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Dear Fellow RiverSource(SM) New Dimensions Fund Shareholder:
I'm writing to summarize changes to RiverSource New Dimensions Fund that are
reflected in the enclosed prospectus. Let's begin with what has not changed: the
investment objective. We continue to be committed to the investment goal of
long-term growth of your capital. The key changes to the Fund are:
Changes in portfolio management. We have announced the closure of our San Diego
office and will focus our equity-management resources in three U.S. locations,
Boston, Cambridge and Minneapolis. The management of RiverSource New Dimensions
Fund, previously team-managed in San Diego, has moved to Boston and is now
managed by the experienced team in our office there. The Boston-based investment
team will manage the Fund similar to RiverSource(SM) Large Cap Equity Fund,
which has enjoyed solid, competitive performance since its inception. (Keep in
mind that past performance is no guarantee as to future investment results.)
Repositioning the Fund. Previously, the Fund invested in large company growth
stocks, although the portfolio management team sometimes added large company
value-style stocks, such that, at times, the Fund had been considered a "core"
fund. To make it very clear as to how the Fund invests, we have repositioned
RiverSource New Dimensions Fund as a core fund. This means that the Fund will
invest in both growth and value-style stocks. Going forward, we do not expect
the Fund to drift between growth and core styles.
See the prospectus for a complete description of the Fund's investment strategy
and more detailed information about the Fund's new management team.
With the changes now in place the Funds' Board of Directors has approved, in
principle, a merger of RiverSource New Dimensions Fund into RiverSource Large
Cap Equity Fund. This proposed merger will be included among several other
issues brought to shareholders for a proxy vote late in 2005. If approved, the
merger would be effective in March 2006.
I want to thank you for your continued confidence in RiverSource Investments.
With the changes now in place, we will continue to strive to deliver consistent,
competitive performance that meets - or exceeds - your expectations.
In addition to the specific changes to your RiverSource New Dimensions Fund, I
want to tell you about some broader changes to our company and to your family of
funds.
On September 30, Ameriprise Financial, Inc. (formerly American Express Financial
Corporation) became an independent company from American Express. An affiliate
of Ameriprise Financial, RiverSource Investments now serves as investment
adviser to your fund. This brings many exciting changes that I would like to
summarize for you.
The funds and our investment adviser will use the name RiverSource, to
distinguish us from the name of our parent company, Ameriprise Financial. We
have adopted a different name to emphasize the fact that, in addition to being
part of the broader Ameriprise Financial mission and tradition to help
individuals achieve their goals through financial planning, we have a distinct
mission to deliver products and services that meet client needs through
professional investment management.
Additionally, we have taken the step of committing to pricing that, in most
cases, will establish the cost that investors can expect to pay when investing
in a RiverSource fund at levels equivalent
This letter is not part of the prospectus.
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to or below the median for a comparable group of funds across the
industry. In short, we will strive to deliver above average results for an
average or below-average price - a pricing philosophy we believe is both fair to
current shareholders and compelling to prospective investors.
We continually strive to deliver above average investment performance in every
product we offer. In recent years, we have been pleased with our overall
progress.
Again, I thank you for the confidence you have placed in us, and as
RiverSource Funds, we look forward to helping you meet your investment goals.
Yours truly,
/s/ Paula R. Meyer
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Paula R. Meyer
President, RiverSource Fund
Senior Vice President, RiverSource Investments
This material must be preceded or accompanied by a current prospectus, which
contains more complete information about the variable annuity and the Fund,
including the investment objectives, risks, charges and expenses. For additional
information about our funds, please call (800) 297-3863, TTY: (800)846-4852.
Read the prospectus carefully before you invest.
Investment products are not federally or FDIC insured, are not deposits or
obligations of, or guaranteed by, any financial institution and involve
investment risks including possible loss of principal and fluctuation in value.
RiverSource Funds are managed by RiverSource Investments, LLC and distributed by
Ameriprise Financial Services, Inc., Member NASD. Both companies are part of
Ameriprise Financial, Inc. On August 1, 2005, American Express Financial
Advisors Inc. changed its name to Ameriprise Financial Services, Inc., and as of
September 30, 2005, we are no longer owned by American Express Company.
This letter is not part of the prospectus.
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Dear Client's Name __________________:
As a shareholder in RiverSource(SM) New Dimensions Fund, you have received
notice of changes to that fund. As your financial advisor, I want to discuss
these changes with you and tell you why I believe these changes were necessary
and timely.
In an effort to improve investment performance and provide greater clarity
around the Fund's investment strategy, RiverSource Investments, the Fund's
manager, has made changes in the Fund. The changes were effective on October 17,
2005 and are reflected in your new prospectus of that same date. The key changes
to the Fund are:
o The portfolio management team has changed. RiverSource Investments made the
decision to close their San Diego-based equity office, from which several
funds, including RiverSource New Dimensions Fund, were managed. The
Boston-based RiverSource Large Cap Equity team is an excellent and logical
successor. This successful and experienced equity investment team has taken
over the responsibility for managing your fund. The team will manage the
Fund similar to RiverSource(SM) Large Cap Equity Fund, which has enjoyed
solid competitive performance since its inception in 2002.
o The Fund has been repositioned as a "core" fund. Previously, the Fund's
emphasis was on large company growth stocks, but sometimes added enough
value stocks to drift from a growth style to a core style in the eyes of
independent data providers, such as Morningstar. To make it very clear as
to how the fund invests, RiverSource Investments repositioned it as a
"core" fund. This means that the Fund will invest in both growth- and
value-style stocks. Going forward, we do not expect the Fund to drift
between growth and core styles. The Fund's current prospectus gives a
complete explanation of the Fund's investment strategy and more detailed
information about the Fund's management. In addition, RiverSource Funds has
received approval, in principal, from its Board of Directors to merge
RiverSource New Dimensions Fund into RiverSource Large Cap Equity Fund. The
next step is to ask shareholders to agree. This proposed merger will be
included among several other issues brought to you in a proxy vote later
this year. If approved, the merger would occur in 2006. The changes to this
fund are important for you to understand, and in my opinion, will benefit
many investors who have stayed the course with the Fund. I want to make
sure, however, that these changes will benefit you. I am currently
reviewing your asset allocation, and will contact you soon with my
recommendation. Meanwhile, if you have questions about this fund or any
other investment, please call me.
Sincerely,
Advisor's Name _________________
You should consider the investment objectives, risks, charges and expenses for a
fund carefully before investing. For a free copy of a prospectus, which contains
this and other information, call (800) 297-3863, TTY: (800)846-4852. Read the
prospectus carefully before you invest.
Investment products are not federally or FDIC insured, are not deposits or
obligations of, or guaranteed by, any financial institution and involve
investment risks including possible loss of principal and fluctuation in value.
RiverSource Funds are managed by RiverSource Investments, LLC and distributed by
Ameriprise Financial Services, Inc., Member NASD. Both companies are part of
Ameriprise Financial, Inc. On August 1, 2005, American Express Financial
Advisors Inc. changed its name to Ameriprise Financial Services, Inc.
Q&A Transition of RiverSource(SM) New Dimensions Fund to the Boston Office
What's happening to RiverSource New Dimensions Fund?
We will transfer large-cap retail portfolios managed in San Diego to the Boston
large-cap platform by Oct. 17, 2005. This includes RiverSource New Dimensions
Fund and RiverSource(SM) VP New Dimensions Fund.
In addition, we will reposition RiverSource New Dimensions Fund and the VP fund
as large-cap core portfolios. This is a change from the funds' current
positioning as large-cap growth portfolios. With this transition, the funds
would be run similar to RiverSource(SM) Large Cap Equity that Nick Thakore, Bob
Ewing and a team of analysts under Nick and Bob's oversight each manage
one-third of the portfolio. Thakore's large growth strategy, combined with
Ewing's large value style, helps ensure a core portfolio.
Will RiverSource New Dimensions Fund eventually merge into RiverSource Large Cap
Equity Fund? The Fund's Board of Directors has given approval in principal to
merge RiverSource New Dimensions Fund into RiverSource Large Equity Fund and
RiverSource VP New Dimensions Fund into RiverSource VP Large Cap Equity Fund -
pending final shareholder approval. If shareholders support the merger, later
next year we would offer clients, advisors, plan sponsors and others two main
large-cap core strategies - a fundamental strategy out of Boston and a
quantitative strategy out of Cambridge.
Who is managing the fund before it moves to the team in Boston?
The management team in the San Diego Office is continuing to manage the fund
until the Boston-based Large Cap Equity Team takes over the fund on October
17th. During the transition, the two offices are working closely to monitor the
fund and make any trade decisions.
Why are you closing the San Diego office?
We are closing the San Diego office to focus our resources on Boston, Cambridge
and Minneapolis - platforms we believe are well positioned for long-term growth.
This supports our ongoing goal of delivering consistent, competitive results by
focusing our resources in three US equity locations.
How will the new management structure work for RiverSource New Dimensions Fund?
RiverSource New Dimensions Fund will be run in the same manner that RiverSource
Large Cap Equity Fund is currently being run. RiverSource Large Cap Equity Fund
is managed by the entire Boston team with the fund divided into three equal
sub-portfolios. One third of the fund is run by Bob Ewing and is patterned after
RiverSource Large Cap Value Fund, one-third of the fund is run by Nick Thakore
and is patterned after RiverSource(SM) Growth Fund and one-third of the fund is
run in a core style by the Boston-based analyst team. Nick Thakore and Bob Ewing
oversee the management of the fund and have overall portfolio management
responsibility.
FOR INTERNAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION.
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What is the timeframe for the transition?
The Boston Team will take over management of RiverSource New Dimensions Fund on
October 17th. The team will turn over approximately 65% of the fund in order to
position it in the same manner in which they are currently running RiverSource
Large Cap Equity Fund. Approximately 85% of those trades will be made within the
first five days with the rest of the trades taking place over the next couple of
weeks. The team expects the portfolio to be fully transitioned by the end of
October.
Will there be any tax loss carry forward after the two funds merge?
RiverSource New Dimensions Fund has no tax loss carry forward at this point. The
tax loss carry forward on RiverSource Large Cap Equity Fund will not carry over
after the merger. For clients currently in RiverSource Large Cap Equity Fund,
the lower expense structure that the merged fund will have will offset the loss
of the tax loss carry forward.
Will there be tax consequences for my clients with the transition of RiverSource
New Dimensions Fund to the new management team in Boston? We calculate capital
gains estimates for all funds as of the end of October and will be able to
provide more details on tax consequences related to capital gains in early
November.
How will shareholders be notified of the change?
Shareholder will receive a new prospectus with the updated information. It will
be dated October 17, 2005 and mailed that week. The prospectus will be
accompanied by a letter from Paula Meyer, the Funds' President, with an
explanation of the changes.
In addition, there will be a client letter available for advisors to send to
their clients.
What will the expense structure be after the merger?
The merged fund will have the same expense structure that New Dimensions
currently has. The expense ratio will be around 0.91, which is the current
expense ratio of RiverSource New Dimensions Fund. This will mean the same
expenses for current RiverSource New Dimensions Fund shareholders and lower
expenses for RiverSource Large Cap Equity shareholders.
Has the merger been approved by the Board and when will it take place?
The Funds' Board of Directors has given approval in principal to merge
RiverSource New Dimensions Fund into RiverSource Large Cap Equity Fund and
RiverSource VP New Dimensions Fund into RiverSource VP Large Cap Equity Fund.
Pending final shareholder approval, the merger will take place in a March/April
2006 timeframe.
Will the track record and name of RiverSource New Dimensions be eliminated with
the merger?
Yes. Since RiverSource New Dimensions Fund will be patterned after RiverSource
Large Cap Equity Fund, the name and track record of the surviving fund will
remain in place after the merger.
FOR INTERNAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION.
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Why wasn't Mike Nance moved to the Boston Office?
At this point, there are no additional resources needed to continue managing the
fund. The Boston Office has an existing structure in place, and under this
structure they have successfully managed RiverSource Large Cap Equity Fund over
the last year.
Why re-position this fund to the large cap core space?
RiverSource New Dimensions and RiverSource VP New Dimensions funds have espoused
a growth bias, and their primary benchmark has been the S&P 500 with a secondary
benchmark of the Russell 1000 Growth. Once transferred to Boston, the funds'
primary benchmark will be the Russell 1000. We believe a move to core is
consistent with current shareholders' goals. In fact, today in Lipper, the funds
are categorized as large-cap core portfolios. We believe defining the funds as
large cap core funds and adding a more risk controlled process will create
greater clarity for investors and advisors.
Repositioning RiverSource New Dimensions and RiverSource VP New Dimensions funds
as core will also clearly differentiate them from RiverSource Growth and
RiverSource VP Growth funds.
The large-cap core space is one of the largest asset categories in the industry.
It is our goal to be more visible in this category. Moving RiverSource New
Dimensions Fund to the core space will provide advisors and clients access to
large cap core funds from quantitative management from Cambridge, including
RiverSource(SM) Disciplined Equity Fund and fundamental management from Boston,
including RiverSource Large Cap Equity Fund, and as of October 17, RiverSource
New Dimensions Fund.
(Retirement Services - DC)
Why re-position this fund to the large cap core space?
We repositioned RiverSource New Dimensions Fund to a core fund because we
already have a strong growth offering in RiverSource Growth Fund. This
repositioning allows us to clearly differentiate the two funds.
Why not merge RiverSource New Dimensions Fund into RiverSource Growth Fund?
We repositioned RiverSource New Dimensions Fund to a core fund because we
already have a strong growth offering in RiverSource Growth Fund.
Why not merge RiverSource Large Cap Equity Fund into RiverSource New Dimensions
Fund?
The Boston-based Large Cap Equity Team will be running RiverSource New
Dimensions Fund in the same manner in which they are currently running
RiverSource Large Cap Equity Fund. Since RiverSource Large Cap Equity Fund will
remain the same with this transition we will be merging the repositioned fund
into the unchanged fund and keeping the name and track record of RiverSource
Large Cap Equity Fund.
FOR INTERNAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION.
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How long has the Large Cap Equity Team been running the fund?
Doug Chase was previously the portfolio manager on RiverSource Large Cap Equity
Fund. He left the firm in September of 2004 to pursue other opportunities
outside of the investment field. The new team structure was put into place at
that time with Bob Ewing and Nick Thakore having overall portfolio management
responsibilities.
How has the performance on RiverSource Large Cap Equity Fund been since Bob,
Nick and the analyst team have been running the portfolio?
The team has been running the fund since 9/29/04. As of 9/30/05, the fund ranks
in the 26th percentile against Lipper Large Cap Core peers for 1-year
performance.
- ------------------------------- ------------ ---------------- ------------------
RiverSource Large Cap Equity 1 Year 3 Year Since Inception
Performance through 9/30/05 (9/29/04)
- ------------------------------- ------------ ---------------- ------------------
- ------------------------------- ------------ ---------------- ------------------
Performance 13.80 13.95 2.86
- ------------------------------- ------------ ---------------- ------------------
- ------------------------------- ------------ ---------------- ------------------
Lipper Rank 26% 55% 36%
- ------------------------------- ------------ ---------------- ------------------
- ------------------------------- ------------ ---------------- ------------------
Funds in Category 223/881 414/765 259/724
- ------------------------------- ------------ ---------------- ------------------
The performance information shown represents past performance and is not a
guarantee of future results. Fund returns for all periods would have been lower
if the applicable sales charge were included. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
visiting riversource.com/investments.
What investments are you making in the other platforms?
We will be investing in all of our equity and fixed income platforms as we
continue generating consistent, competitive investment performance. We believe
our foundation for long-term growth will include Minneapolis as the headquarters
of our fixed income operation, Threadneedle as our international investment
platform, Los Angeles as the headquarters for our CDO business with Boston,
Cambridge and Minneapolis operating as independent equity platforms. We have
strong teams in place, and we intend to grow our assets under management.
What impact does this have to Minneapolis?
Minneapolis is an important equity and fixed income platform. In addition to
being our headquarters for fixed income, all our deep value portfolios are
team-managed from Minneapolis, and we will be adding mid-cap growth portfolios.
The mid-cap funds were managed in Minneapolis prior to our moving them to San
Diego several years ago. In addition, we will be adding additional analyst
positions to further support mid-cap and other Minneapolis-based portfolios.
You're moving assets to Boston and Minneapolis with the majority going to
Boston. Why not transfer assets to Cambridge?
We fully expect to grow assets in all three equity platforms and will be making
strategic investments in each platform to help reach our goals. In terms of
Cambridge, we recently increased their responsibilities for RiverSource(SM)
Small Cap Advantage and RiverSource(SM) Stock Funds. Also, with Board of
Director approval in principal, we plan to ask shareholders of RiverSource Stock
Fund to approve the merger of that fund's assets into RiverSource(SM)
Quantitative Large Cap Equity Fund, which is managed in Cambridge, an important
equity platform for us. More information about this change will be communicated
at a later time.
FOR INTERNAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION.
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Is Michelle Keeley's role changing?
Michelle will continue to lead all Minneapolis and Los Angeles investment
operations. She will lead the San Diego office through this transition.
Is John Schonberg's role changing?
He will continue in his role of equity product specialist/equity team leader
reporting to Michelle. He will work with Michelle and the San Diego team in the
weeks ahead to ensure a smooth transition. He will also work with the
Minneapolis teams.
On August 1, 2005, American Express Financial Advisors, Inc. changed its name to
Ameriprise Financial Services, Inc. RiverSource Funds (previously American
Express Funds) are managed by RiverSource Investments, LLC and distributed by
Ameriprise financial Services, Inc., Member NASD. Both companies are part of
Ameriprise Financial, Inc.
FOR INTERNAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION.
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