.67%; next $.25 - .645%; next $1 - .62%; over $2 -
.595%
- ------------------------------ ------------------------------------------------------- --------------------------------
High Yield Bond First $1 - .59%; next $1 - .565%; next $1 - .54%;
next $3 - .515%; next $3 - .49%; over $9 - .465%
- ------------------------------ ------------------------------------------------------- --------------------------------
Income Opportunities First $1 - .61%; next $1 - .585%; next $1 - .56%; 1.19% until 7/31/06
next $3 - .535%; next $3 - .51%; over $9 - .485%
- ------------------------------ ------------------------------------------------------- --------------------------------
Inflation Protected First $1 - .44%; next $1 - .415%; next $1 - .39%; 0.84% until 7/31/06
Securities next $3 - .365%; next $3 - .34%; over $9 - .315%
- ------------------------------ ------------------------------------------------------- --------------------------------
Insured Tax-Exempt
Intermediate Tax-Exempt
- ------------------------------ ------------------------------------------------------- --------------------------------
Tax-Exempt Bond First $1 - .45%; next $1 - .425%; next $1 - .4%; next Intermediate Tax-Exempt and
$3 - .375%; over $6 - .35% Tax-Exempt Bond: 0.79% until
11/30/06 Insured Tax-Exempt:
0.79% until 6/30/06
- ------------------------------ ------------------------------------------------------- --------------------------------
International Aggressive First $.25 - 1%; next $.25 - .975%; next $.25 -
Growth(2),(9) .95%; next $.25 - .925%; next $1 - .90%; over $2 -
.875%
- ------------------------------ ------------------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------
61 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-1. (continued)
- ---------------------------------- -------------------------------------------------- -------------------------
Retail Funds Current Management Fee Fee Cap or Waivers(1)
(annual rate; in billions) (if applicable)
- ---------------------------------- -------------------------------------------------- -------------------------
International Equity(2),(10) First $.25 - .97%; next $.25 - .945%; next $.25 1.65% until 10/31/06
- .92%; next $.25 - .895%; next $1 - .87%; over
$2 - .845%
- ---------------------------------- -------------------------------------------------- -------------------------
International Select First $.25 - .90%; next $.25 - .875%; next $.25
Value(2),(11) - .85%; next $.25 - .825%; next $1 - .80%; over
$2 - .775%
- ---------------------------------- -------------------------------------------------- -------------------------
International Small First $.25 - 1.12%; next $.25 - 1.095%; next 1.92% until 10/31/06
Cap(2),(12) $.25 - 1.070%; next $.25 - 1.045%; next $1 -
1.020%; over $2 - .995%
- ---------------------------------- -------------------------------------------------- -------------------------
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%
- ---------------------------------- -------------------------------------------------- -------------------------
Portfolio Builder 0.08% 0.59% until 1/31/07
Conservative
- ---------------------------------- -------------------------------------------------- -------------------------
Portfolio Builder 0.08% 0.59% until 1/31/07
Moderate Conservative
- ---------------------------------- -------------------------------------------------- -------------------------
Portfolio Builder 0.08% 0.59% until 1/31/07
Moderate
- ---------------------------------- -------------------------------------------------- -------------------------
Portfolio Builder 0.08% 0.59% until 1/31/07
Moderate Aggressive
- ---------------------------------- -------------------------------------------------- -------------------------
Portfolio Builder 0.08% 0.59% until 1/31/07
Aggressive
- ---------------------------------- -------------------------------------------------- -------------------------
Portfolio Builder Total 0.08% 0.59% until 1/31/07
Equity
- ---------------------------------- -------------------------------------------------- -------------------------
Real Estate(2) First $1 - .84%; next $1 - .815%; next $1 - 1.49% until 6/30/06
.79%; next $3 - .765%; next $6 - .74%; next $12
- .73%; over $24 - .72%
- ---------------------------------- -------------------------------------------------- -------------------------
S&P 500 Index First $1 - .24; next $1 - .23%; next $3 - .22%; 0.59% until 1/31/07
over $5 - .21%
- ---------------------------------- -------------------------------------------------- -------------------------
Select Value(2),(13) First $.5 - .78%; next $.5 - .755%; next $1 -
.73%; next $1 - .705%; next $3 - .68%; over $6 -
.65%
- ---------------------------------- -------------------------------------------------- -------------------------
Small Cap Advantage(2),(14) First $.25 - .74%; next $.25 - .715%; next $.25
- .69%; next $.25 - .665%; next $1 - .64%; over
$2 - .615%
- ---------------------------------- -------------------------------------------------- -------------------------
- --------------------------------------------------------------------------------
62 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-1. (continued)
- -------------------------------- ------------------------------------------------------- -----------------------------
Retail Funds Current Management Fee Fee Cap or Waivers(1)
(annual rate; in billions) (if applicable)
- -------------------------------- ------------------------------------------------------- -----------------------------
Small Cap Equity (2),(15) First $.25 - .97%; next $.25 - .945%; next $.25 - Small Cap Equity: 1.55%
Small Cap Value(2),(16) .92%; next $.25 - .895%; over $1 - .87% until 5/31/06; Small Cap
Value: 1.59% until 5/31/06
- -------------------------------- ------------------------------------------------------- -----------------------------
Small Cap Growth(2),(17) First $.25 - .92%; next $.25 - .895%; next $.25 - 1.70% until 3/31/07
.87%; next $.25 - .845%; next $1 - .82%; over $2 -
.795%
- -------------------------------- ------------------------------------------------------- -----------------------------
Small Company Index First $.25 - .38%; next $.25 - .37%; next $.25 - 0.89% until 1/31/07
.36%; next $.25 - .35%; over $1 - .34%
- -------------------------------- ------------------------------------------------------- -----------------------------
Strategy Aggressive(2),(4) First $1 - .60%; next $1 - .575%; next $1 - .55%;
next $3 - .525%; over $6 - .50%
- -------------------------------- ------------------------------------------------------- -----------------------------
Tax-Exempt High Income First $1 - .49%; next $1 - .465%; next $1 - .44%; 0.79% until 11/30/06
next $3 - .415%; next $3 - .39%; over $9 - .36%
- -------------------------------- ------------------------------------------------------- -----------------------------
(1) For all funds except S&P 500 Index, the information is shown for Class A
shares. Fees and expenses in excess of the percentage shown will be
waived or reimbursed, prior to giving effect to any PIA. For S&P 500
Index, the fee cap is shown for Class D shares. 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 the master/feeder structure. Management fees are paid
by the portfolio on behalf of the fund.
(4) The fund has subadvisory agreements with American Century Investment
Management, Inc. and Turner Investment Partners, Inc.
(5) The fund has a subadvisory agreement with Threadneedle International
Limited.
(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 Selected Advisers, L.P.
(8) The fund has a subadvisory agreement with Lord, Abbett & Co.
(9) The fund has subadvisory agreements with American Century Global
Investment Management, Inc. and Columbia Wanger Asset Management, L.P.
(10) The fund has subadvisory agreements with Marsico Capital Management LLC
and The Boston Company Asset Management.
(11) The fund has a subadvisory agreement with Alliance Capital Management L.
P.
(12) The fund has subadvisory agreements with Wellington Management Company,
LLP and Templeton Investment Counsel LLP.
(13) The fund has a subadvisory agreement with Gabelli Asset Management
Company.
(14) The fund has a subadvisory agreement with Kenwood Capital Management LLC.
(15) The fund has subadvisory agreements with American Century Investment
Management, Inc., Lord, Abbett & Co. and Wellington Management Company,
LLP.
(16) 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.
(17) The fund has subadvisory agreements with Essex Investment Management
Company, LLC, Turner Investment Partners, Inc.; MDT Advisers and UBS
Global Asset Management (Americas) Inc.
- --------------------------------------------------------------------------------
63 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-1. (continued)
- -------------------------------- ------------------------------------------------------ ---------------------------
Variable Portfolio Funds Current Management Fee Fee Cap or Waivers(1)
(annual rate; in billions) (if applicable)
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Balanced(2) First $.5 - .63%; next $.5 - .615%; next $1 - .60%;
next $1 - .585%; next $3 - .57%; over $6 - .55%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Cash Management First $1 - .51%; next $.5 - .493%; next $.5 - .475%;
next $.5 - .458%; over $2.5 - .44%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Core Bond First $1 - .63%; next $1 - .615%; next $1 - .60%; .83% until 8/31/06
next $3 - .585%; next $3 - .57%; over $9 - .555%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Core Equity .40% .40%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Diversified Bond First $1 - .61%; next $1 - .595%; next $1 - .58%;
VP Short Duration next $3 - .565%; next $3 - .55%; over $9 - .535%
U.S. Gov't
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Diversified Equity First $.5 - .56%; next $.5 - .545%; next $1 - .53%;
Income(1) next $1 - .515%; next $3 - .50% over $6 - .47%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Emerging Markets(2),(3) First $.25 - 1.17%; next $.25 - 1.155%; next $.25 - 1.75% until 8/31/06
1.14%; next $.25 -1.125%; next $1 - 1.11%; over $2 -
1.095%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Global Bond First $.25 - .84%; next $.25 - .825%; next $.25 -
.81%; next $.25 - .795%; over $1 - .78%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Growth(2) First $1 - .63%; next $1 - .615%; next $1 - .60%; For VP Large Cap Value:
VP Large Cap Equity(2) next $3 - .585%; over $6 - .57% 1.05% until 8/31/06
VP Large Cap Value(2)
VP New Dimensions(2)
- -------------------------------- ------------------------------------------------------ ---------------------------
VP High Yield Bond First $1 - .62%; next $1 - .605%; next $1 - .59%;
next $3 - .575%; next $3 - .56%; over $9 - .545%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Income Opportunities First $1 - .64%; next $1 - .625%; next $1 - .61%; .99% until 8/31/06
next $3 - .595%; next $3 - .58%; over $9 - .565%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Global Inflation First $1 - .49%; next $1 - .475%; next $1 - .46%; .72% until 8/31/06
Protected Securities next $3 - .445%; next $3 - .43%; over $9 - .415%
- -------------------------------- ------------------------------------------------------ ---------------------------
- --------------------------------------------------------------------------------
64 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-1. (continued)
- -------------------------------- ------------------------------------------------------ ---------------------------
Variable Portfolio Funds Current Management Fee (annual rate; in billions) Fee Cap or Waivers(1) (if
applicable)
- -------------------------------- ------------------------------------------------------ ---------------------------
VP International First $.25 - .87%; next $.25 - .855%; next $.25 -
Opportunity(2),(3) .84%; next $.25 - .825%; next $1 - .81%; over $2 -
.795%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Mid Cap Growth(2) First $.25 - .65%; next $.25 - .635%; next $.25 - 1.10% until 8/31/06
.62%; next $.25 - .605%; next $1 - .59%; next $1 -
.575%; over $3 - .56%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Mid Cap Value(2) First $1 - .73%; next $1 - .705%; next $1 - .68%; 1.08% until 8/31/06
next $3 - .655%; next $6 - .63%; next $12 - .62%;
over $24 - .61%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP S&P 500 Index First $1 - .29%; next $1 - .28%; next $3 - .27%; .495% until 8/31/06
over $5 - .26%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Select Value(2),(6) First $.5 - .81%; next $.5 - .795%; next $1 - .78%; 1.15% until 8/31/06
next $1 - .765%; next $3 - .75%; over $6 - .72%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Small Cap First $.25 - .79%; next $.25 - .77%; next $.25 -
Advantage(2),(5) .75%; next $.25 - .73%; next $1 - .71%; over $2 -
.65%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Small Cap Value(2),(4) First $.25 - 1.02%; next $.25 - 1.00%; next $.25 - 1.25% until 8/31/06
.98%; next $.25 -.96%; next $1 - .94%; over $2 - .92%
- -------------------------------- ------------------------------------------------------ ---------------------------
VP Strategy Aggressive First $.25 - .65%; next $.25 - .635%; next $.25 -
.62%; next $.25 -.605%; next $1 - .59%; over $2 -
.575%
- -------------------------------- ------------------------------------------------------ ---------------------------
(1) Fees and expenses in excess of the percentage shown will be waived or
reimbursed, prior to giving effect to any PIA.
(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 has a subadvisory agreement with Threadneedle International
Limited.
(4) The fund has subadvisory agreements with Royce & Associates, LLC; Goldman
Sachs Asset Management L.P.; Barrow, Hanley, Mewhinney & Strauss, Inc.;
Donald Smith & Co., Inc.; and Franklin Portfolio Associates.
(5) The fund has a subadvisory agreement with Kenwood Capital Management LLC.
(6) The fund has a subadvisory agreement with Gabelli Asset Management
Company.
- --------------------------------------------------------------------------------
65 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Retail Funds:
Aggressive Growth
Class A $30,462,999 3,807,197 (1)
Class B 7,757,666 986,357 None
Class C 637,400 81,067 (2)
Class I 55,735,958 6,923,089 (3)
Class Y 38,714 4,821 (4)
Balanced
Class A 989,847,242 100,563,086 None
Class B 81,235,246 8,306,982 None
Class C 3,167,432 324,045 None
Class Y 164,003,751 16,664,056 (5)
California Tax-Exempt
Class A 184,480,530 35,291,948 None
Class B 12,739,113 2,438,311 None
Class C 2,878,539 550,017 (6)
Cash Management
Class A 2,969,965,376 2,969,755,089 None
Class B 107,414,013 107,605,539 None
Class C 2,026,510 2,026,881 (7)
Class I 13,215,488 13,216,008 (8)
Class Y 139,566,909 139,634,090 (9)
Core Bond
Class A 35,122,802 3,630,787 (10)
Class B 12,106,767 1,251,196 None
Class C 605,474 62,555 (11)
Class I 122,992,343 12,723,991 (12)
Class Y 100,581 10,399 (13)
Disciplined Equity
Class A 32,276,709 4,753,442 (14)
Class B 9,368,502 1,396,861 None
Class C 215,153 32,080 (15)
Class I 90,562,547 13,259,515 (16)
Class Y 34,836 5,118 (17)
- --------------------------------------------------------------------------------
66 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Diversified Bond
Class A $1,742,668,306 360,929,225 (18)
Class B 476,270,093 98,619,257 None
Class C 17,722,563 3,665,171 None
Class I 9,836 2,037 (19)
Class Y 144,541,408 29,933,483 (20)
Diversified Equity Income
Class A 3,750,582,404 309,712,571 (21)
Class B 1,141,019,668 94,507,900 None
Class C 58,192,375 4,825,898 None
Class I 95,654,501 7,887,479 (22)
Class Y 57,831,755 4,771,115 (23)
Dividend Opportunity
Class A 889,897,301 118,997,386 (24)
Class B 289,152,159 38,928,684 None
Class C 13,343,663 1,797,479 None
Class I 11,337 1,513 (19)
Class Y 389,323 51,944 (25)
Emerging Markets
Class A 313,828,701 35,659,061 (26)
Class B 78,466,067 9,430,788 None
Class C 2,768,987 332,026 None
Class I 19,954,288 2,236,448 (27)
Class Y 21,620,897 2,427,357 (28)
Equity Value
Class A 890,011,764 81,585,220 None
Class B 219,010,206 20,036,987 None
Class C 3,408,830 314,205 (29)
Class I 11,683 1,070 (19)
Class Y 9,687,928 887,315 (30)
- --------------------------------------------------------------------------------
67 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
European Equity
Class A $83,096,070 19,221,477 (31)
Class B 32,333,856 7,595,255 None
Class C 1,453,637 341,461 (32)
Class I 12,407 2,865 (19)
Class Y 15,877 3,668 (33)
Fundamental Growth
Class A 17,834,417 2,982,269 (34)
Class B 6,910,298 1,178,412 None
Class C 350,088 59,641 (35)
Class I 99,230,986 16,470,665 (36)
Class Y 35,817 5,952 (37)
Fundamental Value
Class A 721,649,741 126,248,011 (38)
Class B 291,432,945 52,324,537 None
Class C 18,188,243 3,253,306 None
Class I 50,966,087 8,838,871 (39)
Class Y 692,384 120,515 (40)
Global Bond
Class A 364,917,832 54,679,841 (41)
Class B 114,417,059 17,124,375 None
Class C 4,388,971 659,671 None
Class I 83,000,365 12,413,605 (42)
Class Y 85,205 12,737 (25)
Global Equity
Class A 455,785,733 70,888,162 (43)
Class B 104,061,342 17,145,801 None
Class C 2,244,332 372,030 None
Class Y 6,551,615 1,010,179 (44)
Global Technology
Class A 124,419,109 61,345,765 (45)
Class B 48,110,237 27,206,908 None
Class C 3,403,255 1,919,217 None
Class I 12,047 5,882 (19)
Class Y 330,049 162,034 (46)
- --------------------------------------------------------------------------------
68 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Growth
Class A $2,203,304,395 77,837,603 (47)
Class B 523,481,036 20,177,254 None
Class C 16,241,663 625,977 None
Class I 159,774,716 5,525,838 (48)
Class Y 292,709,960 10,170,179 (49)
High Yield Bond
Class A 1,726,980,660 600,282,256 (50)
Class B 527,513,471 183,465,543 None
Class C 33,582,470 11,748,841 None
Class I 10,137 3,521 (19)
Class Y 487,959 169,744 (51)
Income Opportunities
Class A 204,752,316 19,672,643 (52)
Class B 74,389,770 7,149,878 None
Class C 7,071,403 679,776 None
Class I 74,497,853 7,148,199 (53)
Class Y 410,217 39,385 (54)
Inflation Protected Securities
Class A 93,446,225 9,199,467 (55)
Class B 47,670,447 4,695,096 None
Class C 3,819,693 376,194 None
Class I 58,035,240 5,713,259 (56)
Class Y 10,157 1,000 (57)
Intermediate Tax-Exempt Bond
Class A 106,627,185 20,015,248 (58)
Class B 17,466,213 3,281,104 None
Class C 6,566,497 1,233,452 None
Class Y 1,285 243 (19)
International Aggressive Growth
Class A 221,743,043 26,725,985 (59)
Class B 59,272,357 7,352,091 None
Class C 3,382,513 419,633 None
Class I 80,949,756 9,664,713 (60)
Class Y 465,015 55,744 (61)
- --------------------------------------------------------------------------------
69 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
International Equity
Class A $95,352,103 12,695,477 (62)
Class B 24,664,771 3,329,668 None
Class C 1,486,163 200,537 (63)
Class I 44,481,652 5,890,334 (64)
Class Y 96,360 12,808 (65)
International Opportunity
Class A 424,142,870 53,835,610 (66)
Class B 84,430,216 11,021,450 None
Class C 2,764,134 363,224 None
Class I 49,026,932 6,155,539 (67)
Class Y 362,926 45,811 (68)
International Select Value
Class A 1,022,343,469 109,991,789 (69)
Class B 315,518,381 35,007,800 None
Class C 17,431,882 1,935,319 None
Class I 60,250,633 6,417,520 (70)
Class Y 908,843 97,133 (71)
International Small Cap
Class A 67,746,637 7,437,597 (72)
Class B 17,486,625 1,965,173 None
Class C 844,258 94,641 None
Class I 10,035,932 1,091,527 (73)
Class Y 84,692 9,257 (74)
Large Cap Equity
Class A 1,044,944,281 199,514,923 (75)
Class B 372,956,613 72,818,404 None
Class C 8,898,385 1,734,333 None
Class I 46,831,631 8,852,605 (76)
Class Y 253,870 48,212 (77)
- --------------------------------------------------------------------------------
70 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Large Cap Value
Class A $72,486,323 12,434,782 (78)
Class B 25,555,403 4,436,034 None
Class C 1,276,581 221,632 None
Class I 41,242,356 7,030,729 (79)
Class Y 117,748 20,125 (80)
Limited Duration Bond
Class A 81,010,661 8,304,193 (81)
Class B 23,332,279 2,391,337 None
Class C 1,661,660 170,364 (82)
Class I 76,435,968 7,834,086 (83)
Class Y 59,987 6,150 (84)
Massachusetts Tax-Exempt
Class A 55,318,102 10,318,149 (85)
Class B 15,136,280 2,823,230 None
Class C 1,246,511 232,598 (86)
Michigan Tax-Exempt
Class A 51,366,096 9,706,841 (87)
Class B 4,693,474 886,584 (88)
Class C 1,926,971 364,102 (89)
Mid Cap Growth
Class A 1,369,390,930 97,396,587 (90)
Class B 327,603,602 25,385,891 None
Class C 12,405,180 961,433 None
Class I 39,230,589 2,743,086 (91)
Class Y 193,879,455 13,619,592 (92)
Mid Cap Value
Class A 781,922,066 91,332,628 (93)
Class B 242,238,244 28,890,614 None
Class C 13,765,853 1,641,443 None
Class I 11,962,750 1,382,578 (94)
Class Y 817,956 94,943 (95)
- --------------------------------------------------------------------------------
71 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Minnesota Tax-Exempt
Class A $336,606,720 63,704,128 None
Class B 42,526,880 8,046,992 None
Class C 8,926,130 1,689,083 None
New York Tax-Exempt
Class A 70,838,255 13,852,761 (96)
Class B 9,242,795 1,807,455 None
Class C 1,302,757 254,752 (97)
Ohio Tax-Exempt
Class A 49,888,439 9,467,139 (98)
Class B 7,371,782 1,399,019 (99)
Class C 1,849,037 350,777 (100)
Portfolio Builder Aggressive
Class A 218,947,226 19,377,058 None
Class B 62,196,208 5,557,321 None
Class C 5,231,913 467,685 None
Class Y 87,026 7,693 (101)
Portfolio Builder Conservative
Class A 59,992,550 5,784,108 None
Class B 30,232,453 2,922,068 None
Class C 6,219,336 600,940 None
Class Y 32,699 3,178 (102)
Portfolio Builder Moderate
Class A 336,213,095 30,859,805 None
Class B 126,014,155 11,603,313 None
Class C 14,353,538 1,320,552 None
Class Y 33,938 3,119 (103)
Portfolio Builder Moderate Aggressive
Class A 456,042,200 41,155,187 None
Class B 124,634,025 11,282,511 None
Class C 12,522,364 1,133,803 None
Class Y 70,704 6,376 (104)
- --------------------------------------------------------------------------------
72 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Portfolio Builder Moderate Conservative
Class A $126,353,145 11,887,101 None
Class B 54,413,478 5,130,965 None
Class C 9,246,715 871,601 None
Class Y 26,266 2,480 (105)
Portfolio Builder Total Equity
Class A 176,564,460 15,413,673 None
Class B 52,116,332 4,592,863 None
Class C 4,495,245 396,157 None
Class Y 99,865 8,702 (106)
Precious Metals
Class A 69,126,703 6,576,173 (107)
Class B 16,440,817 1,647,821 None
Class C 1,830,621 185,149 (108)
Class I 10,467 989 (19)
Class Y 49,268 4,651 (109)
Real Estate
Class A 74,321,515 5,319,896 (110)
Class B 19,622,739 1,411,899 None
Class C 1,046,594 75,305 None
Class I 55,514,957 3,967,605 (111)
Class Y 28,765 2,063 (112)
S&P 500 Index
Class D 65,141,971 13,653,518 (25)
Class E 217,968,597 45,417,444 (113)
Select Value
Class A 547,056,024 78,504,743 (114)
Class B 189,313,145 27,858,129 None
Class C 11,895,508 1,750,301 None
Class I 17,705,990 2,515,653 (115)
Class Y 94,561 13,494 (116)
- --------------------------------------------------------------------------------
73 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Short Duration U.S. Gov't
Class A $820,480,655 172,635,517 (117)
Class B 463,856,176 97,584,022 None
Class C 20,258,420 4,262,297 None
Class I 50,510,115 10,614,046 (118)
Class Y 32,204,927 6,774,009 (119)
Small Cap Advantage
Class A 607,717,167 79,464,010 (120)
Class B 204,643,195 28,153,629 None
Class C 11,925,584 1,640,448 None
Class I 8,925,772 1,148,172 (121)
Class Y 654,355 84,691 (122)
Small Cap Equity
Class A 140,497,613 22,370,142 (123)
Class B 47,818,274 7,837,487 None
Class C 3,841,785 630,386 None
Class I 10,123,884 1,596,475 (124)
Class Y 293,135 46,319 (125)
Small Cap Growth
Class A 139,313,934 30,294,588 (126)
Class B 60,835,369 13,710,954 None
Class C 5,967,033 1,344,464 None
Class I 9,587,094 2,058,945 (127)
Class Y 132,123 28,541 (128)
Small Cap Value
Class A 755,648,619 106,905,619 (129)
Class B 328,789,656 47,762,801 None
Class C 21,307,670 3,089,422 None
Class I 11,822,805 1,655,717 (130)
Class Y 217,488 30,597 (131)
- --------------------------------------------------------------------------------
74 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Small Company Index
Class A $865,614,276 96,733,551 (132)
Class B 346,782,708 42,102,446 None
Class Y 10,897,824 1,199,057 (133)
Strategic Allocation
Class A 937,599,917 94,157,621 None
Class B 96,316,204 9,745,469 None
Class C 6,951,649 705,134 None
Class Y 4,286,748 430,514 (134)
Tax-Exempt Bond
Class A 620,913,752 160,136,048 None
Class B 30,276,575 7,808,249 None
Class C 3,928,709 1,012,887 None
Class Y 1,887 487 (19)
Tax-Exempt High Income Bond
Class A 3,581,661,059 808,428,906 None
Class B 197,504,197 44,583,702 None
Class C 24,270,554 5,476,132 None
Class Y 1,998 450 (19)
Tax-Exempt Money Market 113,855,036 113,982,997 None
U.S. Gov't Mortgage
Class A 153,898,993 30,441,915 (135)
Class B 84,767,339 16,760,791 None
Class C 9,356,540 1,849,778 None
Class I 9,808 1,942 (19)
Class Y 33,759,158 6,682,021 (136)
Value
Class A 260,276,151 46,716,933 (137)
Class B 128,769,111 23,679,313 None
Class C 8,924,498 1,636,718 (138)
Class I 61,275,692 10,907,810 (139)
Class Y 106,228 18,985 (140)
- --------------------------------------------------------------------------------
75 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-2. Fund Size And 5% Owners (continued)
as of September 30, 2005
Fund Net Assets Outstanding Shares 5% Owners
Variable Portfolio Funds:
VP Balanced $2,414,575,668 158,692,917 (141)
VP Cash Management 688,876,582 689,122,640 (141)
VP Core Bond 57,499,365 5,793,938 (141)
VP Core Equity 481,194,512 43,832,498 (141)
VP Diversified Bond 1,825,389,081 173,434,677 (141)
VP Diversified Equity Income 1,767,297,182 125,390,813 (141)
VP Emerging Markets 225,885,649 15,845,639 (141)
VP Global Bond 572,251,015 53,077,261 (141)
VP Global Inflation Protected
Securities 137,581,939 13,561,962 (141)
VP Growth 426,597,618 63,767,447 (141)
VP High Yield Bond 1,232,046,365 184,819,604 (141)
VP Income Opportunities 47,361,227 4,612,911 (141)
VP International Opportunity 1,220,375,783 117,257,076 (141)
VP Large Cap Equity 2,522,811,193 116,466,470 (141)
VP Large Cap Value 15,554,971 1,402,847 (141)
VP Mid Cap Growth 257,201,572 20,343,440 (141)
VP Mid Cap Value 8,536,568 738,583 (141)
VP S&P 500 Index 370,933,979 44,332,968 (141)
VP Select Value 24,361,339 2,135,809 (141)
VP Short Duration U.S. Gov't 479,756,279 47,231,205 (141)
VP Small Cap Advantage 234,299,870 15,485,771 (141)
VP Small Cap Value 426,254,253 29,410,355 (141)
(1) Charles Schwab & Co Inc., a brokerage firm, owns of record 5.45%.
(2) Roger J., Sylvia Ann and Matthew Thompson, Eagle, ID own 10.11%.
(3) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.12%.
RiverSource Portfolio Builder Moderate Fund owns 20.46%. RiverSource
Portfolio Builder Aggressive Fund owns 19.50%. RiverSource Portfolio
Builder Total Equity Fund owns 19.22%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.95%.
(4) Charles Schwab & Co Inc., a brokerage firm, owns of record 58.52%.
Ameriprise Financial, Minneapolis, MN owns 41.48%.
(5) Ameriprise Trust Company, Minneapolis, MN owns of record 99.82%.
(6) Arthur Mendel and Dorothy Mendel as the Trustees of the Dorothy M. Mendel
Irrevocable Trust, Richmond, CA , own 6.73%.
(7) Jerry J. Meyer and Roma J. Meyer, Williamsburg, IN own 11.34%. Dr. Frank
Bernhardt and Monika Bernhardt, West Chester, OH own 5.08%.
(8) RiverSource Portfolio Builder Conservative Fund owns 55.88%. RiverSource
Portfolio Builder Moderate Conservative Fund owns 44.04%.
- --------------------------------------------------------------------------------
76 RIVERSOURCE FUNDS -- PROXY STATEMENT
(9) Ameriprise Trust Company, Minneapolis, MN owns of record 98.34%.
(10) Charles Schwab & Co. Inc., a brokerage firm, owns of record 14.72%. IDS
Life Insurance Company, Minneapolis, MN owns 6.14%.
(11) Frank S. Gregory, Derry, NH owns 6.49%. Donald L. Arnold and Helen
Arnold, Silver Lake, IN own 5.01%.
(12) RiverSource Portfolio Builder Moderate Fund owns 41.26%. RiverSource
Portfolio Builder Moderate Aggressive Fund owns 32.54%. RiverSource
Portfolio Builder Conservative Fund owns 12.14%. RiverSource Portfolio
Builder Moderate Conservative Fund owns 10.27%.
(13) Charles Schwab & Co. Inc., a brokerage firm, owns of record 90.38%. IDS
Life Insurance Company, Minneapolis, MN owns 9.62%.
(14) Charles Schwab & Co Inc., a brokerage firm, owns of record 10.23%.
(15) Emmanual A. Madeira and Kelly D. Madeira, S. Dartmouth, MA own 8.49%.
Brian L. Hopp and Mary Jane Hopp, Beldenville, WI own 7.33%. Ameriprise
Financial, Minneapolis, MN owns 6.23%. Linda L. Lane, Bay Pines, FL owns
5.59%. Paul M. Farmer and Nikki S. Farmer, Franklin, TN own 5.03%.
(16) 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%.
(17) Charles Schwab & Co Inc., a brokerage firm, owns of record 60.92%.
Ameriprise Financial, Minneapolis, MN owns 39.08%.
(18) Charles Schwab & Co Inc., a brokerage firm, owns of record 6.36%.
(19) Ameriprise Financial, Minneapolis, MN owns 100%.
(20) Ameriprise Trust Company, Minneapolis, MN owns of record 96.62%.
(21) Charles Schwab & Co Inc., a brokerage firm, owns of record 14.11%.
(22) RiverSource Portfolio Builder Moderate Aggressive Fund owns 32.95%.
RiverSource Portfolio Builder Moderate Fund owns 20.54%. RiverSource
Portfolio Builder Aggressive Fund owns 19.53%. RiverSource Portfolio
Builder Total Equity Fund owns 19.24%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.96%.
(23) Ameriprise Trust Company, Minneapolis, MN, owns of record 48.92%. Wells
Fargo Bank owns of record 27.29%. Wells Fargo Bank as Tr of the Holland
American Line, Minneapolis, MN owns 17.35%.
(24) Charles Schwab & Co Inc., a brokerage firm, owns of record 11.09%.
(25) Charles Schwab & Co Inc., a brokerage firm, owns of record 100%.
(26) Charles Schwab & Co Inc., a brokerage firm, owns of record 11.74%.
(27) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.80%.
RiverSource Portfolio Builder Moderate Fund owns 20.86%. RiverSource
Portfolio Builder Aggressive Fund owns 19.92%. RiverSource Portfolio
Builder Total Equity Fund owns 19.48%. RiverSource Moderate Conservative
Fund owns 5.88%.
(28) Ameriprise Trust Company, Minneapolis, MN, owns of record 97.68%.
(29) John C. Mullarkey, Willowbrook, IL owns 6.86%.
(30) Ameriprise Trust Company, Minneapolis, MN owns of record 98.89%.
(31) Charles Schwab & Co Inc., a brokerage firm, owns of record 13.46%.
(32) Marilyn O. Matthews, Pasadena, CA, owns 6.37%.
(33) Charles Schwab & Co Inc., a brokerage firm, owns of record 83.54%.
Ameriprise Financial, Minneapolis, MN owns 16.46%.
(34) Charles Schwab & Co Inc., a brokerage firm, owns of record 6.86%.
(35) Terry H. Henson, Fairmount, GA owns 8.05%. Richard Louis Moore, Mesa, AZ
owns 5.63%. Nancy P. Kofranek, Oxnard, CA owns 5.24%. Christine S.
Scarpati, Tempe, AZ owns 5.10%.
(36) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.24%.
RiverSource Portfolio Builder Moderate Fund owns 20.64%. RiverSource
Portfolio Builder Aggressive Fund owns 19.54%. RiverSource Portfolio
Builder Total Equity Fund owns 19.12%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.78%.
(37) Charles Schwab & Co Inc., a brokerage firm, owns of record 66.40%.
Ameriprise Financial, Minneapolis, MN owns 33.60%.
(38) Charles Schwab & Co Inc., a brokerage firm, owns of record 14.83%.
- --------------------------------------------------------------------------------
77 RIVERSOURCE FUNDS -- PROXY STATEMENT
(39) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.14%.
RiverSource Portfolio Builder Moderate Fund owns 20.66%. RiverSource
Portfolio Builder Aggressive Fund owns 19.55%. RiverSource Portfolio
Builder Total Equity Fund owns 19.19%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.73%.
(40) Charles Schwab & Co Inc., a brokerage firm, owns of record 98.34%.
(41) Charles Schwab & Co Inc., a brokerage firm, owns of record 17.52%.
(42) RiverSource Portfolio Builder Moderate Aggressive Fund owns 43.66%.
RiverSource Portfolio Builder Moderate Fund owns 33.93%. RiverSource
Portfolio Builder Moderate Conservative Fund owns 13.83%. RiverSource
Portfolio Builder Aggressive Fund owns 7.22%.
(43) Charles Schwab & Co Inc., a brokerage firm, owns of record 8.42%.
(44) Ameriprise Trust Company, Minneapolis, MN owns of record 90.62%. Met Life
Securities Inc., Jersey City, NJ owns of record 7.86%.
(45) Charles Schwab & Co Inc., a brokerage firm, owns of record 11.29%.
(46) Ameriprise Trust Company, Minneapolis, MN owns of record 91.13%. Charles
Schwab & Co Inc., a brokerage firm, owns of record 8.74%.
(47) Charles Schwab & Co Inc., a brokerage firm, owns of record 6.91%.
(48) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.15%.
RiverSource Portfolio Builder Moderate Fund owns 20.62%. RiverSource
Portfolio Builder Aggressive Fund owns 19.57%. RiverSource Portfolio
Builder Total Equity Fund owns 19.15%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.81%.
(49) Ameriprise Trust Company, Minneapolis, MN owns of record 98.93%.
(50) Charles Schwab & Co Inc., a brokerage firm, owns of record 10.62%.
(51) Met Life Securities Inc., Jersey City, NJ, owns of record 60.05%. Charles
Schwab & Co Inc., a brokerage firm, owns of record 39.95%.
(52) Charles Schwab & Co Inc., a brokerage firm, owns of record 19.74%.
(53) RiverSource Portfolio Builder Moderate Fund owns 53.12%. RiverSource
Portfolio Builder Moderate Aggressive Fund owns 24.83%. RiverSource
Portfolio Builder Aggressive Fund owns 12.65%. RiverSource Portfolio
Builder Moderate Conservative Fund owns 9.39%.
(54) Charles Schwab & Co Inc., a brokerage firm, owns of record 97.46%.
(55) Charles Schwab & Co Inc., a brokerage firm, owns of record 17.74%.
(56) RiverSource Portfolio Builder Moderate Fund owns 37.87%. RiverSource
Portfolio Builder Moderate Aggressive Fund owns 31.89%. RiverSource
Portfolio Builder Moderate Conservative Fund owns 20.05%. RiverSource
Portfolio Builder Conservative Fund owns 10.17%.
(57) IDS Life Insurance Company, Minneapolis, MN owns 100%.
(58) Charles Schwab & Co Inc., a brokerage firm, owns of record 11.55%.
(59) Charles Schwab & Co Inc., a brokerage firm, owns of record 12.15%.
(60) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.13%.
RiverSource Portfolio Builder Moderate Fund owns 20.58%. RiverSource
Portfolio Builder Aggressive Fund owns 19.49%. RiverSource Portfolio
Builder Total Equity Fund owns 18.92%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.94%.
(61) Charles Schwab & Co Inc., a brokerage firm, owns of record 96.41%.
(62) Ameriprise Financial, Minneapolis, MN owns 13.09%. Charles Schwab & Co
Inc., a brokerage firm, owns of record 9.60%.
(63) Daniel and Linda L. Miklovic, St. Louis, MO own 5.35%.
(64) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.04%.
RiverSource Portfolio Builder Moderate Fund owns 20.61%. RiverSource
Portfolio Builder Aggressive Fund owns 19.52%. RiverSource Portfolio
Builder Total Equity Fund owns 19.08%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.88%.
(65) Charles Schwab & Co Inc., a brokerage firm, owns of record 84.38%.
Ameriprise Financial, Minneapolis, MN owns 15.62%.
(66) Charles Schwab & Co Inc., a brokerage firm, owns of record 12.80%.
- --------------------------------------------------------------------------------
78 RIVERSOURCE FUNDS -- PROXY STATEMENT
(67) RiverSource Portfolio Builder Moderate Aggressive Fund owns 32.89%.
RiverSource Portfolio Builder Moderate Fund owns 20.30%. RiverSource
Portfolio Builder Aggressive Fund owns 19.69%. RiverSource Portfolio
Builder Total Equity Fund owns 19.26%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.88%.
(68) Charles Schwab & Co Inc., a brokerage firm, owns of record 94.85%. Met
Life Securities Inc., Jersey City, NJ owns of record 5.15%.
(69) Charles Schwab & Co Inc., a brokerage firm, owns of record 18.37%.
(70) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.13%.
RiverSource Portfolio Builder Moderate Fund owns 20.57%. RiverSource
Portfolio Builder Aggressive Fund owns 19.53%. RiverSource Portfolio
Builder Total Equity Fund owns 18.97%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.88%.
(71) Charles Schwab & Co Inc., a brokerage firm, owns of record 97.94%.
(72) Ameriprise Financial, Minneapolis, MN owns 15.53%. Charles Schwab & Co
Inc., a brokerage firm, owns of record 15.10%.
(73) RiverSource Portfolio Builder Moderate Aggressive Fund owns 32.87%.
RiverSource Portfolio Builder Moderate Fund owns 20.48%. RiverSource
Portfolio Builder Aggressive Fund owns 19.41%. RiverSource Portfolio
Builder Total Equity Fund owns 18.75%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 6.07%.
(74) Charles Schwab & Co Inc., a brokerage firm, owns of record 78.39%.
Ameriprise Financial, Minneapolis, MN owns 21.61%.
(75) Charles Schwab & Co. Inc., a brokerage firm, owns of record 5.47%.
(76) 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%.
(77) 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%.
(78) Charles Schwab & Co Inc., a brokerage firm, owns of record 15.44%.
(79) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.13%.
RiverSource Portfolio Builder Moderate Fund owns 20.61%. RiverSource
Portfolio Builder Aggressive Fund owns 19.60%. RiverSource Portfolio
Builder Total Equity Fund owns 19.16%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.77%.
(80) Charles Schwab & Co Inc., a brokerage firm, owns of record 90.06%.
Ameriprise Financial, Minneapolis, MN owns 9.94%.
(81) Charles Schwab & Co. Inc., a brokerage firm, owns of record 19.83%.
(82) Donald and Elizabeth Snow, Derry, NH own 7.28%. Sylvia Cohen and Barbara
Ann Knibbe, Stockton, CA own 5.36%.
(83) RiverSource Portfolio Builder Moderate Conservative Fund owns 30.25%.
RiverSource Portfolio Builder Moderate Aggressive Fund owns 24.01%.
RiverSource Portfolio Builder Aggressive Fund owns 17.13%. RiverSource
Portfolio Builder Conservative Fund owns 14.37%. RiverSource Portfolio
Builder Moderate Fund owns 14.24%.
(84) Charles Schwab & Co Inc., a brokerage firm, owns of record 83.74%. IDS
Life Insurance Company, Minneapolis, MN owns 16.26%.
(85) Charles Schwab & Co. Inc., a brokerage firm, owns of record 6.50%.
(86) June P. Venette and Norman E. Venette as Trustees of the Norman E.
Venette Revocable Trust, Orange, MA own 9.51%. Donald A. Simard and
Claire G. Simard, Ipswich, MA own 7.34%. Alphonse A. Di Nardo and Linda
Di Nardo, Leominster, MA own 6.48%. Harvey W. Levin and Phyllis Levin,
Swampscott, MA own 6.28%. Rita Hashem, Tewksbury, MA owns 5.34%.
(87) Charles Schwab & Co. Inc., a brokerage firm, owns of record 5.33%.
- --------------------------------------------------------------------------------
79 RIVERSOURCE FUNDS -- PROXY STATEMENT
(88) Chester V. Mysliwiec and Rose M. Mysliwiec as Trustees of the Rose M.
Mysliwiec Living Trust, Grand Rapids, MI own 8.05%. Sarah Frances Ohm,
Lansing, MI owns 5.09%.
(89) Barry J. Fishman and Teresa A McMahon, as Trustees for the Barry J.
Fishman Living Trust, Ann Arbor, MI own 10.39%. Ray W. Butler and
Gertrude E. Butler, Clarkston, MI own 6.82%. R. Paul Minger and Diane E.
Minger, Huntley, IL own 5.25%.
(90) Charles Schwab & Co. Inc., a brokerage firm, owns of record 6.36%.
(91) RiverSource Portfolio Builder Moderate Aggressive Fund owns 32.88%.
RiverSource Portfolio Builder Moderate Fund owns 20.63%. RiverSource
Portfolio Builder Aggressive Fund owns 19.50%. RiverSource Portfolio
Builder Total Equity Fund owns 19.22%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.98%.
(92) Ameriprise Trust Company, Minneapolis, MN owns of record 92.27%.
(93) Charles Schwab & Co. Inc., a brokerage firm, owns of record 22.18%.
(94) RiverSource Portfolio Builder Moderate Aggressive Fund owns 32.89%.
RiverSource Portfolio Builder Moderate Fund owns 20.46%. RiverSource
Portfolio Builder Aggressive Fund owns 19.72%. RiverSource Portfolio
Builder Total Equity Fund owns 19.18%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.92%.
(95) Charles Schwab & Co. Inc., a brokerage firm, owns of record 97.89%.
(96) Charles Schwab & Co. Inc., a brokerage firm, owns of record 5.07%.
(97) Arthur Ezersky and Sandra Ezersky, Woodbury, NY own 7.39%. Charles D.
Adler and Judith E. Adler, New York, NY own 6.16%.
(98) Charles Schwab & Co. Inc., a brokerage firm, owns of record 5.50%.
(99) Sandra K. Ogle and David L. Mazzie, Strongsville, OH own 5.64%.
(100) Richard L. Sears, Parma, OH owns 6.37%. Joseph A. Sears, Berea, OH owns
6.37%. James N. Sears, Columbus, OH owns 6.37%. David A. Sears,
Brunswick, OH owns 6.15%.
(101) Charles Schwab & Co. Inc., a brokerage firm, owns of record 87.00%.
Ameriprise Financial, Minneapolis, MN owns 13.00%.
(102) Charles Schwab & Co. Inc., a brokerage firm, owns of record 68.54%.
Ameriprise Financial, Minneapolis, MN owns 31.46%.
(103) Charles Schwab & Co. Inc., a brokerage firm, owns of record 67.94%.
Ameriprise Financial, Minneapolis, MN owns 32.06%.
(104) Charles Schwab & Co. Inc., a brokerage firm, owns of record 84.32%.
Ameriprise Financial, Minneapolis, MN owns 15.68%.
(105) Charles Schwab & Co. Inc., a brokerage firm, owns of record 59.68%.
Ameriprise Financial, Minneapolis, MN owns 40.32%.
(106) Charles Schwab & Co. Inc., a brokerage firm, owns of record 88.51%.
Ameriprise Financial, Minneapolis, MN owns 11.49%.
(107) Charles Schwab & Co. Inc., a brokerage firm, owns of record 16.40%.
(108) Richard L. and Susan Angela Venerable, Argyle, TX own 5.94%.
(109) Charles Schwab & Co. Inc., a brokerage firm, owns of record 97.08%.
(110) Charles Schwab & Co. Inc., a brokerage firm, owns of record 10.17%.
(111) RiverSource Portfolio Builder Moderate Aggressive Fund owns 31.79%.
RiverSource Portfolio Builder Moderate fund owns 25.83%. RiverSource
Portfolio Builder Aggressive Fund owns 15.31%. RiverSource Portfolio
Builder Total Equity Fund owns 12.36%.
(112) Charles Schwab & Co. Inc., a brokerage firm, owns of record 51.53%.
Ameriprise Financial, Minneapolis, MN owns 48.47%.
(113) Ameriprise Trust Company, Minneapolis, MN owns of record 51.53%. Charles
Schwab & Co. Inc., a brokerage firm, owns of record 16.71%.
(114) Charles Schwab & Co. Inc., a brokerage firm, owns of record 10.99%.
(115) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.19%.
RiverSource Portfolio Builder Moderate Fund owns 20.54%. RiverSource
Portfolio Builder Aggressive Fund owns 19.58%. RiverSource Portfolio
Builder Total Equity Fund owns 19.16%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.80%.
- --------------------------------------------------------------------------------
80 RIVERSOURCE FUNDS -- PROXY STATEMENT
(116) Charles Schwab & Co. Inc., a brokerage firm, owns of record 82.56%.
Ameriprise Financial, Minneapolis, MN owns 17.44%.
(117) Charles Schwab & Co. Inc., a brokerage firm, owns of record 9.41%.
(118) RiverSource Portfolio Builder Moderate Conservative Fund owns 29.81%.
RiverSource Portfolio Builder Aggressive Fund owns 26.58%. RiverSource
Portfolio Builder Conservative Fund owns 24.71%. RiverSource Portfolio
Builder Moderate Aggressive Fund owns 14.53%.
(119) Ameriprise Trust Company, Minneapolis, MN owns of record 96.7%.
(120) Charles Schwab & Co. Inc., a brokerage firm, owns of record 17.13%.
(121) RiverSource Portfolio Builder Moderate Aggressive Fund owns 32.85%.
RiverSource Portfolio Builder Moderate Fund owns 20.76%. RiverSource
Portfolio Builder Aggressive Fund owns 19.60%. RiverSource Portfolio
Builder Total Equity Fund owns 19.19%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.81%.
(122) Charles Schwab & Co. Inc., a brokerage firm, owns of record 99.50%.
(123) Charles Schwab & Co. Inc., a brokerage firm, owns of record 21.05%.
(124) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.44%.
RiverSource Portfolio Builder Moderate Fund owns 20.76%. RiverSource
Portfolio Builder Aggressive Fund owns 19.25%. RiverSource Portfolio
Builder Total Equity Fund owns 19.03%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.68%.
(125) Charles Schwab & Co. Inc., a brokerage firm, owns of record 95.68%.
(126) Charles Schwab & Co. Inc., a brokerage firm, owns of record 14.20%.
(127) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.44%.
RiverSource Portfolio Builder Moderate Fund owns 20.49%. RiverSource
Portfolio Builder Aggressive Fund owns 19.47%. RiverSource Portfolio
Builder Total Equity Fund owns 19.09%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.78%.
(128) Ameriprise Trust Company, Minneapolis, MN owns of record 81.97%. Charles
Schwab & Co., Inc., a brokerage firm, owns of record 16.62%.
(129) Charles Schwab & Co. Inc., a brokerage firm, owns of record 21.22%.
(130) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.03%.
RiverSource Portfolio Builder Moderate Fund owns 20.75%. RiverSource
Portfolio Builder Aggressive Fund owns 19.43%. RiverSource Portfolio
Builder Total Equity Fund owns 19.17%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.80%.
(131) Charles Schwab & Co. Inc., a brokerage firm, owns of record 93.46%.
(132) Charles Schwab & Co. Inc., a brokerage firm, owns of record 9.58%.
(133) Ameriprise Trust Company, Minneapolis, MN owns of record 85.74%. Met Life
Securities, Inc., Jersey City, NJ, owns of record 11.42%.
(134) Ameriprise Trust Company, Minneapolis, MN owns of record 94.54%. Charles
Schwab & Co., Inc., a brokerage firm, owns of record 5.46%.
(135) Charles Schwab & Co. Inc., a brokerage firm, owns of record 15.14%.
(136) Wells Fargo Bank NA, owns of record 99.90%.
(137) Charles Schwab & Co. Inc., a brokerage firm, owns of record 12.34%.
(138) National Financial Services Corp. owns 17.78%.
(139) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.10%.
RiverSource Portfolio Builder Moderate Fund owns 20.57%. RiverSource
Portfolio Builder Aggressive Fund owns 19.55%. RiverSource Portfolio
Builder Total Equity Fund owns 19.22%. RiverSource Portfolio Builder
Moderate Conservative Fund owns 5.85%.
(140) Charles Schwab & Co. Inc., a brokerage firm, owns of record 89.47%.
Ameriprise Financial, Minneapolis, MN owns 10.53%.
(141) 100% of the fund's assets are owned by the subaccounts of IDS Life
Insurance Company in Minneapolis, MN, IDS Life Insurance Company of New
York in Albany, NY, American Centurion Life Assurance Company in Albany,
NY, American Enterprise Life Insurance Company in Minneapolis, MN, and
American Partners Life Insurance Company in Minneapolis, MN.
- --------------------------------------------------------------------------------
81 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-3. Fund Payments to the Investment Manager and its Affiliates*
during the fund's last fiscal period
Fund Admin Dist. Service TA Custody
Retail Funds:
Aggressive Growth $24,630 $104,711 $34 $64,474 $124,750
Balanced 524,986 3,681,074 181,971 2,037,070 185,020
California Tax-Exempt 87,771 699,509 N/A 91,207 **
Cash Management 1,016,703 4,465,116 N/A 11,374,578 450,360
Core Bond 78,241 258,538 52 63,985 77,920
Disciplined Equity 29,441 97,138 30 45,400 27,540
Diversified Bond 1,259,427 10,480,135 198,919 4,760,451 **
Diversified Equity Income 1,216,876 18,879,476 73,957 7,077,427 322,975
Dividend Opportunity 406,110 4,794,080 223 1,962,651 95,670
Emerging Markets 271,857 1,203,938 18,278 764,555 291,850
Equity Value 454,202 5,158,196 5,740 2,385,075 90,845
European Equity 78,835 625,142 22 420,160 65,348
Fundamental Growth 31,978 97,804 72 42,916 76,134
Fundamental Value 458,121 3,739,499 329 1,510,868 79,210
Global Bond 314,640 2,563,496 75 1,113,855 178,550
Global Equity 284,795 2,187,202 4,591 1,658,386 154,577
Global Technology 131,702 1,062,308 361 1,045,369 56,947
Growth 1,370,094 10,829,474 329,679 6,589,850 264,471
High Yield Bond 1,219,476 12,201,690 546 3,681,247 **
Income Opportunities 164,038 1,262,784 348 336,398 42,517
Inflation Protected Securities 61,197 502,630 10 103,995 42,726
Intermediate Tax-Exempt Bond 69,058 692,175 1 102,241 **
International Aggressive Growth 149,750 781,390 118 477,653 246,000
International Equity 88,536 411,570 39 199,825 185,484
International Opportunity 255,871 1,582,591 30,931 1,890,275 164,050
International Select Value 549,050 3,301,526 359 1,612,094 160,566
International Small Cap 46,103 205,340 74 105,340 272,331
Large Cap Equity 860,387 8,240,812 3,664 4,045,271 296,060
Large Cap Value 67,667 475,371 121 192,922 158,870
Limited Duration Bond 88,881 506,494 30 120,583 86,805
Massachusetts Tax-Exempt 30,362 349,028 N/A 53,501 **
Michigan Tax-Exempt 23,283 215,343 N/A 37,436 **
- --------------------------------------------------------------------------------
82 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-3. (continued)
Fund Admin Dist. Service TA Custody
Retail Funds:
Mid Cap Growth $1,056,445 $8,161,940 $213,175 $4,559,724 $178,721
Mid Cap Value 385,071 3,348,657 534 1,614,273 104,584
Minnesota Tax-Exempt 163,503 1,486,886 N/A 220,922 **
New York Tax-Exempt 36,031 333,821 N/A 55,750 **
Ohio Tax-Exempt 24,486 243,018 N/A 40,724 **
Portfolio Builder Aggressive 13,785 294,500 24 135,459 ***
Portfolio Builder Conservative 5,969 156,166 10 31,246 ***
Portfolio Builder Moderate 23,460 551,194 11 150,122 ***
Portfolio Builder Moderate 28,002 590,354 15 228,780 ***
Aggressive
Portfolio Builder Moderate 10,779 271,925 10 60,528 ***
Conservative
Portfolio Builder Total Equity 10,959 236,859 47 107,336 ***
Precious Metals 51,848 370,915 70 183,324 43,910
Real Estate 41,449 213,988 23 109,319 24,743
S&P 500 Index 319,791 169,434 N/A 606,841 79,551
Select Value 427,460 3,270,218 73 1,525,521 77,571
Short Duration U.S. Gov't 960,018 10,661,037 110,896 3,369,129 168,781
Small Cap Advantage 491,869 4,150,433 347 1,955,571 153,750
Small Cap Equity 129,820 741,653 145 407,486 238,100
Small Cap Growth 224,042 1,364,335 141 884,819 211,597
Small Cap Value 824,914 5,632,720 239 2,773,387 272,927
Small Company Index 784,439 6,468,464 17,587 2,535,097 156,295
Strategic Allocation 383,942 3,290,117 4,337 1,556,527 241,825
Tax-Exempt Bond 323,368 2,283,046 3 379,119 **
Tax-Exempt High Income 1,447,459 13,569,367 3 2,080,286 **
Tax-Exempt Money Market 45,528 143,129 N/A 156,687 **
U.S. Gov't Mortgage 152,145 1,662,982 22 547,586 72,460
Value 285,752 2,291,662 145 913,774 58,720
- --------------------------------------------------------------------------------
83 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-3. (continued)
Fund Admin Dist. Service TA Custody
Variable Portfolio Funds:
VP Balanced $892,514 $3,258,265 N/A N/A $326,925
VP Cash Management 228,193 886,958 N/A N/A 52,955
VP Core Bond 19,968 57,634 N/A N/A 57,746
VP Core Equity**** 0 0 N/A N/A 0
VP Diversified Bond 863,405 2,163,215 N/A N/A 214,024
VP Diversified Equity Income 468,417 1,559,298 N/A N/A 355,460
VP Emerging Markets 98,265 126,227 N/A N/A 146,667
VP Global Bond 289,959 617,003 N/A N/A 179,440
VP Global Inflation Protected 16,066 42,814 N/A N/A 34,503
Securities
VP Growth 149,053 365,846 N/A N/A 63,060
VP High Yield Bond 625,083 1,525,551 N/A N/A 93,250
VP Income Opportunities 15,279 32,273 N/A N/A 23,697
VP International Opportunity 593,033 1,392,429 N/A N/A 398,819
VP Large Cap Equity 1,227,017 3,171,288 N/A N/A 236,000
VP Large Cap Value 5,559 13,898 N/A N/A 123,705
VP Mid Cap Growth 151,155 310,975 N/A N/A 48,280
VP Mid Cap Value 718 1,795 N/A N/A 7,610
VP S&P 500 Index 272,087 419,788 N/A N/A 90,195
VP Select Value 5,557 19,359 N/A N/A 11,370
VP Short Duration U.S. Gov't 258,743 623,988 N/A N/A 69,184
VP Small Cap Advantage 132,967 275,040 N/A N/A 118,470
VP Small Cap Value 251,446 394,484 N/A N/A 205,993
* The Administrative Services Agreement ("Admin") is between the fund and
Ameriprise Financial. The Plan and Agreement of Distribution ("Dist.")
and Shareholder Service Agreement ("Service") are between the fund and
Ameriprise Financial Services, Inc. The Transfer Agent Agreement ("TA")
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 by the same
companies after the IMS Agreement is approved, with the exception that TA
services for VP funds will be provided by RiverSource Service
Corporation.
** For this fund, the Custodian Agreement is with U.S. Bank, N.A., a company
that is not affiliated with the investment manager.
*** For this fund, the fee paid to the Custodian is de minimis.
**** All services are provided under the IMS Agreement.
- --------------------------------------------------------------------------------
84 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-4. Brokerage Commissions Paid to Broker-Dealer Affiliates
during the fund's last fiscal period
Amount of % of All
Fund Broker/Dealer Commissions Commissions
Retail Funds:
Aggressive Growth JP Morgan Securities, Inc.(1) $27 0.01%
Balanced N/A N/A N/A
California Tax-Exempt N/A N/A N/A
Cash Management N/A N/A N/A
Core Bond N/A N/A N/A
Disciplined Equity N/A N/A N/A
Diversified Bond N/A N/A N/A
Diversified Equity Income AEIS(2) 1,716 0.05
Dividend Opportunity AEIS(2) 20,898 3.36
Emerging Markets N/A N/A N/A
Equity Value AEIS(2) 10,142 1.18
European Equity N/A N/A N/A
Fundamental Growth Goldman Sachs 38 0.02
& Company(3)
Fundamental Value N/A N/A N/A
Global Bond N/A N/A N/A
Global Equity N/A N/A N/A
Global Technology AEIS(2) 97,718 2.33
Growth AEIS(2) 13,720 0.09
High Yield Bond N/A N/A N/A
Income Opportunities N/A N/A N/A
Inflation Protected Securities N/A N/A N/A
Intermediate Tax-Exempt Bond N/A N/A N/A
International Aggressive J.P. Morgan 22,343 3.73
Growth Securities, Inc.(1)
International Equity N/A N/A N/A
International Opportunity N/A N/A N/A
International Select Value SanFord C. Bernstein 20,637 2.46
& Co. LLC(4)
International Small Cap N/A N/A N/A
Large Cap Equity AEIS(2) 10,214 0.15
Large Cap Value AEIS(2) 276 0.15
Limited Duration Bond N/A N/A N/A
- --------------------------------------------------------------------------------
85 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-4. (continued)
Amount of % of All
Fund Broker/Dealer Commissions Commissions
Massachusetts Tax-Exempt N/A N/A N/A
Michigan Tax-Exempt N/A N/A N/A
Mid Cap Growth AEIS(2) $17,994 1.10%
Mid Cap Value N/A N/A N/A
Minnesota Tax-Exempt N/A N/A N/A
New York Tax-Exempt N/A N/A N/A
Ohio Tax-Exempt N/A N/A N/A
Portfolio Builder Aggressive N/A N/A N/A
Portfolio Builder Conservative N/A N/A N/A
Portfolio Builder Moderate N/A N/A N/A
Portfolio Builder Moderate N/A N/A N/A
Aggressive
Portfolio Builder Moderate N/A N/A N/A
Conservative
Portfolio Builder Total Equity N/A N/A N/A
Precious Metals AEIS(2) 3,614 0.29
Real Estate N/A N/A N/A
S&P 500 Index N/A N/A N/A
Select Value Gabelli & Co.(5) 143,463 46.14
Short Duration U.S. Gov't N/A N/A N/A
Small Cap Advantage N/A N/A N/A
Small Cap Equity N/A N/A N/A
Small Cap Growth N/A N/A N/A
Small Cap Value Goldman Sachs & Company(3) 1,943 0.08
Legg Mason Wood 2,700 0.11
Walker, Inc.(6)
Small Company Index N/A N/A N/A
Strategic Allocation N/A N/A N/A
Tax-Exempt Bond N/A N/A N/A
Tax-Exempt High Income N/A N/A N/A
Tax-Exempt Money Market N/A N/A N/A
U.S. Gov't Mortgage N/A N/A N/A
Value N/A N/A N/A
- --------------------------------------------------------------------------------
86 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-4. (continued)
Amount of % of All
Fund Broker/Dealer Commissions Commissions
Variable Portfolio Funds:
VP Balanced AEIS(2) $3,299 0.15%
VP Cash Management N/A N/A N/A
VP Core Bond N/A N/A N/A
VP Core Equity N/A N/A N/A
VP Diversified Bond N/A N/A N/A
VP Diversified Equity Income AEIS(2) 1,052 0.09
VP Emerging Markets N/A N/A N/A
VP Global Bond N/A N/A N/A
VP Global Inflation N/A N/A N/A
Protected Securities
VP Growth AEIS(2) 714 0.04
VP High Yield Bond N/A N/A N/A
VP Income Opportunities N/A N/A N/A
VP International Opportunity N/A N/A N/A
VP Large Cap Equity AEIS(2) 14,132 0.14
VP Large Cap Value N/A N/A N/A
VP Mid Cap Growth N/A N/A N/A
VP Mid Cap Value N/A N/A N/A
VP S&P 500 Index N/A N/A N/A
VP Select Value Gabelli & Co.(5) 3,655 15.66
VP Short Duration U.S. Gov't N/A N/A N/A
VP Small Cap Advantage N/A N/A N/A
VP Small Cap Value Goldman Sachs & Company(3) 457 0.06
Legg Mason Wood Walker, Inc.(6) 297 0.04
(1) Affiliate of American Century, a subadviser.
(2) American Enterprise Investment Services, Inc., a wholly-owned subsidiary of
Ameriprise Financial. The amount shown represents brokerage clearing fees.
(3) Affiliate of Goldman Sachs Asset Management L.P., a subadviser.
(4) Affiliate of Alliance Capital, a subadviser.
(5) Affiliate of GAMCO Investors, Inc., a subadviser.
(6) Affiliate of Royce & Associates, LLC., a subadviser.
- --------------------------------------------------------------------------------
87 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-5. Dates Relating to Approval of Management Agreements
Date Last Reason
Date of Approved by Submitted to
Fund Contract Shareholders Shareholders
- -------------------------------------------------- ---------------- --------------- -------------------
Retail Funds:
- -------------------------------------------------- ---------------- --------------- -------------------
California Tax-Exempt,
Diversified Bond,
Massachusetts Tax-Exempt,
Michigan Tax-Exempt,
Minnesota Tax-Exempt,
New York Tax-Exempt,
Ohio Tax-Exempt,
Tax-Exempt Bond 3/20/1995 9/9/1994 (1)
- -------------------------------------------------- ---------------- --------------- -------------------
Tax-Exempt High Income 5/13/1996 9/9/1994 (1)
- -------------------------------------------------- ---------------- --------------- -------------------
High Yield Bond, Short Duration
U.S. Gov't 6/10/1996 9/9/1994 (1)
- -------------------------------------------------- ---------------- --------------- -------------------
Intermediate Tax-Exempt 11/13/1996 11/13/1996 Initial approval
- -------------------------------------------------- ---------------- --------------- -------------------
Cash, Tax-Exempt Money Market 7/1/1999 9/9/1994 (1)
- -------------------------------------------------- ---------------- --------------- -------------------
S&P 500 Index 9/9/1999 9/9/1999 Initial approval
- -------------------------------------------------- ---------------- --------------- -------------------
U.S. Gov't Mortgage 1/10/2002 1/10/2002 Initial approval
- -------------------------------------------------- ---------------- --------------- -------------------
International Equity,
International Small Cap 7/11/2002 7/11/2002 Initial approval
- -------------------------------------------------- ---------------- --------------- -------------------
Global Bond 12/1/2002 9/9/1994 (1)
- -------------------------------------------------- ---------------- --------------- -------------------
Balanced,
Diversified Equity Income,
Dividend Opportunity,
Emerging Markets, Equity Value,
European Equity, Global Equity,
Fundamental Value,
Global Technology, Growth,
International Aggressive Growth,
International Opportunity,
International Select Value,
Large Cap Equity, Large Cap Value,
Mid Cap Growth, Mid Cap Value,
Precious Metals, Select Value,
Small Cap Advantage, Small Cap Growth,
Small Cap Equity, Small Cap Value,
Strategic Allocation, Value 12/1/2002 11/13/2002 (2)
- -------------------------------------------------- ---------------- --------------- -------------------
Small Company Index 12/1/2002 11/13/2002 (3)
- -------------------------------------------------- ---------------- --------------- -------------------
Aggressive Growth, Fundamental Growth 1/9/2003 1/9/2003 Initial approval
- -------------------------------------------------- ---------------- --------------- -------------------
- --------------------------------------------------------------------------------
88 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-5. (continued)
Date Last Reason
Date of Approved by Submitted to
Fund Contract Shareholders Shareholders
- -------------------------------------------------- --------------- ---------------- -------------------
Retail Funds:
- -------------------------------------------------- --------------- ---------------- -------------------
Disciplined Equity 1/9/2003 1/9/2003 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
Core Bond, Limited Duration,
Income Opportunities 4/9/2003 4/9/2003 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
Real Estate,
Inflation Protected Securities,
- -------------------------------------------------- --------------- ---------------- -------------------
Portfolio Builders 11/13/2003 11/13/2003 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
Variable Portfolio Funds
VP Balanced,
VP Diversified Equity Income,
VP Emerging Markets, VP Growth,
VP International Opportunity,
VP Large Cap Equity,
VP Mid Cap Growth,
VP S&P 500 Index,
VP Short Duration U.S. Gov't,
VP Small Cap Advantage,
VP Small Cap Value 12/1/2002 11/13/2002 (2),(4)
- -------------------------------------------------- --------------- ---------------- -------------------
VP Cash Management
VP Diversified Bond,
VP Global Bond, VP High Yield Bond, 12/1/2002 11/13/2002 (4)
- -------------------------------------------------- --------------- ---------------- -------------------
VP Core Bond 7/10/2003 7/10/2003 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
VP Select Value 7/10/2003 7/10/2003 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
VP Large Cap Value 9/10/2003 9/10/2003 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
VP Core Equity 4/7/2004 4/7/2004 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
VP Income Opportunities 4/8/2004 4/8/2004 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
VP Global Inflation Protected Securities 4/8/2004 4/8/2004 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
VP Mid Cap Value 1/12/2005 1/12/2005 Initial approval
- -------------------------------------------------- --------------- ---------------- -------------------
(1) Shareholders approved (1) basing the fee solely on the assets of the fund,
not on the assets of all of the funds in the fund family and (2)
eliminating provisions regarding administration and accounting services.
The fund and the investment manager then entered into a separate
Administrative Services Agreement.
(2) Shareholders approved adding or modifying a performance incentive
adjustment.
(3) Shareholders approved the elimination of the performance incentive
adjustment.
(4) Shareholders approved changing the investment manager from IDS Life to AEFC
(now Ameriprise Financial).
- --------------------------------------------------------------------------------
89 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-6. Actual and Pro Forma Investment Management Services
Agreement Fees*
based on the fund's last fiscal period
Fund Actual Fee Pro Forma Fee % Change
Retail Funds:
Aggressive Growth $399,501 $399,501 0.00%
Balanced 7,169,932 7,169,932 0.00%
California Tax-Exempt 1,010,591 882,811 -12.64%
Cash Management 12,052,160 11,027,693 -8.50%
Core Bond 846,872 755,653 -10.77%
Disciplined Equity 408,720 408,720 0.00%
Diversified Bond 13,003,467 11,971,972 -7.93%
Diversified Equity Income 24,183,415 28,169,860 16.48%
Dividend Opportunity 6,201,403 6,210,387 0.14%
Emerging Markets 2,770,886 2,770,886 0.00%
Equity Value 6,836,800 6,836,800 0.00%
European Equity 872,149 872,149 0.00%
Fundamental Growth 410,475 410,475 0.00%
Fundamental Value 5,556,219 5,556,219 0.00%
Global Bond 4,143,714 3,888,386 -6.16%
Global Equity 3,302,062 3,302,062 0.00%
Global Technology 1,812,789 1,812,789 0.00%
Growth 18,968,320 19,042,512 0.39%
High Yield Bond 14,973,845 14,876,083 -0.65%
Income Opportunities 1,954,757 1,962,255 0.38%
Inflation Protected Securities 552,220 554,198 0.36%
Intermediate Tax-Exempt Bond 752,882 648,787 -13.83%
International Aggressive Growth 1,878,346 1,878,346 0.00%
International Equity 1,015,577 1,015,577 0.00%
International Opportunity 2,926,933 2,926,933 0.00%
International Select Value 6,467,621 6,467,621 0.00%
International Small Cap 600,389 600,389 0.00%
Large Cap Equity 9,680,873 9,721,037 0.41%
Large Cap Value 803,736 806,869 0.39%
Limited Duration Bond 960,788 857,324 -10.77%
Massachusetts Tax-Exempt 372,649 325,537 -12.64%
Michigan Tax-Exempt 294,025 256,851 -12.64%
Mid Cap Growth 10,550,526 12,623,229 19.65%
Mid Cap Value 5,816,781 5,816,781 0.00%
Minnesota Tax-Exempt 1,895,714 1,650,838 -12.92%
- --------------------------------------------------------------------------------
90 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-6. (continued)
based on the fund's last fiscal period
Fund Actual Fee Pro Forma Fee % Change
Retail Funds:
New York Tax-Exempt $434,449 $379,527 -12.64%
Ohio Tax-Exempt 307,214 268,379 -12.64%
Portfolio Builder Aggressive 55,141 55,141 0.00%
Portfolio Builder Conservative 23,875 23,875 0.00%
Portfolio Builder Moderate 93,838 93,838 0.00%
Portfolio Builder Moderate Aggressive 112,009 112,009 0.00%
Portfolio Builder Moderate Conservative 43,118 43,118 0.00%
Portfolio Builder Total Equity 43,835 43,835 0.00%
Precious Metals 659,595 659,595 0.00%
Real Estate 725,491 725,491 0.00%
S&P 500 Index 933,587 853,268 -8.60%
Select Value 5,256,934 5,256,934 0.00%
Short Duration U.S. Gov't 10,141,504 9,301,445 -8.28%
Small Cap Advantage 6,341,134 6,796,738 7.18%
Small Cap Equity 1,560,155 1,560,155 0.00%
Small Cap Growth 2,276,290 2,276,290 0.00%
Small Cap Value 9,857,858 9,857,858 0.00%
Small Company Index 4,547,058 4,281,626 -5.84%
Strategic Allocation 5,960,581 6,499,097 9.03%
Tax-Exempt Bond 3,457,986 3,132,660 -9.41%
Tax-Exempt High Income 20,079,644 19,075,485 -5.00%
Tax-Exempt Money Market 515,265 472,326 -8.33%
U.S. Gov't Mortgage 1,532,464 1,405,399 -8.29%
Value 3,311,867 3,311,867 0.00%
Variable Portfolio Funds:
VP Balanced 16,475,472 13,975,774 -15.17%
VP Cash Management 3,618,791 2,343,813 -35.23%
VP Core Bond 290,514 221,481 -23.76%
VP Core Equity 1,513,777 1,513,777 0.00%
VP Diversified Bond 10,446,764 8,131,189 -22.17%
VP Diversified Equity Income 7,790,892 8,385,083 7.63%
VP Emerging Markets 1,128,628 1,058,519 -6.21%
VP Global Bond 4,107,042 3,495,819 -14.88%
- --------------------------------------------------------------------------------
91 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-6. (continued)
based on the fund's last fiscal period
Fund Actual Fee Pro Forma Fee % Change
Variable Portfolio Funds:
VP Global Inflation Protected Securities $167,833 $154,787 -7.77%
VP Growth 2,023,076 1,936,735 -4.27%
VP High Yield Bond 7,533,530 7,151,618 -5.07%
VP Income Opportunities 165,239 157,587 -4.63%
VP International Opportunity 8,953,186 7,985,002 -10.81%
VP Large Cap Equity 15,079,399 14,124,124 -6.33%
VP Large Cap Value 70,240 66,953 -4.68%
VP Mid Cap Growth 1,435,137 1,561,565 8.81%
VP Mid Cap Value** 10,481 29,796 184.29%
VP S&P 500 Index 973,909 739,446 -24.07%
VP Select Value 123,757 119,188 -3.69%
VP Short Duration U.S. Gov't 3,045,061 2,398,346 -21.24%
VP Small Cap Advantage 1,570,788 1,572,287 0.10%
VP Small Cap Value 3,087,940 2,929,402 -5.13%
* The fund may be subject to an expense cap and management fees may be less for
an agreed upon period of time. Refer to Table D-1 for detailed information.
** The fund began operations in 2005.
- --------------------------------------------------------------------------------
92 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7A. Actual and Pro Forma Fund Expenses - Class A, Tax-Exempt Money
Market and Variable Portfolio Funds
(as a percent of average daily net assets)
based on the fund's last fiscal period
Class A, Tax Exempt Total Fund
Money Market and Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Retail Funds:
Aggressive Growth 0.89% 0.89% 0.25% 0.25% 0.83% 0.83% 1.97% 1.97%
Balanced 0.53 0.53 0.25 0.25 0.25 0.27 1.03 1.05
California Tax-Exempt 0.47 0.41 0.25 0.25 0.14 0.17 0.86 0.83
Cash Management 0.32 0.29 0.10 0.10 0.38 0.41 0.80 0.80
Core Bond 0.54 0.48 0.25 0.25 0.25 0.27 1.04 1.00
Disciplined Equity 0.62 0.62 0.25 0.25 0.48 0.49 1.35 1.36
Diversified Bond 0.50 0.46 0.25 0.25 0.27 0.29 1.02 1.00
Diversified Equity Income 0.56 0.65 0.25 0.25 0.23 0.25 1.04 1.15
Dividend Opportunity 0.60 0.60 0.25 0.25 0.27 0.29 1.12 1.14
Emerging Markets 1.01 1.02 0.25 0.25 0.57 0.55 1.83 1.82
Equity Value 0.58 0.58 0.25 0.25 0.28 0.30 1.11 1.13
European Equity 0.68 0.68 0.25 0.25 0.56 0.58 1.49 1.51
Fundamental Growth 0.72 0.72 0.25 0.25 0.59 0.59 1.56 1.56
Fundamental Value 0.73 0.73 0.25 0.25 0.32 0.32 1.30 1.30
Global Bond 0.75 0.70 0.25 0.25 0.34 0.36 1.34 1.31
Global Equity 0.67 0.67 0.25 0.25 0.49 0.51 1.41 1.43
Global Technology 0.83 0.83 0.25 0.25 0.66 0.66 1.74 1.74
Growth 0.63 0.63 0.25 0.25 0.31 0.32 1.19 1.20
High Yield Bond 0.57 0.57 0.25 0.25 0.22 0.24 1.04 1.06
- --------------------------------------------------------------------------------
93 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7A. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Class A, Tax Exempt Total Fund
Money Market and Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Income Opportunities 0.61% 0.61% 0.25% 0.25% 0.24% 0.26% 1.10% 1.12%
Inflation Protected Securities 0.44 0.44 0.25 0.25 0.32 0.34 1.01 1.03
Intermediate Tax-Exempt Bond 0.45 0.39 0.25 0.25 0.19 0.22 0.89 0.86
International Aggressive Growth 1.02 1.02 0.25 0.25 0.58 0.58 1.85 1.85
International Equity 0.93 0.93 0.25 0.25 0.55 0.55 1.73 1.73
International Opportunity 0.68 0.68 0.25 0.25 0.61 0.63 1.54 1.56
International Select Value 0.90 0.90 0.25 0.25 0.37 0.37 1.52 1.52
International Small Cap 1.06 1.06 0.25 0.25 0.95 0.95 2.26 2.26
Large Cap Equity 0.57 0.57 0.25 0.25 0.35 0.36 1.17 1.18
Large Cap Value 0.59 0.59 0.25 0.25 0.45 0.46 1.29 1.30
Limited Duration Bond 0.54 0.48 0.25 0.25 0.26 0.28 1.05 1.01
Massachusetts Tax-Exempt 0.47 0.41 0.25 0.25 0.22 0.25 0.94 0.91
Michigan Tax-Exempt 0.47 0.41 0.25 0.25 0.24 0.27 0.96 0.93
Mid Cap Growth 0.49 0.60 0.25 0.25 0.29 0.30 1.03 1.15
Mid Cap Value 0.78 0.78 0.25 0.25 0.34 0.35 1.37 1.38
Minnesota Tax-Exempt 0.46 0.40 0.25 0.25 0.14 0.17 0.85 0.82
New York Tax-Exempt 0.47 0.41 0.25 0.25 0.20 0.23 0.92 0.89
Ohio Tax-Exempt 0.47 0.41 0.25 0.25 0.23 0.26 0.95 0.92
Portfolio Builder Aggressive(4) 0.08 0.08 0.25 0.25 0.45 0.45 0.78 0.78
Portfolio Builder Conservative(4) 0.08 0.08 0.25 0.25 0.59 0.59 0.92 0.92
- --------------------------------------------------------------------------------
94 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7A. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Class A, Tax Exempt Total Fund
Money Market and Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Portfolio Builder Moderate(4) 0.08% 0.08% 0.25% 0.25% 0.30% 0.30% 0.63% 0.63%
Portfolio Builder Moderate
Aggressive(4) 0.08 0.08 0.25 0.25 0.32 0.32 0.65 0.65
Portfolio Builder Moderate
Conservative(4) 0.08 0.08 0.25 0.25 0.39 0.39 0.72 0.72
Portfolio Builder Total Equity(4) 0.08 0.08 0.25 0.25 0.50 0.50 0.83 0.83
Precious Metals 0.77 0.77 0.25 0.25 0.48 0.48 1.50 1.50
Real Estate 0.85 0.85 0.25 0.25 0.47 0.48 1.57 1.58
Select Value 0.74 0.74 0.25 0.25 0.34 0.34 1.33 1.33
Short Duration U.S. Gov't 0.51 0.47 0.25 0.25 0.25 0.27 1.01 0.99
Small Cap Advantage 0.72 0.77 0.25 0.25 0.33 0.35 1.30 1.37
Small Cap Equity 0.97 0.97 0.25 0.25 0.59 0.59 1.81 1.81
Small Cap Growth 0.83 0.83 0.25 0.25 0.55 0.55 1.63 1.63
Small Cap Value 0.87 0.87 0.25 0.25 0.39 0.40 1.51 1.52
Small Company Index 0.36 0.34 0.25 0.25 0.30 0.32 0.91 0.91
Strategic Allocation 0.59 0.64 0.25 0.25 0.25 0.29 1.09 1.18
Tax-Exempt Bond 0.45 0.41 0.25 0.25 0.12 0.15 0.82 0.81
Tax-Exempt High Income 0.45 0.43 0.25 0.25 0.10 0.13 0.80 0.81
Tax-Exempt Money Market 0.36 0.33 0.10 0.10 0.27 0.30 0.73 0.73
U.S. Gov't Mortgage 0.52 0.48 0.25 0.25 0.33 0.35 1.10 1.08
Value 0.72 0.72 0.25 0.25 0.32 0.32 1.29 1.29
- --------------------------------------------------------------------------------
95 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7A. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Class A, Tax Exempt Total Fund
Money Market and Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Variable Portfolio Funds:(5)
VP Balanced 0.63% 0.54% 0.13% 0.13% 0.06% 0.14% 0.82% 0.81%
VP Cash Management 0.51 0.33 0.13 0.13 0.06 0.15 0.70 0.61
VP Core Bond 0.63 0.48 0.13 0.13 0.25 0.33 1.01 0.94
VP Core Equity 0.40 0.40 0.00 0.00 0.00 0.00 0.40 0.40
VP Diversified Bond 0.60 0.47 0.13 0.13 0.09 0.17 0.82 0.77
VP Diversified Equity Income 0.63 0.68 0.13 0.13 0.08 0.16 0.84 0.97
VP Emerging Markets 1.12 1.05 0.13 0.13 0.30 0.34 1.55 1.52
VP Global Bond 0.83 0.71 0.13 0.13 0.12 0.20 1.08 1.04
VP Global Inflation
Protected Securities 0.49 0.44 0.13 0.13 0.25 0.33 0.87 0.90
VP Growth 0.69 0.66 0.13 0.13 0.10 0.17 0.92 0.96
VP High Yield Bond 0.62 0.59 0.13 0.13 0.08 0.16 0.83 0.88
VP Income Opportunities 0.64 0.61 0.13 0.13 0.26 0.34 1.03 1.08
VP International Opportunity 0.80 0.72 0.13 0.13 0.11 0.20 1.04 1.05
VP Large Cap Equity 0.60 0.56 0.13 0.13 0.07 0.14 0.80 0.83
VP Large Cap Value 0.63 0.60 0.13 0.13 1.79 1.86 2.55 2.59
VP Mid Cap Growth 0.58 0.63 0.13 0.13 0.11 0.17 0.82 0.93
VP Mid Cap Value 0.73 0.70 0.13 0.13 2.11 2.18 2.97 3.01
- --------------------------------------------------------------------------------
96 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7A. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Class A, Tax Exempt Total Fund
Money Market and Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
VP S&P 500 Index 0.29% 0.22% 0.13% 0.13% 0.14% 0.18% 0.56% 0.53%
VP Select Value 0.80 0.77 0.13 0.13 0.24 0.30 1.17 1.20
VP Short Duration U.S. Gov't 0.61 0.48 0.13 0.13 0.09 0.17 0.83 0.78
VP Small Cap Advantage 0.71 0.71 0.13 0.13 0.14 0.22 0.98 1.06
VP Small Cap Value 0.97 0.92 0.13 0.13 0.18 0.24 1.28 1.29
(1) The management fee is shown net of the performance incentive adjustment.
(2) Other expenses include an administrative services fee, a transfer agency
fee and other nonadvisory expenses.
(3) The fund may be subject to an expense cap and the total fund operating
expenses may be less for an agreed upon period of time. Refer to Table D-1
for detailed information.
(4) Expenses shown are those of the fund of funds. The table does not include
expenses of the underlying funds.
(5) The table does not reflect separate account expenses, including sales
charges.
- --------------------------------------------------------------------------------
97 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: This example is intended to help you compare the cost of investing in
the fund with the cost investing in other mutual funds. Assume you invest
$10,000 and the fund earns a 5% return. The operating expenses remain the same
each year. The following table shows your costs under the current arrangements
and your costs if the proposed changes had been in effect:
Class A, Tax-Exempt
Money Market and 1 year 3 years 5 years 10 years
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Retail Funds:
Aggressive Growth $763 $763 $1,158 $1,158 $1,577 $1,577 $2,743 $2,743
Balanced 674 676 884 890 1,112 1,122 1,766 1,788
California Tax-Exempt 559 556 737 728 930 914 1,489 1,456
Cash Management 82 82 256 256 445 445 994 994
Core Bond 576 572 790 779 1,023 1,002 1,690 1,646
Disciplined Equity 705 706 978 981 1,273 1,278 2,110 2,121
Diversified Bond 574 572 784 779 1,012 1,002 1,668 1,646
Diversified Equity Income 675 685 887 920 1,117 1,172 1,777 1,897
Dividend Opportunity 683 685 911 917 1,157 1,167 1,864 1,886
Emerging Markets 750 749 1,118 1,115 1,509 1,504 2,604 2,594
Equity Value 682 684 908 914 1,152 1,162 1,853 1,875
European Equity 718 720 1,019 1,025 1,342 1,352 2,257 2,278
Fundamental Growth 725 725 1,040 1,040 1,377 1,377 2,329 2,329
Fundamental Value 700 700 964 964 1,248 1,248 2,057 2,057
Global Bond 605 602 880 871 1,175 1,160 2,016 1,984
Global Equity 710 712 996 1,002 1,303 1,313 2,173 2,194
Global Technology 742 742 1,092 1,092 1,465 1,465 2,513 2,513
Growth 689 690 931 934 1,193 1,198 1,940 1,951
- --------------------------------------------------------------------------------
98 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: (continued)
Class A, Tax-Exempt
Money Market and 1 year 3 years 5 years 10 years
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Retail Funds (cont.)
High Yield Bond $576 $578 $790 $796 $1,023 $1,033 $1,690 $1,712
Income Opportunities 582 584 808 814 1,053 1,063 1,756 1,778
Inflation Protected Securities 573 575 782 787 1,007 1,017 1,657 1,679
Intermediate Tax-Exempt Bond 562 559 746 737 945 930 1,523 1,489
International Aggressive Growth 752 752 1,124 1,124 1,519 1,519 2,624 2,624
International Equity 741 741 1,089 1,089 1,461 1,461 2,503 2,503
International Opportunity 723 725 1,034 1,040 1,367 1,377 2,309 2,329
International Select Value 721 721 1,028 1,028 1,357 1,357 2,288 2,288
International Small Cap 791 791 1,241 1,241 1,716 1,716 3,025 3,025
Large Cap Equity 687 688 925 928 1,183 1,188 1,918 1,929
Large Cap Value 699 700 961 964 1,243 1,248 2,047 2,057
Limited Duration Bond 577 573 793 782 1,028 1,007 1,701 1,657
Massachusetts Tax-Exempt 566 563 761 752 971 956 1,579 1,546
Michigan Tax-Exempt 568 565 767 758 982 966 1,601 1,568
Mid Cap Growth 674 685 884 920 1,112 1,172 1,766 1,897
Mid Cap Value 706 707 984 987 1,283 1,288 2,131 2,142
Minnesota Tax-Exempt 558 555 734 725 925 909 1,478 1,444
New York Tax-Exempt 564 562 755 746 961 945 1,557 1,523
Ohio Tax-Exempt 567 564 764 755 976 961 1,590 1,557
- --------------------------------------------------------------------------------
99 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: (continued)
Class A, Tax-Exempt
Money Market and 1 year 3 years 5 years 10 years
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Retail Funds (cont.)
Portfolio Builder Aggressive $650 $650 $810 $810 $984 $984 $1,489 $1,489
Portfolio Builder Conservative 564 564 755 755 961 961 1,557 1,557
Portfolio Builder Moderate 636 636 765 765 907 907 1,319 1,319
Portfolio Builder Moderate
Aggressive 638 638 771 771 917 917 1,342 1,342
Portfolio Builder Moderate
Conservative 545 545 694 694 857 857 1,331 1,331
Portfolio Builder Total Equity 655 655 825 825 1,010 1,010 1,545 1,545
Precious Metals 719 719 1,022 1,022 1,347 1,347 2,267 2,267
Real Estate 726 726 1,042 1,045 1,382 1,387 2,340 2,350
Select Value 703 703 972 972 1,263 1,263 2,089 2,089
Short Duration U.S. Gov't 573 571 782 776 1,007 997 1,657 1,635
Small Cap Advantage 700 706 964 984 1,248 1,283 2,057 2,131
Small Cap Equity 748 748 1,112 1,112 1,500 1,500 2,584 2,584
Small Cap Growth 731 731 1,060 1,060 1,411 1,411 2,401 2,401
Small Cap Value 720 721 1,025 1,028 1,352 1,357 2,278 2,288
Small Company Index 663 663 849 849 1,051 1,051 1,634 1,634
Strategic Allocation 680 688 902 928 1,142 1,188 1,832 1,929
Tax-Exempt Bond 555 554 725 722 909 904 1,444 1,433
Tax-Exempt High Income 553 554 719 722 899 904 1,422 1,433
Tax-Exempt Money Market 75 75 234 234 407 407 910 910
U.S. Gov't Mortgage 582 580 808 802 1,053 1,043 1,756 1,734
Value 699 699 961 961 1,243 1,243 2,047 2,047
- --------------------------------------------------------------------------------
100 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: (continued)
Class A, Tax-Exempt
Money Market and 1 year 3 years 5 years 10 years
Variable Portfolio Funds Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Variable Portfolio Funds:
VP Balanced $84 $83 $262 $259 $456 $450 $1,018 $1,006
VP Cash Management 72 62 224 196 390 341 874 766
VP Core Bond 103 96 322 300 559 521 1,241 1,159
VP Core Equity 41 41 129 129 225 225 508 508
VP Diversified Bond 84 79 262 246 456 429 1,018 958
VP Diversified Equity Income 86 99 268 309 467 537 1,041 1,194
VP Emerging Markets 158 155 490 481 846 830 1,851 1,818
VP Global Bond 110 106 344 331 596 575 1,322 1,276
VP Global Inflation
Protected Securities 89 92 278 287 483 499 1,077 1,112
VP Growth 94 98 294 306 510 532 1,136 1,183
VP High Yield Bond 85 90 265 281 461 488 1,029 1,089
VP Income Opportunities 105 110 328 344 570 596 1,264 1,322
VP International Opportunity 106 107 331 334 575 580 1,276 1,287
VP Large Cap Equity 82 85 256 265 445 461 994 1,029
VP Large Cap Value 258 262 794 806 1,356 1,376 2,889 2,928
VP Mid Cap Growth 84 95 262 297 456 516 1,018 1,147
VP Mid Cap Value 300 304 919 930 1,563 1,582 3,293 3,330
VP S&P 500 Index 57 54 180 170 313 297 705 668
VP Select Value 119 122 372 381 645 661 1,425 1,459
VP Short Duration U.S. Gov't 85 80 265 249 461 434 1,029 970
VP Small Cap Advantage 100 108 312 337 543 586 1,206 1,299
VP Small Cap Value 130 131 406 409 703 709 1,550 1,561
- --------------------------------------------------------------------------------
101 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7B. Actual and Pro Forma Fund Expenses - Class B
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class B Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Aggressive Growth 0.89% 0.89% 1.00% 1.00% 0.86% 0.86% 2.75% 2.75%
Balanced 0.53 0.53 1.00 1.00 0.28 0.30 1.81 1.83
California Tax-Exempt 0.47 0.41 1.00 1.00 0.14 0.17 1.61 1.58
Cash Management 0.32 0.29 0.75 0.85 0.38 0.41 1.45 1.55
Core Bond 0.54 0.48 1.00 1.00 0.29 0.31 1.83 1.79
Disciplined Equity 0.62 0.62 1.00 1.00 0.51 0.52 2.13 2.14
Diversified Bond 0.50 0.46 1.00 1.00 0.28 0.30 1.78 1.76
Diversified Equity Income 0.56 0.65 1.00 1.00 0.24 0.26 1.80 1.91
Dividend Opportunity 0.60 0.60 1.00 1.00 0.28 0.30 1.88 1.90
Emerging Markets 1.01 1.02 1.00 1.00 0.58 0.56 2.59 2.58
Equity Value 0.58 0.58 1.00 1.00 0.30 0.32 1.88 1.90
European Equity 0.68 0.68 1.00 1.00 0.58 0.60 2.26 2.28
Fundamental Growth 0.72 0.72 1.00 1.00 0.62 0.62 2.34 2.34
Fundamental Value 0.73 0.73 1.00 1.00 0.33 0.33 2.06 2.06
Global Bond 0.75 0.70 1.00 1.00 0.35 0.37 2.10 2.07
Global Equity 0.67 0.67 1.00 1.00 0.51 0.53 2.18 2.20
Global Technology 0.83 0.83 1.00 1.00 0.69 0.69 2.52 2.52
Growth 0.63 0.63 1.00 1.00 0.34 0.35 1.97 1.98
High Yield Bond 0.57 0.57 1.00 1.00 0.22 0.24 1.79 1.81
Income Opportunities 0.61 0.61 1.00 1.00 0.25 0.27 1.86 1.88
- --------------------------------------------------------------------------------
102 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7B. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class B Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Inflation Protected Securities 0.44% 0.44% 1.00% 1.00% 0.33% 0.35% 1.77% 1.79%
Intermediate Tax-Exempt Bond 0.45 0.39 1.00 1.00 0.19 0.22 1.64 1.61
International Aggressive Growth 1.02 1.02 1.00 1.00 0.60 0.60 2.62 2.62
International Equity 0.93 0.93 1.00 1.00 0.58 0.58 2.51 2.51
International Opportunity 0.68 0.68 1.00 1.00 0.64 0.66 2.32 2.34
International Select Value 0.90 0.90 1.00 1.00 0.38 0.38 2.28 2.28
International Small Cap 1.06 1.06 1.00 1.00 0.98 0.98 3.04 3.04
Large Cap Equity 0.57 0.57 1.00 1.00 0.37 0.38 1.94 1.95
Large Cap Value 0.59 0.59 1.00 1.00 0.46 0.47 2.05 2.06
Limited Duration Bond 0.54 0.48 1.00 1.00 0.28 0.30 1.82 1.78
Massachusetts Tax-Exempt 0.47 0.41 1.00 1.00 0.22 0.25 1.69 1.66
Michigan Tax-Exempt 0.47 0.41 1.00 1.00 0.24 0.27 1.71 1.68
Mid Cap Growth 0.49 0.60 1.00 1.00 0.31 0.32 1.80 1.92
Mid Cap Value 0.78 0.78 1.00 1.00 0.35 0.36 2.13 2.14
Minnesota Tax-Exempt 0.46 0.40 1.00 1.00 0.14 0.17 1.60 1.57
New York Tax-Exempt 0.47 0.41 1.00 1.00 0.20 0.23 1.67 1.64
Ohio Tax-Exempt 0.47 0.41 1.00 1.00 0.23 0.26 1.70 1.67
Portfolio Builder Aggressive(4) 0.08 0.08 1.00 1.00 0.46 0.46 1.54 1.54
Portfolio Builder Conservative(4) 0.08 0.08 1.00 1.00 0.60 0.60 1.68 1.68
- --------------------------------------------------------------------------------
103 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7B. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class B Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Portfolio Builder Moderate(4) 0.08% 0.08% 1.00% 1.00% 0.31% 0.31% 1.39% 1.39%
Portfolio Builder Moderate
Aggressive(4) 0.08 0.08 1.00 1.00 0.34 0.34 1.42 1.42
Portfolio Builder Moderate
Conservative(4) 0.08 0.08 1.00 1.00 0.41 0.41 1.49 1.49
Portfolio Builder Total Equity(4) 0.08 0.08 1.00 1.00 0.51 0.51 1.59 1.59
Precious Metals 0.77 0.77 1.00 1.00 0.49 0.49 2.26 2.26
Real Estate 0.85 0.85 1.00 1.00 0.49 0.50 2.34 2.35
Select Value 0.74 0.74 1.00 1.00 0.35 0.35 2.09 2.09
Short Duration U.S. Gov't 0.51 0.47 1.00 1.00 0.25 0.27 1.76 1.74
Small Cap Advantage 0.72 0.77 1.00 1.00 0.35 0.37 2.07 2.14
Small Cap Equity 0.97 0.97 1.00 1.00 0.61 0.61 2.58 2.58
Small Cap Growth 0.83 0.83 1.00 1.00 0.57 0.57 2.40 2.40
Small Cap Value 0.87 0.87 1.00 1.00 0.41 0.42 2.28 2.29
Small Company Index 0.36 0.34 1.00 1.00 0.31 0.33 1.67 1.67
Strategic Allocation 0.59 0.64 1.00 1.00 0.27 0.31 1.86 1.95
Tax-Exempt Bond 0.45 0.41 1.00 1.00 0.13 0.16 1.58 1.57
Tax-Exempt High Income 0.45 0.43 1.00 1.00 0.10 0.13 1.55 1.56
U.S. Gov't Mortgage 0.52 0.48 1.00 1.00 0.34 0.36 1.86 1.84
Value 0.72 0.72 1.00 1.00 0.34 0.34 2.06 2.06
(1) The management fee is shown net of the performance incentive adjustment.
(2) Other expenses include an administrative services fee, a transfer agency
fee and other nonadvisory expenses.
(3) The fund may be subject to an expense cap and the total fund operating
expenses may be less for an agreed upon period of time. Refer to Table D-1
for detailed information.
(4) Expenses shown are those of the fund of funds. The table does not include
expenses of the underlying funds.
- --------------------------------------------------------------------------------
104 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: This example is intended to help you compare the cost of investing in
the fund with the cost investing in other mutual funds. Assume you invest
$10,000 and the fund earns a 5% return. The operating expenses remain the same
each year. The following table shows your costs under the current arrangements
and your costs if the proposed changes had been in effect:
1 year 3 years 5 years 10 years
Class B Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Aggressive Growth $278 $278 $853 $853 $1,455 $1,455 $2,896 $2,896
Balanced 184 186 570 576 981 999 1,926 1,948
California Tax-Exempt 164 161 508 499 877 861 1,714 1,681
Cash Management 148 158 459 490 793 846 1,563 1,648
Core Bond 186 182 576 564 991 971 1,945 1,901
Disciplined Equity 216 217 667 670 1,145 1,150 2,268 2,278
Diversified Bond 181 179 561 554 965 955 1,899 1,877
Diversified Equity Income 183 194 567 600 976 1,033 1,920 2,039
Dividend Opportunity 191 193 591 597 1,017 1,027 2,007 2,028
Emerging Markets 262 261 806 803 1,376 1,371 2,743 2,733
Equity Value 191 193 591 597 1,017 1,027 2,004 2,026
European Equity 229 231 707 713 1,211 1,221 2,405 2,426
Fundamental Growth 237 237 731 731 1,251 1,251 2,485 2,485
Fundamental Value 209 209 646 646 1,109 1,109 2,199 2,199
Global Bond 213 210 658 649 1,130 1,114 2,241 2,210
Global Equity 221 223 682 688 1,170 1,181 2,322 2,343
Global Technology 255 255 785 785 1,341 1,341 2,668 2,668
Growth 200 201 619 622 1,063 1,068 2,098 2,109
High Yield Bond 182 184 564 570 971 981 1,912 1,934
Income Opportunities 189 191 585 591 1,007 1,017 1,985 2,007
- --------------------------------------------------------------------------------
105 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: (continued)
1 year 3 years 5 years 10 years
Class B Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Inflation Protected Securities $180 $182 $557 $564 $ 960 $ 971 $1,888 $1,909
Intermediate Tax-Exempt Bond 167 164 518 508 893 877 1,748 1,714
International Aggressive Growth 265 265 815 815 1,391 1,391 2,771 2,771
International Equity 254 254 782 782 1,336 1,336 2,658 2,658
International Opportunity 234 237 724 731 1,240 1,251 2,464 2,485
International Select Value 231 231 713 713 1,221 1,221 2,429 2,429
International Small Cap 307 307 939 939 1,597 1,597 3,176 3,176
Large Cap Equity 197 198 609 613 1,048 1,053 2,069 2,079
Large Cap Value 208 209 643 646 1,104 1,109 2,188 2,199
Limited Duration Bond 185 181 573 561 986 965 1,939 1,896
Massachusetts Tax-Exempt 172 169 533 524 919 903 1,803 1,770
Michigan Tax-Exempt 174 171 539 530 929 914 1,825 1,792
Mid Cap Growth 183 195 567 603 976 1,038 1,918 2,047
Mid Cap Value 216 217 667 670 1,145 1,150 2,273 2,283
Minnesota Tax-Exempt 163 160 505 496 872 856 1,703 1,670
New York Tax-Exempt 170 167 527 518 908 893 1,781 1,748
Ohio Tax-Exempt 173 170 536 527 924 908 1,814 1,781
Portfolio Builder Aggressive 157 157 487 487 840 840 1,634 1,634
Portfolio Builder Conservative 171 171 530 530 914 914 1,789 1,789
Portfolio Builder Moderate 142 142 440 440 761 761 1,465 1,465
Portfolio Builder Moderate
Aggressive 145 145 450 450 777 777 1,496 1,496
- --------------------------------------------------------------------------------
106 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: (continued)
1 year 3 years 5 years 10 years
Class B Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Portfolio Builder Moderate
Conservative $152 $152 $471 $471 $814 $814 $1,575 $1,575
Portfolio Builder Total Equity 162 162 502 502 867 867 1,689 1,689
Precious Metals 229 229 707 707 1,211 1,211 2,408 2,408
Real Estate 237 238 731 734 1,251 1,256 2,488 2,498
Select Value 212 212 655 655 1,125 1,125 2,231 2,231
Short Duration U.S. Gov't 179 177 554 548 955 945 1,879 1,858
Small Cap Advantage 210 217 649 670 1,114 1,150 2,207 2,281
Small Cap Equity 261 261 803 803 1,371 1,371 2,731 2,731
Small Cap Growth 243 243 749 749 1,281 1,281 2,549 2,549
Small Cap Value 231 232 713 716 1,221 1,226 2,426 2,436
Small Company Index 170 170 527 527 908 908 1,778 1,778
Strategic Allocation 189 198 585 613 1,007 1,053 1,983 2,079
Tax-Exempt Bond 161 160 499 496 861 856 1,678 1,667
Tax-Exempt High Income 158 159 490 493 846 851 1,648 1,659
U.S. Gov't Mortgage 189 187 585 579 1,007 996 1,985 1,964
Value 209 209 646 646 1,109 1,109 2,196 2,196
- --------------------------------------------------------------------------------
107 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7C. Actual and Pro Forma Fund Expenses - Class C
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class C Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Aggressive Growth 0.89% 0.89% 1.00% 1.00% 0.86% 0.86% 2.75% 2.75%
Balanced 0.53 0.53 1.00 1.00 0.28 0.30 1.81 1.83
California Tax-Exempt 0.47 0.41 1.00 1.00 0.15 0.18 1.62 1.59
Cash Management 0.32 0.29 0.75 0.75 0.38 0.41 1.45 1.45
Core Bond 0.54 0.48 1.00 1.00 0.30 0.32 1.84 1.80
Disciplined Equity 0.62 0.62 1.00 1.00 0.51 0.52 2.13 2.14
Diversified Bond 0.50 0.46 1.00 1.00 0.29 0.31 1.79 1.77
Diversified Equity Income 0.56 0.65 1.00 1.00 0.25 0.27 1.81 1.92
Dividend Opportunity 0.60 0.60 1.00 1.00 0.29 0.31 1.89 1.91
Emerging Markets 1.01 1.02 1.00 1.00 0.59 0.57 2.60 2.59
Equity Value 0.58 0.58 1.00 1.00 0.30 0.32 1.88 1.90
European Equity 0.68 0.68 1.00 1.00 0.58 0.60 2.26 2.28
Fundamental Growth 0.72 0.72 1.00 1.00 0.63 0.63 2.35 2.35
Fundamental Value 0.73 0.73 1.00 1.00 0.34 0.34 2.07 2.07
Global Bond 0.75 0.70 1.00 1.00 0.34 0.36 2.09 2.06
Global Equity 0.67 0.67 1.00 1.00 0.52 0.54 2.19 2.21
Global Technology 0.83 0.83 1.00 1.00 0.66 0.66 2.49 2.49
Growth 0.63 0.63 1.00 1.00 0.34 0.35 1.97 1.98
High Yield Bond 0.57 0.57 1.00 1.00 0.22 0.24 1.79 1.81
Income Opportunities 0.61 0.61 1.00 1.00 0.25 0.27 1.86 1.88
- --------------------------------------------------------------------------------
108 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7C. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class C Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Inflation Protected Securities 0.44% 0.44% 1.00% 1.00% 0.32% 0.34% 1.76% 1.78%
Intermediate Tax-Exempt Bond 0.45 0.39 1.00 1.00 0.19 0.22 1.64 1.61
International Aggressive Growth 1.02 1.02 1.00 1.00 0.59 0.59 2.61 2.61
International Equity 0.93 0.93 1.00 1.00 0.58 0.58 2.51 2.51
International Opportunity 0.68 0.68 1.00 1.00 0.62 0.64 2.30 2.32
International Select Value 0.90 0.90 1.00 1.00 0.38 0.38 2.28 2.28
International Small Cap 1.06 1.06 1.00 1.00 0.99 0.99 3.05 3.05
Large Cap Equity 0.57 0.57 1.00 1.00 0.37 0.38 1.94 1.95
Large Cap Value 0.59 0.59 1.00 1.00 0.47 0.48 2.06 2.07
Limited Duration Bond 0.54 0.48 1.00 1.00 0.27 0.29 1.81 1.77
Massachusetts Tax-Exempt 0.47 0.41 1.00 1.00 0.23 0.26 1.70 1.67
Michigan Tax-Exempt 0.47 0.41 1.00 1.00 0.25 0.28 1.72 1.69
Mid Cap Growth 0.49 0.60 1.00 1.00 0.32 0.33 1.81 1.93
Mid Cap Value 0.78 0.78 1.00 1.00 0.35 0.36 2.13 2.14
Minnesota Tax-Exempt 0.46 0.40 1.00 1.00 0.15 0.18 1.61 1.58
New York Tax-Exempt 0.47 0.41 1.00 1.00 0.21 0.24 1.68 1.65
Ohio Tax-Exempt 0.47 0.41 1.00 1.00 0.24 0.27 1.71 1.68
Portfolio Builder Aggressive(4) 0.08 0.08 1.00 1.00 0.47 0.47 1.55 1.55
Portfolio Builder Conservative(4) 0.08 0.08 1.00 1.00 0.60 0.60 1.68 1.68
- --------------------------------------------------------------------------------
109 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7C. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class C Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Portfolio Builder Moderate(4) 0.08% 0.08% 1.00% 1.00% 0.32% 0.32% 1.40% 1.40%
Portfolio Builder Moderate
Aggressive(4) 0.08 0.08 1.00 1.00 0.33 0.33 1.41 1.41
Portfolio Builder Moderate
Conservative(4) 0.08 0.08 1.00 1.00 0.44 0.44 1.52 1.52
Portfolio Builder Total Equity(4) 0.08 0.08 1.00 1.00 0.52 0.52 1.60 1.60
Precious Metals 0.77 0.77 1.00 1.00 0.47 0.47 2.24 2.24
Real Estate 0.85 0.85 1.00 1.00 0.48 0.49 2.33 2.34
Select Value 0.74 0.74 1.00 1.00 0.35 0.35 2.09 2.09
Short Duration U.S. Gov't 0.51 0.47 1.00 1.00 0.26 0.28 1.77 1.75
Small Cap Advantage 0.72 0.77 1.00 1.00 0.35 0.37 2.07 2.14
Small Cap Equity 0.97 0.97 1.00 1.00 0.60 0.60 2.57 2.57
Small Cap Growth 0.83 0.83 1.00 1.00 0.57 0.57 2.40 2.40
Small Cap Value 0.87 0.87 1.00 1.00 0.41 0.42 2.28 2.29
Strategic Allocation 0.59 0.64 1.00 1.00 0.28 0.32 1.87 1.96
Tax-Exempt Bond 0.45 0.41 1.00 1.00 0.13 0.16 1.58 1.57
Tax-Exempt High Income 0.45 0.43 1.00 1.00 0.10 0.13 1.55 1.56
U.S. Gov't Mortgage 0.52 0.48 1.00 1.00 0.33 0.35 1.85 1.83
Value 0.72 0.72 1.00 1.00 0.33 0.33 2.05 2.05
(1) The management fee is shown net of the performance incentive adjustment.
(2) Other expenses include an administrative services fee, a transfer agency
fee and other nonadvisory expenses.
(3) The fund may be subject to an expense cap and the total fund operating
expenses may be less for an agreed upon period of time. Refer to Table D-1
for detailed information.
(4) Expenses shown are those of the fund of funds. The table does not include
expenses of the underlying funds.
- --------------------------------------------------------------------------------
110 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: This example is intended to help you compare the cost of investing in
the fund with the cost investing in other mutual funds. Assume you invest
$10,000 and the fund earns a 5% return. The operating expenses remain the same
each year. The following table shows your costs under the current arrangements
and your costs if the proposed changes had been in effect:
1 year 3 years 5 years 10 years
Class C Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Aggressive Growth $278 $278 $853 $853 $1,455 $1,455 $3,084 $3,084
Balanced 184 186 570 576 981 991 2,132 2,153
California Tax-Exempt 165 162 511 502 882 867 1,927 1,894
Cash Management 148 148 459 459 793 793 1,740 1,740
Core Bond 187 183 579 567 996 976 2,164 2,121
Disciplined Equity 216 217 667 670 1,145 1,150 2,467 2,477
Diversified Bond 182 180 564 557 971 960 2,110 2,089
Diversified Equity Income 184 195 570 603 981 1,038 2,132 2,248
Dividend Opportunity 192 194 594 600 1,022 1,033 2,216 2,238
Emerging Markets 263 262 809 806 1,381 1,376 2,938 2,928
Equity Value 191 193 591 597 1,017 1,027 2,206 2,227
European Equity 229 231 707 713 1,211 1,221 2,600 2,620
Fundamental Growth 238 238 734 734 1,256 1,256 2,690 2,690
Fundamental Value 210 210 649 649 1,114 1,114 2,405 2,405
Global Bond 212 209 655 646 1,125 1,109 2,425 2,394
Global Equity 222 224 685 691 1,175 1,186 2,528 2,549
Global Technology 252 252 776 776 1,326 1,326 2,830 2,830
Growth 200 201 619 622 1,063 1,068 2,301 2,311
High Yield Bond 182 184 564 570 971 981 2,110 2,132
Income Opportunities 189 191 585 591 1,007 1,017 2,185 2,206
- --------------------------------------------------------------------------------
111 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: (continued)
1 year 3 years 5 years 10 years
Class C Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Inflation Protected Securities $179 $181 $554 $561 $ 955 $ 965 $2,078 $2,100
Intermediate Tax-Exempt Bond 167 164 518 508 893 877 1,949 1,916
International Aggressive Growth 264 264 812 812 1,386 1,386 2,948 2,948
International Equity 254 254 782 782 1,336 1,336 2,850 2,850
International Opportunity 233 235 719 725 1,231 1,241 2,640 2,660
International Select Value 231 231 713 713 1,221 1,221 2,620 2,620
International Small Cap 308 308 942 942 1,602 1,602 3,367 3,367
Large Cap Equity 197 198 609 613 1,048 1,053 2,269 2,280
Large Cap Value 209 210 646 649 1,109 1,114 2,394 2,405
Limited Duration Bond 184 180 570 557 981 960 2,132 2,089
Massachusetts Tax-Exempt 173 170 536 527 924 908 2,014 1,981
Michigan Tax-Exempt 175 172 542 533 934 919 2,035 2,003
Mid Cap Growth 184 196 570 606 981 1,043 2,132 2,259
Mid Cap Value 216 217 667 670 1,145 1,150 2,467 2,477
Minnesota Tax-Exempt 164 161 508 499 877 861 1,916 1,883
New York Tax-Exempt 171 168 530 521 914 898 1,992 1,960
Ohio Tax-Exempt 174 171 539 530 929 914 2,024 1,992
Portfolio Builder Aggressive 158 158 490 490 846 846 1,851 1,851
Portfolio Builder Conservative 171 171 530 530 914 914 1,992 1,992
Portfolio Builder Moderate 143 143 443 443 767 767 1,685 1,685
Portfolio Builder Moderate
Aggressive 144 144 447 447 772 772 1,696 1,696
- --------------------------------------------------------------------------------
112 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: (continued)
1 year 3 years 5 years 10 years
Class C Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Portfolio Builder Moderate
Conservative $155 $155 $481 $481 $ 830 $ 830 $1,818 $1,818
Portfolio Builder Total Equity 163 163 505 505 872 872 1,905 1,905
Precious Metals 227 227 701 701 1,201 1,201 2,579 2,579
Real Estate 236 237 728 731 1,246 1,251 2,670 2,680
Select Value 212 212 655 655 1,125 1,125 2,425 2,425
Short Duration U.S. Gov't 180 178 557 551 960 950 2,089 2,067
Small Cap Advantage 210 217 649 670 1,114 1,150 2,405 2,477
Small Cap Equity 260 260 800 800 1,366 1,366 2,909 2,909
Small Cap Growth 243 243 749 749 1,281 1,281 2,741 2,741
Small Cap Value 231 232 713 716 1,221 1,226 2,620 2,630
Strategic Allocation 190 199 588 616 1,012 1,058 2,195 2,290
Tax-Exempt Bond 161 160 499 496 861 856 1,883 1,872
Tax-Exempt High Income 158 159 490 493 846 851 1,851 1,862
U.S. Gov't Mortgage 188 186 582 576 1,002 991 2,174 2,153
Value 208 208 643 643 1,104 1,104 2,384 2,384
- --------------------------------------------------------------------------------
113 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7D. Actual and Pro Forma Fund Expenses - Class D
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement Distribution Other Expenses(1) Operating Expenses
Class D Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
S&P 500 Index(2) 0.24% 0.22% 0.25% 0.25% 0.33% 0.31% 0.82% 0.78%
(1) Other expenses include an administrative services fee, a transfer agency
fee and other nonadvisory expenses.
(2) The fund is subject to an expense cap and the total fund operating expenses
will be less for an agreed upon period of time. Refer to Table D-1 for
detailed information.
Example: This example is intended to help you compare the cost of investing in
the fund with the cost investing in other mutual funds. Assume you invest
$10,000 and the fund earns a 5% return. The operating expenses remain the same
each year. The following table shows your costs under the current arrangements
and your costs if the proposed changes had been in effect:
1 year 3 years 5 years 10 years
Class D Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
S&P 500 Index $84 $80 $262 $249 $456 $434 $1,018 $970
- --------------------------------------------------------------------------------
114 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7E. Actual and Pro Forma Fund Expenses - Class E
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement Distribution Other Expenses(1) Operating Expenses
Class E Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
S&P 500 Index(2) 0.24% 0.22% 0.00% 0.00% 0.32% 0.30% 0.56% 0.52%
(1) Other expenses include an administrative services fee, a transfer agency
fee and other nonadvisory expenses.
(2) The fund is subject to an expense cap and the total fund operating expenses
will be less for an agreed upon period of time. Refer to Table D-1 for
detailed information.
Example: This example is intended to help you compare the cost of investing in
the fund with the cost investing in other mutual funds. Assume you invest
$10,000 and the fund earns a 5% return. The operating expenses remain the same
each year. The following table shows your costs under the current arrangements
and your costs if the proposed changes had been in effect:
1 year 3 years 5 years 10 years
Class E Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
S&P 500 Index $57 $53 $180 $167 $313 $291 $705 $656
- --------------------------------------------------------------------------------
115 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7I. Actual and Pro Forma Fund Expenses - Class I
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class I Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Aggressive Growth 0.89% 0.89% 0.00% 0.00% 0.61% 0.61% 1.50% 1.50%
Cash Management 0.32 0.29 0.00 0.00 0.07 0.10 0.39 0.39
Core Bond 0.54 0.48 0.00 0.00 0.18 0.20 0.72 0.68
Disciplined Equity 0.62 0.62 0.00 0.00 0.29 0.30 0.91 0.92
Diversified Bond 0.50 0.46 0.00 0.00 0.10 0.12 0.60 0.58
Diversified Equity Income 0.56 0.65 0.00 0.00 0.06 0.08 0.62 0.73
Dividend Opportunity 0.60 0.60 0.00 0.00 0.10 0.12 0.70 0.72
Emerging Markets 1.01 1.02 0.00 0.00 0.34 0.32 1.35 1.34
Equity Value 0.58 0.58 0.00 0.00 0.09 0.11 0.67 0.69
European Equity 0.68 0.68 0.00 0.00 0.28 0.30 0.96 0.98
Fundamental Growth 0.72 0.72 0.00 0.00 0.39 0.39 1.11 1.11
Fundamental Value 0.73 0.73 0.00 0.00 0.12 0.12 0.85 0.85
Global Bond 0.75 0.70 0.00 0.00 0.14 0.16 0.89 0.86
Global Technology 0.83 0.83 0.00 0.00 0.20 0.20 1.03 1.03
Growth 0.63 0.63 0.00 0.00 0.12 0.13 0.75 0.76
High Yield Bond 0.57 0.57 0.00 0.00 0.07 0.09 0.64 0.66
Income Opportunities 0.61 0.61 0.00 0.00 0.13 0.15 0.74 0.76
Inflation Protected Securities 0.44 0.44 0.00 0.00 0.21 0.23 0.65 0.67
- --------------------------------------------------------------------------------
116 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7I. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class I Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
International Aggressive Growth 1.02% 1.02% 0.00% 0.00% 0.35% 0.35% 1.37% 1.37%
International Equity 0.93 0.93 0.00 0.00 0.36 0.36 1.29 1.29
International Opportunity 0.68 0.68 0.00 0.00 0.19 0.21 0.87 0.89
International Select Value 0.90 0.90 0.00 0.00 0.18 0.18 1.08 1.08
International Small Cap 1.06 1.06 0.00 0.00 0.77 0.77 1.83 1.83
Large Cap Equity 0.57 0.57 0.00 0.00 0.14 0.15 0.71 0.72
Large Cap Value 0.59 0.59 0.00 0.00 0.27 0.28 0.86 0.87
Limited Duration Bond 0.54 0.48 0.00 0.00 0.19 0.21 0.73 0.69
Mid Cap Growth 0.49 0.60 0.00 0.00 0.11 0.12 0.60 0.72
Mid Cap Value 0.78 0.78 0.00 0.00 0.11 0.12 0.89 0.90
Precious Metals 0.77 0.77 0.00 0.00 0.22 0.22 0.99 0.99
Real Estate 0.85 0.85 0.00 0.00 0.25 0.26 1.10 1.11
Select Value 0.74 0.74 0.00 0.00 0.12 0.12 0.86 0.86
Short Duration U.S. Gov't 0.51 0.47 0.00 0.00 0.06 0.08 0.57 0.55
Small Cap Advantage 0.72 0.77 0.00 0.00 0.12 0.14 0.84 0.91
Small Cap Equity 0.97 0.97 0.00 0.00 0.35 0.35 1.32 1.32
Small Cap Growth 0.83 0.83 0.00 0.00 0.24 0.24 1.07 1.07
- --------------------------------------------------------------------------------
117 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7I. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class I Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Small Cap Value 0.87% 0.87% 0.00% 0.00% 0.15% 0.16% 1.02% 1.03%
U.S. Gov't Mortgage 0.52 0.48 0.00 0.00 0.14 0.16 0.66 0.64
Value 0.72 0.72 0.00 0.00 0.13 0.13 0.85 0.85
(1) The management fee is shown net of the performance incentive adjustment.
(2) Other expenses include an administrative services fee, a transfer agency
fee and other nonadvisory expenses.
(3) The fund may be subject to an expense cap and the total fund operating
expenses may be less for an agreed upon period of time. Refer to Table D-1
for detailed information.
- --------------------------------------------------------------------------------
118 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: This example is intended to help you compare the cost of investing in
the fund with the cost investing in other mutual funds. Assume you invest
$10,000 and the fund earns a 5% return. The operating expenses remain the same
each year. The following table shows your costs under the current arrangements
and your costs if the proposed changes had been in effect:
1 year 3 years 5 years 10 years
Class I Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Aggressive Growth $153 $153 $474 $474 $819 $819 $1,796 $1,796
Cash Management 40 40 125 125 219 219 495 495
Core Bond 74 69 230 218 401 379 898 850
Disciplined Equity 93 94 290 294 505 510 1,124 1,136
Diversified Bond 61 59 192 186 335 324 753 729
Diversified Equity Income 63 75 199 234 346 407 778 910
Dividend Opportunity 72 74 224 230 390 401 874 898
Emerging Markets 137 136 428 425 740 735 1,629 1,618
Equity Value 68 70 215 221 374 385 838 862
European Equity 98 100 306 312 532 543 1,183 1,206
Fundamental Growth 113 113 353 353 612 612 1,356 1,356
Fundamental Value 87 87 271 271 472 472 1,053 1,053
Global Bond 91 88 284 275 494 478 1,100 1,065
Global Technology 105 105 328 328 570 570 1,264 1,264
Growth 77 78 240 243 418 423 934 946
High Yield Bond 65 67 205 211 357 368 802 826
Income Opportunities 76 78 237 243 412 423 922 946
Inflation Protected Securities 66 68 208 215 363 374 814 838
International Aggressive Growth 139 139 434 434 751 751 1,651 1,651
International Equity 131 131 409 409 709 709 1,561 1,561
- --------------------------------------------------------------------------------
119 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: (continued)
1 year 3 years 5 years 10 years
Class I Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
International Opportunity $ 89 $ 91 $278 $284 $483 $494 $1,077 $1,100
International Select Value 110 110 344 344 596 596 1,322 1,322
International Small Cap 186 186 576 576 991 991 2,153 2,153
Large Cap Equity 73 74 227 230 396 401 886 898
Large Cap Value 88 89 275 278 478 483 1,065 1,077
Limited Duration Bond 75 70 234 221 407 385 910 862
Mid Cap Growth 62 74 194 230 338 401 758 898
Mid Cap Value 91 92 284 287 494 499 1,100 1,112
Precious Metals 101 101 316 316 548 548 1,218 1,218
Real Estate 112 113 350 353 607 612 1,345 1,356
Select Value 88 88 275 275 478 478 1,065 1,065
Short Duration U.S. Gov't 58 56 183 176 319 308 717 692
Small Cap Advantage 86 93 268 290 467 505 1,041 1,124
Small Cap Equity 134 134 419 419 724 724 1,595 1,595
Small Cap Growth 109 109 341 341 591 591 1,310 1,310
Small Cap Value 104 105 325 328 564 570 1,252 1,264
U.S. Gov't Mortgage 67 65 211 205 368 357 826 802
Value 87 87 271 271 472 472 1,053 1,053
- --------------------------------------------------------------------------------
120 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7Y. Actual and Pro Forma Fund Expenses - Class Y
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class Y Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Aggressive Growth 0.89% 0.89% 0.00% 0.00% 0.91% 0.91% 1.80% 1.80%
Balanced 0.53 0.53 0.00 0.00 0.34 0.36 0.87 0.89
Cash Management 0.32 0.29 0.00 0.00 0.34 0.37 0.66 0.66
Core Bond 0.54 0.48 0.00 0.00 0.38 0.40 0.92 0.88
Disciplined Equity 0.62 0.62 0.00 0.00 0.56 0.57 1.18 1.19
Diversified Bond 0.50 0.46 0.00 0.00 0.35 0.37 0.85 0.83
Diversified Equity Income 0.56 0.65 0.00 0.00 0.31 0.33 0.87 0.98
Dividend Opportunity 0.60 0.60 0.00 0.00 0.34 0.36 0.94 0.96
Emerging Markets 1.01 1.02 0.00 0.00 0.64 0.62 1.65 1.64
Equity Value 0.58 0.58 0.00 0.00 0.36 0.38 0.94 0.96
European Equity 0.68 0.68 0.00 0.00 0.61 0.63 1.29 1.31
Fundamental Growth 0.72 0.72 0.00 0.00 0.67 0.67 1.39 1.39
Fundamental Value 0.73 0.73 0.00 0.00 0.40 0.40 1.13 1.13
Global Bond 0.75 0.70 0.00 0.00 0.42 0.44 1.17 1.14
Global Equity 0.67 0.67 0.00 0.00 0.56 0.58 1.23 1.25
Global Technology 0.83 0.83 0.00 0.00 0.72 0.72 1.55 1.55
Growth 0.63 0.63 0.00 0.00 0.39 0.40 1.02 1.03
High Yield Bond 0.57 0.57 0.00 0.00 0.30 0.32 0.87 0.89
Income Opportunities 0.61 0.61 0.00 0.00 0.33 0.35 0.94 0.96
Inflation Protected Securities 0.44 0.44 0.00 0.00 0.42 0.44 0.86 0.88
- --------------------------------------------------------------------------------
121 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7Y. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class Y Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Intermediate Tax-Exempt Bond 0.45% 0.39% 0.00% 0.00% 0.25% 0.28% 0.70 0.67
International Aggressive Growth 1.02 1.02 0.00 0.00 0.67 0.67 1.69 1.69
International Equity 0.93 0.93 0.00 0.00 0.64 0.64 1.57 1.57
International Opportunity 0.68 0.68 0.00 0.00 0.68 0.70 1.36 1.38
International Select Value 0.90 0.90 0.00 0.00 0.45 0.45 1.35 1.35
International Small Cap 1.06 1.06 0.00 0.00 1.02 1.02 2.08 2.08
Large Cap Equity 0.57 0.57 0.00 0.00 0.39 0.40 0.96 0.97
Large Cap Value 0.59 0.59 0.00 0.00 0.52 0.53 1.11 1.12
Limited Duration Bond 0.54 0.48 0.00 0.00 0.41 0.43 0.95 0.91
Mid Cap Growth 0.49 0.60 0.00 0.00 0.38 0.39 0.87 0.99
Mid Cap Value 0.78 0.78 0.00 0.00 0.41 0.42 1.19 1.20
Portfolio Builder Aggressive(4) 0.08 0.08 0.00 0.00 0.53 0.53 0.61 0.61
Portfolio Builder Conservative(4) 0.08 0.08 0.00 0.00 0.68 0.68 0.76 0.76
Portfolio Builder Moderate(4) 0.08 0.08 0.00 0.00 0.39 0.39 0.47 0.47
Portfolio Builder Moderate
Aggressive(4) 0.08 0.08 0.00 0.00 0.40 0.40 0.48 0.48
Portfolio Builder Moderate
Conservative(4) 0.08 0.08 0.00 0.00 0.49 0.49 0.57 0.57
Portfolio Builder Total Equity(4) 0.08 0.08 0.00 0.00 0.58 0.58 0.66 0.66
Precious Metals 0.77 0.77 0.00 0.00 0.58 0.58 1.35 1.35
Real Estate 0.85 0.85 0.00 0.00 0.54 0.55 1.39 1.40
- --------------------------------------------------------------------------------
122 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-7Y. (continued)
(as a percent of average daily net assets)
based on the fund's last fiscal period
Annual Operating Expenses Total Fund
Management Agreement(1) Distribution Other Expenses(2) Operating Expenses(3)
Class Y Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Select Value 0.74% 0.74% 0.00% 0.00% 0.41% 0.41% 1.15% 1.15%
Short Duration U.S. Gov't 0.51 0.47 0.00 0.00 0.33 0.35 0.84 0.82
Small Cap Advantage 0.72 0.77 0.00 0.00 0.40 0.42 1.12 1.19
Small Cap Equity 0.97 0.97 0.00 0.00 0.66 0.66 1.63 1.63
Small Cap Growth 0.83 0.83 0.00 0.00 0.61 0.61 1.44 1.44
Small Cap Value 0.87 0.87 0.00 0.00 0.47 0.48 1.34 1.35
Small Company Index 0.36 0.34 0.00 0.00 0.38 0.40 0.74 0.74
Strategic Allocation 0.59 0.64 0.00 0.00 0.33 0.37 0.92 1.01
Tax-Exempt Bond 0.45 0.41 0.00 0.00 0.21 0.24 0.66 0.65
Tax-Exempt High Income 0.45 0.43 0.00 0.00 0.21 0.24 0.66 0.67
U.S. Gov't Mortgage 0.52 0.48 0.00 0.00 0.42 0.44 0.94 0.92
Value 0.72 0.72 0.00 0.00 0.40 0.40 1.12 1.12
(1) The management fee is shown net of the performance incentive adjustment.
(2) Other expenses include an administrative services fee, a shareholder
services fee, a transfer agency fee and other nonadvisory expenses.
(3) The fund may be subject to an expense cap and the total fund operating
expenses may be less for an agreed upon period of time. Refer to Table D-1
for detailed information.
(4) Expenses shown are those of the fund of funds. The table does not include
expenses of the underlying funds.
- --------------------------------------------------------------------------------
123 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example: This example is intended to help you compare the cost of investing in
the fund with the cost investing in other mutual funds. Assume you invest
$10,000 and the fund earns a 5% return. The operating expenses remain the same
each year. The following table shows your costs under the current arrangements
and your costs if the proposed changes had been in effect:
1 year 3 years 5 years 10 years
Class Y Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Aggressive Growth $183 $183 $567 $567 $976 $976 $2,121 $2,121
Balanced 89 91 278 284 483 494 1,077 1,100
Cash Management 67 67 211 211 368 368 826 826
Core Bond 94 90 294 281 510 488 1,136 1,089
Disciplined Equity 120 121 375 378 650 655 1,437 1,448
Diversified Bond 87 85 271 265 472 461 1,053 1,029
Diversified Equity Income 89 100 278 312 483 543 1,077 1,206
Dividend Opportunity 96 98 300 306 521 532 1,159 1,183
Emerging Markets 168 167 521 518 898 893 1,960 1,949
Equity Value 96 98 300 306 521 532 1,159 1,183
European Equity 131 133 409 415 709 719 1,561 1,584
Fundamental Growth 142 142 440 440 761 761 1,674 1,674
Fundamental Value 115 115 359 359 623 623 1,379 1,379
Global Bond 119 116 372 362 645 629 1,425 1,391
Global Equity 125 127 391 397 677 687 1,494 1,516
Global Technology 158 158 490 490 846 846 1,851 1,851
Growth 104 105 325 328 564 570 1,252 1,264
High Yield Bond 89 91 278 284 483 494 1,077 1,100
Income Opportunities 96 98 300 306 521 532 1,159 1,183
Inflation Protected Securities 88 90 275 281 478 488 1,065 1,089
- --------------------------------------------------------------------------------
124 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example (continued)
1 year 3 years 5 years 10 years
Class Y Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Intermediate Tax-Exempt Bond $72 $68 $224 $215 $390 $374 $ 874 $ 838
International Aggressive Growth 172 172 533 533 919 919 2,003 2,003
International Equity 160 160 496 496 856 856 1,872 1,872
International Opportunity 138 140 431 437 746 756 1,640 1,662
International Select Value 137 137 428 428 740 740 1,629 1,629
International Small Cap 211 211 652 652 1,120 1,120 2,415 2,415
Large Cap Equity 98 99 306 309 532 537 1,183 1,194
Large Cap Value 113 114 353 356 612 618 1,356 1,368
Limited Duration Bond 97 93 303 290 526 505 1,171 1,124
Mid Cap Growth 89 101 278 316 483 548 1,077 1,218
Mid Cap Value 121 122 378 381 655 661 1,448 1,459
Portfolio Builder Aggressive 62 62 196 196 341 341 766 766
Portfolio Builder Conservative 78 78 243 243 423 423 946 946
Portfolio Builder Moderate 48 48 151 151 264 264 594 594
Portfolio Builder Moderate
Aggressive 49 49 154 154 269 269 607 607
Portfolio Builder Moderate
Conservative 58 58 154 154 319 319 717 717
Portfolio Builder Total Equity 67 67 211 211 368 368 826 826
Precious Metals 137 137 428 428 740 740 1,629 1,629
Real Estate 142 143 440 443 761 767 1,674 1,685
Select Value 117 117 366 366 634 634 1,402 1,402
Short Duration U.S. Gov't 86 84 268 262 467 456 1,041 1,018
- --------------------------------------------------------------------------------
125 RIVERSOURCE FUNDS -- PROXY STATEMENT
Example (continued)
1 year 3 years 5 years 10 years
Class Y Actual Pro Forma Actual Pro Forma Actual Pro Forma Actual Pro Forma
Small Cap Advantage $114 $121 $356 $378 $618 $655 $1,368 $1,448
Small Cap Equity 166 166 514 514 888 888 1,938 1,938
Small Cap Growth 147 147 456 456 788 788 1,729 1,729
Small Cap Value 136 137 425 428 735 740 1,618 1,629
Small Company Index 76 76 237 237 412 412 922 922
Strategic Allocation 94 103 294 322 510 559 1,136 1,241
Tax-Exempt Bond 67 66 211 208 368 363 826 814
Tax-Exempt High Income 67 68 211 215 368 374 826 838
U.S. Gov't Mortgage 96 94 300 294 521 510 1,159 1,136
Value 114 114 356 356 618 618 1,368 1,368
- --------------------------------------------------------------------------------
126 RIVERSOURCE FUNDS -- 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 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:
- --------------------------------------------------------------------------------
127 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-8A. Audit Fees
during the fund's last two fiscal periods
Last Fiscal Previous
Fund Period Fiscal Period
Retail Funds:
Aggressive Growth $18,000 $17,000
Balanced 47,000 45,000
California Tax-Exempt 20,500 19,500
Cash Management 37,000 36,500
Core Bond 20,000 18,000
Disciplined Equity 20,500 18,000
Diversified Bond 45,000 43,000
Diversified Equity Income 44,000 40,000
Dividend Opportunity 30,000 29,000
Emerging Markets 32,000 28,000
Equity Value 25,500 25,000
European Equity 20,000 18,000
Fundamental Growth 18,000 17,000
Fundamental Value 20,000 18,000
Global Bond 36,000 34,000
Global Equity 38,000 36,000
Global Technology 32,000 28,000
Growth 44,000 42,000
High Yield Bond 52,000 52,000
Income Opportunities 20,000 18,000
Inflation Protected Securities 21,000 18,000
Intermediate Tax-Exempt Bond 20,500 19,000
International Aggressive Growth 20,000 18,000
International Equity 19,000 17,000
International Opportunity 39,500 39,500
International Select Value 20,000 18,000
International Small Cap 18,000 17,000
Large Cap Equity 30,000 23,000
Large Cap Value 20,500 18,500
Limited Duration Bond 20,000 18,000
Massachusetts Tax-Exempt 19,000 18,250
- --------------------------------------------------------------------------------
128 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-8A. (continued)
Last Fiscal Previous
Fund Period Fiscal Period
Retail Funds (cont.)
Michigan Tax-Exempt $19,000 $18,250
Mid Cap Growth 30,000 29,000
Mid Cap Value 22,000 19,000
Minnesota Tax-Exempt 22,000 21,250
New York Tax-Exempt 19,500 18,750
Ohio Tax-Exempt 19,000 18,250
Portfolio Builder Aggressive 14,500 N/A
Portfolio Builder Conservative 14,500 N/A
Portfolio Builder Moderate 14,500 N/A
Portfolio Builder Moderate Aggressive 14,500 N/A
Portfolio Builder Moderate Conservative 14,500 N/A
Portfolio Builder Total Equity 14,500 N/A
Precious Metals 23,000 20,500
Real Estate 20,500 18,000
S&P 500 Index 19,500 18,500
Select Value 20,000 18,000
Short Duration U.S. Gov't 49,500 49,500
Small Cap Advantage 22,500 19,000
Small Cap Equity 19,500 17,500
Small Cap Growth 20,000 18,000
Small Cap Value 20,000 18,000
Small Company Index 24,000 23,000
Strategic Allocation 50,000 48,000
Tax-Exempt Bond 37,000 37,000
Tax-Exempt High Income 50,000 50,000
Tax-Exempt Money Market 23,250 22,500
U.S. Gov't Mortgage 21,000 19,000
Value 20,000 18,000
- --------------------------------------------------------------------------------
129 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-8A. (continued)
Last Fiscal Previous
Fund Period Fiscal Period
Variable Portfolio Funds:
VP Balanced $26,500 $25,000
VP Cash Management 20,000 19,250
VP Core Bond 19,500 18,000
VP Core Equity 18,000 N/A
VP Diversified Bond 26,500 25,500
VP Diversified Equity Income 22,000 19,000
VP Emerging Markets 20,000 18,000
VP Global Bond 23,500 21,250
VP Global Inflation Protected Securities 19,500 18,000
VP Growth 20,500 19,000
VP High Yield Bond 26,500 25,250
VP Income Opportunities 19,500 18,000
VP International Opportunity 26,000 23,500
VP Large Cap Equity 27,000 24,500
VP Large Cap Value 19,000 18,000
VP Mid Cap Growth 19,000 18,000
VP Mid Cap Value 19,000 N/A
VP S&P 500 Index 20,000 18,000
VP Select Value 19,000 18,000
VP Short Duration U.S. Gov't 21,500 20,500
VP Small Cap Advantage 20,000 18,000
VP Small Cap Value 20,500 18,500
The following table shows aggregate fees paid by the fund to KPMG LLP in each of
the last two fiscal periods for services that are not included in Table D-8A.
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 KPMG LLP.
- --------------------------------------------------------------------------------
130 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-8B. Audit-Related, Tax and Other Fees
during the fund's last two fiscal periods
Aggregate Audit- Related Fees Aggregate Tax Fees Aggregate Other Fees
Fund Last Previous Last Previous Last Previous
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Period Period Period Period Period Period
Retail Funds:
Aggressive Growth $14 $3 $2,650 $2,550 $298 $0
Balanced 302 322 6,650 6,250 252 0
California Tax-Exempt 50 49 2,750 2,550 40 0
Cash Management 806 879 2,750 2,550 958 0
Core Bond 38 16 2,750 2,550 318 0
Disciplined Equity 22 3 2,750 2,550 304 0
Diversified Bond 589 639 2,750 2,550 776 0
Diversified Equity Income 1,001 651 7,100 6,650 1,120 0
Dividend Opportunity 245 215 2,750 2,550 490 0
Emerging Markets 61 38 6,650 6,470 0 0
Equity Value 255 0 2,650 2,550 0 0
European Equity 28 24 2,550 2,495 0 0
Fundamental Growth 20 4 2,650 2,550 303 0
Fundamental Value 220 107 2,650 2,550 469 0
Global Bond 117 107 6,650 6,700 0 0
Global Equity 105 99 6,650 6,470 0 0
Global Technology 49 8,759 6,650 6,470 0 0
Growth 661 707 7,100 6,650 836 0
High Yield Bond 563 569 6,950 6,650 755 0
- --------------------------------------------------------------------------------
131 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-8B. (continued)
during the fund's last two fiscal periods
Aggregate Audit- Related Fees Aggregate Tax Fees Aggregate Other Fees
Fund Last Previous Last Previous Last Previous
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Period Period Period Period Period Period
Retail Funds (cont.)
Income Opportunities $76 $42 $2,750 $2,550 $349 $0
Inflation Protected Securities 36 0 2,750 2,550 315 0
Intermediate Tax-Exempt Bond 35 29 2,650 2,550 0 0
International Aggressive Growth 38 19 2,550 2,495 0 0
International Equity 23 8 2,550 2,495 0 0
International Opportunity 91 78 2,550 2,725 0 0
International Select Value 149 54 2,550 2,495 0 0
International Small Cap 11 3 2,550 2,495 0 0
Large Cap Equity 362 72 2,750 2,550 1,787 0
Large Cap Value 32 18 2,750 2,550 312 0
Limited Duration Bond 43 23 2,750 2,550 322 0
Massachusetts Tax-Exempt 18 18 2,750 2,550 15 0
Michigan Tax-Exempt 14 14 2,750 2,550 12 0
Mid Cap Growth 455 301 2,650 2,550 0 0
Mid Cap Value 175 70 2,750 2,550 431 0
Minnesota Tax-Exempt 94 91 2,750 2,550 78 0
New York Tax-Exempt 20 21 2,750 2,550 17 0
Ohio Tax-Exempt 14 16 2,750 2,550 12 0
Portfolio Builder Aggressive 0 0 2,650 850 0 0
- --------------------------------------------------------------------------------
132 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-8B. (continued)
during the fund's last two fiscal periods
Aggregate Audit- Related Fees Aggregate Tax Fees Aggregate Other Fees
Fund Last Previous Last Previous Last Previous
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Period Period Period Period Period Period
Retail Funds (cont.)
Portfolio Builder Conservative $0 $0 $2,650 $850 $0 $0
Portfolio Builder Moderate 0 0 2,650 850 0 0
Portfolio Builder Moderate Aggressive 0 0 2,650 850 0 0
Portfolio Builder Moderate Conservative 0 0 2,650 850 0 0
Portfolio Builder Total Equity 0 0 2,650 850 0 0
Precious Metals 23 0 2,650 2,550 0 0
Real Estate 25 0 2,750 2,550 307 0
S&P 500 Index 89 63 2,650 2,550 0 6,000
Select Value 167 101 2,650 2,550 1,625 0
Short Duration U.S. Gov't 391 507 6,950 6,650 611 0
Small Cap Advantage 180 0 2,650 2,550 0 0
Small Cap Equity 40 28 2,650 2,550 319 0
Small Cap Growth 67 0 2,650 2,550 0 0
Small Cap Value 252 215 2,650 2,550 495 0
Small Company Index 268 180 2,650 2,550 0 0
Strategic Allocation 227 219 7,100 6,650 189 0
Tax-Exempt Bond 165 180 2,650 2,550 0 0
Tax-Exempt High Income 949 976 6,750 6,525 0 0
Tax-Exempt Money Market 32 39 2,650 2,550 0 0
- --------------------------------------------------------------------------------
133 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-8B. (continued)
during the fund's last two fiscal periods
Aggregate Audit- Related Fees Aggregate Tax Fees Aggregate Other Fees
Fund Last Previous Last Previous Last Previous
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Period Period Period Period Period Period
Retail Funds (cont.)
U.S. Gov't Mortgage $63 $72 $2,650 $2,550 $338 $0
Value 108 86 2,650 2,550 375 0
Variable Portfolio Funds:
VP Balanced 587 509 1,850 1,700 1,689 0
VP Cash Management 162 149 1,850 1,700 1,335 0
VP Core Bond 11 5 2,750 2,550 9 0
VP Core Equity 0 0 2,650 850 0 0
VP Diversified Bond 402 350 1,850 1,700 1,534 0
VP Diversified Equity Income 308 140 1,850 1,700 1,456 0
VP Emerging Markets 27 7 2,750 2,550 23 0
VP Global Bond 122 81 1,850 1,700 102 0
VP Global Inflation Protected Securities 9 0 2,750 2,550 8 0
VP Growth 65 56 1,850 1,700 54 0
VP High Yield Bond 281 221 1,850 1,700 234 0
VP Income Opportunities 7 0 2,750 2,550 6 0
- --------------------------------------------------------------------------------
134 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table D-8B. (continued)
during the fund's last two fiscal periods
Aggregate Audit- Related Fees Aggregate Tax Fees Aggregate Other Fees
Fund Last Previous Last Previous Last Previous
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Period Period Period Period Period Period
Variable Portfolio Funds (cont.)
VP International Opportunity $261 $175 $1,850 $1,700 $1,418 $0
VP Large Cap Equity 567 423 1,850 1,700 1,672 0
VP Large Cap Value 4 0 2,750 2,550 3 0
VP Mid Cap Growth 54 47 1,850 2,550 45 0
VP Mid Cap Value 0 0 2,750 N/A 0 0
VP S&P 500 Index 79 53 1,850 1,700 66 0
VP Select Value 4 2 2,750 2,550 3 0
VP Short Duration U.S. Gov't 115 96 1,850 1,700 1,296 0
VP Small Cap Advantage 48 35 1,850 1,700 40 0
VP Small Cap Value 74 42 1,850 2,550 61 0
Aggregate Non-Audit Fees to Funds, Investment Manager and Affiliates
For the year ended Sept. 30, 2005, the aggregate non-audit fees billed for
services rendered to all of the funds, 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 $418,415. For the year
ended Sept. 30, 2004, the aggregate amount was $414,969.
- --------------------------------------------------------------------------------
135 RIVERSOURCE FUNDS -- PROXY STATEMENT
Section E - Board Member Information
This section contains the following information:
o Table E-1 shows the compensation paid to Board members by each fund in its
last fiscal year.
o Table E-2 shows the dollar range of shares of all the funds owned by the
Board members and the dollar range of shares owned in each individual fund.
Table E-1. Board Member Compensation*
during the fund's last fiscal period
Flynn Jones Lewis Paglia Simpson Taunton-Rigby
Fund
Aggressive Growth - total $750 $1,347 $1,448 $758 $842 $1,092
Amount deferred 271 556
Balanced - total 2,858 3,733 4,135 3,142 2,725 3,325
Amount deferred 1,188 1,435
California Tax-Exempt - total 808 1,405 1,557 867 900 1,200
Amount deferred 300 583
Cash Management - total 2,700 4,004 4,155 2,975 3,500 3,800
Amount deferred 1,138 1,515
Core Bond - total 967 1,404 1,555 1,025 900 1,200
Amount deferred 379 562
Disciplined Equity - total 967 1,288 1,433 1,025 783 1,083
Amount deferred 379 554
Diversified Bond - total 2,308 3,188 3,339 2,517 2,683 2,983
Amount deferred 975 1,196
Diversified Equity Income - total 4,075 5,133 5,535 4,450 4,125 4,725
Amount deferred 1,750 1,932
Dividend Opportunity - total 1,100 1,905 2,057 1,200 1,400 1,700
Amount deferred 425 769
Emerging Markets - total 0 2,374 2,674 0 2,066 2,266
Amount deferred 1,049
Equity Value - total 692 1,905 2,005 758 1,450 1,700
Amount deferred 213 803
European Equity - total 0 1,204 1,354 0 1,050 1,150
Amount deferred 532
Fundamental Growth - total 992 1,755 1,857 1,033 1,250 1,500
Amount deferred 375 715
Fundamental Value - total 892 1,597 1,748 917 1,142 1,392
Amount deferred 333 670
Global Bond - total 0 2,524 2,824 0 2,217 2,417
Amount deferred 1,112
Global Equity - total 0 2,508 2,808 0 2,200 2,400
Amount deferred 1,102
- --------------------------------------------------------------------------------
136 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table E-1. (continued)
Flynn Jones Lewis Paglia Simpson Taunton-Rigby
Fund
Global Technology - total $0 $2,308 $2,608 $0 $2,000 $2,200
Amount deferred 1,027
Growth - total 1,367 2,004 2,155 1,475 1,500 1,800
Amount deferred 554 782
High Yield Bond - total 2,300 4,310 4,614 2,450 3,400 3,900
Amount deferred 875 1,758
Income Opportunities - total 1,025 1,463 1,614 1,083 958 1,258
Amount deferred 408 584
Inflation Protected
Securities - total 967 1,404 1,555 1,025 900 1,200
Amount deferred 379 562
Intermediate Tax-Exempt
Bond - total 208 1,204 1,404 158 1,050 1,150
Amount deferred 506
International Aggressive
Growth - total 0 1,320 1,470 0 1,167 1,267
Amount deferred 571
International Equity - total 0 1,204 1,354 0 1,050 1,150
Amount deferred 532
International Opportunity - total 0 1,337 1,487 0 1,183 1,283
Amount deferred 581
International Select Value - total 0 1,237 1,387 0 1,083 1,183
Amount deferred 552
International Small Cap - total 0 887 1,037 0 783 833
Amount deferred 342
Large Cap Equity - total 1,700 2,521 2,672 1,850 2,017 2,317
Amount deferred 700 970
Large Cap Value - total 967 1,404 1,555 1,025 900 1,200
Amount deferred 379 562
Limited Duration Bond - total 967 1,404 1,555 1,025 900 1,200
Amount deferred 379 562
Massachusetts
Tax-Exempt - total 808 1,405 1,557 867 900 1,200
Amount deferred 300 583
Michigan Tax-Exempt - total 808 1,405 1,557 867 900 1,200
Amount deferred 300 583
Mid Cap Growth - total 317 2,462 2,662 267 2,308 2,408
Amount deferred 945
Mid Cap Value - total 1,292 1,679 1,880 1,408 1,175 1,475
Amount deferred 538 652
Minnesota Tax-Exempt - total 925 1,605 1,757 1,000 1,100 1,400
Amount deferred 300 583
- --------------------------------------------------------------------------------
137 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table E-1. (continued)
Flynn Jones Lewis Paglia Simpson Taunton-Rigby
Fund
New York Tax-Exempt - total $808 $1,405 $1,557 $867 $900 $12,00
Amount deferred 300 583
Ohio Tax-Exempt - total 808 1,405 1,557 867 900 1,200
Amount deferred 300 583
Portfolio Builder Aggressive ** ** ** ** ** **
Portfolio Builder Conservative ** ** ** ** ** **
Portfolio Builder Moderate ** ** ** ** ** **
Portfolio Builder
Moderate Aggressive ** ** ** ** ** **
Portfolio Builder ** ** ** ** ** **
Moderate Conservative
Portfolio Builder ** ** ** ** ** **
Total Equity
Precious Metals - total 483 1,255 1,355 492 800 1,050
Amount deferred 138 550
Real Estate - total 808 1,027 1,172 867 625 925
Amount deferred 300 489
S&P 500 Index - total 442 1,445 1,595 417 1,042 1,242
Amount deferred 108 638
Select Value - total 900 1,647 1,798 933 1,192 1,442
Amount deferred 333 686
Short Duration U.S.
Gov't - total 2,108 3,986 4,288 2,233 3,075 3,575
Amount deferred 791 1,631
Small Cap Advantage - total 642 1,680 1,780 683 1,225 1,475
Amount deferred 200 722
Small Cap Equity - total 750 1,355 1,507 758 900 1,150
Amount deferred 271 575
Small Cap Growth - total 517 1,355 1,455 533 900 1,150
Amount deferred 150 590
Small Cap Value - total 1,050 1,922 2,073 1,108 1,467 1,717
Amount deferred 396 792
Small Company Index - total 533 1,954 2,104 550 1,550 1,750
Amount deferred 133 827
Strategic Allocation - total 2,684 3,508 3,910 2,941 1,510 3,100
Amount deferred 1,113 1,356
Tax-Exempt Bond - total 242 1,612 1,812 192 1,458 1,558
Amount deferred 652
Tax-Exempt High Income - total 650 5,249 5,649 550 4,942 5,142
Amount deferred 2,017
- --------------------------------------------------------------------------------
138 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table E-1. (continued)
Flynn Jones Lewis Paglia Simpson Taunton-Rigby
Fund
Tax-Exempt Money
Market - total $208 $1,154 $1,304 $167 $950 $1,000
Amount deferred 430
U.S. Gov't Mortgage - total 800 1,455 1,607 817 1,000 1,250
Amount deferred 292 613
Value - total 850 1,547 1,698 875 1,092 1,342
Amount deferred 313 648
Variable Portfolio Funds:
VP Balanced - total $2,283 $3,088 $3,239 $2,467 $2,583 $2,883
Amount deferred 975 1,163
VP Cash Management - total 1,317 1,821 1,972 1,400 1,317 1,617
Amount deferred 542 706
VP Core Bond - total 1,025 1,454 1,605 1,083 950 1,250
Amount deferred 408 573
VP Core Equity - total 0 0 0 0 0 0
Amount deferred
VP Diversified Bond - total 1,775 2,446 2,597 1,917 1,942 2,242
Amount deferred 742 931
VP Diversified Equity
Income - total 1,383 1,888 2,039 1,467 1,383 1,683
Amount deferred 575 731
VP Emerging Markets - total 1,025 1,454 1,605 1,083 950 1,250
Amount deferred 408 573
VP Global Bond - total 1,167 1,621 1,772 1,233 1,117 1,417
Amount deferred 475 634
VP Global Inflation Protected
Securities - total 217 319 319 217 217 217
Amount deferred 108 80
VP Growth - total 1,100 1,554 1,705 1,167 1,050 1,350
Amount deferred 442 609
VP High Yield Bond - total 1,542 2,121 2,272 1,650 1,617 1,917
Amount deferred 642 814
VP Income
Opportunities - total 383 486 537 433 383 433
Amount deferred 192 134
VP International
Opportunity - total 1,458 1,988 2,139 1,550 1,483 1,783
Amount deferred 608 767
VP Large Cap Equity - total 2,200 2,946 3,097 2,367 2,442 2,742
Amount deferred 942 1,114
- --------------------------------------------------------------------------------
139 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table E-1. (continued)
Flynn Jones Lewis Paglia Simpson Taunton-Rigby
Fund
Variable Portfolio Funds:
VP Large Cap Value - total $0 $0 $0 $0 $0 $0
Amount deferred
VP Mid Cap Growth - total 1,025 1,454 1,605 1,083 950 1,250
Amount deferred 408 573
VP Mid Cap Value - total 0 0 0 0 0 0
Amount deferred
VP S&P 500 Index - total 1,092 1,521 1,672 1,150 1,017 1,317
Amount deferred 442 598
VP Select Value - total 0 0 0 0 0 0
Amount deferred
VP Short Duration
U.S. Gov't - total 1,175 1,654 1,805 1,250 1,150 1,450
Amount deferred 475 645
VP Small Cap
Advantage - total 1,025 1,454 1,605 1,083 950 1,250
Amount deferred 408 573
VP Small Cap Value - total 1,092 1,521 1,672 1,150 1,017 1,317
Amount deferred 442 598
* Arne H. Carlson, Chair of the Board, is compensated by Board Services
Corporation. Ms. Blatz, Mr. Laikind, and Ms. Pryor were not Board members
prior to September 30, 2005 and therefore are not included in the table.
** Portfolio Builder funds do not pay additional compensation to the Board
members for attending meetings. Compensation is paid directly from the
underlying funds in which each Portfolio Builder fund invests.
- --------------------------------------------------------------------------------
140 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table E-2. Board Member Holdings*
As of Sept. 30, 2005 Aggregate dollar
range of equity
securities of all
RiverSource Funds
overseen by
Board Member
Dollar range of equity securities in the fund**
Board Member Fund Range Range
Carlson Cash Management Over $100,000
Disciplined Equity $10,001-$50,000
Dividend Opportunity $10,001-$50,000
Fundamental Value $10,001-$50,000 Over $100,000
Growth $10,001-$50,000
Select Value $0-$10,000
Strategic Allocation $10,001-$50,000
Flynn Growth*** $10,001-$50,000
Strategic Allocation*** $10,001-$50,000 $10,001-$50,000
Strategic Allocation $10,001-$50,000
Jones Diversified Bond $10,001-$50,000
Global Bond Over $100,000
Global Equity $50,001-$100,000
Growth Over $100,000
High Yield Bond Over $100,000
New Dimensions $50,001-$100,000 Over $100,000
Selective $10,001-$50,000
Short Duration U.S. Government Over $100,000
Small Company Index Over $100,000
Tax-Exempt Bond $10,001-$50,000
Lewis Diversified Equity Income $10,001-$50,000
Diversified Equity Income*** $50,001-$100,000
Emerging Markets*** $10,001-$50,000 Over $100,000
International Opportunity*** $10,001-$50,000
Mid Cap Growth $10,001-$50,000
Paglia Diversified Equity Income $10,001-$50,000
Growth $10,001-$50,000 $50,001-$100,000
Simpson International Opportunity $50,001-$100,000 $50,001-$100,000
Taunton-Rigby Diversified Equity Income $10,001-$50,000
Global Technology $10,001-$50,000
Growth $10,001-$50,000
International Aggressive $10,001-$50,000
Large Cap Equity $10,001-$50,000 Over $100,000
Large Cap Value $10,001-$50,000
Mid Cap Value $10,001-$50,000
Strategic Allocation $10,001-$50,000
- --------------------------------------------------------------------------------
141 RIVERSOURCE FUNDS -- PROXY STATEMENT
Table E-2. Board Member Holdings* (continued)
Aggregate dollar
range of equity
securities of all
RiverSource Funds
overseen by
Board Member
Dollar range of equity securities in the fund**
Board Member Fund Range Range
Truscott Balanced $50,001-$100,000
Disciplined Equity $50,001-$100,000
Diversified Bond $10,001-$50,000
Dividend Opportunity Over $100,000
Emerging Markets $10,001-$50,000
Global Equity $50,001-$100,000
Global Technology $10,001-$50,000
Growth $50,001-$100,000
High Yield Bond $50,001-$100,000
High Yield Tax-Exempt $50,001-$100,000
Income Opportunities $10,001-$50,000 Over $100,000
Intermediate Tax-Exempt $50,001-$100,000
International Opportunity Over $100,000
Large Cap Equity Over $100,000
Large Cap Value $50,001-$100,000
Massachusetts Tax-Exempt Over $100,000
Mid Cap Growth $50,001-$100,000
Mid Cap Value Over $100,000
Portfolio Builder Moderate Aggressive Growth Over $100,000
Real Estate $50,001-$100,000
Strategic Allocation Over $100,000
* Ms. Blatz, Mr. Laikind and Ms. Pryor were not Board members as of Sept.
30, 2005 and therefore are not included in the table. All shares of the
variable portfolio funds are owned by life insurance companies. Shares
of the variable portfolio funds are not available for purchase by
individuals, including Board members.
** 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.
*** Share equivalents held under the Deferred Compensation Plan.
- --------------------------------------------------------------------------------
142 RIVERSOURCE FUNDS -- PROXY STATEMENT
Exhibit A
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.
- --------------------------------------------------------------------------------
A.1 RIVERSOURCE FUNDS -- PROXY STATEMENT
Exhibit B
This charter is scheduled to be reviewed at an upcoming meeting of the Board. At
that time, the Board is expected to update the charter, including changing
references from American Express Financial Corporation and its subsidiaries to
Ameriprise Financial and its subsidiaries. In addition, references to American
Express Company will be eliminated.
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
compensation 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;
- --------------------------------------------------------------------------------
B.1 RIVERSOURCE FUNDS -- PROXY STATEMENT
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.
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;
- --------------------------------------------------------------------------------
B.2 RIVERSOURCE FUNDS -- PROXY STATEMENT
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
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;
- --------------------------------------------------------------------------------
B.3 RIVERSOURCE FUNDS -- PROXY STATEMENT
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.
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
- --------------------------------------------------------------------------------
B.4 RIVERSOURCE FUNDS -- PROXY STATEMENT
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
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.
- --------------------------------------------------------------------------------
B.5 RIVERSOURCE FUNDS -- PROXY STATEMENT
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.
- --------------------------------------------------------------------------------
B.6 RIVERSOURCE FUNDS -- PROXY STATEMENT
Fund Names
Former AXP Fund Name New RiverSource Fund Name
Retail Funds: Retail Funds:
AXP California Tax-Exempt RiverSource California Tax-Exempt
AXP Cash Management RiverSource Cash Management
AXP Core Bond RiverSource Core Bond
AXP Diversified Bond RiverSource Diversified Bond
AXP Diversified Equity Income RiverSource Diversified Equity Income
AXP Dividend Opportunity RiverSource Dividend Opportunity
AXP Equity Select RiverSource Mid Cap Growth
AXP Equity Value RiverSource Equity Value
AXP Global Bond RiverSource Global Bond
AXP Global Technology RiverSource Global Technology
AXP Growth RiverSource Growth
AXP High Yield Bond RiverSource High Yield Bond
AXP High Yield Tax-Exempt RiverSource Tax-Exempt High Income
AXP Income Opportunities RiverSource Income Opportunities
AXP Inflation Protected Securities RiverSource Inflation Protected Securities
AXP Intermediate Tax-Exempt RiverSource Intermediate Tax-Exempt
AXP Large Cap Equity RiverSource Large Cap Equity
AXP Large Cap Value RiverSource Large Cap Value
AXP Limited Duration Bond RiverSource Limited Duration Bond
AXP Managed Allocation RiverSource Strategic Allocation
AXP Massachusetts Tax-Exempt RiverSource Massachusetts Tax-Exempt
AXP Michigan Tax-Exempt RiverSource Michigan Tax-Exempt
AXP Mid Cap Value RiverSource Mid Cap Value
AXP Minnesota Tax-Exempt RiverSource Minnesota Tax-Exempt
AXP Mutual RiverSource Balanced
AXP New York Tax-Exempt RiverSource New York Tax-Exempt
AXP Ohio Tax-Exempt RiverSource Ohio Tax-Exempt
AXP Partners Aggressive Growth RiverSource Aggressive Growth
AXP Partners Fundamental Value RiverSource Fundamental Value
AXP Partners Growth RiverSource Fundamental Growth
AXP Partners International Aggressive Growth RiverSource International Aggressive Growth
AXP Partners International Core RiverSource International Equity
AXP Partners International Select Value RiverSource International Select Value
AXP Partners International Small Cap RiverSource International Small Cap
AXP Partners Select Value RiverSource Select Value
AXP Partners Small Cap Core RiverSource Small Cap Equity
AXP Partners Small Cap Growth RiverSource Small Cap Growth
AXP Partners Small Cap Value RiverSource Small Cap Value
AXP Partners Value RiverSource Value
AXP Portfolio Builder Aggressive RiverSource Portfolio Builder Aggressive
AXP Portfolio Builder Conservative RiverSource Portfolio Builder Conservative
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT
Fund Names (continued)
Former AXP Fund Name New RiverSource Fund Name
Retail Funds: (cont.) Retail Funds: (cont.)
AXP Portfolio Builder Moderate RiverSource Portfolio Builder Moderate
AXP Portfolio Builder Moderate Aggressive RiverSource Portfolio Builder Moderate
Aggressive
AXP Portfolio Builder Moderate Conservative RiverSource Portfolio Builder Moderate
Conservative
AXP Portfolio Builder Total Equity RiverSource Portfolio Builder Total Equity
AXP Precious Metals RiverSource Precious Metals
AXP Quantitative Large Cap Equity RiverSource Disciplined Equity
AXP Real Estate RiverSource Real Estate
AXP S&P 500 Index RiverSource S&P 500 Index
AXP Short Duration U.S. Government RiverSource Short Duration U.S. Government
AXP Small Cap Advantage RiverSource Small Cap Advantage
AXP Small Company Index RiverSource Small Company Index
AXP Tax-Exempt Bond RiverSource Tax-Exempt Bond
AXP Tax-Free Money RiverSource Tax-Exempt Money Market
AXP Threadneedle Emerging Markets RiverSource Emerging Markets
AXP Threadneedle European Equity RiverSource European Equity
AXP Threadneedle Global Equity RiverSource Global Equity
AXP Threadneedle International RiverSource International Opportunity
AXP U.S. Government Mortgage RiverSource U.S. Government Mortgage
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT
Fund Names (continued)
Former AXP Fund Name New RiverSource Fund Name
Variable Portfolio Funds: Variable Portfolio Funds:
AXP VP - Cash Management RiverSource VP - Cash Management
AXP VP - Core Bond RiverSource VP - Core Bond
AXP VP - Core Equity RiverSource VP - Core Equity
AXP VP - Diversified Bond RiverSource VP - Diversified Bond
AXP VP - Diversified Equity Income RiverSource VP - Diversified Equity Income
AXP VP - Equity Select RiverSource VP - Mid Cap Growth
AXP VP - Global Bond RiverSource VP - Global Bond
AXP VP - Global Inflation Protected Securities RiverSource VP - Global Inflation
Protected Securities
AXP VP - Growth RiverSource VP - Growth
AXP VP - High Yield Bond RiverSource VP - High Yield Bond
AXP VP - Income Opportunities RiverSource VP - Income Opportunities
AXP VP - Large Cap Equity RiverSource VP - Large Cap Equity
AXP VP - Large Cap Value RiverSource VP - Large Cap Value
AXP VP - Managed RiverSource VP - Balanced
AXP VP - Mid Cap Value RiverSource VP - Mid Cap Value
AXP VP - Partners Select Value RiverSource VP - Select Value
AXP VP - Partners Small Cap Value RiverSource VP - Small Cap Value
AXP VP - S&P 500 Index RiverSource VP - S&P 500 Index
AXP VP - Short Duration U.S. Government RiverSource VP - Short Duration
U.S. Government
AXP VP - Small Cap Advantage RiverSource VP - Small Cap Advantage
AXP VP - Threadneedle Emerging Markets RiverSource VP - Emerging Markets
AXP VP - Threadneedle International RiverSource VP - International Opportunity
- --------------------------------------------------------------------------------
RIVERSOURCE FUNDS -- PROXY STATEMENT
Non-M
S-6380 A (12/05)
THREE EASY WAYS TO VOTE
- ------------------------------------------------ ------------------------- ------------------------------ --------------------------
RIVERSOURCE(SM) FUNDS To vote by Telephone To vote by Internet To vote by Mail
formerly known as American Express(R) Funds
P.O. BOX 9132 1) Read the proxy 1) Read the proxy statement 1) Read the proxy
HINGHAM, MA 02043-9132 statement and have and have the proxy card statement.
the proxy card at at hand. 2) Check the appropriate
hand. 2) Go to www.proxyweb.com boxes on the reverse
2) Call 1-888-221-0697 3) Follow the on-line side.
3) Follow the recorded directions. 3) Sign and date the
instructions. proxy card below.
4) Return the proxy card
in the envelope
provided.
- ------------------------------------------------ ------------------------- ------------------------------ --------------------------
FUND NAME PRINTS HERE
RIVERSOURCE(SM) FUNDS
(formerly known as AMERICAN EXPRESS(R) FUNDS)
PROXY FOR THE REGULAR MEETING OF SHAREHOLDERS
FEBRUARY 15, 2006
Your fund will hold a shareholders' meeting in the Galaxy Room on the 50th floor of the IDS Center, 80 South Eighth Street,
Minneapolis, MN, at 10:00 a.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/Trustees recommends that you vote FOR each
proposal.
The undersigned hereby appoints Arne H. Carlson and Leslie L. Ogg or either 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 (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.
AMPF COMMON - 1
Please refer to Pages 5 and 6 in the Proxy Statement to determine if Proposals are applicable to your Fund(s).
Please fill in box(es) as shown using black or blue ink or number 2 pencil. (X)
PLEASE DO NOT USE FINE POINT PENS.
To vote FOR on all Proposals, mark this box (no other vote is necessary) -> 0
1. ELECTION OF BOARD MEMBERS. FOR WITHHOLD FOR ALL
(All Funds) ALL ALL EXCEPT
(01) Kathleen Blatz (05) Jeffrey Laikind (09) Alan K. Simpson 0 0 0 1.
(02) Arne H. Carlson (06) Stephen R. Lewis, Jr. (10) Alison Taunton-Rigby
(03) Patricia M. Flynn (07) Catherine James Paglia (11) William F. Truscott
(04) Anne P. Jones (08) Vikki L. Pryor
__________________________________________________________________________________
(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 above.)
FOR AGAINST ABSTAIN
2. Amend the Articles of Incorporation to permit the Board to establish the minimum account
value and to change the name of the corporation (All Funds except California Tax-Exempt, 0 0 0 2.
Massachusetts Tax-Exempt, Michigan Tax-Exempt, Minnesota Tax-Exempt, New York Tax-Exempt
and Ohio Tax-Exempt)
3. Approve an Investment Management Services Agreement with RiverSource 0 0 0 3.
Investments, LLC (All Funds)
4. Approve a Subadvisory Agreement between RiverSource Investments and Kenwood Capital
Management LLC (Small Cap Advantage, VP Small Cap Advantage only) 0 0 0 4.
5. Approve a Subadvisory Agreement between RiverSource Investments and Threadneedle
International Limited (Emerging Markets, European Equity, Global Equity, International
Opportunity, VP Emerging Markets, VP International Opportunity) 0 0 0 5.
6. Approve a Subadvisory Agreement between RiverSource Investments and Davis
Selected Adviser, L.P. (Fundamental Value only) 0 0 0 6.
7. Approve changes in fundamental investment policies
A. Diversification (Applicable to All Funds except California Tax-Exempt, European Equity,
Global Bond, Global Technology, Inflation Protected Securities, Massachusetts Tax-Exempt,
Michigan Tax-Exempt, Minnesota Tax-Exempt, New York Tax-Exempt, Ohio Tax-Exempt,
Portfolio Builder Aggressive, Portfolio Builder Conservative, Portfolio Builder Moderate,
Portfolio Builder Moderate Aggressive, Portfolio Builder Moderate Conservative, Portfolio
Builder Total Equity, Precious Metals, Real Estate, S&P 500 Index, Small Cap Value,
VP Global Bond, VP Global Inflation Protected Securities, VP S&P 500 Index, VP Small
Cap Value) 0 0 0 7A.
B. Ten Percent Limitation in Single Issuer ( Applicable to Balanced, Cash Management,
Diversified Bond, Diversified Equity Income, Dividend Opportunity, Emerging Markets,
Equity Value, Global Bond, Global Equity, Growth, High Yield Bond, Intermediate
Tax-Exempt, International Opportunity, Mid Cap Growth, Select Value, Short Duration
U.S. Gov't, Small Cap Advantage, Small Cap Growth, Small Company Index, Strategic
Allocation, Tax-Exempt Bond, Tax-Exempt High Income, Tax-Exempt Money Market,
VP Balanced, VP Cash Management, VP Diversified Bond, VP Diversified Equity Income,
VP Emerging Markets, VP Global Bond, VP Growth, VP High Yield Bond, VP International
Opportunity, VP Large Cap Equity, VP Mid Cap Growth, VP Short Duration U.S. Gov't,
VP Small Cap Advantage) 0 0 0 7B.
C. Lending (All Funds) 0 0 0 7C.
D. Borrowing (All Funds) 0 0 0 7D.
If you do not mark a proposal, your proxy will be voted FOR the proposal.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
AMPF COMMON - 1
RIVERSOURCE(SM) FUNDS ezVote (SM) Consolidated Proxy Card
formerly known as American Express(R) Funds This form is your EzVote Consolidated Proxy. It reflects all of your accounts
P.O. BOX 9132 registered to the same Social Security or Tax I.D. number at this address. By
HINGHAM, MA 02043-9132 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.
RIVERSOURCE(SM) FUNDS
(formerly known as AMERICAN EXPRESS(R) FUNDS)
PROXY FOR THE REGULAR MEETING OF SHAREHOLDERS
FEBRUARY 15, 2006
Your fund will hold a shareholders' meeting in the Galaxy Room on the 50th floor of the IDS Center, 80 South Eighth Street,
Minneapolis, MN, at 10:00 a.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/Trustees recommends that you vote FOR
each proposal.
The undersigned hereby appoints Arne H. Carlson and Leslie L. Ogg or either 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.
AMPF COMMON EZ - 1
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. the Consolidated Proxy Card at 2) Check the appropriate boxes
2) Call 1-888-221-0697. hand. on the reverse side.
3) Follow the recorded instructions. 2) Go to www.proxyweb.com 3) Sign and date the proxy card.
3) Follow the on-line directions. 4) Return the proxy card in the
envelope provided.
- --------------------------------------------------- ------------------------------------------- ------------------------------------
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR CARD.
INDIVIDUAL BALLOTS
On the reverse side of this form (and on accompanying
pages, if necessary) you will find individual ballots,
one for each of your accounts. If you would wish to vote
each of these accounts separately, sign in the signature
box below, mark each individual ballot to indicate your
vote, detach the form at the perforation 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 __________________
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.
AMPF COMMON IND - 1
ezVote(SM) Consolidated Proxy Card
Please refer to Pages 5 and 6 in the Proxy Statement to determine Proposals applicable to your Fund(s).
Please fill in box(es) as shown using black or blue ink or number 2 pencil. (X)
PLEASE DO NOT USE FINE POINT PENS.
To vote FOR on all Proposals, mark this box (no other vote is necessary)
1. ELECTION OF BOARD MEMBERS. FOR WITHHOLD FOR ALL
(All Funds) ALL ALL EXCEPT
(01) Kathleen Blatz (05) Jeffrey Laikind (09) Alan K. Simpson 0 0 0 1.
(02) Arne H. Carlson (06) Stephen R. Lewis, Jr. (10) Alison Taunton-Rigby
(03) Patricia M. Flynn (07) Catherine James Paglia (11) William F. Truscott
(04) Anne P. Jones (08) Vikki L. Pryor
(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 above.)
2. Amend the Articles of Incorporation to permit the Board to establish the minimum account
value and to change the name of the corporation (All Funds except California Tax-Exempt,
Massachusetts Tax-Exempt, Michigan Tax-Exempt, Minnesota Tax-Exempt, New York Tax-Exempt
and Ohio Tax-Exempt) 0 0 0 2.
3. Approve an Investment Management Services Agreement with RiverSource Investments, LLC
(All Funds) 0 0 0 3.
4. Approve a Subadvisory Agreement between RiverSource Investments and Kenwood Capital
Management LLC (Small Cap Advantage, VP Small Cap Advantage only) 0 0 0 4.
5. Approve a Subadvisory Agreement between RiverSource Investments and Threadneedle
International Limited (Emerging Markets, European Equity, Global Equity, International
Opportunity, VP Emerging Markets, VP International Opportunity) 0 0 0 5.
6. Approve a Subadvisory Agreement between RiverSource Investments and Davis Selected
Adviser, L.P. (Fundamental Value only) 0 0 0 6.
7. Approve changes in fundamental investment policies
A. Diversification (see applicable funds below) 0 0 0 7A.
B. Ten Percent Limitation in Single Issuer (see applicable funds below) 0 0 0 7B.
C. Lending (All Funds) 0 0 0 7C.
D. Borrowing (All Funds) 0 0 0 7D.
If you do not mark a proposal, your proxy will be voted FOR the proposal.
PLEASE SIGN AND DATE ON THE REVERSE SIDE. AMPF COMMON EZ - 1
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.
- -------------------------------------------------------------- --------------------------------------------------------------
FUND NAME PRINTS HERE FUND NAME PRINTS HERE
FOR WITHHOLD FOR ALL FOR WITHHOLD FOR ALL
ALL ALL EXCEPT* ALL ALL EXCEPT*
1. ELECTION OF BOARD MEMBERS. 1. ELECTION OF BOARD MEMBERS.
(See Nominee list on consolidated (See Nominee list on consolidated
ballot.) ballot.)
*EXCEPT ____________________________ O O O *EXCEPT ____________________________ O O O
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. Amend the Articles of 2. Amend the Articles of
Incorporation O O O Incorporation O O O
3. Approve Investment Management 3. Approve Investment Management
Services Agreement O O O Services Agreement O O O
4. Approve a Subadvisory Agreement 4. Approve a Subadvisory Agreement
w/Kenwood O O O w/Kenwood O O O
5. Approve a Subadvisory Agreement 5. Approve a Subadvisory Agreement
w/ Threadneedle O O O w/ Threadneedle O O O
6. Approve a Subadvisory Agreement 6. Approve a Subadvisory Agreement
w/ Davis Selected Adviser, L.P. O O O w/ Davis Selected Adviser, L.P. O O O
7. Approve changes in fundamental 7. Approve changes in fundamental
policies O O O policies O O O
A. Diversification O O O A. Diversification O O O
B. Ten Percent Limitation in B. Ten Percent Limitation in
Single Issuer O O O Single Issuer O O O
C. Lending O O O C. Lending O O O
D. Borrowing O O O D. Borrowing O O O
- -------------------------------------------------------------- --------------------------------------------------------------
7A. Applicable to All Funds except California Tax-Exempt, European Equity, Global Bond, Global Technology, Inflation Protected
Securities, Massachusetts Tax-Exempt, Michigan Tax-Exempt, Minnesota Tax-Exempt, New York Tax-Exempt, Ohio Tax-Exempt,
Portfolio Builder Aggressive, Portfolio Builder Conservative, Portfolio Builder Moderate, Portfolio Builder Moderate Aggressive,
Portfolio Builder Moderate Conservative, Portfolio Builder Total Equity, Precious Metals, Real Estate, S&P 500 Index,
Small Cap Value, VP Global Bond, VP Global Inflation Protected Securities, VP S&P 500 Index, VP Small Cap Value
7B. Applicable to Balanced, Cash Management, Diversified Bond, Diversified Equity Income, Dividend Opportunity, Emerging Markets,
Equity Value, Global Bond, Global Equity, Growth, High Yield Bond, Intermediate Tax-Exempt, International Opportunity,
Mid Cap Growth, Select Value, Short Duration U.S. Gov't, Small Cap Advantage, Small Cap Growth, Small Company Index,
Strategic Allocation, Tax-Exempt Bond, Tax-Exempt High Income, Tax-Exempt Money Market, VP Balanced, VP Cash Management,
VP Diversified Bond, VP Diversified Equity Income, VP Emerging Markets, VP Global Bond, VP Growth, VP High Yield Bond,
VP International Opportunity, VP Large Cap Equity, VP Mid Cap Growth, VP Short Duration U.S. Gov't, VP Small Cap Advantage
AMPF COMMON IND - 1
Proxy Statement
Dec. 16, 2005
Here is a brief overview of some of the changes being recommended for your
RiverSource mutual fund or variable portfolio fund. We encourage you to read the
full text of the enclosed proxy statement.
Q: What changes have recently taken place?
On Sept. 30, the fund's investment manager, Ameriprise Financial, Inc.
("Ameriprise Financial") (formerly 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
("RiverSource Investments"), a wholly-owned subsidiary of Ameriprise Financial.
The Board of Directors/Trustees ("Board") changed the name of each fund and the
funds are now listed in newspapers under RiverSource.
Q: Why am I being asked to vote?
Mutual funds are required to get shareholders' approval for certain contracts
and certain kinds of changes, like the ones included in this proxy statement.
Q: Is my vote important?
Absolutely! While the Board of each RiverSource Fund 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 (in most cases, 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 of all funds will elect Board members and consider approving an
Investment Management Services Agreement ("IMS Agreement") with RiverSource
Investments. In addition, shareholders of certain funds will vote on other
proposals. These proposals include:
o Amending the fund's Articles of Incorporation to permit the Board to
establish the minimum account value and to change the name of the
corporation.
o For funds subadvised by Kenwood Capital Management LLC, Threadneedle
International Limited or Davis Selected Advisers, L.P., approving subadvisory
agreements.
o Approving changes in fundamental investment policies related to
diversification, lending and borrowing.
Some of these changes affect all funds, while others affect only certain funds.
Please refer to "Section A - Overview" of the proxy statement to see what
proposals apply to your fund. We encourage you to read the full text of the
proxy statement to obtain a more detailed understanding of the issues.
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?
While the spin off of Ameriprise Financial and transfer of the IMS Agreement to
RiverSource Investments 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 IMS Agreement. For equity and balanced funds, the IMS Agreement
clarifies the circumstances under which the Board may change an index for
purposes of calculating a performance incentive adjustment. For variable
portfolio funds, the IMS Agreement eliminates transfer agency services, which
will be provided under a separate agreement if shareholders approve the IMS
Agreements. Finally, for many funds the IMS Agreement includes revised fee
schedules. The fee schedules reflect the broader pricing philosophy recommended
by RiverSource Investments and approved by the Board. Under that pricing
philosophy, the investment manager and its affiliates will contractually set fee
caps and waive fees such that net expenses for most funds will be at or below
median net expenses relative to a group of comparable funds.
Q: What changes are proposed to the Subadvisory Agreements?
Certain subadvisers are considered affiliates of RiverSource Investments.
Shareholders of funds advised by those subadvisers are being asked to approve
the subadvisory agreements as a result of the spin off described in the previous
paragraphs. In addition, the subadvisory agreements with Kenwood and Davis
include proposed changes in the fee schedules. Because subadvisory fees are paid
by RiverSource Investments, not by the fund, the proposed change does not
directly affect the expenses of the fund.
Q: What changes are proposed to investment policies?
Investment policies are being standardized to match the other funds in the group
and to eliminate unnecessary limitations on investment options. They are not
intended to change the way your fund is managed.
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?
o 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. If you own more than one fund, it is important that you
vote for each fund.
Q: Whom should I call if I have questions?
If you have questions about any of the proposals described in the proxy
statement or about voting procedures, please call your financial advisor or call
client services toll free at (877) 256-6085.