N-14/A 1 n-14.txt AXP GROWTH SERIES, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] Pre-Effective Amendment No. 1 (File No.: 333-129013) [ ] Post-Effective Amendment No. [ ] (Check Appropriate Box or Boxes) AXP Growth Series, Inc. ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) (612) 330-9283 ------------------------------------------------------------------------------- (Area Code and Telephone Number) 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268 ------------------------------------------------------------------------------- (Address of Principal Executive Offices: Number, Street, City, State, Zip Code) Leslie L. Ogg - 901 Marquette Avenue South, ------------------------------------------------------------------------------- (Name and Address of Agent For Service) Suite 2810, Minneapolis MN 55402-3268 ------------------------------------------------------------------------------- (Number and Street) (City) (State) (Zip Code) Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of the Registration Statement. Title of Securities Being Registered: Common Stock No filing fee is due because of reliance on Section 24(f) of the Investment Company Act of 1940. This Registration Statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933. RIVERSOURCE FUNDS (formerly known as American Express Funds) Principal Executive Office 901 Marquette Avenue South, Suite 2810 Minneapolis, MN 55402-3268 NOTICE OF A REGULAR MEETING OF SHAREHOLDERS TO BE HELD FEB. 15, 2006 AXP(R) DIMENSIONS SERIES, INC. RiverSource New Dimensions Fund (formerly AXP New Dimensions Fund) RiverSource New Dimensions Fund ("New Dimensions" or the "Selling Fund") will hold a regular shareholders' meeting at 10:00 a.m. on Feb. 15, 2006, at the IDS Center, 80 S. Eighth Street, Minneapolis, MN on the 50th floor. At the meeting, shareholders will consider the following proposals: - To approve an Agreement and Plan of Reorganization (the "Agreement") between the Selling Fund and RiverSource Large Cap Equity Fund ("Large Cap Equity" or the "Buying Fund"). Under this Agreement, the Selling Fund will transfer all of its assets attributable to Classes A, B, C, I and Y to the Buying Fund in exchange for corresponding Class A, B, C, I and Y shares of the Buying Fund. These shares will be distributed proportionately to you and the other shareholders of the Selling Fund. The Buying Fund will assume the Selling Fund's liabilities. - To elect Board members. - To amend the Articles of Incorporation. - To approve an Investment Management Services Agreement ("IMS Agreement") with RiverSource Investments, LLC. - Other business as may properly come before the meeting, or any adjournment of the meeting. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 1 Please take some time to read the proxy statement. It discusses the proposals in more detail. If you were a shareholder on Dec. 16, 2005, you may vote at the meeting or any adjournment of the meeting. We hope you can attend the meeting. For those of you who cannot attend, please vote by mail, telephone or internet. Just follow the instructions on the enclosed proxy card. If you have questions, please call your advisor or call client services toll free at (877) 256-6085. It is important that you vote. The Board of Directors (the "Board") recommends that you vote FOR each of the proposals. This proxy statement was first mailed to shareholders on or about Dec. 16, 2005. By order of the Board of Directors Leslie L. Ogg, Secretary Dec. 16, 2005 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 2 COMBINED PROXY STATEMENT/PROSPECTUS DATED DEC. 16, 2005 This document is a proxy statement for New Dimensions and a prospectus for Large Cap Equity (each individually a "Fund" and collectively the "Funds"). It contains the information you should know before voting on the proposal. Please read it carefully and keep it for future reference. The address of each of the Funds is 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268. The phone number for each of the Funds is (612) 330-9283. The following information describes the proposed reorganization of the Selling Fund into the Buying Fund (the "Reorganization"). HOW THE REORGANIZATION WILL WORK - The Selling Fund will transfer all of its assets to the Buying Fund. The Buying Fund will assume the Selling Fund's liabilities. - The Buying Fund will issue shares of Classes A, B, C, I and Y to the Selling Fund in an amount equal to the value of the assets of Classes A, B, C, I and Y that it receives from the Selling Fund, less the liabilities it assumes. These shares will be distributed to the Selling Fund's shareholders in proportion to their holdings in the Selling Fund. You will not pay any sales charge in connection with this distribution of shares. If you already have a Buying Fund account, shares distributed in the Reorganization will be added to that account. As a result, when average cost is calculated for income tax purposes, the cost of the shares in the two accounts you owned will be combined. FUND INVESTMENT OBJECTIVES The investment objective for each of the Funds is as follows: SELLING FUND: The Fund seeks to provide shareholders with long-term growth of capital. BUYING FUND: The Fund seeks to provide shareholders with long-term growth of capital. Please note that the Fund is not a bank deposit, is not federally insured, is not endorsed by any bank or government agency and is not guaranteed to achieve its goal. As with all mutual funds, the Securities and Exchange Commission (the "SEC") has not approved or disapproved these securities or passed on the adequacy of this prospectus. Any representation to the contrary is a criminal offense. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 3 WHERE TO GET MORE INFORMATION THE BUYING FUND Most recent prospectus, dated Oct. 3, 2005. Accompanying, and incorporated by reference into, this proxy statement/prospectus. Most recent annual report, for the period Incorporated by reference into this proxy statement/prospectus. For ended July 31, 2005. a copy at no charge, call toll-free (800) 862-7919 or write to the address at the bottom of this table. THE SELLING FUND Most recent prospectus, dated Oct. 17, 2005. Incorporated by reference into this proxy statement/prospectus. For a copy at no charge, call toll-free (800) 862-7919 or write to the address at the bottom of this table. Most recent annual report, for the period Incorporated by reference into this proxy statement/prospectus. For ended July 31, 2005. a copy at no charge, call toll-free (800) 862-7919 or write to the address at the bottom of this table. THIS PROXY STATEMENT/PROSPECTUS Statement of Additional Information dated Incorporated by reference into this proxy statement/prospectus. For the same date as this proxy a copy at no charge, call toll-free (877) 256-6085 or write to the statement/prospectus. This document address at the bottom of this table. contains information about both the Selling Fund and the Buying Fund. To ask questions about this proxy Call toll-free (877) 256-6085 or write to: statement/prospectus. RiverSource Service Corporation, 70100 Ameriprise Financial Center,Minneapolis, MN 55474.
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 4 Each of the Funds is subject to the information requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and files reports, proxy materials and other information with the SEC. These reports, proxy materials and other information can be inspected and copied at the Public Reference Room maintained by the SEC. Copies may be obtained, after paying a duplicating fee, by electronic request at http://www.publicinfo@sec.gov, or by writing to the Public Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies of these documents may be viewed on-line or downloaded from the SEC's Web site at http://www.sec.gov. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 5 TABLE OF CONTENTS PAGE SECTION A -- FUND PROPOSALS PROPOSAL 1. APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION 7 SUMMARY 7 How the Reorganization Will Work 7 Comparison of the Selling Fund and the Buying Fund 8 Risk Factors 12 Tax Consequences 14 FEES AND EXPENSES 15 THE REORGANIZATION 18 Terms of the Reorganization 18 Conditions to Closing the Reorganization 19 Termination of the Agreement 19 Tax Status of the Reorganization 19 Reasons for the Proposed Reorganization and Board Deliberations 22 Boards' Determinations 24 Recommendation and Vote Required 24 PROPOSAL 2. ELECT BOARD MEMBERS 25 PROPOSAL 3. APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES OF INCORPORATION 32 PROPOSAL 4. APPROVE OR REJECT AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH RIVERSOURCE INVESTMENTS, LLC 34 SECTION B -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION 42 SECTION C -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION 45 EXHIBITS A. Form of Agreement and Plan of Reorganization A.1 B. Matters Subject to Approval at Regular Meeting of Buying Fund B.1 C. Minnesota Business Corporation Act Sections 302A.471 and 302A.473 C.1 D. Most Recent Buying Fund Prospectus D.1 E. Board Effectiveness Committee Charter E.1 F. Joint Audit Committee Charter F.1 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 6 SECTION A -- FUND PROPOSALS PROPOSAL 1. APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION SUMMARY This proxy statement/prospectus is being used by the Selling Fund to solicit proxies to vote at a meeting of shareholders. Shareholders will consider a proposal to approve the Agreement providing for the Reorganization of the Selling Fund into the Buying Fund. A form of the Agreement is included in Exhibit A. The following is a summary. More complete information appears later in this proxy statement/prospectus. You should read the entire proxy statement/prospectus and the exhibits because they contain details that are not in the summary. HOW THE REORGANIZATION WILL WORK - The Selling Fund will transfer all of its assets to the Buying Fund. The Buying Fund will assume the Selling Fund's stated liabilities. - The Buying Fund will issue shares of Classes A, B, C, I and Y to the Selling Fund in an amount equal to the value of the assets of Classes A, B, C, I and Y that it receives from the Selling Fund, less the liabilities it assumes. These shares will be distributed to the Selling Fund's shareholders in proportion to their holdings in the Selling Fund. - As part of the Reorganization, systematic transactions (such as bank authorizations and systematic payouts) currently set up for your Selling Fund account will be transferred to your new Buying Fund account. If you do not want your systematic transactions to continue, please contact your financial advisor to make changes. - Neither the Selling Fund nor the shareholders of the Selling Fund will pay any sales charge in connection with the Reorganization. - After the Reorganization is completed, current Selling Fund shareholders will be shareholders of the Buying Fund. The Selling Fund will be terminated. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 7 COMPARISON OF THE SELLING FUND AND THE BUYING FUND Both the Selling Fund and the Buying Fund: - Are structured as a series of capital stock of an open-end management investment company organized as a Minnesota corporation. - Have RiverSource Investments, LLC (the "investment manager" or "RiverSource Investments") as an investment adviser. - Have the same policies for buying and selling shares and the same exchange rights. - Have the same distribution policies. - Have different classes of shares: Classes A, B, C, I and Y. COMPARISON OF INVESTMENT OBJECTIVES The investment objectives for the Funds are as follows: SELLING FUND: The Fund seeks to provide shareholders with long-term growth of capital. BUYING FUND: The Fund seeks to provide shareholders with long-term growth of capital. COMPARISON OF INVESTMENT STRATEGIES Prior to October 2005, the Selling Fund was managed as a large-cap growth fund and was permitted to invest up to 30% of its total assets in foreign investments. The Buying Fund has, and, since October 2005, the Selling Fund has had, a policy to invest at least 80% of its net assets in the common stocks of equity securities of large-cap companies with market capitalization greater than $5 billion at the time of purchase. Additionally, the Buying Fund is, and, since October 2005, the Selling Fund has been, managed as a core fund, with portions of the Fund's portfolio uniquely dedicated to "growth," "value," and "core" investing, with no more than 20% of total assets permitted to invest in foreign investments. Detailed strategies for the Selling Fund and the Buying Fund are set forth below: NEW DIMENSIONS (SELLING FUND): UNTIL OCTOBER 2005, THE FUND WAS MANAGED AS FOLLOWS: The Fund primarily invests in common stocks showing potential for significant growth. These companies often operate in areas where dynamic economic and technological changes are occurring. The Fund may invest up to 30% of its total assets in foreign investments. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 8 In pursuit of the Fund's goal, the investment manager chooses investments by: - Identifying companies that the investment manager believes have above-average long-term growth potential based on: - Effective management, - Financial strength, and - Competitive market position; as well as - Considering opportunities and risks by reviewing interest rate and economic forecasts both domestically and abroad. In evaluating whether to sell a security, the investment manager considers, among other factors, whether: - The security is overvalued relative to alternative investments. - The company has met the investment manager's earnings and/or growth expectations. - Political, economic, or other events could affect the company's performance. - The investment manager wishes to minimize potential losses. - The investment manager identifies a more attractive opportunity. SINCE OCTOBER 2005, THE FUND HAS BEEN MANAGED IN THE SAME WAY AS LARGE CAP EQUITY BELOW: LARGE CAP EQUITY (BUYING FUND): Under normal market conditions, at least 80% of the Fund's net assets are invested in equity securities of companies with a market capitalization greater than $5 billion at the time of purchase. The Fund may invest in income-producing equity securities, such as dividend-paying stocks, convertible securities and preferred stocks. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. In pursuit of the Fund's objective, the investment manager (RiverSource Investments, LLC) will hold both growth and value companies and at times may favor one more than the other based on available opportunities. When optimizing for growth, the investment manager invests in companies it believes to have above-average long-term growth potential, or technological superiority, and it selects investments based, among other factors, on: - Effective management. - Financial strength. - Competitive market or product position. - Technological advantage relative to other companies. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 9 When optimizing for value, the investment manager invests in companies that appear to be undervalued by various measures or that may be temporarily out of favor, but have good prospects for capital appreciation, and it selects investments based, among other factors, on: - Identifying a variety of large, well-established companies whose underlying fundamentals are stable, or are anticipated to become stable, or whose fundamentals are improving. - Identifying stocks that are undervalued: - because they have one or more ratios, such as price-to-earnings or price-to-cash flow, that are low relative to the general market, or have a yield that exceeds the market, - because one or more of their valuation ratios are low relative to historical levels for the stock, - because one or more of their valuation ratios or other financial measures make that stock attractive relative to its peers, or - because they are undervalued relative to their intrinsic value, as identified by the investment manager. In evaluating whether to sell a security, the investment manager considers factors including, among others whether: - The security is overvalued relative to other potential investments. - The security has reached the investment manager's price objective. - The company has met the investment manager's earnings and/or growth expectations. - Potential losses, due to factors such as a market down-turn, can be minimized. - A more attractive opportunity has been identified. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 10 BOTH FUNDS: - UNUSUAL MARKET CONDITIONS. During unusual market conditions, each of the Funds may invest more of its assets in money market securities than during normal market conditions. Although investing in these securities would serve primarily to avoid losses, this type of investing could prevent the Fund from achieving its investment objective. During these times, the investment manager may make frequent securities trades that could result in increased fees, expenses and taxes, and decreased performance. - OTHER INVESTMENT STRATEGIES. Each Fund may invest in other securities and may use other investment strategies that are not principal investment strategies. Additionally, the Fund may use derivatives (financial instruments where the value depends upon, or is derived from, the value of something else) such as futures, options and forward contracts, to produce incremental earnings, to hedge existing positions or to increase flexibility. Just as with securities in which the Fund invests directly, derivatives are subject to a number of risks, including market, liquidity, interest rate and credit risk. In addition, a relatively small price movement in the underlying security, currency or index may result in a substantial gain or loss for the Fund using derivatives. Even though the Fund's policies permit the use of derivatives in this manner, the investment manager is not required to use derivatives. COMPARISON OF FUNDAMENTAL POLICIES The Buying Fund shareholders will vote on changes to the fundamental policies for the Buying Fund at a meeting scheduled to be held on the same day as the Selling Fund shareholder meeting. The proposed changes are shown in Exhibit B. If all of the proposed changes to the Buying Fund's fundamental policies are approved, the differences in investment policies will be as follows: Each Fund has substantially similar fundamental investment policies. The Buying Fund has a policy permitting borrowing money for temporary purposes in an amount not exceeding one-third of the market value of its total assets. The Selling Fund has a similar policy that applies to money or property and permits borrowing only for extraordinary or emergency purposes. The Buying Fund has a policy prohibiting the issuing of senior securities, except as permitted under the 1940 Act. Even though this is not stated as a fundamental policy of the Selling Fund, the Fund is nonetheless subject to that restriction under the provisions of the 1940 Act. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 11 The Buying Fund has a policy permitting the Fund to lend fund securities and participate in an interfund lending program up to 33 1/3% of the value of the Fund's total assets. This policy does not prohibit the Buying Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchase agreements. The Selling Fund has a policy permitting the Selling Fund to lend fund securities up to 30% of its net assets. In addition, the Selling Fund has a policy that it may make cash loans up to 5% of its total assets. The Selling Fund has a policy prohibiting loans to the investment manager, its board members and officers and to the board members and officers of the Selling Fund. The Buying Fund has a policy that it will not purchase more than 10% of the outstanding voting securities of an issuer, except up to 25% of its total assets may be invested without regard to this 10% limitation. The Selling Fund has a similar policy, but does not have the 25% exception. The Buying Fund has a policy that it will not invest more than 5% of its total assets in securities of any one company, government, or political subdivision thereof, except the limitation will not apply to investments in securities issued by the U.S. government, its agencies, or instrumentalities, or other investment companies, and except that up to 25% of its total assets may be invested without regard to this 5% limitation. The Selling Fund has a similar policy, but does not include other investment companies in the exception. If shareholders of the Selling Fund approve the Reorganization, they will be subject to the fundamental investment policies of the Buying Fund. The investment manager does not believe that the differences between the fundamental investment policies will result in any material difference in the way the Funds are managed. RISK FACTORS Prior to October 2005, the Selling Fund had increased risks of style specific investing, highlighted in Market Risk, as the fund emphasized growth stocks. Since October 2005, the principal risks of investing in each of the Selling Fund and the Buying Fund are identical and are shown below:
NEW DIMENSIONS NEW DIMENSIONS RISK UNTIL OCT. 2005 SINCE OCT. 2005 LARGE CAP EQUITY Active Management Risk x x x Foreign Risk x Issuer Risk x x x Market Risk x x x
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 12 - ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the investment manager's ability to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - FOREIGN RISK. The following are all components of foreign risk: COUNTRY RISK includes the political, economic, and other conditions of the country. These conditions include lack of publicly available information, less government oversight (including lack of accounting, auditing, and financial reporting standards), the possibility of government-imposed restrictions, and even the nationalization of assets. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times it may be difficult to sell foreign securities at desirable prices. CURRENCY RISK results from changing exchange rate between local currency and the U.S. dollar. Whenever the Fund holds securities valued in a foreign currency or holds the currency, changes in the exchange rate add or subtract from the value of the investment. CUSTODY RISK refers to the process of clearing and settling trades. It also covers holding securities with local agents and depositories. Low trading volumes and volatile prices in less developed markets make trades harder to complete and settle. Local agents are held only to the standard of care of the local market. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a country's securities market is, the greater the likelihood of problems occurring. The liquidity of foreign investments may be more limited than for most U.S. investments, which means that, at times it may be difficult to sell foreign securities at desirable prices. - ISSUER RISK. An issuer may perform poorly and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. - MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of all securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid-sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperformance other mutual funds if that style falls out of favor with the market. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 13 PERFORMANCE Performance information for Class A shares of the Funds is shown below. TABLE A-1 AVERAGE ANNUAL TOTAL RETURNS AS OF SEPT. 30, 2005(a)
SINCE INCEPTION FUND 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE New Dimensions (Selling Fund) 0.85% -6.17% 7.21% N/A N/A Large Cap Equity (Buying Fund) 7.27% N/A N/A 1.13% 3/28/2002
(a) Returns include the 5.75% Class A sales charge. TAX CONSEQUENCES The Reorganization is expected to be tax-free for federal income tax purposes and will not take place unless the Selling Fund and the Buying Fund receive a satisfactory opinion of tax counsel, substantially to that effect. Accordingly, no gain or loss is expected to be recognized by the Selling Fund or its shareholders as a direct result of the Reorganization. Prior to or after completion of the Reorganization, no major sell-offs to realign the portfolio are expected in relation to, or as a result of the Reorganization. However, the Reorganization will end the tax year of the Selling Fund, and so it will accelerate distributions from the Selling Fund for its short tax year ending on the date of the Reorganization to you as a shareholder. Those tax year-end distributions, which are taxable, will also include any capital gains resulting from portfolio turnover prior to the implementation of the Reorganization. At any time prior to the consummation of the Reorganization a shareholder may redeem shares. This would likely result in recognition of gain or loss to the shareholder for federal income tax purposes. The tax basis and holding period of the shareholders' Selling Fund shares is expected to carry over to the shareholders' new shares in the Buying Fund. For more information about the federal income tax consequences of the Reorganization, see the section entitled "Tax Status of the Reorganization." RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 14 FEES AND EXPENSES The following table describes the fees and expenses adjusted to reflect current fees that you pay if you buy and hold shares of the Selling Fund or shares of the Buying Fund. The table also shows pro forma expenses of the Buying Fund assuming the proposed Reorganization had been effective during the most recent fiscal year, adjusted to reflect current fees. The fees and expenses below exclude the costs of this Reorganization as these will be paid by Ameriprise Financial. TABLE A-2 ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS I CLASS Y Maximum sales charge (load) imposed on purchases(a) as a percentage of offering price 5.75% none none none none Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) none(b) 5% 1% none none
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS A CLASS B CLASS C CLASS I CLASS Y NEW DIMENSIONS (SELLING FUND)(g) Management fees(c) 0.45% 0.45% 0.45% 0.45% 0.45% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00% Other expenses(d) 0.26% 0.29% 0.29% 0.08% 0.34% Total 0.96% 1.74% 1.74% 0.53% 0.79% LARGE CAP EQUITY (BUYING FUND) Management fees(e) 0.57% 0.57% 0.57% 0.57% 0.57% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00% Other expenses(d) 0.36% 0.38% 0.38% 0.15% 0.40% Total 1.18% 1.95% 1.95% 0.72% 0.97% LARGE CAP EQUITY -- PRO FORMA WITH NEW DIMENSIONS Management fees(f) 0.48% 0.48% 0.48% 0.48% 0.48% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00% Other expenses(h) 0.27% 0.29% 0.29% 0.08% 0.34% Total 1.00% 1.77% 1.77% 0.56% 0.82%
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 15 NOTES TO ANNUAL FUND OPERATING EXPENSES. (a) This charge may be reduced depending on the value of your total investments in RiverSource mutual funds. (b) For Class A purchases over $1,000,000 on which no sales charge is assessed, a 1% sales charge may apply if you sell your shares within one year after purchase. (c) The management fee rate is the actual fee rate charged as of fiscal year ended July 31, 2005. It includes the impact of a performance incentive adjustment that decreased the management fee by 0.07%. Prior to November 2005 the index against which New Dimensions performance was measured for purposes of determining the performance incentive adjustment was the Lipper Large-Cap Growth Funds Index. Since November 2005, the index against which New Dimensions performance is measured for purposes of determining the performance incentive adjustment is the Lipper Large Cap Core Funds Index. Should this Reorganization not be approved, there is a separate proposal to modify the management fee schedule. Under the new fee schedule, the projected management fee ratio based on average net assets as of July 31, 2005, net of the 0.07% performance incentive adjustment decrease, is 0.44%. (d) Other expenses include an administrative services fee, a custody fee, a transfer agency fee, other nonadvisory expenses and, for Class Y shares, a shareholder service fee. The other expense ratios shown in this chart have been adjusted to reflect the new administrative fee that went into effect October 2005. (e) The management fee ratio shown reflects what the ratio would be based on the fund's average net assets as of July 31, 2005 under the proposed management fee schedule. The ratio includes the impact of a performance incentive adjustment that decreased the management fee by 0.02%. The index against which the Fund's performance is measured for purposes of determining the performance incentive adjustment is the Lipper Large-Cap Core Funds Index. (f) The management fee ratio shown reflects what the ratio would be under the proposed management fee schedule based on the combined average net assets of the two funds as of July 31, 2005. It includes the impact of a performance incentive adjustment that decreased the management fee by 0.02%. It also includes the impact of a special management fee waiver that will be in effect until August 2006 on the merged fund. This special management fee waiver is estimated to reduce the management fee ratio by 0.01%. The index against which the Fund's performance is measured for purposes of determining the performance incentive adjustment is the Lipper Large-Cap Core Funds Index. (g) New Dimensions is a feeder fund that is part of a master/feeder structure. For New Dimensions, both in this table and the following example, fund operating expenses include expenses charged by both the Fund and its Master Portfolio. (h) Other expenses include an administrative services fee, a custody fee, a transfer agency fee, other nonadvisory expenses and, for Class Y shares, a shareholder services fee. The other expense ratios shown in this chart have been adjusted to reflect the new administrative fee that went into effect in October 2005. In addition, these ratios have been adjusted to reflect closed account fees following the Reorganization and an anticipated reduction in transfer agent fees due to the New Dimensions and Large Cap Equity accounts that will be combined as a result of the Reorganization. EXAMPLE: These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods indicated under the current arrangements and if the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 16
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS NEW DIMENSIONS (SELLING FUND) Class A(a) $667 $ 863 $1,076 $1,690 Class B $677(b) $ 948(b) $1,145(b) $1,850(c) Class C $277(b) $ 548 $ 945 $2,057 Class I $ 54 $ 170 $ 297 $ 668 Class Y $ 81 $ 253 $ 440 $ 982 LARGE CAP EQUITY (BUYING FUND) Class A(a) $688 $ 928 $1,188 $1,929 Class B $698(b) $1,013(b) $1,253(b) $2,079(c) Class C $298(b) $ 613 $1,053 $2,280 Class I $ 74 $ 230 $ 401 $ 898 Class Y $ 99 $ 309 $ 537 $1,194 LARGE CAP EQUITY - PRO FORMA WITH NEW DIMENSIONS Class A(a) $671 $ 875 $1,097 $1,733 Class B $680(b) $ 957(b) $1,160(b) $1,885(c) Class C $280(b) $ 557 $ 960 $2,089 Class I $ 57 $ 180 $ 313 $ 705 Class Y $ 84 $ 262 $ 456 $1,018
(a) Includes a 5.75% sales charge. (b) Includes the applicable contingent deferred sales charge. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. You would pay the following expenses if you did not redeem your shares.
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS NEW DIMENSIONS (SELLING FUND) Class A(a) $667 $863 $1,076 $1,690 Class B $177 $548 $ 945 $1,850(b) Class C $177 $548 $ 945 $2,057 Class I $ 54 $170 $ 297 $ 668 Class Y $ 81 $253 $ 440 $ 982
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 17
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS LARGE CAP EQUITY (BUYING FUND) Class A(a) $688 $928 $1,188 $1,929 Class B $198 $613 $1,053 $2,079(b) Class C $198 $613 $1,053 $2,280 Class I $ 74 $230 $ 401 $ 898 Class Y $ 99 $309 $ 537 $1,194 LARGE CAP EQUITY - PRO FORMA WITH NEW DIMENSIONS Class A(a) $671 $875 $1,097 $1,733 Class B $180 $557 $ 960 $1,885(b) Class C $180 $557 $ 960 $2,089 Class I $ 57 $180 $ 313 $ 705 Class Y $ 84 $262 $ 456 $1,018
(a) Includes a 5.75% sales charge. (b) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. THE REORGANIZATION TERMS OF THE REORGANIZATION The Board has approved the Agreement, a copy of which is attached as Exhibit A. The Agreement provides for Reorganization on the following terms: - The Reorganization is scheduled to occur on the first day that the New York Stock Exchange is open for business following shareholder approval and receipt of any necessary regulatory approvals, but may occur on any later date agreed to by the Selling Fund and the Buying Fund. - The Selling Fund will transfer all of its assets to the Buying Fund and, in exchange, the Buying Fund will assume the Selling Fund's stated liabilities. - The Buying Fund will issue Class A, B, C, I and Y shares to the Selling Fund in an amount equal to the value of the assets of Classes A, B, C, I and Y that it receives from the Selling Fund, less the liabilities assumed by the Buying Fund in the transaction. These shares will immediately be distributed by the Selling Fund to its shareholders in proportion to their holdings in the Selling Fund. As a result, shareholders of the Selling Fund will become Class A, B, C, I or Y shareholders of the Buying Fund. - Neither the Selling Fund nor the shareholders of the Selling Fund will pay any sales charge in connection with the Reorganization. - The net asset value of the Selling Fund and the Buying Fund will be computed as of 3:00 p.m. Central time, on the closing date. - After the Reorganization, the Selling Fund will be terminated. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 18 CONDITIONS TO CLOSING THE REORGANIZATION The completion of the Reorganization is subject to certain conditions described in the Agreement, including: - The Selling Fund will have declared and paid a dividend that will distribute all of the Fund's taxable income, if any, to the shareholders of the Fund for the taxable years ending at or prior to the closing. - The Funds will have received any approvals, consents or exemptions from the SEC or any regulatory body necessary to carry out the Reorganization. - A registration statement on Form N-14 will have been filed with the SEC and declared effective. - The shareholders of the Selling Fund will have approved the Agreement. - The Selling Fund will have received an opinion of tax counsel that the proposed Reorganization will result in no gain or loss being recognized by any shareholder. TERMINATION OF THE AGREEMENT The Agreement and the transactions contemplated by it may be terminated and abandoned by resolutions of the Board of the Selling Fund or the Buying Fund at any time prior to closing. In the event of a termination, there will be no liability for damages on the part of either the Selling Fund or the Buying Fund or the directors, officers or shareholders of the Selling Corporation or of the Buying Corporation. TAX STATUS OF THE REORGANIZATION The Reorganization is expected to be tax-free for federal income tax purposes and will not take place unless the Selling Fund and the Buying Fund receive a satisfactory opinion of tax counsel (which opinion will be based on certain factual representations and certain customary assumptions), to the effect that, although not entirely free from doubt, on the basis of existing provisions of the Internal Revenue Code of 1986, as amended (the "Code"): - The transfer of the Selling Fund's assets to the Buying Fund in exchange for Class A, B, C, I and Y shares of the Buying Fund and the assumption of the Selling Fund's liabilities, followed by the distribution of those Class A, B, C, I and Y shares to the Selling Fund's shareholders and the termination of the Selling Fund will be a "reorganization" within the meaning of Section 368(a)(1) of the Code, and the Selling Fund and the Buying Fund will each be a "party to the reorganization" within the meaning of Section 368(b) of the Code. - Under Section 361 of the Code, no gain or loss will be recognized by the Selling Fund upon the transfer of all of its assets to the Buying Fund or on the distribution by the Selling Fund of Class A, B, C, I and Y shares of the Buying Fund to Selling Fund shareholders in liquidation. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 19 - Under Section 354 of the Code, the shareholders of the Selling Fund will not recognize gain or loss upon the exchange of their Class A, B, C, I or Y shares of the Selling Fund solely for Buying Fund Class A, B, C, I or Y shares as part of the Reorganization. - Under Section 358 of the Code, the aggregate basis of the Class A, B, C, I or Y shares of the Buying Fund that a Selling Fund shareholder receives in the Reorganization will be the same as the aggregate basis of the Class A, B, C, I or Y shares of the Selling Fund exchanged therefor. - Under Section 1223(1) of the Code, the tax holding period for the Class A, B, C, I or Y shares of the Buying Fund that a Selling Fund shareholder receives in the Reorganization will include the period for which he or she held the Class A, B, C, I or Y shares of the Selling Fund exchanged therefor, provided that on the date of the exchange he or she held such Selling Fund shares as capital assets. - Under Section 1032 of the Code, no gain or loss will be recognized by the Buying Fund upon the receipt of the Selling Fund's assets solely in exchange for the issuance of Buying Fund's Class A, B, C, I and Y shares to the Selling Fund and the assumption of all of the Selling Fund's liabilities by the Buying Fund. - Under Section 362(b) of the Code, the Buying Fund's tax basis in the assets that the Buying Fund received from the Selling Fund will be the same as the Selling Fund's tax basis in those assets immediately prior to the transfer. - Under Section 1223(2) of the Code, the Buying Fund's holding periods in the assets received from the Selling Fund will include the Selling Fund's holding periods in such assets. - Under Section 381 of the Code, the Buying Fund will succeed to and take into account the items of the Selling Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and Regulations thereunder. Tax counsel will express no view with respect to the effect of the Reorganization on any transferred assets as to which any unrealized gain or loss is required to be recognized at the end of a taxable year (or on the termination or transfer thereof) under federal income tax principles. Prior to the closing of the Reorganization, the Selling Fund will, and the Buying Fund may, declare a distribution to shareholders, which together with all previous distributions, will have the effect of distributing to shareholders all of its investment company taxable income (computed without regard to the deduction for dividends paid) and net realized capital gains (after reduction by any available capital loss carryforwards), if any, through the closing of the Reorganization. These distributions will be taxable to shareholders. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 20 A fund's ability to carry forward capital losses and use them to offset future gains may be limited. First, one fund's "pre-acquisition losses" (including capital loss carryforwards, net current-year capital losses, and unrealized losses that exceed certain thresholds) cannot be used to offset unrealized gains in another fund that are "built in" at the time of the reorganization and that exceed certain thresholds ("non-de minimis built-in gains") for five tax years. Second, a portion of a fund's pre-acquisition losses may become unavailable to offset any gains at all. Third, any remaining pre-acquisition losses will offset capital gains realized after a reorganization and thus will reduce subsequent capital gain distributions to a broader group of shareholders than would have been the case absent such reorganization. Therefore, in certain circumstances, former shareholders of a fund may pay taxes sooner, or pay more taxes, than they would have had a reorganization not occurred. The impact of the rules described above will depend on the relative sizes of, and the losses and gains in, each fund at the time of the Reorganization. As stated above, for five years beginning after the closing date, the combined fund will not be allowed to offset gains "built in" to either fund at the time of the Reorganization against capital losses (including capital loss carryforwards) built in to the other fund. However, as of August 31, 2005, the other two rules mentioned in the immediately preceding paragraph would not have affected the Selling Fund directly because the Selling Fund's net realized and unrealized gains exceeded its capital loss carryforwards and thus the Selling Fund had no pre-acquisition "net losses" (i.e., capital loss carryforwards as of its last fiscal year end as adjusted by year-to-date realized gains or losses and all net unrealized gains) that would have become unavailable to offset gains or been spread over a broader group of shareholders. However, a portion of the Buying Fund's losses would have been lost. The realized and unrealized gains and losses of each Fund at the time of the Reorganization will determine the extent to which the combining Funds' respective losses, both realized and unrealized, will be available to reduce gains realized by the combined Fund following the Reorganization, and consequently the extent to which the combined Fund may be required to distribute gains to its shareholders earlier than would have been the case absent the Reorganization. This description of the federal income tax consequences of the Reorganization does not take into account your particular facts and circumstances. Consult your own tax adviser about the effect of state, local, foreign, and other tax laws. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 21 REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS The Board believes that the proposed Reorganization will be advantageous to Selling Fund shareholders based on its consideration of the following matters: - TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and conditions of the Reorganization as described in the previous paragraphs. - TAX CONSEQUENCES. The Board considered the tax-free nature of the Reorganization. - CONTINUITY OF INVESTMENT. The Board took into account the fact that, currently, the Selling Fund and the Buying Fund have an identical investment objective and identical investment strategies and that, as a result, both Funds are, in fact, managed in substantially the same way. The Board took note of the fact that following the Reorganization, shareholders of the Selling Fund will be invested in a fund holding a substantially similar investment securities portfolio to the portfolio currently held by the Selling Fund. - EXPENSE RATIOS. The Board considered the relative expenses of the Funds. As of the end of each Fund's most recent fiscal year, the expense ratios for the Buying Fund were higher than the expense ratios for the Selling Fund. For example, the Selling Fund's expense ratio for Class A shares as of July 31, 2005, its most recent fiscal year end, adjusted to reflect current fees (after giving effect to the performance incentive adjustment) was 0.96% (1.03% before giving effect to the performance incentive adjustment). The Buying Fund's expense ratio for Class A shares as of July 31, 2005, its most recent fiscal year end, adjusted to reflect current fees (after giving effect to the performance incentive adjustment) was 1.18% (1.20% before giving effect to the performance incentive adjustment). The Board considered that the Funds have the same management and administrative fee schedules with the same breakpoints, and that the Selling Fund's lower ratio is primarily attributable to the fact that it has realized additional breakpoints in its fee schedules because of its larger asset size. Therefore, the Board considered that, after taking into account the effect of the Reorganization (that is, the combination of the Selling Fund's assets with those of the Buying Fund), the Buying Fund's Class A expense ratio would experience a reduction (as new breakpoints are reached) and would, as a result, closely approximate the current Class A expense ratio of the Selling Fund (the pro forma expense ratio of the Buying Fund on July 31, 2005, restated to take into account the effect of the Reorganization, is one basis point lower than the Selling Fund's expense ratio on that date). In conducting this analysis, the Board did not take into account the effect of any performance incentive adjustment on the Selling Fund's or Buying Fund's expense ratio. The Board also considered that higher aggregate net assets resulting from the Reorganization and the RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 22 opportunity for net cash inflows (or reduced outflows) may reduce the risk that, if net assets of the Selling Fund fail to grow, or diminish, its total expense ratio could rise from current levels as fixed expenses become a larger percentage of net assets. - ECONOMIES OF SCALE. The Board considered the advantage of combining Funds that share an identical investment objective and identical investment strategies. The Board believes that by combining the Funds, the combined fund can take advantage of the economies of scale associated with a larger fund. For example, a larger fund should have an enhanced ability to effect portfolio transactions on more favorable terms and should have greater investment flexibility. Furthermore, as indicated above, fixed expenses, such as audit expenses and accounting expenses that are charged on a per fund basis, will be reduced. - COSTS. The Board considered the fact that the investment manager has agreed to bear all solicitation expenses in order to achieve shareholder approval of the Reorganization and to bear any other costs of effecting the Reorganization (the filing, closing and other costs of consummating the transaction). - DILUTION. The Board considered the fact that the Reorganization will not dilute the interests of the current shareholders because it would be effected on the basis of the relative net asset value per share of the Selling Fund and Buying Fund, respectively. Thus, a Class A shareholder of the Selling Fund will receive Class A shares of the Buying Fund equal in value to his or her Class A shares in the Selling Fund. - PERFORMANCE AND OTHER FACTORS. The Board considered the relative performance records of the funds. The Board took into account the better overall track record of the Buying Fund, when compared to the Selling Fund, over the past three years, noting that the difference in performance between the two funds was attributable to the fact that, prior to October 2005, both Funds had materially different investment strategies. While the Board was cognizant of the fact that the Buying Fund's past performance is no guarantee of its future results, it did recognize that the better three year track record of the Buying Fund could help attract more assets into the combined fund and therefore could help reduce the rate of outflows that have been experienced by the Selling Fund. The Board considered that reduced outflows or increased inflows could help the Selling Fund shareholders achieve further economies of scale (see "Economies of Scale" above). The Board also considered the fact that the funds have an identical investment objective, and, since October 2005, the same investment strategies, and substantially similar holdings and, absent the Reorganization, the two funds are likely to compete against each other for the same investor RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 23 base and, thus, could draw assets away from the other fund. The Reorganization should allow for a concentrated selling effort thereby potentially benefiting both funds. The Board further took into account the investment manager's belief that the Selling Fund, as a stand-alone fund, was unlikely to experience any growth in assets as a result of investor inflows. - POTENTIAL BENEFITS TO THE INVESTMENT MANAGER AND ITS AFFILIATES. The Board also considered the potential benefits from the Reorganization that could be realized by the investment manager and its affiliates. The Board recognized that the potential benefits to the investment manager consist principally of the elimination of expenses incurred in duplicative efforts to administer separate funds. The Board also noted, however, that shareholders of the Selling Fund will benefit over time from any decrease in overall operating expense ratios resulting from the proposed Reorganization. BOARDS' DETERMINATIONS After considering the factors described above and other relevant information, at a meeting held on Nov. 9-10, 2005, the Selling Fund Board members, including a majority of the independent Board members, found that participation in the Reorganization is in the best interests of the Selling Fund and that the interests of existing shareholders of the Fund will not be diluted as a result of the Reorganization. The Board of Directors of the Buying Fund approved the Agreement at a meeting held on Nov. 9-10, 2005. Among other factors, the Board members considered the terms of the Agreement, the provisions intended to avoid the dilution of shareholder interests and the anticipated tax consequences of the Reorganization. The Board found that participation in the Reorganization is in the best interests of the Buying Fund and that the interests of existing shareholders of the Buying Fund will not be diluted as a result of the Reorganization. RECOMMENDATION AND VOTE REQUIRED The Board recommends that shareholders approve the proposed Agreement. The Agreement must be approved by a majority of the voting power of all shares entitled to vote. If the Agreement is not approved, the Board will consider what further action should be taken. If shareholders approve the Reorganization, it will take place shortly after the shareholder meeting. During the period between the shareholder meeting and the Reorganization, or if the Reorganization is not approved, it will be important for the Fund to have a properly elected Board and an IMS Agreement that has been approved by shareholders. Therefore, the Board is also recommending that shareholders approve the other proposals. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 24 PROPOSAL 2. ELECT BOARD MEMBERS REFERENCE TO THE "FUND" IN THIS PROPOSAL IS A REFERENCE TO NEW DIMENSIONS. 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 following 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. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 25 TABLE A-3. INDEPENDENT NOMINEES
NAME, POSITION HELD WITH ADDRESS, FUND AND LENGTH PRINCIPAL OCCUPATION COMMITTEE AGE OF SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS MEMBERSHIPS ---------------------------------------------------------------------------------------------------------------------------------- Kathleen Blatz Board member since Chief Justice, Minnesota Supreme 901 Marquette Ave. January 2006 Court, 1998-2005 Minneapolis, MN 55402 Age 51 Arne H. Carlson Board member since Chair, Board Services Corporation Contracts, 901 S. Marquette Ave. 1999 (provides administrative services to Executive, Minneapolis, MN 55402 boards); former Governor of Minnesota Investment Review, Age 71 Board Effectiveness Patricia M. Flynn Board member since Trustee Professor of Economics and Investment Review, 901 S. Marquette Ave. 2004 Management, Bentley College; former Joint Audit Minneapolis, MN 55402 Dean, McCallum Graduate School of Age 54 Business, Bentley College Anne P. Jones Board member since Attorney and consultant Joint Audit, Board 901 S. Marquette Ave. 1985 Effectiveness, Minneapolis, MN 55402 Executive, Age 70 Investment Review
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 26 INDEPENDENT NOMINEES (CONTINUED)
NAME, POSITION HELD WITH ADDRESS, FUND AND LENGTH OF PRINCIPAL OCCUPATION COMMITTEE AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS MEMBERSHIPS ---------------------------------------------------------------------------------------------------------------------------------- Jeffrey Laikind Board member since Former Managing Director, Shikiar American 901 S. Marquette Ave. 2005 Asset Management Progressive Minneapolis, MN 55402 Insurance Age 70 Stephen R. Lewis, Jr. Board member since President Emeritus and Professor of Valmont Industries, Contracts, 901 S. Marquette Ave. 2002 Economics, Carleton College Inc. (manufactures Investment Review, Minneapolis, MN 55402 irrigation systems) Executive, Board Age 65 Effectiveness Catherine James Paglia Board member since Director, Enterprise Asset Management, Strategic Contracts, 901 S. Marquette Ave. 2004 Inc. (private real estate and asset Distribution, Inc. Investment Review Minneapolis, MN 55402 management company) (transportation, Age 53 distribution and logistics consultants) Vikki L. Pryor President and Chief Executive Officer, 901 S. Marquette Ave. SBLI USA Mutual Life Insurance Company, Minneapolis, MN 55402 Inc. since 1999 Age 52 Alan K. Simpson Board member since Former three-term United States Senator Investment Review, 1201 Sunshine Ave. 1997 for Wyoming Board Effectiveness Cody, Wyoming 82414 Age 74
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 27 INDEPENDENT NOMINEES (CONTINUED)
NAME, POSITION HELD WITH ADDRESS, FUND AND LENGTH OF PRINCIPAL OCCUPATION COMMITTEE AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS MEMBERSHIPS ---------------------------------------------------------------------------------------------------------------------------------- Alison Taunton-Rigby Board member since Chief Executive Officer, RiboNovix, Inc. Hybridon, Inc. Investment Review, 901 S. Marquette Ave. 2002 since 2003 (biotechnology); former (biotechnology) Contracts Minneapolis, MN 55402 President, Forester Biotech Age 61
TABLE A-4. NOMINEE AFFILIATED WITH RIVERSOURCE INVESTMENTS
NAME, POSITION HELD WITH ADDRESS, FUND AND LENGTH OF PRINCIPAL OCCUPATION COMMITTEE AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS MEMBERSHIPS ---------------------------------------------------------------------------------------------------------------------------------- William F. Truscott* Board member since President - U.S. Asset Management and 53600 Ameriprise 2001, Vice President Chief Investment Officer, Ameriprise Financial Center since 2002 Financial, Inc. and President, Chairman Minneapolis, MN 55474 of the Board and Chief Investment Age 45 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, securityholder and/or employee of RiverSource Investments. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 28 BOARD COMMITTEES. The Board has several committees that facilitate the work of the Board. The Executive Committee has authority to act for the full Board between meetings. The Contracts Committee receives and analyzes reports covering the level and quality of services provided under contracts with the fund and advises the Board regarding actions taken on these contracts during the annual review process. The Investment Review Committee considers investment management policies and strategies; investment performance; risk management techniques; and securities trading practices and reports areas of concern to the Board. The Board Effectiveness Committee's charter, Exhibit E, requires it to make recommendations regarding nominees based on criteria approved by the Board. All members of the Committee are independent. Nominee recommendations are based on a matrix of skill sets, experience, and geographical location and each nominee must have a background that demonstrates the ability to furthering the interest of all shareholders. The Committee will consider recommendations from shareholders who write to the Boards and provide detailed information about a candidate. All candidates are processed in the same fashion; first by evaluating a candidate's detailed information against the criteria; then interviewing those candidates who best fill vacancies identified by the matrix. You may write the Board by addressing a letter to Arne H. Carlson, the independent 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 F. The Joint Audit Committee meets with the independent auditors, internal auditors and corporate officers to review and discuss audited financial statements, reports, issues, and compliance matters. This Committee reports significant issues to the Board and makes recommendations to the independent Board members regarding the selection of the independent public accountant. More information regarding this Committee and the fund's independent auditor is found in Section C. During the 12-month period ended Sept. 30, 2005, the Board met 8 times, Executive 2 times, Contracts 7 times, Investment Review 5 times, Board Effectiveness 6 times and Joint Audit 4 times. All Board members had 100% attendance except for Mr. Simpson who had 82% attendance due to serious illness in January 2005. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 29 SHAREHOLDER COMMUNICATIONS WITH THE BOARD. Shareholders may communicate directly with the Board by sending correspondence to Arne H. Carlson, Chair of the Board, RiverSource Funds, 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268. Correspondence to specific individual Board members also may be directed to the same address. Account-specific correspondence should be directed to RiverSource Funds, 70100 Ameriprise Financial Center, Minneapolis, MN 55474. BOARD MEMBER COMPENSATION. The following table shows the total compensation received by each Board member from all of the RiverSource Funds. The funds do not pay retirement benefits to Board members. Under a Deferred Compensation Plan, independent Board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of one or more designated RiverSource funds. TABLE A-3. BOARD MEMBER COMPENSATION(a)
AGGREGATE COMPENSATION FROM ALL COMPENSATION FROM THE RIVERSOURCE FUNDS FOR THE SELLING FUND DURING NOMINEE YEAR ENDED SEPT. 30, 2005 LAST FISCAL YEAR Flynn $143,675(b) $2,958(c) Jones 185,892 4,579 Lewis 204,700 4,730(d) Paglia 157,708(e) 3,317 Simpson 138,842 4,075 Taunton-Rigby 166,842 4,375
(a) Board members affiliated with RiverSource Investments or Board Services Corporation, a company providing administrative services to RiverSource funds, are not paid by RiverSource 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, which is included in the aggregate compensation shown above, 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. (b) Includes the portion of compensation deferred in the amount of $60,371 from RiverSource funds. (c) Includes the portion of compensation deferred in the amount of $1,225 from the Fund. (d) Includes the portion of compensation deferred in the amount of $1,716 from the Fund. (e) Includes the portion of compensation deferred in the amount of $54,839 from RiverSource funds. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 30 The following table shows the dollar range of shares of all RiverSource funds owned by the Board members and the dollar range of shares owned in the Selling Fund. TABLE A-4. BOARD MEMBER HOLDINGS* Dollar range of equity securities beneficially owned as of Sept. 30, 2005
AGGREGATE DOLLAR RANGE OF EQUITY DOLLAR RANGE OF EQUITY SECURITIES OF ALL RIVERSOURCE FUNDS SECURITIES IN THE NOMINEE OVERSEEN BY BOARD MEMBER SELLING FUND** Carlson over $100,000 None Flynn $10,001 - $50,000 None Jones over $100,000 $50,001 - $100,000 Lewis over $100,000 None Paglia $50,001 - $100,000 None Simpson $50,001 - $100,000 None Taunton-Rigby over $100,000 None Truscott over $100,000 None
* Ms. Blatz, Mr. Laikind and Ms. Pryor were not Board members prior to Sept. 30, 2005 and therefore are not included in the table. ** The percentage of shares beneficially owned by all Board members and officers as a group does not exceed 1% of any class of shares of the fund. FUND OFFICERS. In addition to Mr. Truscott, the fund's other executive officers are: LESLIE L. OGG, age 67. Vice president, general counsel and secretary since 1978. President of Board Services Corporation. JEFFREY P. FOX, age 50. Treasurer since 2002. Vice President - Investment Accounting of Ameriprise Financial. PAULA R. MEYER, age 51. President since 2002. Senior Vice President - 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, RiverSource Investments or Board Services Corporation. During the last fiscal year, no officer earned more than $60,000 from any fund. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 31 PROPOSAL 3. APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES OF INCORPORATION REFERENCE TO THE "FUND" IN THIS PROPOSAL IS A REFERENCE TO NEW DIMENSIONS. The fund is a Minnesota corporation and operates under an organizational document called the articles of incorporation. The articles of incorporation set forth various provisions relating to the authority of the fund to conduct business and the governance of the fund. The Board has approved, and recommends that shareholders approve, a proposal to amend the fund's articles of incorporation (the "Articles"). The fund's investments and investment policies will not change by virtue of the adoption of the amendment to the Articles. A. MINIMUM ACCOUNT VALUE. Generally, shareholders must invest at least $2,000 to open a fund account. Section 7 of the Articles currently provides that the fund may redeem shares if an account falls below a value of $1,000. Small accounts can be costly to maintain and this provision allows the Board to close accounts that no longer meet the fund's minimum standards. However, the current provision does not allow the Board to redeem accounts if the value is higher than $1,000. In the future, there may be circumstances in which a minimum account value higher than $1,000 is in the best interest of the fund and its shareholders. As a consequence, the Board recommends that the Articles be amended to eliminate the reference to a specific dollar amount. As proposed, the amended Articles will permit the Board to establish a minimum account value that will be disclosed in the fund prospectus. The Board will be able to change the minimum account value without further action by shareholders. If the change is approved, the Articles will be amended as follows (additions are [underline] underlined[/underline], [strikethrough] deletions are lined through [/strikethrough]): Article III, Section 7 will be amended to read: Section 7. The Fund may redeem the shares of a shareholder if the amount invested is less than [strikethrough] $1,000 [/strikethrough] [underline] an amount determined by the Board of Directors and set forth in the current Fund prospectus. [/underline] RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 32 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. in anticipation of its spin off from American Express Company, its parent company. On Oct. 1, 2005, Ameriprise Financial transferred responsibility for the fund's investment advisory services to its wholly-owned subsidiary, RiverSource Investments. The Board made a corresponding change to the name of the fund by substituting the name RiverSource for AXP. The fund is part of a corporation made up of one fund. The name of the corporate entity can be changed only with approval of the shareholders of all the underlying funds that make up the corporation. The Board recommends that the name of the corporate entity also be changed to include the name RiverSource instead of AXP. The change to the name of the corporation is shown in the table below. This is the first shareholder meeting since the spin off of the investment manager and the first opportunity for shareholders to consider a name change for the corporation. TABLE A-5. PROPOSED NAME OF CORPORATION
CURRENT NAME OF CORPORATION PROPOSED NAME OF CORPORATION AXP Dimensions Series, Inc. RiverSource Dimensions Series, Inc
BOARD RECOMMENDATION AND VOTE REQUIRED. The Board recommends that you vote to approve the amendments to the Articles. The changes require the approval by a majority of the shares voted at the meeting. The changes will be effective when the amendments are filed with the Secretary of State's office. This filing is expected to occur shortly after the shareholder meeting. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 33 PROPOSAL 4. APPROVE OR REJECT AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH RIVERSOURCE INVESTMENTS, LLC REFERENCE TO THE "FUND" IN THIS PROPOSAL IS A REFERENCE TO NEW DIMENSIONS. The fund pays fees to RiverSource Investments under an Investment Management Services Agreement (the "IMS Agreement") for investment management services. The services include providing the personnel, equipment and office facilities necessary for the management of the fund's assets. Subject to the oversight of the Board and consistent with the fund's investment policies, the investment manager decides what securities to buy, hold or sell. The investment manager also executes buy and sell orders and provides research and statistical data to support investment management activities. INVESTMENT MANAGER. On Sept. 30, 2005, Ameriprise Financial became a publicly traded company and on Oct. 1, 2005 transferred the 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 vote on the arrangement and the changes discussed below. SUMMARY OF KEY CHANGES A. PERFORMANCE INCENTIVE ADJUSTMENT ("PIA"). The management fee 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. STANDARD OF CARE. For all funds, the investment manager will be held to a higher standard of care than under the current IMS Agreement. C. 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, except under limited circumstances. D. 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. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 34 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 similar funds managed by RiverSource Investments is found in Section C. The fund also pays its taxes, brokerage commission and nonadvisory expenses, which include custodian fees; audit and certain legal fees; fidelity bond premiums; registration fees for shares; consultant fees; Board compensation; corporate filing fees; organizational expenses; expenses incurred in connection with lending portfolio securities; and other expenses properly payable by the fund, approved by the Board. Section C includes information on the date of the current IMS Agreement, the date it was last approved by shareholders and the reason why it was submitted to shareholders at that time. A. PIA CALCULATION. The management fee includes a PIA as part of the fee. The adjustment is based on the performance of the fund compared to the performance of a Lipper Index. The proposed modification does not change the IMS Agreement, but clarifies the circumstances where the Board may change the index for purposes of this calculation. The provision in the current IMS Agreement will be modified to read as follows (additions are underlined, deletions are lined through): If an Index ceases to be published for a period of more than 90 days, changes in any material respect, otherwise becomes impracticable or, in the discretion of the Board, is no longer appropriate to use for purposes of a performance incentive adjustment, for example, if Lipper reclassifies the Fund from one peer group to another, the Board may take action it deems appropriate and in the best interests of shareholders, including: (1) discontinuance of the performance incentive adjustment until such time as it approves a substitute index, or (2) adoption of a methodology to transition to a substitute index it has approved. The PIA is determined by measuring the difference in the 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. 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, RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 35 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. C. 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, unless required by law or necessary to provide services to the fund. D. 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. 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 the 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 the fund were satisfactory and that fees were fair and RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 36 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 the 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 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 the IMS Agreement would terminate as a result of the spin-off. Accordingly, the Board determined to renew the IMS Agreement for the interim period only and to consider a new IMS Agreement for the 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 the fund with post-spin Ameriprise Financial (or its subsidiary). 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 Agreement. As a key step in this process, independent counsel sent, on behalf of the independent members of the Board, a detailed and expansive request for information to American Express Company and Ameriprise Financial, seeking specified information thought to be relevant to the Board's consideration of the proposed contracts with post-spin Ameriprise Financial. The Board and its committees were provided with a wealth of written and oral information intended to assist them in considering the proposed contracts, including the proposed IMS Agreement. 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. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 37 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 each of the new contracts, including the proposed IMS Agreement. On Oct. 1, 2005, pursuant to an agreement between the Fund and Ameriprise Financial, the IMS Agreement was transferred to RiverSource Investments, 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 the 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 Agreement, the Board evaluated the following four factors: (i) the nature, extent and quality of services to be provided by RiverSource Investments; (ii) the investment performance of the fund; (iii) the costs of the services to be provided and the profits to be realized by Ameriprise Financial; and (iv) the extent to which economies of scale would be realized as the fund grows and whether the fee level reflects these economies of scale for the benefit of fund investors. NATURE, EXTENT AND QUALITY OF SERVICES TO BE PROVIDED BY POST-SPIN AMERIPRISE FINANCIAL (AND ITS SUBSIDIARIES). The Board recognized that only a few months had passed since its April 2005 determination to renew the IMS Agreement for the 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 RiverSource 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) RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 38 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 (including RiverSource Investments) 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 Investments) would be in a position to continue to provide a high quality of investment management services to the funds. INVESTMENT PERFORMANCE. The Board next focused on investment performance. The Board reviewed reports documenting the fund's performance over one-, three- and five-year periods, as well as the entire period during which its current portfolio manager has managed the fund, and compared the performance to relevant Lipper and market indices. The Board took into account its considerations in April 2005, in particular, that investment performance in 2004 was below median, but that Ameriprise Financial has taken steps to address the underperformance. The Board also considered that it has received monthly performance reports for the funds. The Board and its committees concluded in September 2005 that there have been no significant deviations from April's overall performance data. COST OF SERVICES PROVIDED. The Board evaluated comparative fees and the costs of services to be provided under the current and proposed IMS Agreements, including fees charged by Ameriprise Financial (including RiverSource Investments 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 considered that the fund's management fees would not change under the proposed IMS Agreement. 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 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 39 appropriate index for the fund for the comparison of performance; (ii) the methodology for determining when the Board may change an index used to calculate the performance incentive adjustment; (iii) the periods used for averaging the fund's assets and computing investment performance; and (iv) the length of the period over which performance is computed. The Board next considered the expected profitability to RiverSource Investments and its affiliates derived from their relationships with the fund, recalling the April 2005 determination that the profitability level was appropriate. The Board noted that projected profitability of RiverSource Investments would allow it to operate effectively and, at the same time, reinvest in its businesses. The Board also considered that the proposed changes in advisory fees for certain RiverSource funds, as well as the mergers of certain RiverSource 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 fund and from other business relationships that result from managing the fund. 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 the net asset levels of the fund grew and the extent to which shareholders would benefit from such growth. The Board observed that the fee schedule 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 grow. 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 Agreement. 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 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 40 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 fund with an expectation that the current investment advisory organization would be servicing the fund. As a result of all of the foregoing, the Board determined that the fees to be paid under the 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 the fund approve the proposed IMS Agreement. The proposed IMS Agreement must be approved by the lesser of (a) a majority of the fund's outstanding shares or (b) 67% of the shares voted at the meeting, so long as more than 50% of the shares actually vote. If shareholders approve the proposed IMS Agreement, it will take effect shortly after the shareholder meeting. If the proposed IMS Agreement is not approved, the Board will consider appropriate steps to take. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 41 SECTION B -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO NEW DIMENSIONS. VOTING. You are entitled to vote based on your total dollar interest in the Fund. Each dollar is entitled to one vote. For those of you who cannot come to the meeting, the Board is asking permission to vote for you. The shares will be voted as you instruct either by mail, telephone or internet. Signed proxy cards returned without instructions will be voted in favor of all proposals. In voting for Board members, you may vote all of your shares cumulatively. This means that you have the right to give each nominee an equal number of votes or divide the votes among the nominees as you wish. You have as many votes as the number of dollars you own on the record date, multiplied by the number of Board members to be elected. If you elect to withhold authority for any individual nominee or nominees, you may do so by marking the box labeled "For All Except," and by striking the name of any excepted nominee, as is further explained on the card itself. If you do withhold authority, the proxies will not vote shares equivalent to the proportionate number applicable to the names for which authority is withheld. All votes count toward a quorum, regardless of how they are voted (For, Against or Abstain). Broker non-votes will be counted toward a quorum but not toward the approval of any proposals. (Broker non-votes are shares for which the underlying owner has not voted and the broker holding the shares does not have authority to vote.) If your shares are held in an IRA account with Ameriprise Trust Company as custodian, you have the right to instruct the IRA Custodian how to vote those shares. The IRA Custodian will vote any shares for which it has not received voting instructions in proportionately the same manner -- either For, Against, or Abstain -- as other fund shareholders have voted. MASTER/FEEDER FUNDS. New Dimensions currently is part of a master/feeder structure. The feeder fund seeks its investment objective by investing its assets in a master fund with the same policies. The master fund invests in and manages the securities. Immediately prior to the Reorganization, the Board intends to withdraw the Fund's assets from the master fund. REVOKING YOUR PROXY. If you change your mind after you vote and you can attend the meeting, simply inform the Secretary at the meeting that you will be voting your shares in person. Also, if you change your mind after you vote, but cannot attend the meeting, you may change your vote or revoke it by mail, telephone or internet. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 42 SIMULTANEOUS MEETINGS. The meeting will be held simultaneously with meetings of other RiverSource mutual funds. Each proposal will be voted on separately by shareholders of a corporation or by shareholders of a fund or by a class of shares of the fund where appropriate. If any shareholder objects to the holding of simultaneous meetings, the shareholder may move for an adjournment of his or her fund's meeting to a time immediately after the simultaneous meetings so that a meeting of that fund may be held separately. If a shareholder makes this motion, the persons named as proxies will take into consideration the reasons for the objection in deciding whether to vote in favor of the adjournment. SOLICITATION OF PROXIES. The Board is asking for your vote and for you to vote as promptly as possible. The investment manager will pay the expenses of the solicitation. Supplementary solicitations may be made by mail, telephone, electronic means or personal contact. SHAREHOLDER PROPOSALS. No proposals were received from shareholders. RiverSource funds are not required to hold regular meetings of shareholders each year. However, meetings of shareholders are held from time to time and proposals of shareholders that are intended to be presented at future shareholder meetings must be submitted in writing to RiverSource funds in reasonable time prior to the solicitation of proxies for the meeting. DISSENTERS' RIGHT OF APPRAISAL. Under Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act, Selling Fund shareholders are entitled to assert dissenters' rights in connection with the Reorganization and obtain payment of the "fair value" of their shares, provided that they comply with the requirements of Minnesota law. A copy of the relevant provisions is attached as Exhibit C. Notwithstanding the provisions of Minnesota law, the SEC has taken the position that use of state appraisal procedures by a mutual fund would be a violation of Rule 22c-1, the forward pricing rule, under the 1940 Act. This rule states that no mutual fund may redeem its shares other than at net asset value next computed after receipt of a request for redemption. It is the SEC's position that Rule 22c-1 supersedes appraisal provisions in state statutes. In the interest of ensuring equal valuation for all shareholders, dissenters' rights will be determined in accordance with the SEC's interpretation. As a result, if any shareholder elects to exercise dissenters' rights under Minnesota law, the Selling Fund intends to submit this question to a court of competent jurisdiction. In that event, a dissenting shareholder would not receive any payment until the end of the court proceeding. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 43 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 voting power of the shares present at the meeting. The persons named as proxies will vote in favor of adjournment those shares they are entitled to vote that have voted in favor of the proposal. They will vote against any adjournment those shares that have voted against the proposal. The investment manager will pay the costs of any additional solicitation and of any adjourned meeting. A shareholder vote may be taken on one or more of the items in this proxy statement prior to adjournment if sufficient votes have been received. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 44 SECTION C -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO NEW DIMENSIONS. This section contains the following information about the funds, their investment manager and the independent auditors:
TABLE CONTENT (all information is shown for the last fiscal year unless noted otherwise) C-1 Actual and pro forma capitalization of the Selling Fund and the Buying Fund C-2 Actual and pro forma ownership of fund shares C-3 Current management fee schedule for the Fund and other RiverSource funds with similar investment objectives C-4 Fund payments made to the investment manager and its affiliates C-5 Brokerage commissions paid to a broker-dealer affiliate C-6 Shareholder approval of current management agreement C-7A Audit fees during the Fund's last two fiscal years C-7B Audit-related, tax and other fees during the Fund's last two fiscal years
THE FUND'S INVESTMENT MANAGER AND DISTRIBUTOR. RiverSource Investments is the investment manager for each fund. Ameriprise Financial Services, Inc., a wholly owned subsidiary of Ameriprise Financial, is the distributor for the fund. The address for RiverSource Investments and Ameriprise Financial Services, Inc. is 200 Ameriprise Financial Center, Minneapolis, MN 55474. PRESIDENT AND BOARD OF DIRECTORS OF RIVERSOURCE INVESTMENTS. William F. Truscott is President of RiverSource Investments. The following individuals are directors of RiverSource Investments. Except as otherwise noted, each director is an officer of RiverSource Investments, 200 Ameriprise Financial Center, Minneapolis, MN 55474. Directors: William F. Truscott, Ward D. Armstrong and Michelle M. Keeley. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 45 CAPITALIZATION The following table shows the capitalization of the Funds as of Sept. 30, 2005 and on a pro forma basis, assuming the proposed Reorganization had taken place. TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE SELLING FUND AND THE BUYING FUND
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING NEW DIMENSIONS Class A $6,543,192,746 $24.23 269,996,693 Class B 1,639,556,390 22.84 71,781,236 Class C 41,776,416 22.81 1,831,277 Class I 76,291,847 24.40 3,126,628 Class Y 2,351,528,369 24.38 96,470,277 LARGE CAP EQUITY Class A $1,044,944,281 $5.24 199,514,923 Class B 372,956,613 5.12 72,818,404 Class C 8,898,385 5.13 1,734,333 Class I 46,831,631 5.29 8,852,605 Class Y 253,870 5.27 48,212 LARGE CAP EQUITY - PRO FORMA WITH NEW DIMENSIONS Class A $7,588,137,027 $5.24 1,448,215,829 Class B 2,012,513,003 5.12 393,044,261 Class C 50,674,801 5.13 9,877,884 Class I 123,123,478 5.29 23,274,504 Class Y 2,351,782,239 5.27 446,258,529
OWNERSHIP OF FUND SHARES The following table provides information on shareholders who owned more than 5% of each Fund's outstanding shares as of Sept. 30, 2005. As of Sept. 30, 2005, officers and directors of the Fund as a group owned less than 1% of the outstanding shares of the Fund. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 46 TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES
PERCENT OF PERCENT SHARES HELD OF SHARES FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION NEW DIMENSIONS Class A (1) 5% 4% Class B None -- -- Class C None -- -- Class I (2) 98% 61% Class Y (3) 85% 85% LARGE CAP EQUITY Class A (4) 5% * Class B None -- -- Class C None -- -- Class I (5) 98% 37% Class Y (6) 95% *
(1) Charles Schwab & Co. Inc., a brokerage firm, owns of record 5.16%. (2) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.05%. RiverSource Portfolio Builder Moderate Fund owns 20.54%. RiverSource Portfolio Builder Aggressive Fund owns 19.59%. RiverSource Portfolio Builder Total Equity Fund owns 19.20%. RiverSource Portfolio Builder Moderate Conservative Fund owns 5.89%. (3) Ameriprise Trust Company, Minneapolis, MN owns of record 85.28%. (4) Charles Schwab & Co. Inc., a brokerage firm, owns of record 5.47%. (5) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.40%. RiverSource Portfolio Builder Moderate Fund owns 20.69%. RiverSource Portfolio Builder Aggressive Fund owns 19.45%. RiverSource Portfolio Builder Total Equity Fund owns 19.16%. RiverSource Portfolio Builder Moderate Conservative Fund owns 5.65%. (6) Charles Schwab & Co. Inc., a brokerage firm, owns of record 80.07%. Wells Fargo Bank as Trustee of the Holland American Line, Minneapolis, MN owns 15.18%. * Less than 1%. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 47 The following table shows the management fee schedule for the fund and other domestic equity funds managed by the investment manager. TABLE C-3. CURRENT MANAGEMENT FEE SCHEDULE FOR THE FUND AND OTHER RIVERSOURCE FUNDS WITH SIMILAR INVESTMENT OBJECTIVES
MANAGEMENT FEE FEE CAP OR WAIVERS(1) RETAIL FUNDS (ANNUAL RATE; IN BILLIONS) (IF APPLICABLE) Aggressive Growth(2),(4) First $.5 - .89%; next $.5 - .865%; next $1 - .84%; 1.53% until 5/31/06 next $1 - .815%; next $3 - .79%; over $6 - .765% Disciplined Equity(2) First $1 - .60%; next $1 - .575%; next $1 - .55%; Disciplined Equity: Growth(2),(3) next $3 - .525%; next $6 - .50%; next $12 - .49%; 1.25% until 7/31/06 Large Cap Equity(2) over $24 - .48% Large Cap Value: Large Cap Value(2) 1.35% until 7/31/06 Mid Cap Growth(2) New Dimensions(2),(3) New Dimensions(2) First $.25 - .64%; next $.25 - .615%; 1.49% until 7/31/06 next $.25 - .59%; next $.25 - .565%; next $1 - .54%; over $2 - .515% Diversified Equity First $.5 - .53%; next $.5 - .505%; Income(2),(3) next $1 - .48%; next $1 - .455%; Equity Value(2) next $3 - .43%; over $6 - .40% Stock(2),(3) Strategic Allocation(2),(3) Dividend Opportunity(2) First $.5 - .61%; next $.5 - .585%; next $1 - .56%; next $1 - .535%; next $3 - .51%; over $6 - .48% Fundamental Growth(2),(6) First $.5 - .78%; next $.5 - .78%; next $1 - .755%; 1.50% until 5/31/06 next $1 - .73%; next $3 - .705%; over $6 - .68% Fundamental Value(2),(7) First $.5 - .73%; next $.5 - .705%; next $1 - .68%; Value(2),(8) next $1 - .655%; next $3 - .63%; over $6 - .60% Mid Cap Value(2) First $1 - .70%; next $1 - .675%; next $1 - .65%; next $3 - .625%; next $6 - .60%; next $12 - .59%; over $24 - .58% Select Value(2),(9) First $.5 - .78%; next $.5 - .755%; next $1 - .73%; next $1 - .705%; next $3 - .68%; over $6 - .65% Small Cap Advantage(2),(10) First $.25 - .74%; next $.25 - .715%; next $.25 - .69%; next $.25 - .665%; next $1 - .64%; over $2 - .615% Large Cap Equity(2),(5) First $.25 - .97%; next $.25 - .945%; next $.25 - 1.55% until 5/31/06 Small Cap Value(2),(11) .92%; next $.25 - .895%; over $1 - .87% 1.59% until 5/31/06 Small Cap Growth(2),(12) First $.25 - .92%; next $.25 - .895%; 1.70% until 3/31/07 next $.25 - .87%; next $.25 - .845%; next $1 - .82%; over $2 - .795% Strategy Aggressive(2),(4) First $1 - .60%; next $1 - .575%; next $1 - .55%; next $3 - .525%; over $6 - .50%
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 48 (1) The information is shown for Class A shares. Fees and expenses in excess of the percentage shown will be waived. Fee caps for other classes of shares will vary slightly based on the expenses of those classes. (2) The fund has a PIA based on its performance compared to a Lipper index of comparable funds over a rolling 12-month period. (3) The fund is part of a master/feeder structure. Management fees are paid by the portfolio on behalf of the fund. (4) The fund has a subadvisory agreement with American Century Investment Management, Inc. and Turner Investment Partners, Inc. (5) The fund has subadvisory agreements with American Century Investment Management, Inc., Lord, Abbett & Co. and Wellington Management Company, LLP. (6) The fund has subadvisory agreements with Wellington Management Company, LLP and Goldman Sachs Asset Management L.P. (7) The fund has a subadvisory agreement with Davis Advisors. (8) The fund has a subadvisory agreement with Lord, Abbett & Co. (9) The fund has a subadvisory agreement with Gabelli Asset Management Company. (10) The fund has a subadvisory agreement with Kenwood Capital Management LLC. (11) The fund has subadvisory agreements with Royce & Associates, Inc.; Goldman Sachs Asset Management L.P.; Barrow, Hanley, Mewhinney & Strauss, Inc.; Donald Smith & Co., Inc.; and Franklin Portfolio Associates. (12) The fund has subadvisory agreements with Essex Management Company, LCC, Turner Investment Partners, Inc.; MDT Advisers and UBS Global Asset Management (Americas) Inc. TABLE C-4. FUND PAYMENTS TO THE INVESTMENT MANAGER AND ITS AFFILIATES*
FUND ADMIN DIST IMS SERVICE TA CUSTODY New Dimensions $4,756,123 $45,964,652 $60,896,353 $2,800,648 $24,739,313 $1,042,579
* The Administrative Services Agreement ("Admin") is between the fund and Ameriprise Financial. The Agreement of Distribution ("Dist") and Shareholder Service Agreement ("Service") are between the fund and Ameriprise Financial Services, Inc. The Investment Management Services Agreement ("IMS") is between the fund and RiverSource Investments. The Transfer Agent 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. TABLE C-5. BROKERAGE COMMISSIONS PAID TO BROKER-DEALER AFFILIATES
BROKER/ AMOUNT OF % OF ALL FUND DEALER COMMISSIONS COMMISSIONS New Dimensions AEIS(1) $108,435 0.37%
(1) Wholly-owned subsidiary of Ameriprise Financial. The amount shown represents brokerage clearing fees. TABLE C-6. DATES RELATING TO APPROVAL OF MANAGEMENT AGREEMENT
DATE LAST REASON DATE OF APPROVED BY SUBMITTED TO FUND CONTRACT SHAREHOLDERS SHAREHOLDERS New Dimensions 12/1/02 11/13/2002 1
(1) Shareholders approved modifications to the performance incentive adjustment. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 49 THE FUND'S INDEPENDENT REGISTERED PUBLIC ACCOUNTANT. The 1940 Act provides that every registered investment company must be audited at least once each year by independent registered public accountants selected by a majority of the independent Board members. The Selling Fund's Board has selected KPMG LLP to be the Fund's independent registered public accountant for the current fiscal year. KPMG LLP, in accordance with Independence Standards Board Standard No. 1 ("ISB No. 1"), has confirmed in writing to the Board's Joint Audit Committee that they are independent accountants with respect to the Fund. The independent accountants examine the financial statements for the Fund that are set forth in the annual report to shareholders and provide other requested non-audit and tax-related services to the Fund. The Joint Audit Committee reviewed and discussed the audited financial statements with RiverSource Investments and reviewed with KPMG LLP the matters required to be discussed by SAS 61 (for example, methods used to account for significant unusual transactions). The Joint Audit Committee does not consider other non-audit services provided by KPMG LLP to be incompatible with maintaining the independence of KPMG LLP in its audits of the Fund, taking into account representations from KPMG LLP, in accordance with ISB No. 1, regarding its independence from the Fund and its related entities. Representatives of KPMG LLP are expected to be present at the meeting. They will be given the opportunity to make a statement to shareholders and are expected to be available to respond to any questions that may be raised at the meeting. JOINT AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. Pursuant to the pre-approval requirements of the Sarbanes-Oxley Act of 2002, all services to be performed by KPMG LLP for the Fund; the Fund's investment adviser; and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Fund, must be pre-approved by the Joint Audit Committee. AUDIT FEES. During the last two fiscal years, the aggregate fees paid to KPMG LLP for professional services rendered for the audit of the annual financial statements or services that are normally provided in connection with statutory and regulatory filings for the fund were as follows: TABLE C-7A. AUDIT FEES DURING THE FUND'S LAST TWO FISCAL YEARS
FUND LAST FISCAL YEAR PREVIOUS FISCAL YEAR New Dimensions $50,000 $48,000
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 50 The following table shows aggregate fees paid by the Fund to KPMG LLP in each of the last two fiscal years for services that are not included in Table C-7A. All of the services performed were pre-approved by the Joint Audit Committee. - AUDIT-RELATED FEES. Assurance and related services that are reasonably related to the performance of the audit or review - TAX FEES. Tax compliance, tax consulting services related to Class I shares and tax work related to fund mergers and liquidations. - ALL OTHER FEES. All other services rendered by KPMG LLP. TABLE C-7B. AUDIT-RELATED, TAX AND OTHER FEES DURING THE FUND'S LAST TWO FISCAL YEARS
AGGREGATE AUDIT- AGGREGATE AGGREGATE RELATED FEES TAX FEES OTHER FEES ------------------------------------------------------------------------------ LAST PREVIOUS LAST PREVIOUS LAST PREVIOUS FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FUND YEAR YEAR YEAR YEAR YEAR YEAR New Dimensions $2,781 $3,484 $7,100 $6,650 $3,803 $0
AGGREGATE NON-AUDIT FEES TO NEW DIMENSIONS, RIVERSOURCE INVESTMENTS AND ITS AFFILIATES For the year ended Sept. 30, 2005, the aggregate non-audit fees billed for services rendered to the Fund, to the investment manager and to any entity controlling, controlled by or under common control with the investment manager that provides ongoing services to the fund was $100,684. For the year ended Sept. 30, 2004, the aggregate amount was $137,034. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT 51 THIS PAGE LEFT BLANK INTENTIONALLY EXHIBIT A FORM OF AGREEMENT AND PLAN OF REORGANIZATION This Agreement and Plan of Reorganization dated as of Nov. 10, 2005 (the "Agreement") is between AXP Dimensions Series, Inc. (the "Selling Corporation"), a Minnesota corporation, on behalf of its series, RiverSource New Dimensions Fund (the "Selling Fund"), and AXP Growth Series, Inc. (the "Buying Corporation"), a Minnesota corporation, on behalf of its series, RiverSource Large Cap Equity Fund (the "Buying Fund"), and RiverSource Investments, LLC (solely for the purposes of Section 3c and 10 of the Agreement). In consideration of their mutual promises, the parties agree as follows: 1. SHAREHOLDER APPROVAL. The Selling Fund will call a meeting of its shareholders for the purpose of approving the Agreement and the transactions it contemplates (the "Reorganization"). The Buying Fund agrees to furnish data and information, as reasonably requested, for the proxy statement to be furnished to shareholders of the Selling Fund. 2. REORGANIZATION. a. Plan of Reorganization. The Reorganization will be a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"). At the Closing, the Selling Corporation will convey all of the assets of the Selling Fund to the Buying Fund. The Buying Fund will assume all liabilities of the Selling Fund. At the Closing, the Buying Corporation will deliver shares of the Buying Fund, including fractional shares, to the Selling Corporation. The number of shares will be determined by dividing the value of the net assets of shares of the Selling Fund, computed as described in paragraph 3(a), by the net asset value of one share of the Buying Fund, computed as described in paragraph 3(b). The Selling Fund will not pay a sales charge on the receipt of Buying Fund shares in exchange for the assets of the Selling Fund. In addition, the shareholders of the Selling Fund will not pay a sales charge on distribution to them of shares of the Buying Fund. b. Closing and Effective Time of the Reorganization. The Reorganization and all related acts necessary to complete the Reorganization (the "Closing") will occur on the first day on which the New York Stock Exchange (the "NYSE") is open for business following approval of shareholders of the Selling Fund and receipt of all necessary regulatory approvals, or such later date as the parties may agree. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.1 3. VALUATION OF NET ASSETS. a. The net asset value of shares of the Selling Fund will be computed as of the close of regular trading on the NYSE on the day of Closing (the "Valuation Date") using the valuation procedures in the Buying Fund's prospectus. b. The net asset value per share of shares of the Buying Fund will be determined as of the close of regular trading on the NYSE on the Valuation Date, using the valuation procedures in the Buying Fund's prospectus. c. At the Closing, the Selling Fund will provide the Buying Fund with a copy of the computation showing the valuation of the net asset value per share of shares of the Selling Fund on the Valuation Date. The Buying Fund will provide the Selling Fund with a copy of the computation showing the determination of the net asset value per share of shares of the Buying Fund on the Valuation Date. Both computations will be certified by an officer of RiverSource Investments, LLC, the investment manager. 4. LIQUIDATION AND DISSOLUTION OF THE SELLING FUND. a. As soon as practicable after the Valuation Date, the Selling Corporation will liquidate the Selling Fund and distribute shares of the Buying Fund to the Selling Fund's shareholders of record. The Buying Fund will establish shareholder accounts in the names of each Selling Fund shareholder, representing the respective pro rata number of full and fractional shares of the Buying Fund due to each shareholder. All issued and outstanding shares of the Selling Fund will simultaneously be cancelled on the books of the Selling Corporation. The Buying Fund or its transfer agent will establish shareholder accounts in accordance with instructions from the Selling Corporation. b. Immediately after the Valuation Date, the share transfer books of the Selling Corporation relating to the Selling Fund will be closed and no further transfer of shares will be made. c. Promptly after the distribution, the Buying Fund or its transfer agent will notify each shareholder of the Selling Fund of the number of shares distributed to the shareholder and confirm the registration in the shareholder's name. d. As promptly as practicable after the liquidation of the Selling Fund, and in no event later than twelve months from the date of the Closing, the Selling Fund will be dissolved. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.2 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYING CORPORATION. The Buying Corporation represents and warrants to the Selling Fund as follows: a. Organization, Existence, etc. The Buying Corporation is a corporation duly organized, validly existing and in good standing under the laws of the state of Minnesota and has the power to carry on its business as it is now being conducted. b. Registration as Investment Company. The Buying Fund is a series of the Buying Corporation, registered under the Investment Company Act of 1940 (the "1940 Act") as an open-end, management investment company. c. Capitalization. The Buying Corporation has authorized capital of 10,000,000,000 shares of common stock, par value $0.01 per share. All of the outstanding shares have been duly authorized and are validly issued, fully paid and non-assessable. Since the Buying Fund is engaged in the continuous offering and redemption of its shares, the number of outstanding shares may vary daily. d. Financial Statements. The audited financial statements as of the end of the last fiscal year, and the subsequent unaudited semi-annual financial statements, if any (the "Buying Fund Financial Statements"), fairly present the financial position of the Buying Fund, and the results of its operations and changes in its net assets for the periods shown. e. Shares to be Issued Upon Reorganization. The shares to be issued in connection with the Reorganization will be duly authorized and, at the time of the Closing, will be validly issued, fully paid and non-assessable. f. Authority Relative to the Agreement. The Buying Corporation has the power to enter into and carry out the obligations described in this Agreement. The Agreement and the transactions contemplated by it have been duly authorized by the Board of Directors of the Buying Corporation and no other proceedings by the Buying Corporation or the Buying Fund are necessary. g. No Violation. The Buying Corporation is not in violation of its Articles of Incorporation or By-Laws (the "Articles") or in default in the performance of any material agreement to which it is a party. The execution of this Agreement and the completion of the transactions contemplated by it will not conflict with, or constitute a breach of, any material contract or other instrument to which the Buying Fund is subject. The transactions will not result in any violation of the provisions of the Articles or any law, administrative regulation or administrative or court decree applicable to the Buying Fund. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.3 h. Liabilities. There are no liabilities of the Buying Fund other than: - liabilities disclosed in the Buying Fund Financial Statements, - liabilities incurred in the ordinary course of business subsequent to the date of the latest annual or semi-annual financial statements, or - liabilities previously disclosed to the Selling Fund, none of which has been materially adverse to the business, assets or results of operation of the Buying Fund. i. Litigation. There is no litigation, administrative proceeding or investigation before any court or governmental body currently pending or, to the knowledge of the Buying Fund, threatened, that would materially and adversely affect the Buying Fund, its financial condition or the conduct of its business, or that would prevent or hinder completion of the transactions contemplated by this Agreement. The Buying Fund knows of no facts that might form the basis for the institution of any such litigation, proceeding or investigation and the Buying Fund is not a party to or subject to the provisions of any order, decree or judgment. j. Contracts. Except for contracts and agreements previously disclosed to the Selling Corporation, the Buying Fund is not a party to or subject to any material contract, debt instrument, plan, lease, franchise, license or permit. k. Taxes. The Buying Fund has qualified as a regulated investment company under the Internal Revenue Code with respect to each taxable year since commencement of its operations and will qualify as a regulated investment company at all times through the Closing. As of the Closing, the Buying Fund will (i) have filed all federal and other tax returns and reports that have been required to be filed, (ii) have paid or provided for payment of all federal and other taxes shown to be due on such returns or on any assessments received, (iii) have adequately provided for all tax liabilities on its books, (iv) except as disclosed to the Selling Fund, not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and (v) except as disclosed to the Selling Fund, not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid. l. Registration Statement. The Buying Fund will file a registration statement on Form N-14 (the "Registration Statement") with the Securities and Exchange Commission under the Securities Act of 1933 (the "1933 Act") relating to the shares to be issued in the Reorganization. At the time the Registration Statement becomes effective, at the time of the shareholders' meeting and at the Closing, the Registration Statement will not contain an untrue statement of a material fact or omit to state a RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.4 material fact necessary to make the statements therein not misleading. However, none of the representations and warranties in this subsection apply to statements in, or omissions from, the Registration Statement made in reliance on information furnished by the Selling Fund for use in the Registration Statement. 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING CORPORATION. The Selling Corporation represents and warrants to the Buying Fund as follows: a. Organization, Existence, etc. The Selling Corporation is a corporation duly organized, validly existing and in good standing under the laws of the state of Minnesota and has the power to carry on its business as it is now being conducted. b. Registration as Investment Company. The Selling Fund is a series of the Selling Corporation, registered under the 1940 Act as an open-end, management investment company. c. Capitalization. The Selling Corporation has authorized capital of 10,000,000,000 shares of common stock, par value $0.01 per share. All of the outstanding shares have been duly authorized and are validly issued, fully paid and non-assessable. Since the Selling Fund is engaged in the continuous offering and redemption of its shares, the number of outstanding shares may vary daily. d. Financial Statements. The audited financial statements as of the end of the last fiscal year, and the subsequent unaudited semi-annual financial statements, if any (the "Selling Fund Financial Statements"), fairly present the financial position of the Selling Fund, and the results of its operations and changes in its net assets for the periods shown. e. Authority Relative to the Agreement. The Selling Corporation has the power to enter into and to carry out its obligations under this Agreement. The Agreement and the transactions contemplated by it have been duly authorized by the Board of Directors of the Selling Corporation and no other proceedings by the Selling Corporation or the Selling Fund are necessary. f. No Violation. The Selling Corporation is not in violation of its Articles or in default in the performance of any material agreement to which it is a party. The execution of this Agreement and the completion of the transactions contemplated by it will not conflict with or constitute a breach of, any material contract to which the Selling Fund is subject. The transactions will not result in any violation of the provisions of the Articles or any law, administrative regulation or administrative or court decree applicable to the Selling Fund. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.5 g. Liabilities. There are no liabilities of the Selling Fund other than: - liabilities disclosed in the Selling Fund Financial Statements, - liabilities incurred in the ordinary course of business subsequent to the date of the latest annual or semi-annual financial statements, or - liabilities previously disclosed to the Buying Fund, none of which has been materially adverse to the business, assets or results of operation of the Selling Fund. h. Litigation. There is no litigation, administrative proceeding or investigation before any court or governmental body currently pending or, to the knowledge of the Selling Fund, threatened, that would materially and adversely affect the Selling Fund, its financial condition or the conduct of its business, or that would prevent or hinder completion of the transactions contemplated by this Agreement. The Selling Fund knows of no facts that might form the basis for the institution of any such litigation, proceeding or investigation and is not a party to or subject to the provisions of any order, decree or judgment. i. Contracts. Except for contracts and agreements previously disclosed to the Buying Corporation, the Selling Fund is not a party to or subject to any material contract, debt instrument, plan, lease, franchise, license or permit. j. Taxes. The Selling Fund has qualified as a regulated investment company under the Internal Revenue Code with respect to each taxable year since commencement of its operations and will qualify as regulated investment company at all times through the Closing. As of the Closing, the Selling Fund will (i) have filed all federal and other tax returns and reports that have been required to be filed, (ii) have paid or provided for payment of all federal and other taxes shown to be due on such returns or on any assessments received, (iii) have adequately provided for all tax liabilities on its books, (iv) except as disclosed to the Buying Fund, not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and (v) except as disclosed to the Buying Fund, not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid. k. Fund Securities. All securities listed in the schedule of investments of the Selling Fund as of the Closing will be owned by the Selling Fund free and clear of any encumbrances, except as indicated in the schedule. l. Registration Statement. The Selling Fund will cooperate with the Buying Fund and will furnish information relating to the Selling Corporation and the Selling Fund required in the Registration Statement. At the time the Registration Statement becomes effective, at the time of the RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.6 shareholders' meeting and at the Closing, the Registration Statement, as it relates to the Selling Corporation or the Selling Fund, will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. However, the representations and warranties in this subsection apply only to statements in or omissions from the Registration Statement made in reliance upon information furnished by the Selling Corporation or the Selling Fund for use in the Registration Statement. 7. CONDITIONS TO OBLIGATIONS OF THE BUYING CORPORATION. The obligations of the Buying Corporation with respect to the Reorganization are subject to the satisfaction of the following conditions: a. Shareholder Approval. This Agreement will have been approved by the affirmative vote of the holders of the majority of the voting power of all Selling Fund shares entitled to vote. b. Representations, Warranties and Agreements. The Selling Corporation and the Selling Fund will have complied with this Agreement and each of the representations and warranties in this Agreement will be true in all material respects as of the Closing. An officer of the Selling Corporation will provide a certificate to the Buying Fund confirming that, as of the Closing, the representations and warranties set forth in Section 6 are true and correct and that there have been no material adverse changes in the financial condition, results of operations, business, properties or assets of the Selling Fund since the date of its last financial statement, except as otherwise indicated in any financial statements, certified by an officer of the Selling Corporation, and delivered to the Buying Fund on or prior to the last business day before the Closing. c. Regulatory Approvals. - The Registration Statement referred to in Section 5(l) will be effective and no stop orders under the 1933 Act will have been issued. - All necessary approvals, consents and exemptions from federal and state regulatory authorities will have been obtained. d. Tax Opinion. The Buying Corporation will have received the opinion of Ropes & Gray LLP dated as of the Closing, as to the federal income tax consequences of the Reorganization to the Buying Fund and its shareholders. For purposes of rendering their opinion, Ropes & Gray LLP may rely, as to factual matters, upon the statements made in this Agreement, the proxy statement which will be distributed to the shareholders of the Selling Fund, and other written representations as an officer of the Selling Corporation will have verified as of Closing. The opinion of Ropes & Gray LLP will be to the effect that: (i) neither RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.7 the Selling Fund nor the Buying Fund will recognize any gain or loss upon the transfer of the assets of the Selling Fund to, and assumption of its liabilities by, the Buying Fund in exchange for shares of the Buying Fund and upon the distribution of the shares to the Selling Fund shareholders in exchange for their shares of the Selling Fund; (ii) the shareholders of the Selling Fund who receive shares of the Buying Fund in the Reorganization will not recognize any gain or loss on the exchange of their shares of the Selling Fund for the shares of the Buying Fund; (iii) the holding period and the basis of the shares received by the Selling Fund shareholders will be the same as the holding period and the basis of the shares of the Selling Fund surrendered in the exchange; (iv) the holding period and the basis of the assets acquired by the Buying Fund will be the same as the holding period and the basis of the assets to the Selling Fund immediately prior to the Reorganization. e. Opinion of Counsel. The Buying Corporation will have received an opinion of counsel for the Selling Corporation, dated as of the Closing, to the effect that: (i) the Selling Corporation is a corporation duly organized and validly existing under the laws of the state of Minnesota; (ii) the Selling Fund is a series of the Selling Corporation, an open-end investment company registered under the 1940 Act; (iii) this Agreement and the Reorganization have been duly authorized and approved by all requisite action of the Selling Corporation and the Selling Fund and this Agreement has been duly executed by, and is a valid and binding obligation of, the Selling Corporation. f. Declaration of Dividend. The Selling Fund, prior to the Closing, has declared a dividend or dividends, which, together with all previous such dividends, shall have the effect of distributing to the Selling Fund shareholders (i) all of the excess of (x) the Selling Fund's investment income excludable from gross income under Section 103 of the Code over (y) the Selling Fund's deductions disallowed under Sections 265 and 171 of the Code, (ii) all of the Selling Fund's investment company taxable income as defined in Section 852 of the Code (in each case computed without regard to any deduction for dividends paid) and (iii) all of the Selling Fund's net capital gain realized (after reduction for any capital loss carryover), in each case for the current taxable year (which will end on the Closing date) and any preceding taxable years for which such a dividend is eligible to be made under Section 855 of the Code. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.8 8. CONDITIONS TO OBLIGATIONS OF THE SELLING CORPORATION. The obligations of the Selling Corporation with respect to the Reorganization are subject to the satisfaction of the following conditions: a. Shareholder Approval. This Agreement will have been approved by the affirmative vote of the holders of the majority of the voting power of all Selling Fund shares entitled to vote. b. Representations, Warranties and Agreements. The Buying Fund will have complied with this Agreement and each of the representations and warranties in this Agreement will be true in all material respects as of the Closing. An officer of the Buying Corporation will provide a certificate to the Selling Fund confirming that, as of the Closing, the representations and warranties set forth in Section 5 are true and correct and that there have been no material adverse changes in the financial condition, results of operations, business, properties or assets of the Buying Fund since the date of its last financial statement, except as otherwise indicated in any financial statements, certified by an officer of the Buying Corporation, and delivered to the Selling Fund on or prior to the last business day before the Closing. c. Regulatory Approvals. - The Registration Statement referred to in Section 5(l) will be effective and no stop orders under the 1933 Act will have been issued. - All necessary approvals, consents and exemptions from federal and state regulatory authorities will have been obtained. d. Tax Opinion. The Selling Corporation will have received the opinion of Ropes & Gray LLP dated as of the Closing, as to the federal income tax consequences of the Reorganization to the Selling Fund and its shareholders. For purposes of rendering their opinion, Ropes & Gray LLP may rely, as to factual matters, upon the statements made in this Agreement, the proxy statement which will be distributed to the shareholders of the Selling Fund, and other written representations as an officer of the Buying Corporation will have verified as of Closing. The opinion of Ropes & Gray LLP will be to the effect that: (i) neither the Selling Fund nor the Buying Fund will recognize any gain or loss upon the transfer of the assets of the Selling Fund to, and assumption of its liabilities by, the Buying Fund in exchange for shares of the Buying Fund and upon the distribution of the shares to the Selling Fund shareholders in exchange for their shares of the Selling Fund; (ii) the shareholders of the Selling Fund who receive shares of the Buying Fund in the Reorganization will not recognize any gain or loss on the exchange of their shares of the Selling Fund for the shares of the RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.9 Buying Fund; (iii) the holding period and the basis of the shares received by the Selling Fund shareholders will be the same as the holding period and the basis of the shares of the Selling Fund surrendered in the exchange; (iv) the holding period and the basis of the assets acquired by the Buying Fund will be the same as the holding period and the basis of the assets to the Selling Fund immediately prior to the Reorganization; and (v) the Buying Fund will succeed to and take into account the items of the Selling Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383, and 384 of the Code and the regulations thereunder. e. Opinion of Counsel. The Selling Corporation will have received the opinion of counsel for the Buying Corporation, dated as of the Closing, to the effect that: (i) the Buying Corporation is a corporation duly organized and validly existing under the laws of the state of Minnesota; (ii) the Buying Fund is a series of the Buying Corporation, an open-end investment company registered under the 1940 Act; (iii) this Agreement and the Reorganization have been authorized and approved by all requisite action of the Buying Corporation and the Buying Fund and this Agreement has been duly executed by, and is a valid and binding obligation of, the Buying Corporation; and (iv) the shares to be issued in the Reorganization are duly authorized and upon issuance in accordance with this Agreement will be validly issued, fully paid and non-assessable shares of the Buying Fund. 9. AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND REPRESENTATIONS. a. This Agreement may be amended in writing if authorized by the respective Boards of Directors. The Agreement may be amended at any time before or after approval by the shareholders of the Selling Fund, but after shareholder approval, no amendment shall be made that substantially changes the terms of paragraphs 2 or 3. b. At any time prior to the Closing, any of the parties may waive in writing (i) any inaccuracies in the representations and warranties made to it and (ii) compliance with any of the covenants or conditions made for its benefit. However, neither party may waive the requirement to obtain shareholder approval or the requirement to obtain a tax opinion. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.10 c. The Selling Corporation may terminate this Agreement at any time prior to the Closing by notice to the Buying Corporation if a material condition to its performance or a material covenant of the Buying Corporation on behalf of the Buying Fund is not fulfilled on or before the date specified for its fulfillment or a material breach of this Agreement is made by the Buying Corporation on behalf of the Buying Fund and is not cured. d. The Buying Corporation may terminate this Agreement at any time prior to the Closing by notice to the Selling Corporation if a material condition to its performance or a material covenant of the Selling Corporation on behalf of the Selling Fund is not fulfilled on or before the date specified for its fulfillment or a material breach of this Agreement is made by the Selling Corporation on behalf of the Selling Fund and is not cured. e. This Agreement may be terminated by any party at any time prior to the Closing, whether before or after approval by the shareholders of the Selling Fund, without any liability on the part of either party or its respective directors, officers, or shareholders, on written notice to the other party, and shall be terminated without liability as of the close of business on Dec. 31, 2006, or a later date agreed upon by the parties, if the Closing is not on or prior to that date. f. The representations, warranties and covenants contained in this Agreement, or in any document delivered in connection with this Agreement, will survive the Reorganization. 10. EXPENSES. RiverSource Investments, LLC will pay all solicitation expenses in order to achieve shareholder approval of the Reorganization whether or not the Reorganization is completed and will bear the other costs of effecting the Reorganization. 11. GENERAL. a. Headings. The headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement. Nothing in this Agreement is intended to confer upon any other person any rights or remedies by reason of this Agreement. b. Governing Law. This Agreement will be governed by the laws of the state of Minnesota. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.11 12. INDEMNIFICATION. Each party will indemnify and hold the other and its officers and directors (each an "Indemnitee") harmless from and against any liability or other cost and expense, in connection with the defense or disposition of any action, suit, or other proceeding, before any court or administrative or investigative body in which the Indemnitee may be involved as a party, with respect to actions taken under this Agreement. However, no Indemnitee will be indemnified against any liability or expense arising by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the Indemnitee's position. IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed. AXP Dimensions Series, Inc. on behalf of RiverSource New Dimensions Fund By ------------------------------------------ Leslie L. Ogg Vice President AXP Growth Series, Inc. on behalf of RiverSource Large Cap Equity Fund By ------------------------------------------ Leslie L. Ogg Vice President The undersigned is a party to this Agreement for purposes of Section 3c and 10 only. RiverSource Investments, LLC By ------------------------------------------ Paula R. Meyer Senior Vice President - Mutual Funds RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT A.12 EXHIBIT B MATTERS SUBJECT TO APPROVAL AT REGULAR MEETING OF BUYING FUND REFERENCE TO THE "FUND" IN THIS EXHIBIT IS A REFERENCE TO LARGE CAP EQUITY. In addition to voting on proposals to elect Board members, to amend the Articles of Incorporation and to approve the IMS Agreement, Buying Fund shareholders will consider the following: APPROVE OR REJECT CHANGES IN FUNDAMENTAL INVESTMENT POLICIES. The fund has some investment policies that are fundamental. This means the policies can be changed only with the approval of shareholders. RiverSource Investments recommended to the Board that certain of those policies be modified in order to standardize the policies for all RiverSource funds and to eliminate unnecessary limitations. RiverSource Investments believes that increased standardization will help to promote operational efficiencies and facilitate monitoring of compliance with fundamental investment policies. Adoption of a new or revised policy is not intended to change current investment techniques employed for the fund. The Board recommends the following changes to the fund's fundamental investment policies: A. DIVERSIFICATION The Board recommends that the fund's fundamental policy with respect to diversification be revised to give the fund the maximum flexibility permitted by the 1940 Act. The Board recommends that shareholders vote to replace the fund's current fundamental investment policy with the following policy (additional or revised language is underlined): The fund will not invest more than 5% of its total assets in securities of any company, government, or political subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or other investment companies, and except that up to 25% of the fund's total assets may be invested without regard to this 5% limitation. The percentage limits in the proposed policy are required under the 1940 Act. The amended policy makes one change from the current policy: subject to applicable 1940 Act requirements, it would permit the fund to invest without limit in the securities of other investment companies. Pursuant to an exemptive order granted by the Securities and Exchange Commission (the "SEC"), the fund may invest up to 25% of its total assets in a non-publicly offered money market fund managed by RiverSource RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT B.1 Investments (the "cash pool fund"). The cash pool fund is not expected to pay investment advisory, management, or transfer agent fees, although it may do so subject to the conditions of the SEC order and Board approval. The cash pool fund will incur minimal costs for services, such as custodian and auditor fees. The investment manager anticipates that making use of the cash pool fund will benefit the fund by enhancing the efficiency of cash management and by providing increased short-term investment opportunities. If the proposal is approved, the cash pool fund is expected to serve as a principal option for managing the cash positions of the fund. Future amendments to the fund's fundamental diversification policy would continue to require shareholder approval. B. LENDING The Board recommends that the fund's fundamental policies with respect to lending be replaced with the following policy: The Fund will not lend securities or participate in an interfund lending program if the total of all such loans would exceed 33 1/3% of the Fund's total assets except this fundamental investment policy shall not prohibit the Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchases agreements. Currently the fund 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. It is proposed that these two 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. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT B.2 C. BORROWING The Board recommends that the fund's fundamental policy with respect to Borrowing be replaced with the following policy: The fund may not borrow money, except for temporary purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings) immediately after the borrowings. Funds typically borrow money to meet redemptions in order to avoid forced, unplanned sales of portfolio securities. This technique allows RiverSource Investments greater flexibility in managing the fund's cash flow. The current policy limits borrowing to "emergency or extraordinary purposes". In order to avoid debate over what constitutes emergency or extraordinary purposes, it is proposed to revise the policy to reflect that the purposes, whatever the circumstances, must be temporary. The fund may not use borrowing for leverage or for investment purposes. 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. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT B.3 EXHIBIT C MINNESOTA BUSINESS CORPORATION ACT SECTIONS 302A.471 AND 302A.473 Minnesota law requires that we provide you with a copy of the state law on dissenters' rights. Notwithstanding the provisions of the law set out below, the SEC has taken the position that use of state appraisal procedures by a registered mutual fund such as the Fund would be a violation of Rule 22c-1, the forward pricing rule, under the 1940 Act. As a result, if any shareholder elects to exercise dissenters' rights under Minnesota law, the Fund intends to submit this question to a court of competent jurisdiction. In that event, a dissenting shareholder would not receive any payment until the end of the court proceeding. 302A.471. RIGHTS OF DISSENTING SHAREHOLDERS SUBDIVISION 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation may dissent from, and obtain payment for the fair value of the shareholder's shares in the event of, any of the following corporate actions: (a) An amendment of the articles that materially and adversely affects the rights or preferences of the shares of the dissenting shareholder in that it: (1) alters or abolishes a preferential right of the shares; (2) creates, alters, or abolishes a right in respect of the redemption of the shares, including a provision respecting a sinking fund for the redemption or repurchase of the shares; (3) alters or abolishes a preemptive right of the holder of the shares to acquire shares, securities other than shares, or rights to purchase shares or securities other than shares; (4) excludes or limits the right of a shareholder to vote on a matter, or to cumulate votes, except as the right may be excluded or limited through the authorization or issuance of securities of an existing or new class or series with similar or different voting rights; except that an amendment to the articles of an issuing public corporation that provides that section 302A.671 does not apply to a control share acquisition does not give rise to the right to obtain payment under this section; (b) A sale, lease, transfer, or other disposition of all or substantially all of the property and assets of the corporation, but not including a transaction permitted without shareholder approval in section 302A.661, subdivision 1, or a disposition in dissolution described in section 302A.725, subdivision 2, or a disposition pursuant to an order of a court, or a disposition for cash on terms requiring that all or substantially all of the net proceeds of disposition be distributed to the shareholders in accordance with their respective interests within one year after the date of disposition; RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT C.1 (c) A plan of merger, whether under this chapter or under chapter 322B, to which the corporation is a party, except as provided in subdivision 3, and except for a plan of merger adopted under section 302A.626; (d) A plan of exchange, whether under this chapter or under chapter 322B, to which the corporation is a party as the corporation whose shares will be acquired by the acquiring corporation, except as provided in subdivision 3; or (e) Any other corporate action taken pursuant to a shareholder vote with respect to which the articles, the bylaws, or a resolution approved by the board directs that dissenting shareholders may obtain payment for their shares. SUBDIVISION 2. BENEFICIAL OWNERS. (a) A shareholder shall not assert dissenters' rights as to less than all of the shares registered in the name of the shareholder, unless the shareholder dissents with respect to all the shares that are beneficially owned by another person but registered in the name of the shareholder and discloses the name and address of each beneficial owner on whose behalf the shareholder dissents. In that event, the rights of the dissenter shall be determined as if the shares as to which the shareholder has dissented and the other shares were registered in the names of different shareholders. (b) The beneficial owner of shares who is not the shareholder may assert dissenters' rights with respect to shares held on behalf of the beneficial owner, and shall be treated as a dissenting shareholder under the terms of this section and section 302A.473, if the beneficial owner submits to the corporation at the time of or before the assertion of the rights a written consent of the shareholder. SUBDIVISION 3. RIGHTS NOT TO APPLY. (a) Unless the articles, the bylaws, or a resolution approved by the board otherwise provide, the right to obtain payment under this section does not apply to a shareholder of (1) the surviving corporation in a merger with respect to shares of the shareholder that are not entitled to be voted on the merger or (2) the corporation whose shares will be acquired by the acquiring corporation in a plan of exchange with respect to shares of the shareholder that are not entitled to be voted on the plan of exchange and are not exchanged in the plan of exchange. (b) If a date is fixed according to section 302A.445, subdivision 1, for the determination of shareholders entitled to receive notice of and to vote on an action described in subdivision 1, only shareholders as of the date fixed, and beneficial owners as of the date fixed who hold through shareholders, as provided in subdivision 2, may exercise dissenters' rights. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT C.2 SUBDIVISION 4. OTHER RIGHTS. The shareholders of a corporation who have a right under this section to obtain payment for their shares do not have a right at law or in equity to have a corporate action described in subdivision 1 set aside or rescinded, except when the corporate action is fraudulent with regard to the complaining shareholder or the corporation. 302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS SUBDIVISION 1. DEFINITIONS. (a) For purposes of this section, the terms defined in this subdivision have the meanings given them. (b) "Corporation" means the issuer of the shares held by a dissenter before the corporate action referred to in section 302A.471, subdivision 1 or the successor by merger of that issuer. (c) "Fair value of the shares" means the value of the shares of a corporation immediately before the effective date of the corporate action referred to in section 302A.471, subdivision 1. (d) "Interest" means interest commencing five days after the effective date of the corporate action referred to in section 302A.471, subdivision 1, up to and including the date of payment, calculated at the rate provided in section 549.09 for interest on verdicts and judgments. SUBDIVISION 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting at which any action described in section 302A.471, subdivision 1 is to be voted upon, the notice of the meeting shall inform each shareholder of the right to dissent and shall include a copy of section 302A.471 and this section and a brief description of the procedure to be followed under these sections. SUBDIVISION 3. NOTICE OF DISSENT. If the proposed action must be approved by the shareholders, a shareholder who is entitled to dissent under section 302A.471 and who wishes to exercise dissenters' rights must file with the corporation before the vote on the proposed action a written notice of intent to demand the fair value of the shares owned by the shareholder and must not vote the shares in favor of the proposed action. SUBDIVISION 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES. (a) After the proposed action has been approved by the board and, if necessary, the shareholders, the corporation shall send to all shareholders who have complied with subdivision 3 and to all shareholders entitled to dissent if no shareholder vote was required, a notice that contains: (1) The address to which a demand for payment and certificates of certificated shares must be sent in order to obtain payment and the date by which they must be received; (2) Any restrictions on transfer of uncertificated shares that will apply after the demand for payment is received; RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT C.3 (3) A form to be used to certify the date on which the shareholder, or the beneficial owner on whose behalf the shareholder dissents, acquired the shares or an interest in them and to demand payment; and (4) A copy of section 302A.471 and this section and a brief description of the procedures to be followed under these sections. (b) In order to receive the fair value of the shares, a dissenting shareholder must demand payment and deposit certificated shares or comply with any restrictions on transfer of uncertificated shares within 30 days after the notice required by paragraph (a) was given, but the dissenter retains all other rights of a shareholder until the proposed action takes effect. SUBDIVISION 5. PAYMENT; RETURN OF SHARES. (a) After the corporate action takes effect, or after the corporation receives a valid demand for payment, whichever is later, the corporation shall remit to each dissenting shareholder who has complied with subdivisions 3 and 4 the amount the corporation estimates to be the fair value of the shares, plus interest, accompanied by: (1) The corporation's closing balance sheet and statement of income for a fiscal year ending not more than 16 months before the effective date of the corporate action, together with the latest available interim financial statements; (2) An estimate by the corporation of the fair value of the shares and a brief description of the method used to reach the estimate; and (3) A copy of section 302A.471 and this section, and a brief description of the procedure to be followed in demanding supplemental payment. (b) The corporation may withhold the remittance described in paragraph (a) from a person who was not a shareholder on the date the action dissented from was first announced to the public or who is dissenting on behalf of a person who was not a beneficial owner on that date. If the dissenter has complied with subdivisions 3 and 4, the corporation shall forward to the dissenter the materials described in paragraph (a), a statement of the reason for withholding the remittance, and an offer to pay to the dissenter the amount listed in the materials if the dissenter agrees to accept that amount in full satisfaction. The dissenter may decline the offer and demand payment under subdivision 6. Failure to do so entitles the dissenter only to the amount offered. If the dissenter makes demand, subdivision 7 and 8 apply. (c) If the corporation fails to remit payment within 60 days of the deposit of certificates or the imposition of transfer restrictions on uncertificated shares, it shall return all deposited certificates and cancel all transfer restrictions. However, the corporation may again give notice under subdivision 4 and require deposit or restrict transfer at a later time. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT C.4 SUBDIVISION 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the amount remitted under subdivision 5 is less than the fair value of the shares plus interest, the dissenter may give written notice to the corporation of the dissenter's own estimate of the fair value of the shares, plus interest, within 30 days after the corporation mails the remittance under subdivision 5, and demand payment of the difference. Otherwise, a dissenter is entitled only to the amount remitted by the corporation. SUBDIVISION 7. PETITION; DETERMINATION. If the corporation receives a demand under subdivision 6, it shall, within 60 days after receiving the demand, either pay to the dissenter the amount demanded or agreed to by the dissenter after discussion with the corporation or file in a court a petition requesting that the court determine the fair value of the shares, plus interest. The petition shall be filed in the county in which the registered office of the corporation is located, except that a surviving foreign corporation that receives a demand relating to the shares of a constituent domestic corporation shall file the petition in the county in this state in which the last registered office of the constituent corporation was located. The petition shall name as parties all dissenters who have demanded payment under subdivision 6 and who have not reached agreement with the corporation. The corporation shall, after filing the petition, serve all parties with a summons and copy of the petition under the rules of civil procedure. Nonresidents of this state may be served by registered or certified mail or by publication as provided by law. Except as otherwise provided, the rules of civil procedures apply to this proceeding. The jurisdiction of the court is plenary and exclusive. The court may appoint appraisers, with powers and authorities the court deems proper, to receive evidence on and recommend the amount of the fair value of the shares. The court shall determine whether the shareholder or shareholders in question have fully complied with the requirements of this section, and shall determine the fair value of the shares, taking into account any and all factors the court finds relevant, computed by any method or combination of methods that the court, in its discretion, sees fit to use, whether or not used by the corporation or by a dissenter. The fair value of the shares as determined by the court is binding on all shareholders, wherever located. A dissenter is entitled to judgment in cash for the amount by which the fair value of the shares as determined by the court, plus interest, exceeds the amount, if any, remitted under subdivision 5, but shall not be liable to the corporation for the amount, if any, by which the amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair value of the shares as determined by the court, plus interest. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT C.5 SUBDIVISION 8. COSTS; FEES; EXPENSES. (a) The court shall determine the costs and expenses of a proceeding under subdivision 7, including the reasonable expenses and compensation of any appraisers appointed by the court, and shall assess those costs and expenses against the corporation, except that the court may assess part or all of those costs and expenses against a dissenter whose action in demanding payment under subdivision 6 is found to be arbitrary, vexatious, or not in good faith. (b) If the court finds that the corporation has failed to comply substantially with this section, the court may assess all fees and expenses of any experts or attorneys as the court deems equitable. These fees and expenses may also be assessed against a person who has acted arbitrarily, vexatiously, or not in good faith in bringing the proceeding, and may be awarded to a party injured by those actions. (c) The court may award, in its discretion, fees and expenses to an attorney for the dissenters out of the amount awarded to the dissenters, if any. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT C.6 Prospectus [RIVERSOURCE(SM) INVESTMENTS LOGO] RIVERSOURCE(SM) LARGE CAP EQUITY FUND PROSPECTUS OCT. 3, 2005 - RIVERSOURCE LARGE CAP EQUITY FUND (FORMERLY AXP(R) LARGE CAP EQUITY FUND) SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM GROWTH OF CAPITAL. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. You may qualify for sales charge discounts on purchases of Class A shares. Please notify your financial advisor or investment professional if you have other accounts holding shares of RiverSource funds to determine whether you qualify for a sales charge discount. See "Buying and Selling Shares" for more information. NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.1 TABLE OF CONTENTS THE FUND D.3 Objective D.3 Principal Investment Strategies D.3 Principal Risks D.5 Past Performance D.6 Fees and Expenses D.9 Other Investment Strategies and Risks D.11 Fund Management and Compensation D.12 BUYING AND SELLING SHARES D.18 Transactions through Unaffiliated Financial Intermediaries D.18 Valuing Fund Shares D.19 Investment Options D.20 Purchasing Shares D.22 Sales Charges D.25 Exchanging/Selling Shares D.31 DISTRIBUTIONS AND TAXES D.36 Dividends and Capital Gain Distributions D.36 Reinvestments D.36 Taxes D.37 FINANCIAL HIGHLIGHTS D.38 CORPORATE REORGANIZATION On Sept. 30, 2005, Ameriprise Financial, Inc. (Ameriprise Financial) (formerly American Express Financial Corporation) was spun off to shareholders of its parent corporation, American Express Company (American Express), and is now a separate public company, trading under the ticker symbol AMP. Ameriprise Financial provides administrative services to the Fund and is the parent company of the Fund's investment manager, RiverSource Investments, LLC; the Fund's distributor, Ameriprise Financial Services, Inc. (formerly American Express Financial Advisors Inc.); the Fund's transfer agent, RiverSource Service Corporation (formerly American Express Client Service Corporation); and the Fund's custodian, Ameriprise Trust Company (formerly American Express Trust Company). On Oct. 1, 2005, the Fund changed its name, such that it no longer is branded AXP(R). The Fund now bears the RiverSource(SM) brand. Ameriprise Financial and its subsidiaries are no longer affiliated with American Express. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.2 THE FUND OBJECTIVE RiverSource Large Cap Equity Fund (the Fund) seeks to provide shareholders with long-term growth of capital. Because any investment involves risk, achieving this objective cannot be guaranteed. PRINCIPAL INVESTMENT STRATEGIES Under normal market conditions, at least 80% of the Fund's net assets are invested in equity securities of companies with a market capitalization greater than $5 billion at the time of purchase. The Fund may invest in income-producing equity securities, such as dividend paying stocks, convertible securities and preferred stocks. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. In pursuit of the Fund's objective, the investment manager (RiverSource Investments, LLC) will hold both growth and value companies and at times may favor one more than the other based on available opportunities. When optimizing for growth, the investment manager invests in companies it believes to have above-average long-term growth potential, or technological superiority, and it selects investments based, among other factors, on: - Effective management. - Financial strength. - Competitive market or product position. - Technological advantage relative to other companies. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.3 When optimizing for value, the investment manager invests in companies that appear to be undervalued by various measures or that may be temporarily out of favor, but have good prospects for capital appreciation, and it selects investments based, among other factors, on: - Identifying a variety of large, well-established companies whose underlying fundamentals are stable, or are anticipated to become stable, or whose fundamentals are improving. - Identifying stocks that are undervalued: - because they have one or more ratios, such as price-to-earnings or price-to-cash flow, that are low relative to the general market, or have a yield that exceeds the market, - because one or more of their valuation ratios are low relative to historical levels for the stock, - because one or more of their valuation ratios or other financial measures make that stock attractive relative to its peers, or - because they are undervalued relative to their intrinsic value, as identified by the investment manager. In evaluating whether to sell a security, the investment manager considers factors including, among others whether: - The security is overvalued relative to other potential investments. - The security has reached the investment manager's price objective. - The company has met the investment manager's earnings and/or growth expectations. - Potential losses, due to factors such as a market down-turn, can be minimized. - A more attractive opportunity has been identified. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.4 PRINCIPAL RISKS Please remember that with any mutual fund investment you may lose money. Principal risks associated with an investment in the Fund include: ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. ISSUER RISK. An issuer may perform poorly, and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid-sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperform other mutual funds if that style falls out of favor with the market. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.5 PAST PERFORMANCE The following bar chart and table provide some illustration of the risks of investing in the Fund by showing, respectively: - how the Fund's performance has varied for each full calendar year shown on the bar chart, and - how the Fund's average annual total returns compare to recognized indexes shown on the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How the Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. See "Fees and Expenses" for any current fee waivers/expense caps. BAR CHART. Class A share information is shown in the bar chart; the sales charge for Class A shares is not reflected in the bar chart. TABLE. The table shows total returns from hypothetical investments in Class A, Class B, Class C and Class Y shares of the Fund. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge for Class A shares, - sales at the end of the period and deduction of the applicable contingent deferred sales charge (CDSC) for Class B and Class C shares, - no sales charge for Class Y shares, and - no adjustments for taxes paid by an investor on the reinvested income and capital gains. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.6 AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. [CHART] CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) +27.57 +5.52 2003 2004
During the periods shown in the bar chart, the highest return for a calendar quarter was +16.15% (quarter ended June 30, 2003) and the lowest return for a calendar quarter was -4.93% (quarter ended Sept. 30, 2004). The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart; if reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The Fund's Class A year-to-date return at June 30, 2005 was +1.59%. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.7 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2004)
SINCE 1 YEAR INCEPTION RiverSource Large Cap Equity: Class A Return before taxes -0.55% +0.02%(a) Return after taxes on distributions -1.55% -0.55%(a) Return after taxes on distributions and sale of fund shares -0.29% -0.29%(a) Class B Return before taxes -0.27% -0.09%(a) Class C Return before taxes +3.72% +1.40%(a) Class Y Return before taxes +5.63% +2.32%(a) Russell 1000(R)Index (reflects no deduction for fees, expenses or taxes) +11.40% +4.39%(b) Lipper Large-Cap Core Funds Index +8.29% +2.27%(b)
(a) Inception date is March 28, 2002. (b) Measurement period started April 1, 2002. The Russell 1000(R) Index, an unmanaged index, measures the performance of the 1,000 largest companies in the Russell 3000 Index, and represents approximately 92% of the total market capitalization of the Russell 3000 Index. The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap core funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. See "Fund Management and Compensation" for more information. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.8 FEES AND EXPENSES Fund investors pay various expenses. The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Expenses are based on the Fund's most recent fiscal year, adjusted to reflect current fees. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS Y Maximum sales charge (load) imposed on purchases(a) (as a percentage of offering price) 5.75% none none none Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) none(b) 5% 1% none
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS: CLASS A CLASS B CLASS C CLASS Y Management fees(c) 0.57% 0.57% 0.57% 0.57% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% Other expenses(d) 0.36% 0.38% 0.38% 0.40% Total 1.18% 1.95% 1.95% 0.97%
(a) This charge may be reduced depending on the value of your total investments in RiverSource funds. See "Sales Charges." (b) For Class A purchases over $1,000,000 on which no sales charge is assessed, a 1% sales charge may apply if you sell your shares within one year after purchase. (c) Includes the impact of a performance incentive adjustment fee that decreased the management fee by 0.02% for the most recent fiscal year. The index against which the Fund's performance is measured for purposes of determining the performance incentive adjustment is the Lipper Large-Cap Core Funds Index. See "Fund Management and Compensation" for more information. (d) Other expenses include an administrative services fee, a transfer agency fee, a custody fee and other nonadvisory expenses and, for Class Y shares, a shareholder service fee. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.9 EXAMPLES These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $688 $ 928 $1,188 $1,929 Class B $698(b) $1,013(b) $1,253(b) $2,079(c) Class C $298(b) $ 613 $1,053 $2,280 Class Y $ 99 $ 309 $ 537 $1,194
(a) Includes a 5.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $688 $928 $1,188 $1,929 Class B $198 $613 $1,053 $2,079(b) Class C $198 $613 $1,053 $2,280 Class Y $ 99 $309 $ 537 $1,194
(a) Includes a 5.75% sales charge. (b) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.10 OTHER INVESTMENT STRATEGIES AND RISKS OTHER INVESTMENT STRATEGIES. In addition to the principal investment strategies previously described, the Fund may invest in other securities and may use other investment strategies that are not principal investment strategies. Additionally, the Fund may use derivatives (financial instruments where the value depends upon, or is derived from, the value of something else) such as futures, options and forward contracts, to produce incremental earnings, to hedge existing positions or to increase flexibility. Just as with securities in which the Fund invests directly, derivatives are subject to a number of risks, including market, liquidity, interest rate and credit risk. In addition, a relatively small price movement in the underlying security, currency or index may result in a substantial gain or loss for the Fund using derivatives. Even though the Fund's policies permit the use of derivatives in this manner, the portfolio managers are not required to use derivatives. For more information on strategies and holdings, and the risks of such strategies, including other derivative instruments that the Fund may use, see the Fund's Statement of Additional Information (SAI) and its annual and semiannual reports. UNUSUAL MARKET CONDITIONS. During unusual market conditions, the Fund may temporarily invest more of its assets in money market securities than during normal market conditions. Although investing in these securities would serve primarily to avoid losses, this type of investing also could prevent the Fund from achieving its investment objective. During these times, the portfolio managers may make frequent securities trades that could result in increased fees, expenses and taxes, and decreased performance. PORTFOLIO TURNOVER. Trading of securities may produce capital gains, which are taxable to shareholders when distributed. Active trading may also increase the amount of commissions or mark-ups paid to broker-dealers that the Fund pays when it buys and sells securities. The Fund's historical portfolio turnover rate, which measures how frequently the Fund buys and sells investments, is shown in the "Financial Highlights." RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.11 SECURITIES TRANSACTION COMMISSIONS. Securities transactions involve the payment by the Fund of brokerage commissions to broker-dealers, on occasion as compensation for research or brokerage services (commonly referred to as "soft dollars"), as the portfolio managers buy and sell securities for the Fund in pursuit of its objective. A description of the policies governing the Fund's securities transactions and the dollar value of brokerage commissions paid by the Fund are set forth in the SAI. The brokerage commissions set forth in the SAI do not include implied commissions or mark-ups (implied commissions) paid by the Fund for principal transactions (transactions made directly with a dealer or other counterparty), including most fixed income securities and certain derivatives. In addition, brokerage commissions do not reflect other elements of transaction costs, including the extent to which the Fund's purchase and sale transactions may cause the market to move and change the market price for an investment. Although brokerage commissions and implied commissions are not reflected in the expense table under "Fees and Expenses," they are reflected in the total return of the Fund. DIRECTED BROKERAGE. The Fund's Board of Directors (Board) has adopted a policy prohibiting the investment manager, or any subadviser, from considering sales of shares of the Fund as a factor in the selection of broker-dealers through which to execute securities transactions. Additional information regarding securities transactions can be found in the SAI. FUND MANAGEMENT AND COMPENSATION INVESTMENT MANAGER RiverSource Investments, LLC (the investment manager or RiverSource Investments), 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, is the investment manager to the RiverSource funds, and is a wholly owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Ameriprise Financial is a financial planning and financial services company that has been offering solutions for clients' asset accumulation, income management and protection needs for more than 110 years. In addition to managing investments for all of the RiverSource funds, RiverSource Investments manages investments for itself and its affiliates. For institutional clients, RiverSource Investments and its affiliates provide investment management and related services, such as separate account asset management, institutional trust and custody, and employee benefit plan administration, as well as other investment products. For all of its clients, RiverSource Investments seeks to allocate investment opportunities in an equitable manner over time. See the SAI for more information. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.12 The Fund pays RiverSource Investments a fee for managing its assets. Under the Investment Management Services Agreement (Agreement), the fee for the most recent fiscal year was 0.57% of the Fund's average daily net assets, including an adjustment under the terms of a performance incentive arrangement. The adjustment is computed by comparing the Fund's performance to the performance of an index of comparable funds published by Lipper Inc. The index against which the Fund's performance is currently measured for purposes of the performance incentive adjustment is the Lipper Large-Cap Core Funds Index. In certain circumstances, the Fund's Board may approve a change in the index. The maximum adjustment (increase or decrease) is 0.12% of the Fund's average net assets on an annual basis. Under the Agreement, the Fund also pays taxes, brokerage commissions, and nonadvisory expenses. A discussion regarding the basis for the Board approving the Agreement is available in the Fund's most recent shareholder report. PORTFOLIO MANAGER(S). The portfolio managers responsible for the day-to-day management of the Fund are: Robert Ewing, CFA, Portfolio Manager - Managed the Fund since 2004. - Joined RiverSource Investments (previously American Express Financial Corporation (AEFC)) in 2002. - Prior to that, Analyst and Portfolio Manager at Fidelity Investments from 1990 to 2002. - Began investment career in 1988. - BS, Boston College Carroll School of Management. Nick Thakore, Portfolio Manager - Managed the Fund since 2004. - Joined RiverSource Investments (previously AEFC) in 2002. - Prior to that, Analyst and Portfolio Manager at Fidelity Investments from 1993 to 2002. - Began investment career in 1993. - MBA, Wharton School at University of Pennsylvania. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.13 Mr. Thakore provides direct day-to-day management for approximately one-third of the portfolio optimizing for growth. Mr. Ewing provides direct day-to-day management for approximately one-third of the portfolio optimizing for value. Messrs. Ewing and Thakore coordinate day-to-day management of the remainder of the portfolio, allocating approximately one-third of the portfolio among a team of research analysts who select investments in their allocations based on the sectors that they cover. These allocations are generally consistent with the sector weightings of the S&P 500 Index, an unmanaged index of common stocks, but allocations may vary. The SAI provides additional information about portfolio manager compensation, management of other accounts and ownership of shares in the Fund. ADDITIONAL SERVICES AND COMPENSATION As described above, RiverSource Investments receives compensation for acting as the Fund's investment manager. RiverSource Investments and its affiliates also receive compensation for providing other services to the Fund. ADMINISTRATION SERVICES. Ameriprise Financial, 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, provides or compensates others to provide administrative services to the RiverSource funds. These services include administrative, accounting, treasury, and other services. Fees paid by the Fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." CUSTODY SERVICES. Ameriprise Trust Company, 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (the custodian or Ameriprise Trust Company), provides custody services to all but a limited number of the RiverSource funds, for which U.S. Bank National Association provides custody services. In addition, Ameriprise Trust Company is paid for certain transaction fees and out-of-pocket expenses incurred while providing services to the funds. Fees paid by the Fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." DISTRIBUTION SERVICES. Ameriprise Financial Services, Inc., 70100 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (the distributor or Ameriprise Financial Services), provides underwriting and distribution services to the RiverSource funds. Under the Distribution Agreement and related distribution and shareholder servicing plan(s), the distributor receives distribution and shareholder servicing fees. The distributor pays a portion of these fees to financial advisors and retains a portion of these fees to support its distribution and shareholder servicing activity. For third party sales, the distributor re-allows a portion of these fees to the financial intermediaries that sell Fund shares and provide services to shareholders, and retains a portion of these fees to support its distribution and shareholder servicing activity. Fees paid by the Fund for RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.14 these services are set forth under "Distribution (12b-1) fees" in the expense table under "Fees and Expenses." More information on how these fees are used is set forth under "Investment Options" and in the SAI. The distributor also administers any sales charges paid by an investor at the time of purchase or at the time of sale (deferred sales charge). See "Shareholder Fees (fees paid directly from your investment)" under "Fees and Expenses" for the scheduled sales charge of each share class. See "Buying and Selling Shares" for variations in the scheduled sales charges, and for how these sales charges are used by the distributor. See "Other Investment Strategies and Risks" for Fund policy regarding directed brokerage. TRANSFER AGENCY SERVICES. RiverSource Service Corporation, 70100 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (the transfer agent or RiverSource Service Corporation), provides or compensates others to provide transfer agency services to the RiverSource funds. The RiverSource funds pay the transfer agent a fee, which varies by share class, as set forth in the SAI and reimburses the transfer agent for its out-of-pocket expenses incurred while providing these transfer agency services to the funds. Fees paid by the Fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." RiverSource funds are primarily sold through Ameriprise Financial Services which is allocated a portion of these fees for providing services to Fund shareholders. RiverSource Service Corporation may also pay a portion of these fees to other financial intermediaries that provide sub-recordkeeping and other services to Fund shareholders. The SAI provides additional information about the services provided and the fee schedules for the agreements set forth above. PAYMENTS TO FINANCIAL INTERMEDIARIES RiverSource Investments and its affiliates may make additional cash payments out of their own resources to financial intermediaries, such as broker-dealers, banks, qualified plan administrators and recordkeepers, or other institutions, including inter-company allocation of resources to affiliated broker-dealers such as Ameriprise Financial Services (financial intermediaries) in connection with the sale of shares of the Fund and/or the provision of services to the Fund or its shareholders. These payments may create an incentive for the financial intermediary, its employees or registered representatives to recommend or sell shares of the Fund to its customers. These payments and inter-company allocations are in addition to any 12b-1 distribution and/or shareholder service fees or other amounts paid by the Fund under distribution or shareholder servicing plans, or paid by the Fund for shareholder account maintenance, sub-accounting or recordkeeping services provided directly by the financial intermediary providing such services. In exchange for these cash payments and RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.15 inter-company allocations, RiverSource Investments and its affiliates may receive preferred access to registered representatives of a financial intermediary (for example, the ability to make presentations in branch offices or at conferences) or preferred access to customers of the financial intermediary (for example, the ability to advertise or directly interact with the financial intermediary's customers in order to sell the Fund). These arrangements are sometimes referred to as "revenue sharing payments." In some cases, these arrangements may create an incentive for a financial intermediary or its representatives to recommend or sell shares of a fund and may create a conflict of interest between a financial intermediary's financial interest and its duties to its customers. Please contact the financial intermediary through which you are purchasing shares of the Fund for details about any payments it may receive in connection with the sale of Fund shares or the provision of services to the Fund. These payments and inter-company allocations are usually calculated based on a percentage of fund sales, and/or as a percentage of fund assets attributable to a particular financial intermediary. These payments may also be negotiated based on other criteria or factors including, but not limited to, the financial intermediary's affiliation with the investment manager, its reputation in the industry, its ability to attract and retain assets, its access to target markets, its customer relationships and the scope and quality of services it provides. The amount of payment or inter-company allocation may vary by financial intermediary and by type of sale (e.g. purchases of different share classes or purchases of the Fund through a qualified plan or through a wrap program) and may be significant. From time to time, RiverSource Investments and its affiliates may make other payments, including non-cash compensation, to financial intermediaries to the extent permitted by law, including providing non-cash compensation to financial intermediaries or their representatives in the form of gifts of nominal value, occasional meals, tickets, or other entertainment, support for due diligence trips, training and educational meetings, or conference sponsorships, support for recognition programs, and other forms of non-cash compensation permissible under regulations to which these financial intermediaries and their representatives are subject. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.16 ADDITIONAL MANAGEMENT INFORMATION MANAGER OF MANAGER EXEMPTION. The Fund operates under an order from the Securities and Exchange Commission that permits RiverSource Investments, subject to the approval of the Board, to appoint a subadviser or change the terms of a subadvisory agreement for the Fund without first obtaining shareholder approval. The order permits the Fund to add or change unaffiliated subadvisers or the fees paid to subadvisers from time to time without the expense and delays associated with obtaining shareholder approval of the change. AFFILIATED FUNDS-OF-FUNDS. RiverSource Investments also serves as investment manager to the RiverSource Portfolio Builder Funds (Portfolio Builder Funds), a group of six funds-of-funds that provide asset-allocation services to shareholders by investing in shares of other RiverSource funds, including the Fund. The Fund may experience relatively large purchases or redemptions from the Portfolio Builder Funds. Although RiverSource Investments seeks to minimize the impact of these transactions by structuring them over a reasonable period of time, the Fund may experience increased expenses as it buys and sells securities to manage transactions for the Portfolio Builder Funds. In addition, because the Portfolio Builder Funds may own a substantial portion of the Fund, a redemption by the Portfolio Builder Funds could cause the Fund's expense ratio to increase as the Fund's fixed costs would be spread over a smaller asset base. RiverSource Investments monitors expense levels and is committed to offering funds that are competitively priced. RiverSource Investments will report to the Fund's Board on the steps it has taken to manage any potential conflicts. FUND HOLDINGS DISCLOSURE. The Fund's Board has adopted policies and procedures that govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the securities owned by the Fund. A description of these policies and procedures is included in the Fund's SAI. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.17 BUYING AND SELLING SHARES TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES Where authorized by the distributor, shares of the Fund may be available through certain 401(k) or other qualified plans, banks, broker-dealers or other institutions (financial intermediaries). These financial intermediaries may charge you additional fees for the services they provide and they may have different policies not described in this prospectus. Some policy differences may include different minimum investment amounts, exchange privileges, fund choices and cutoff times for investments. Additionally, recordkeeping, transaction processing and payments of distributions relating to your account may be performed by the financial intermediaries or their representatives through whom shares are held. Since the Fund may not have a record of your transactions, you should always contact the financial intermediary through whom you purchased the Fund to make changes to or give instructions concerning your account or to obtain information about your account. The Fund and the distributor are not responsible for the failure of one of these financial intermediaries to carry out its obligations to its customers. AVAILABILITY AND TRANSFERABILITY OF FUND SHARES. Please consult your investment professional or financial intermediary to determine availability of the Fund. Currently, RiverSource funds may be purchased or sold through affiliated broker-dealers of RiverSource Investments, including Ameriprise Financial Services and Securities America, Inc. (Securities America), and through a limited number of unaffiliated institutions. If you set up an account at another financial intermediary, you will not be able to transfer RiverSource fund holdings to that account unless that institution has obtained a selling agreement with the distributor of the RiverSource funds. If you set up an account with an unaffiliated financial intermediary that does not have, and is unable to obtain, such a selling agreement, you must either maintain your position with Ameriprise Financial Services or Securities America, find another financial intermediary with such a selling agreement, or sell your shares, paying any applicable deferred sales charge. Please be aware that transactions in taxable accounts would generate a taxable event and may result in an increased income tax liability. For more information, please call RiverSource Service Corporation at (888) 791-3380. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.18 The public offering price for Class A shares of the Fund is the net asset value (NAV) plus a sales charge, and for Class B, C, and Y shares, the NAV. Orders in good form are priced at the NAV next determined after you place your order. Good form or good order means that your instructions have been received in the form required by the distributor. This may include, for example, providing the fund name and account number, the amount of the transaction and all required signatures. For more information, refer to the sections on "Purchasing Shares" and "Exchanging/Selling Shares," or contact your financial advisor or investment professional. If you buy or sell shares through an authorized financial intermediary, consult that firm to determine its procedures for accepting and processing orders. The financial intermediary may charge a fee for its services. VALUING FUND SHARES The NAV is the value of a single share of the Fund. The NAV is determined by dividing the value of the Fund's assets, minus any liabilities, by the number of shares outstanding. The NAV is calculated as of the close of business on the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day that the NYSE is open. The Fund's securities are valued primarily on the basis of market quotations obtained from outside pricing services approved and monitored under procedures adopted by the Board. Certain short-term securities with maturities of 60 days or less are valued at amortized cost. When reliable market quotations are not readily available, securities are priced at fair value based on procedures adopted by the Board. These procedures are also used when the value of a security held by the Fund is materially affected by events that occur after the close of the primary market on which the security is traded but prior to the time as of which the Fund's NAV is determined. Valuing securities at fair value involves reliance on judgment. The fair value of a security is likely to differ from any available quoted or published price. Foreign investments are valued in U.S. dollars. Some of the Fund's securities may be listed on foreign exchanges that trade on weekends or other days when the Fund does not price its shares. In that event, the NAV of the Fund's shares may change on days when shareholders will not be able to purchase or sell the Fund's shares. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.19 INVESTMENT OPTIONS 1. CLASS A shares are sold to the public with a sales charge at the time of purchase and an annual distribution and shareholder servicing (12b-1) fee of 0.25%. 2. CLASS B shares are sold to the public with a contingent deferred sales charge (CDSC) and an annual distribution and shareholder servicing (12b-1) fee of 1.00%. 3. CLASS C shares are sold to the public without a sales charge at the time of purchase and with an annual distribution and shareholder servicing (12b-1) fee of 1.00%. Class C shares redeemed within than one year after purchase may be subject to a CDSC. 4. CLASS Y shares are sold to qualifying institutional investors without a sales charge or distribution fee, but with a separate shareholder servicing fee of 0.10%. Please see the SAI for information on eligibility requirements to purchase Class Y shares. The distribution and shareholder servicing fees for Class A, Class B and Class C shares are subject to the requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended, and are used to reimburse the distributor for certain expenses it incurs in connection with distributing the Fund's shares and providing services to Fund shareholders. These expenses include payment of distribution and shareholder servicing fees to financial intermediaries that sell shares of the Fund. Financial intermediaries receive shareholder servicing fees equal to 0.25% of the average daily net assets of Class A, Class B and Class C shares sold and held through them. For Class A and Class B shares, the distributor begins to pay these fees immediately after purchase. For Class C shares, the distributor begins to pay these fees one year after purchase. Financial intermediaries also receive distribution fees equal to 0.75% of the average daily net assets of Class C shares sold and held through them, which the distributor begins to pay one year after purchase. For Class B shares, the Fund's distributor retains the 0.75% distribution fee in order to finance the payment of sales commissions to financial intermediaries that sell Class B shares, and to pay for other distribution related expenses. Financial intermediaries may compensate their financial advisors and investment professionals with the shareholder servicing and distribution fees paid to them by the distributor. The shareholder servicing fees for Class Y shares are used to reimburse the distributor for providing services and assistance to shareholders regarding ownership of their shares or their accounts. The Fund also offers an additional class of shares, Class I, exclusively to certain institutional investors. Class I shares are made available through a separate prospectus supplement provided to investors eligible to purchase the shares. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.20 INVESTMENT OPTIONS SUMMARY The Fund offers different classes of shares. There are differences among the fees and expenses for each class. Not everyone is eligible to buy every class. After determining which classes you are eligible to buy, decide which class best suits your needs. Your financial advisor or investment professional can help you with this decision. The following table shows the key features of each class:
CLASS A CLASS B CLASS C CLASS Y ----------------------------------------------------------------------------------------------------------------------------- AVAILABILITY Available to all Available to all Available to all Limited to qualifying investors. investors. investors. institutional investors. INITIAL SALES CHARGE Yes. Payable at time No. Entire purchase No. Entire purchase No. Entire purchase of purchase. Lower price is invested in price is invested in price is invested in sales charge for shares of the Fund. shares of the Fund. shares of the Fund. larger investments. DEFERRED SALES CHARGE On purchases over Maximum 5% CDSC 1% CDSC may apply if None. $1,000,000, 1% CDSC during the first year you sell your shares may apply if you sell decreasing to 0% within one year after your shares within after six years. purchase. one year after purchase. 12b-1 DISTRIBUTION FEE Yes.% Yes. Yes. Yes. AND/OR SHAREHOLDER SERVICE 0.25 1.00% 1.00% 0.10% FEE* CONVERSION TO CLASS A N/A Yes, automatically in No. No. ninth year of ownership.
* The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of 1940, as amended, that allows it to pay distribution and shareholder servicing-related expenses for the sale of Class A, Class B and Class C shares. The Fund has also adopted a separate shareholder servicing plan to pay for servicing-related expenses related to Class Y shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time, these fees will increase the cost of your investment and may cost you more than paying other types of distribution (sales) or servicing charges. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.21 SHOULD YOU PURCHASE CLASS A, CLASS B OR CLASS C SHARES? If your investments in RiverSource funds total $100,000 or more, Class A shares may be the better option because the sales charge is reduced for larger purchases. If you qualify for a waiver of the sales charge, Class A shares will be the best option. If you invest less than $100,000, consider how long you plan to hold your shares. Class B shares have a higher annual distribution fee than Class A shares and a CDSC for six years. Class B shares convert to Class A shares in the ninth year of ownership. Class B shares purchased through reinvested dividends and distributions also will convert to Class A shares in the same proportion as the other Class B shares. Class C shares also have a higher annual distribution fee than Class A shares. Class C shares have no sales charge if you hold the shares for longer than one year. Unlike Class B shares, Class C shares do not convert to Class A. As a result, you will pay a 1% distribution fee for as long as you hold Class C shares. If you choose a deferred sales charge option (Class B or Class C), you should consider the length of time you intend to hold your shares. To help you determine which investment is best for you, consult your financial advisor or investment professional. For more information, see the SAI. PURCHASING SHARES Financial intermediaries are required by law to obtain certain personal information from each person who opens an account in order to verify the identity of the person. As a result, when you open an account you will be asked to provide your name, permanent street address, date of birth, and Social Security or Employer Identification number. You may also be asked for other identifying documents or information. If you do not provide this information, the Fund, or the financial intermediary through which you are investing in the Fund, may not be able to open an account for you. If the Fund or if the financial intermediary through which you are investing in the Fund is unable to verify your identity, your account may be closed, or other steps may be taken, as deemed appropriate. TO PURCHASE SHARES WITH A FINANCIAL INTERMEDIARY OTHER THAN AMERIPRISE FINANCIAL SERVICES, PLEASE CONSULT YOUR FINANCIAL INTERMEDIARY. SEE "TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES" FOR MORE INFORMATION. THE FOLLOWING SECTION EXPLAINS POLICIES OF THE RIVERSOURCE FUNDS AND HOW YOU CAN PURCHASE FUND SHARES FROM AMERIPRISE FINANCIAL SERVICES. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.22 If you do not have an existing RiverSource fund account, with Ameriprise Financial Services, you will need to establish a brokerage account. Your financial advisor or investment professional will help you fill out and submit an application. Once your account is set up, you can choose among several convenient ways to invest. When you purchase, your order will be priced at the next NAV calculated after your order is accepted by the Fund. If your application does not specify which class of shares you are purchasing, we will assume you are investing in Class A shares. IMPORTANT: When you open an account, you must provide your correct Taxpayer Identification Number (TIN), which is either your Social Security or Employer Identification number. If you do not provide and certify the correct TIN, you could be subject to backup withholding of 28% of taxable distributions and proceeds from certain sales and exchanges. You also could be subject to further penalties, such as: - a $50 penalty for each failure to supply your correct TIN, - a civil penalty of $500 if you make a false statement that results in no backup withholding, and - criminal penalties for falsifying information. You also could be subject to backup withholding, if the IRS notifies us to do so, because you failed to report required interest or dividends on your tax return. HOW TO DETERMINE THE CORRECT TIN
FOR THIS TYPE OF ACCOUNT: USE THE SOCIAL SECURITY OR EMPLOYER IDENTIFICATION NUMBER OF: Individual or joint account The individual or one of the owners listed on the joint account Custodian account of a minor The minor (Uniform Gifts/Transfers to Minors Act) A revocable living trust The grantor-trustee (the person who puts the money into the trust) An irrevocable trust, pension trust or The legal entity (not the personal representative or trustee, estate unless no legal entity is designated in the account title) Sole proprietorship or single-owner LLC The owner Partnership or multi-member LLC The partnership Corporate or LLC electing corporate status The corporation on Form 8832 Association, club or tax-exempt organization The organization
RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.23 For details on TIN requirements, contact your financial advisor or investment professional to obtain a copy of Form W-9, "Request for Taxpayer Identification Number and Certification." You also may obtain the form on the Internet at www.irs.gov. METHODS OF PURCHASING SHARES BY MAIL Once your account has been established, send your check to: AMERIPRISE FINANCIAL SERVICES 70200 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNTS Initial investment: $2,000* Additional investments: $500** Account balances: $300 Qualified account balances: none If your Fund account balance falls below $300 for any reason, including a market decline, you will be asked to increase it to $300 or establish a scheduled investment plan. If you do not do so within 30 days, your shares may be automatically redeemed and the proceeds mailed to you. * $1,000 for tax qualified accounts. ** $100 minimum add-on for existing mutual fund accounts outside of a brokerage account. BY SCHEDULED INVESTMENT PLAN MINIMUM AMOUNTS Initial investment: $2,000* Additional investments: $100** Account balances: none (on a scheduled investment plan with monthly payments) If your Fund account balance is below $2,000, you must make payments at least monthly. * $100 for accounts outside of a brokerage account. ** $50 minimum per payment for qualified accounts outside of a brokerage account. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.24 BY WIRE OR ELECTRONIC FUNDS TRANSFER Please contact your financial advisor or investment professional for specific instructions. Minimum wire purchase amount: $1,000 or new account minimum, as applicable. BY TELEPHONE If you have a brokerage account, you may use the money in your account to make initial and subsequent purchases. To place your order, call: (800) 297-7378 for brokerage accounts (800) 967-4377 for wrap accounts SALES CHARGES CLASS A -- INITIAL SALES CHARGE ALTERNATIVE Your purchase price for Class A shares is generally the NAV plus a front-end sales charge. Sales charges vary depending on the amount of your purchase. The distributor receives the sales charge and re-allows a portion of the sales charge to the financial intermediary through which you purchased the shares. The distributor retains the balance of the sales charge. Sales charge* for Class A shares:
MAXIMUM AS A % OF AS A % OF RE-ALLOWANCE PURCHASE NET AMOUNT AS A % OF TOTAL MARKET VALUE PRICE** INVESTED PURCHASE PRICE Up to $49,999 5.75% 6.10% 5.00% $50,000-$99,999 4.75 4.99 4.00 $100,000-$249,999 3.50 3.63 3.00 $250,000-$499,999 2.50 2.56 2.15 $500,000-$999,999 2.00 2.04 1.75 $1,000,000 or more*** 0.00 0.00 0.00
* Because of rounding in the calculation of the offering price, the portion of the sales charge retained by the distributor may vary and the actual sales charge you pay may be more or less than the sales charge calculated using these percentages. ** Offering price includes the sales charge. *** Although there is no sales charge for purchases with a total market value over $1,000,000, and therefore no re-allowance, the distributor may pay a sales commission to a financial intermediary making a sale with a total market value of $1,000,000 to $3,000,000, a sales commission up to 1.00%; $3,000,000 to $10,000,000, a sales commission up to 0.50%; and $10,000,000 or more, a sales commission up to 0.25%. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.25 RIGHTS OF ACCUMULATION YOU MAY BE ABLE TO REDUCE THE SALES CHARGE ON CLASS A SHARES, BASED ON THE COMBINED MARKET VALUE OF YOUR ACCOUNTS. The current market values of the following investments are eligible to be added together for purposes of determining the sales charge on your purchase: - Your current investment in this Fund, and - Previous investments you and members of your primary household group have made in Class A, Class B or Class C shares in this and other RiverSource funds, provided your investment was subject to a sales charge. - Your primary household group consists of you, your spouse or domestic partner, and your unmarried children under age 21 sharing a mailing address. For purposes of this policy a domestic partner is an individual who shares your primary residence and with whom you own joint property. If you or any member of your primary household group elects to separate from the primary household group (for example, by asking that account statements be sent to separate addresses), your assets will no longer be combined for purposes of reducing your sales charge. The following accounts are eligible to be included in determining the sales charge on your purchase: - Individual or joint accounts held outside of a brokerage account; - Individual or joint accounts held through a brokerage account; - Roth and traditional IRAs, SEPs, SIMPLEs and TSCAs, provided they are invested in Class A, Class B or Class C shares that are subject to a sales charge; - UGMA/UTMA accounts for which you, your spouse, or your domestic partner is parent or guardian of the minor child; - Revocable trust accounts for which you or a member of your primary household group, individually, is the beneficiary; - Accounts held in the name of your, your spouse's, or your domestic partner's sole proprietorship or single owner limited liability company or S corporation; and - Qualified retirement plan assets, provided that you are the sole owner of the business sponsoring the plan, are the sole participant (other than a spouse) in the plan, and have no intention of adding participants to the plan. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.26 The following accounts are NOT eligible to be included in determining the sales charge on your purchase: - Accounts of pension and retirement plans with multiple participants, such as 401(k) plans (which are combined to reduce the sales charge for the entire pension or retirement plan and therefore are not used to reduce the sales charge for your individual accounts); - Investments in Class A shares where the sales charge is waived, for example, purchases through wrap accounts, including Ameriprise Strategic Portfolio Service ADVANTAGE (SPS); - Investments in Class D, Class E, or Class Y shares; - Investments in 529 plans, donor advised funds, variable annuities, variable life insurance products, wrap accounts or managed separate accounts; and - Charitable and irrevocable trust accounts. If you purchase RiverSource fund shares through different channels or different financial intermediaries, and you want to include those assets toward a reduced sales charge, you must inform Ameriprise Financial Services, your financial advisor or investment professional in writing about the other accounts when placing your purchase order. When placing your purchase order, you must provide your most recent account statement and contact information regarding the other accounts. A financial intermediary other than Ameriprise Financial Services may require additional information. UNLESS YOU PROVIDE AMERIPRISE FINANCIAL SERVICES, YOUR FINANCIAL ADVISOR OR YOUR INVESTMENT PROFESSIONAL IN WRITING WITH INFORMATION ABOUT ALL OF THE ACCOUNTS THAT MAY COUNT TOWARD A SALES CHARGE REDUCTION, THERE CAN BE NO ASSURANCE THAT YOU WILL RECEIVE ALL OF THE REDUCTIONS FOR WHICH YOU MAY BE ELIGIBLE. For more information on rights of accumulation, please see the SAI. LETTER OF INTENT (LOI) Generally, if you intend to invest $50,000 or more over a period of 13 months, you may be able to reduce the front-end sales charges for investments in Class A shares by completing and filing a LOI form. The LOI becomes effective only after the form is processed in good order by the distributor. An LOI can be backdated up to a maximum of 90 days. If the LOI is backdated, you may include prior investments in Class A shares that were charged a front-end sales load toward the LOI commitment amount. If the LOI is backdated, the 13 month period begins on the date of the earliest purchase included in the LOI. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.27 HOLDINGS MORE THAN 90 DAYS OLD. Purchases made more than 90 days before your LOI is processed by the distributor will not be counted towards the commitment amount of the LOI and cannot be used as the starting point for the LOI. While these purchases cannot be included in an LOI, they may help you obtain a reduced sales charge on future purchases as described in "Rights of Accumulation." NOTIFICATION OBLIGATION. If purchasing shares in a brokerage account or through a financial intermediary, you must request the reduced sales charge when you buy shares. If you do not complete and file the LOI form, or do not request the reduced sales charge at the time of purchase, you will not be eligible for the reduced sales charge. For more details on LOIs, please contact your financial advisor, investment professional or see the SAI. WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES Sales charges do not apply to: - current or retired Board members, officers or employees of the Fund or Ameriprise Financial or its subsidiaries, their spouses or domestic partners, children and parents. - current or retired Ameriprise Financial Services financial advisors, employees of financial advisors, their spouses or domestic partners, children and parents. - portfolio managers employed by subadvisers of the RiverSource funds, including their spouses or domestic partners, children and parents. - registered representatives and other employees of financial intermediaries having a sub-distribution agreement with the distributor, including their spouses, domestic partners, children and parents. - qualified employee benefit plans offering participants daily access to RiverSource funds. Eligibility must be determined in advance. For assistance, please contact your financial advisor or investment professional. Participants in certain qualified plans where the initial sales charge is waived may be subject to a deferred sales charge of up to 4%. - shareholders who have at least $1 million in RiverSource funds. If the investment is sold within one year after purchase, a CDSC of 1% may be charged. - direct rollovers from Ameriprise Retirement Services, provided that the rollover involves a transfer of Class Y shares in this Fund to Class A shares in this Fund. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.28 - purchases made: - with dividend or capital gain distributions from this Fund or from the same class of another RiverSource fund, - through or under a wrap fee product or other investment product sponsored by the distributor or another authorized broker-dealer, investment advisor, bank or investment professional, - within a segregated separate account offered by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, - through American Express Personal Trust Services' Asset-Based pricing alternative, provided by American Express Bank, FSB. - shareholders whose original purchase was in a Strategist fund merged into a RiverSource fund in 2000. Policies related to reducing or waiving the sales charge may be modified or withdrawn at any time. UNLESS YOU PROVIDE AMERIPRISE FINANCIAL SERVICES, YOUR FINANCIAL ADVISOR OR INVESTMENT PROFESSIONAL WITH INFORMATION IN WRITING ABOUT ALL OF THE FACTORS THAT MAY COUNT TOWARD A WAIVER OF THE SALES CHARGE, THERE CAN BE NO ASSURANCE THAT YOU WILL RECEIVE ALL OF THE WAIVERS FOR WHICH YOU MAY BE ELIGIBLE. You also may view this information about sales charges and breakpoints free of charge on the Fund's website. Go to www.riversource.com/investments and click on the hyperlink "Sales Charge Discount Information." CLASS B AND CLASS C -- CONTINGENT DEFERRED SALES CHARGE (CDSC) ALTERNATIVE FOR CLASS B, the CDSC is based on the sale amount and the number of years -- including the year of purchase -- between purchase and sale. The following table shows how CDSC percentages on sales decline:
IF THE SALE IS MADE DURING THE: THE CDSC PERCENTAGE RATE IS:* First year 5% Second year 4% Third year 4% Fourth year 3% Fifth year 2% Sixth year 1% Seventh year 0%
* Because of rounding in the calculation, the portion of the CDSC retained by the distributor may vary and the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.29 Although there is no front-end sales charge when you buy Class B shares, the distributor pays a sales commission of 4% to financial intermediaries that sell Class B shares. A portion of this commission may, in turn, be paid to your financial advisor. The distributor receives any CDSC imposed when you sell your Class B shares. Purchases made prior to May 21, 2005 age on a calendar year basis. Purchases made beginning May 21, 2005 age on a daily basis. For example, a purchase made on Nov. 12, 2004 will complete its first year on Dec. 31, 2004 under calendar year aging. However, a purchase made on Nov. 12, 2005 will complete its first year on Nov. 11, 2006 under daily aging. For Class B shares purchased prior to May 21, 2005, those shares will convert to Class A shares in the ninth calendar year of ownership. For Class B shares purchased beginning May 21, 2005, those shares will convert to Class A shares one month after the completion of the eighth year of ownership. FOR CLASS C, a 1% CDSC may be charged if you sell your shares within one year after purchase. Although there is no front-end sales charge when you buy Class C shares, the distributor pays a sales commission of 1% to financial intermediaries that sell Class C shares. A portion of this commission may, in turn, be paid to your financial advisor. The distributor receives any CDSC imposed when you sell your Class C shares. For both Class B and Class C, if the amount you sell causes the value of your investment to fall below the cost of the shares you have purchased, the CDSC will be based on the lower of the cost of those shares purchased or market value. Because the CDSC is imposed only on sales that reduce your total purchase payments, you do not have to pay a CDSC on any amount that represents appreciation in the value of your shares, income earned by your shares, or capital gains. In addition, the CDSC on your sale, if any, will be based on your oldest purchase payment. The CDSC on the next amount sold will be based on the next oldest purchase payment. EXAMPLE Assume you had invested $10,000 in Class B shares and that your investment had appreciated in value to $12,000 after 3 1/2 years, including reinvested dividends and capital gain distributions. You could sell up to $2,000 worth of shares without paying a CDSC ($12,000 current value less $10,000 purchase amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500 representing part of your original purchase price. The CDSC rate would be 3% because the sale was made during the fourth year after the purchase. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.30 WAIVERS OF THE CDSC FOR CLASS B SHARES The CDSC will be waived on sales of shares: - in the event of the shareholder's death, - held in trust for an employee benefit plan, or - held in IRAs or certain qualified plans if Ameriprise Trust Company is the custodian, such as Keogh plans, tax-sheltered custodial accounts or corporate pension plans, provided that the shareholder is: - at least 59 1/2 years old AND - taking a retirement distribution (if the sale is part of a transfer to an IRA or qualified plan, or a custodian-to-custodian transfer, the CDSC will not be waived) OR - selling under an approved substantially equal periodic payment arrangement. WAIVERS OF THE CDSC FOR CLASS C SHARES The CDSC will be waived on sales of shares in the event of the shareholder's death. EXCHANGING/SELLING SHARES TO SELL OR EXCHANGE SHARES HELD WITH FINANCIAL INTERMEDIARIES OTHER THAN AMERIPRISE FINANCIAL SERVICES, PLEASE CONSULT YOUR FINANCIAL INTERMEDIARY. SEE "TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES" FOR MORE INFORMATION. THE FOLLOWING SECTION EXPLAINS POLICIES OF THE RIVERSOURCE FUNDS ON HOW YOU CAN EXCHANGE OR SELL SHARES HELD WITH AMERIPRISE FINANCIAL SERVICES. EXCHANGES You may exchange your Fund shares at no charge for shares of the same class of any other publicly offered RiverSource fund. Exchanges into RiverSource Tax-Exempt Money Market Fund may only be made from Class A shares. For complete information on the other fund, including fees and expenses, read that fund's prospectus carefully. Your exchange will be priced at the next NAV calculated after your transaction request is received in good order. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING BY CERTAIN SHAREHOLDERS INTENDED TO PROFIT AT THE EXPENSE OF OTHER SHAREHOLDERS BY SELLING SHARES OF A FUND SHORTLY AFTER PURCHASE. MARKET TIMING MAY ADVERSELY IMPACT A FUND'S PERFORMANCE BY PREVENTING THE INVESTMENT MANAGER FROM FULLY INVESTING THE ASSETS OF THE FUND, DILUTING THE VALUE OF SHARES HELD BY LONG-TERM SHAREHOLDERS, OR INCREASING THE FUND'S TRANSACTION COSTS. SEE "VALUING FUND SHARES" FOR A DISCUSSION OF THE FUND'S POLICY ON FAIR VALUE PRICING, WHICH IS INTENDED, IN PART, TO REDUCE THE FREQUENCY AND EFFECT OF MARKET TIMING. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.31 THE FUND'S BOARD HAS ADOPTED A POLICY THAT IS DESIGNED TO DETECT AND DETER MARKET TIMING. THE FUND SEEKS TO ENFORCE THIS POLICY AS FOLLOWS: - The Fund tries to distinguish market timing from trading that it believes is not harmful, such as periodic rebalancing for purposes of asset allocation or dollar cost averaging. Under the Fund's procedures, there is no set number of transactions in the Fund that constitutes market timing. Even one purchase and subsequent sale by related accounts may be market timing. Generally, the Fund seeks to restrict the exchange privilege of an investor who makes more than three exchanges into or out of the Fund in any 90-day period. Accounts held by a retirement plan or an institution for the benefit of its participants or clients, which typically engage in daily transactions, are not subject to this limit. The Fund seeks the assistance of financial intermediaries in applying similar restrictions on the sub-accounts of their participants or clients. - If an investor's trading activity is determined to be market timing or otherwise harmful to existing shareholders, the Fund reserves the right to modify or discontinue the investor's exchange privilege or reject the investor's purchases or exchanges, including purchases or exchanges accepted by a financial intermediary. The Fund may treat accounts it believes to be under common control as a single account for these purposes, although it may not be able to identify all such accounts. - Although the Fund does not knowingly permit market timing, it cannot guarantee that it will be able to identify and restrict all short-term trading activity. The Fund receives purchase and sale orders through financial intermediaries where market timing activity may not always be successfully detected. Other exchange policies: - Exchanges must be made into the same class of shares of the new fund. - If your exchange creates a new account, it must satisfy the minimum investment amount for new purchases. - Once we receive your exchange request, you cannot cancel it. - Shares of the new fund may not be used on the same day for another exchange. - If your shares are pledged as collateral, the exchange will be delayed until written approval is received from the secured party. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.32 SELLING SHARES You may sell your shares at any time. The payment will be mailed within seven days after your request is received in good order. When you sell shares, the amount you receive may be more or less than the amount you invested. Your sale price will be the next NAV calculated after your request is received in good order, minus any applicable CDSC. REPURCHASES. You can change your mind after requesting a sale and use all or part of the proceeds to purchase new shares in the same account from which you sold. If you reinvest in Class A, you will purchase the new shares at NAV rather than the offering price on the date of a new purchase. If you reinvest in Class B or Class C, any CDSC you paid on the amount you are reinvesting also will be reinvested. To take advantage of this waiver, you must send a written request within 90 days of the date your sale request was processed and include your account number. This privilege may be limited or withdrawn at any time and use of this option may have tax consequences. The Fund reserves the right to redeem in kind. For more details and a description of other sales policies, please see the SAI. If you decide to sell your shares within 30 days of a telephoned-in address change, a written request is required. IMPORTANT: Payments sent by a bank authorization, check or money order that are not guaranteed may take up to ten days to clear. This may cause your scheduled arrangement or unscheduled request to fail to process if the requested amount includes unguaranteed funds. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.33 WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES BY REGULAR OR EXPRESS MAIL AMERIPRISE FINANCIAL SERVICES 70200 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 Include in your letter: - your account number - the name of the fund(s) - the class of shares to be exchanged or sold - your Social Security number or Employer Identification number - the dollar amount or number of shares you want to exchange or sell - specific instructions regarding delivery or exchange destination - signature(s) of registered account owner(s) (All signatures may be required. Contact your financial advisor or Ameriprise Financial Services for more information.) - any paper certificates of shares you hold Payment will be mailed to the address of record and made payable to the names listed on the account, unless your request specifies differently and is signed by all owners. The express mail delivery charges you pay will vary depending on domestic or international delivery instructions. BY TELEPHONE (800) 297-7378 for brokerage accounts (800) 967-4377 for wrap accounts (800) 862-7919 for non-brokerage/wrap accounts - Reasonable procedures will be used to confirm authenticity of telephone exchange or sale requests. - Telephone exchange and sale privileges automatically apply to all accounts except custodial, corporate or qualified retirement accounts. You may request that these privileges NOT apply by writing the distributor. Each registered owner must sign the request. - Acting on your instructions, your financial advisor may conduct telephone transactions on your behalf. - Telephone privileges may be modified or discontinued at any time. MINIMUM SALE AMOUNT: $100 MAXIMUM SALE AMOUNT: $100,000 RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.34 BY WIRE You can wire money from your account to your bank account. Contact your financial advisor or Ameriprise Financial Services at the above numbers for additional information. - Minimum amount: $1,000 - Pre-authorization is required. - A service fee may be charged against your account for each wire sent. BY SCHEDULED PAYOUT PLAN - Minimum payment: $100* - Contact your financial advisor or Ameriprise Financial Services to set up regular payments. - Purchasing new shares while under a payout plan may be disadvantageous because of the sales charges. * Minimum is $50 in a non-brokerage/wrap account. ELECTRONIC TRANSACTIONS The ability to initiate transactions via the internet may be unavailable or delayed at certain times (for example, during periods of unusual market activity). The Fund and the distributor are not responsible for any losses associated with unexecuted transactions. In addition, the Fund and the distributor are not responsible for any losses resulting from unauthorized transactions if reasonable security measures are followed to validate the investor's identity. The Fund may modify or discontinue electronic privileges at any time for any shareholder without prior notice as deemed necessary and in the best interest of the Fund. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.35 DISTRIBUTIONS AND TAXES As a shareholder you are entitled to your share of the Fund's net income and net gains. The Fund distributes dividends and capital gains to qualify as a regulated investment company and to avoid paying corporate income and excise taxes. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS The Fund's net investment income is distributed to you as DIVIDENDS. Dividends may be composed of qualifying dividend income, which is eligible for preferential tax rates under current tax law, as well as other ordinary dividend income, which may include non-qualifying dividends, interest income and short-term capital gains. Capital gains are realized when a security is sold for a higher price than was paid for it. Each realized capital gain or loss is long-term or short-term depending on the length of time the Fund held the security. Realized capital gains and losses offset each other. The Fund offsets any net realized capital gains by any available capital loss carryovers. Net short-term capital gains are included in net investment income. Net realized long-term capital gains, if any, are distributed by the end of the calendar year as CAPITAL GAIN DISTRIBUTIONS. REINVESTMENTS Dividends and capital gain distributions are automatically reinvested in additional shares in the same class of the Fund, unless: - you request distributions in cash, or - you direct the Fund to invest your distributions in the same class of any publicly offered RiverSource fund for which you have previously opened an account. We reinvest the distributions for you at the next calculated NAV after the distribution is paid. If you choose cash distributions, you will receive cash only for distributions declared after your request has been processed. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.36 TAXES Distributions are subject to federal income tax and may be subject to state and local taxes in the year they are declared. You must report distributions on your tax returns, even if they are reinvested in additional shares. If you buy shares shortly before the record date of a distribution, you may pay taxes on money earned by the Fund before you were a shareholder. You will pay the full pre-distribution price for the shares, then receive a portion of your investment back as a distribution, which may be taxable. For tax purposes, an exchange is considered a sale and purchase, and may result in a gain or loss. A sale is a taxable transaction. If you sell shares for less than their cost, the difference is a capital loss. If you sell shares for more than their cost, the difference is a capital gain. Your gain may be short term (for shares held for one year or less) or long term (for shares held for more than one year). You may not create a tax loss, based on paying a sales charge, by exchanging shares within 91 days of purchase. If you buy Class A shares and within 91 days exchange into another fund, you may not include the sales charge in your calculation of tax gain or loss on the sale of the first fund you purchased. The sales charge may be included in the calculation of your tax gain or loss on a subsequent sale of the second fund you purchased. For more information, see the SAI. Selling shares held in an IRA or qualified retirement account may subject you to federal taxes, penalties and reporting requirements. Please consult your tax advisor. IMPORTANT: This information is a brief and selective summary of some of the tax rules that apply to this Fund. Because tax matters are highly individual and complex, you should consult a qualified tax advisor. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.37 FINANCIAL HIGHLIGHTS THE FINANCIAL HIGHLIGHTS TABLES ARE INTENDED TO HELP YOU UNDERSTAND THE FUND'S FINANCIAL PERFORMANCE. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE FUND SHARE. THE TOTAL RETURNS IN THE TABLES REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED OR LOST ON AN INVESTMENT IN THE FUND (ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THIS INFORMATION HAS BEEN AUDITED BY KPMG LLP, WHOSE REPORT, ALONG WITH THE FUND'S FINANCIAL STATEMENTS, IS INCLUDED IN THE ANNUAL REPORT WHICH, IF NOT INCLUDED WITH THIS PROSPECTUS, IS AVAILABLE UPON REQUEST. CLASS A
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003 2002(b) PER SHARE INCOME AND CAPITAL CHANGES(a) Net asset value, beginning of period $ 4.64 $ 4.53 $ 4.11 $ 5.00 ---------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04 .01 .01 -- Net gains (losses) (both realized and unrealized) .61 .32 .41 (.89) ---------------------------------------------------------------------------------------------------- Total from investment operations .65 .33 .42 (.89) ---------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) -- -- -- Distributions from realized gains (.01) (.22) -- -- ---------------------------------------------------------------------------------------------------- Total distributions (.03) (.22) -- -- ---------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.26 $ 4.64 $ 4.53 $ 4.11 ---------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1,029 $1,248 $ 83 $ 11 ---------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.11% 1.20% 1.25% 1.25%(e) ---------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .79% .36% .24% (.11%)(e) ---------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 128% 99% 135% 88% ---------------------------------------------------------------------------------------------------- Total return(f) 13.99% 7.19% 10.22% (17.80%)(g) ----------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from March 28, 2002 (when shares became publicly available) to July 31, 2002. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class A would have been 1.16%, 1.23%, 1.84% and 5.12% for the periods ended July 31, 2005, 2004, 2003 and 2002, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.38 CLASS B
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003 2002(b) PER SHARE INCOME AND CAPITAL CHANGES(a) Net asset value, beginning of period $ 4.56 $4.48 $4.10 $ 5.00 -------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) -- (.01) (.01) (.01) Net gains (losses) (both realized and unrealized) .60 .31 .39 (.89) -------------------------------------------------------------------------------------------------------- Total from investment operations .60 .30 .38 (.90) -------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Distributions from realized gains (.01) (.22) -- -- -------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.15 $4.56 $4.48 $ 4.10 -------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 472 $ 572 $ 36 $ 5 -------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.88% 1.95% 2.01% 2.01%(e) -------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .02% (.46%) (.52%) (.86%)(e) -------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 128% 99% 135% 88% -------------------------------------------------------------------------------------------------------- Total return(f) 13.09% 6.48% 9.27% (18.00%)(g) --------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from March 28, 2002 (when shares became publicly available) to July 31, 2002. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class B would have been 1.93%, 1.98%, 2.60% and 5.88% for the periods ended July 31, 2005, 2004, 2003 and 2002, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.39 CLASS C
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003 2002(b) PER SHARE INCOME AND CAPITAL CHANGES(a) Net asset value, beginning of period $ 4.57 $4.49 $4.10 $ 5.00 ------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) -- (.01) (.01) (.01) Net gains (losses) (both realized and unrealized) .60 .31 .40 (.89) ------------------------------------------------------------------------------------------------------- Total from investment operations .60 .30 .39 (.90) ------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Distributions from realized gains (.01) (.22) -- -- ------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.16 $4.57 $4.49 $ 4.10 ------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 9 $ 11 $ 2 $ -- ------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) 1.88% 1.98% 2.01% 2.01%(e) ------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets .02% (.43%) (.53%) (.92%)(e) ------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 128% 99% 135% 88% ------------------------------------------------------------------------------------------------------- Total return(f) 13.06% 6.46% 9.51% (18.00%)(g) -------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from March 28, 2002 (when shares became publicly available) to July 31, 2002. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class C would have been 1.93%, 2.01%, 2.60% and 5.88% for the periods ended July 31, 2005, 2004, 2003 and 2002, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.40 CLASS Y
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003 2002(b) PER SHARE INCOME AND CAPITAL CHANGES(a) Net asset value, beginning of period $ 4.66 $4.54 $ 4.11 $ 5.00 ------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04 .01 .01 -- Net gains (losses) (both realized and unrealized) .61 .34 .42 (.89) ------------------------------------------------------------------------------------------------------- Total from investment operations .65 .35 .43 (.89) ------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) (.01) -- -- Distributions from realized gains (.01) (.22) -- -- ------------------------------------------------------------------------------------------------------- Total distributions (.03) (.23) -- -- ------------------------------------------------------------------------------------------------------- Net asset value, end of period $ 5.28 $4.66 $ 4.54 $ 4.11 ------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ -- $ 8 $ -- $ -- ------------------------------------------------------------------------------------------------------- Ratio of expenses to average daily net assets(c),(d) .90% 1.00% 1.07% 1.07%(e) ------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average daily net assets 1.08% .50% .45% .09%(e) ------------------------------------------------------------------------------------------------------- Portfolio turnover rate (excluding short-term securities) 128% 99% 135% 88% ------------------------------------------------------------------------------------------------------- Total return(f) 14.06% 7.44% 10.46% (17.80%)(g) -------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from March 28, 2002 (when shares became publicly available) to July 31, 2002. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class Y would have been 0.95%, 1.03%, 1.66% and 4.94% for the periods ended July 31, 2005, 2004, 2003 and 2002, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.41 This Fund, along with the other RiverSource funds, is distributed by Ameriprise Financial Services, Inc. and can be purchased from Ameriprise Financial Services or from a limited number of other authorized financial intermediaries. The Fund can be found under the "RiverSource " banner in most mutual fund quotations. Additional information about the Fund and its investments is available in the Fund's SAI, and annual and semiannual reports to shareholders. In the Fund's annual report, you will find a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its most recent fiscal year. The SAI is incorporated by reference in this prospectus. For a free copy of the SAI, the annual report, or the semiannual report, or to request other information about the Fund or make a shareholder inquiry, contact your financial advisor, investment professional or Ameriprise Financial Services. Ameriprise Financial Services 70100 Ameriprise Financial Center Minneapolis, MN 55474 (800) 862-7919 TTY: (800) 846-4852 RiverSource Investments Website address: riversource.com/investments You may review and copy information about the Fund, including the SAI, at the Securities and Exchange Commission's (Commission) Public Reference Room in Washington, D.C. (for information about the public reference room call 1-202-942-8090). Reports and other information about the Fund are available on the EDGAR Database on the Commission's Internet site at www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-0102. Investment Company Act File #811-2111 TICKER SYMBOL Class A: ALEAX Class B: ALEBX Class C: ARQCX Class I: -- Class Y: ALEYX [RIVERSOURCE(TM) INVESTMENTS LOGO] RIVERSOURCE INVESTMENTS 200 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 S-6244-99 F (10/05) RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT D.42 EXHIBIT E BOARD EFFECTIVENESS COMMITTEE CHARTER RESOLVED, That the Board Effectiveness Committee be composed of the independent members appointed annually by the Board and the Chair of the Board; RESOLVED, That one member shall be appointed to Chair the Committee and the Committee shall meet upon call of the Chair; RESOLVED, That the Committee will make recommendations to the Board on: - The responsibilities and duties of the Board; - The criteria to be used to determine the size and structure of the Boards and the background and characteristics of independent Board members; - The persons to serve as Board members based on approved criteria whenever necessary to fill a vacancy or in conjunction with a regular meeting of shareholders in which nominees are required to be submitted for a vote of shareholders; - The annual evaluation of the Board's performance and the attendance of members; and - The compensation to be paid to independent members; and further RESOLVED, That the Committee shall be assigned such further areas of responsibility as appropriate to assist the Board in meeting its fiduciary duties in an efficient and effective manner. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT E.1 EXHIBIT F 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 compensations from the Fund except compensations for service as a member of the Board and Board committees. At least one member of the Committee shall be an "audit committee financial expert." An "audit committee financial expert" means a person who has the following attributes: - An understanding of generally accepted accounting principles and financial statements; - The ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves; - Experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant's financial statements, or experience actively supervising one or more persons engaged in such activities; - An understanding of internal controls and procedures for financial reporting; and - An understanding of audit committee functions. A person shall have acquired such attributes through: - Education and experience as a principal financial officer, principal accounting officer, controller, public accountant, or auditor or experience in one or more positions that involve the performance of similar functions; - Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor, or person performing similar functions; RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT F.1 - Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing, or evaluation of financial statements; or - Other relevant experience. The Board shall determine "audit committee financial experts" annually. PURPOSES OF THE COMMITTEE The Committee is to assist independent members of the Boards in fulfilling their oversight responsibilities to the shareholders, potential shareholders and investment community relating to the reliability of financial reporting, the effectiveness and efficiency of operations, the work done by external auditors, the adequacy of internal controls, and the compliance with applicable laws and regulations by: - Overseeing the accounting and financial reporting processes of the Fund and its internal control over financial reporting and, as the Committee deems appropriate, to inquire into the internal control over financial reporting of certain third-party service providers; - Overseeing, or, as appropriate, assisting Board oversight of, the quality and integrity of the Fund's financial statements and the independent audit thereof; - Overseeing, or, as appropriate, assisting Board oversight of, the Fund's compliance with legal and regulatory requirements that relate to the Fund's accounting and financial reporting, internal control over financial reporting and independent audits; and - Approving prior to appointment the engagement of the Fund's independent auditor (Auditor) and, in connection therewith, to review and evaluate the qualifications, independence and performance of the Fund's Auditor. The Auditor for the Fund shall report directly to the Committee. DUTIES AND POWERS To carry out its purposes, the Committee shall have the following duties and powers: - Recommend the Auditor that the Committee believes is qualified to examine and report on the financial statements to the independent members of the Board within 90 days before or after the fiscal year end of the Fund; - Meet with representatives of the Auditor to: - Review and evaluate matters potentially affecting its independence and capabilities by: - Approving prior to appointment the professional services the Auditor requests to perform for American Express Financial Corporation and any of its subsidiaries that provide services to the Fund; RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT F.2 - Considering the controls applied by the Auditor and measures taken by American Express Financial Corporation to assure that all items requiring pre-approval are identified and referred to the Committee in a timely fashion; and - Evaluating the auditor's independence by receiving a report on business relationships at each meeting setting forth the work it has been engaged to do for American Express Company or its subsidiaries. - Consider the scope of the annual audit and any special audits and review and approve the estimated fees to be charged; - Consider the information and comments from the Auditor with respect to the Fund's accounting and financial reporting policies, procedures and internal controls over financial reporting; the responses to the comments by American Express Financial Corporation; and possible improvements that can be made in the quality of the Fund's accounting and financial reporting; - Meet with representatives of American Express Enterprise Risk and Assurance Services to: - Discuss its responsibility to the Fund with respect to its review of operations of American Express Financial Corporation and affiliates to the extent they pertain to the registered investment companies; - Consider its authority, including the support it receives from American Express Financial Corporation's senior management and American Express Company's General Auditor; - Discuss whether it complies with the Institute of Internal Auditors' "Standard for the Professional Practice of Internal Auditing;" - Review its budget, staffing and proposed audit plans each year; and - Review reports issued by American Express Enterprise Risk and Assurance Services that pertain to American Express Financial Corporation's operations related to the registered investment companies. - Encourage open lines of communications among the Committee, the Auditor, and American Express Enterprise Risk and Assurance Services to: - Consider information and comments from the Auditor with respect to the Fund's financial statements, including any adjustments to such statements recommended by the Auditor and to review the opinion of the Auditor; - Resolve any disagreements between American Express Financial Corporation and the Auditor; - Review, in connection with required certifications of Form N-CSR, any significant deficiencies in the design or operations of internal control over financial reporting or material weaknesses therein and any reported evidence of fraud involving any person who has a significant role in the Fund's internal control over financial reporting; RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT F.3 - 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; - Investigate or initiate an investigation of reports of improprieties or suspected improprieties in connection with the Fund's accounting or financial reporting; - Consider the adequacy and effectiveness of internal controls, including the controls over computerized information systems, through discussions with the Auditor, American Express Enterprise Risk and Assurance Services and appropriate American Express Financial Corporation managers who provide reports to the Committee and elicit their recommendations for improving or identifying particular areas where new or more detailed controls or procedures are desirable giving particular emphasis to the adequacy of internal controls for exposing any payments, transactions, or procedures that might be deemed illegal or otherwise improper; - Request to be informed about all new or changed accounting principles and disclosure practices on a timely basis and inquire regarding the judgment and reasoning regarding the appropriateness, not just the acceptability, of the changes or proposed changes; - Report the work of the Committee to the Board as frequently as the Committee deems appropriate; - Review and assess the adequacy of the Committee's charter at least annually and recommend any changes to the Board; - Meet at least once a year in a private meeting with each of the three following groups: the Auditor, the American Express Financial Corporation's management personnel responsible for the financial statements and recordkeeping of the Fund, the Senior Vice President -- Enterprise Risk and Assurance Services for American Express Financial Corporation, and the General Auditor and Chief Operational Risk Officer for American Express Company; - Consider such other matters as any Board or Committee deems appropriate and perform such additional tasks as directed by resolution of any Board; - Conduct its own investigations into issues related to its responsibilities and is authorized to employ such professional and technical assistance as it deems necessary. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT F.4 The Committee shall have the resources and authority appropriate to discharge its responsibilities, including appropriate funding, as determined by the Committee, for payment of compensation to the Auditor for the purpose of conducting the audit and rendering their audit report, the authority to retain and compensate special counsel and other experts or consultants as the Committee deems necessary, and the authority to obtain specialized training for Committee members, at the expense of the Fund, as appropriate. The Committee may delegate any portion of its authority, including the authority to grant pre-approvals of audit and permitted non-audit services to one or more members. Any decisions of the member to grant pre-approvals shall be presented to the Committee at its next regularly scheduled meeting. ROLE AND RESPONSIBILITIES The function of the Committee is oversight; it is American Express Financial Corporation's responsibility to maintain appropriate systems for accounting and internal control over financial reporting, and the Auditor's responsibility to plan and carry out a proper audit. Specifically, American Express Financial Corporation is responsible for: (1) the preparation, presentation and integrity of the Fund's financial statements; (2) the maintenance of appropriate accounting and financial reporting principles and policies; and (3) the maintenance of internal control over financial reporting and other procedures designed to assure compliance with accounting standards and related laws and regulations. The Auditor is responsible for planning and carrying out an audit consistent with applicable legal and professional standards and the terms of their engagement letter. Nothing in the Charter shall be construed to reduce the responsibilities or liabilities of the Fund's service providers, including the Auditor. Although the Committee is expected to take a detached and questioning approach to the matters that come before it, the review of a Fund's financial statements by the Committee is not an audit, nor does the Committee's review substitute for the responsibilities of American Express Financial Corporation's for preparing, or the Auditor for auditing, the financial statements. Members of the Committee are not employees of the Fund and, in serving on this Committee, are not, and do not hold themselves out to be, acting as accountants or auditors. As such, it is not the duty or responsibility of the Committee or its members to conduct "field work" or other types of auditing or accounting reviews or procedures. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT F.5 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. OPERATIONS The Board shall adopt and approve this Charter and may amend it on the Board's own motion. The Committee shall review this Charter at least annually and recommend to the full Board any changes the Committee deems appropriate. The Committee may select one of its members to be the chair and may select a vice chair. A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. The action of a majority of the members of the Audit Committee present at a meeting at which a quorum is present shall be the action of the Committee. The Committee shall meet on a regular basis and at least four times annually and is empowered to hold special meetings as circumstances require. The Chairperson or a majority of the members shall be authorized to call a meeting of the Committee or meetings may be fixed in advance by the Committee. The agenda shall be prepared under the direction and control of the Chairperson. The Committee shall ordinarily meet in person; however, members may attend telephonically, and the Committee may act by written consent, to the extent permitted by law and by the Fund's bylaws. The Committee shall have the authority to meet privately and to admit non-members individually. The Committee may also request to meet with internal legal counsel and compliance personnel of American Express Financial Corporation and with entities that provide significant accounting or administrative services to the Fund to discuss matters relating to the Fund's accounting and compliance as well as other Fund-related matters. The Committee shall prepare and retain minutes of its meetings and appropriate documentation of decisions made outside of meetings by delegated authority. The Committee shall evaluate its performance at least annually. RIVERSOURCE NEW DIMENSIONS FUND -- PROXY STATEMENT F.6 S-6393 A (12/05)
ezVote(SM)Consolidated Proxy Card RIVERSOURCE(SM) FUNDS formerly known as American Express(R) Funds This form is your EzVote Consolidated Proxy. P.O. BOX 9132 It reflects all of your accounts registered to HINGHAM, MA 02043-9132 the same Social Security or Tax I.D. number at this address. By voting and signing the Consolidated Proxy Card, you are voting all of these accounts in the same manner as indicated on the reverse side of the form.
999 999 999 999 99 <- RIVERSOURCE(SM) FUNDS (formerly known as AMERICAN EXPRESS FUNDS) AXP DIMENSION SERIES, INC. PROXY FOR THE REGULAR MEETING OF SHAREHOLDERS RIVERSOURCE NEW DIMENSIONS FUND FEBRUARY 15, 2006 Your fund will hold a shareholders' meeting in the Galaxy Room on the 50th floor of the IDS Center, 80 South Eight 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 recommends that you vote FOR each proposal. The undersigned hereby appoints Arne H. Carlson and Leslie L. Ogg or either 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 New Dimensions EZ - DH IF VOTING THE CONSOLIDATED PROXY CARD DO NOT SIGN, DATE OR RETURN THE INDIVIDUAL BALLOTS
THREE EASY WAYS TO VOTE To vote by Telephone To vote by Internet To vote by Mail 1) Read the proxy statement and have the 1) Read the proxy statement and have 1) Read the Proxy Statement. Consolidated Proxy Card at hand. Consolidated Proxy Card at hand. 2) Check the appropriate boxes on the 2) Call 1-888-221-0697. 2) Go to www.proxyweb.com reverse side. 3) Follow the recorded instructions. 3) Follow the on-line directions. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided.
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR CARD.
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 New Dimensions EZ - DH
ezVote(SM)Consolidated Proxy Card Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X] PLEASE DO NOT USE FINE POINT PENS.
To vote FOR on all Proposals, MARK this box (no other vote is necessary) [ ] FOR AGAINST ABSTAIN 1. Approve the Agreement and Plan of Reorganization. [ ] [ ] [ ] 1. 2. ELECTION OF BOARD MEMBERS. FOR WITHHOLD FOR ALL ALL ALL EXCEPT (01) Kathleen Blatz (05) Jeffrey Laikind (09) Alan K. Simpson (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 [ ] [ ] [ ] 2. (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 below.) FOR AGAINST ABSTAIN 3. Approve an Amendment to the Articles of Incorporation. [ ] [ ] [ ] 3. 4. Approve an Investment Management Services Agreement with RiverSource Investments, LLC. [ ] [ ] [ ] 4. PLEASE SIGN AND DATE ON THE REVERSE SIDE. AMPF New Dimensions EZ - DH IF VOTING THE CONSOLIDATED PROXY CARD DO NOT SIGN, DATE OR RETURN THE INDIVIDUAL BALLOTS INDIVIDUAL BALLOTS NOTE: IF YOU HAVE USED THE CONSOLIDATED BALLOT ABOVE, DO NOT VOTE THE INDIVIDUAL BALLOTS BELOW.
000 0000000000 000 0 000 0000000000 000 0 JOHN Q. PUBLIC JOHN Q. PUBLIC 123 MAIN STREET 123 MAIN STREET ANYTOWN, MA 02030 999 999 999 999 99 ANYTOWN, MA 02030 999 999 999 999 99 RIVERSOURCE NEW DIMENSIONS FUND RIVERSOURCE NEW DIMENSIONS FUND FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 1. Approve the Agreement 1. Approve the Agreement and Plan of and Plan of Reorganization. [ ] [ ] [ ] Reorganization. [ ] [ ] [ ] 2. ELECTION OF BOARD 2. ELECTION OF BOARD MEMBERS. FOR WITHHOLD FOR ALL MEMBERS. FOR WITHHOLD FOR ALL (See Nominee list on ALL ALL EXCEPT* (See Nominee list on ALL ALL EXCEPT* consolidated ballot.) consolidated ballot.) *EXCEPT____________________ [ ] [ ] [ ] *EXCEPT____________________ [ ] [ ] [ ] FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 3. Amend the Articles of 3. Amend the Articles of Incorporation. [ ] [ ] [ ] Incorporation. [ ] [ ] [ ] 4. Approve Investment 4. Approve Investment Management Services Management Services Agreement. [ ] [ ] [ ] Agreement. [ ] [ ] [ ]
AMPF New Dimensions EZ - DH AXP(R) DIMENSIONS SERIES, INC. - RiverSource(SM) New Dimensions Fund (formerly AXP New Dimensions Fund) PROXY STATEMENT Dec. 16, 2005 HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR YOUR RIVERSOURCE MUTUAL FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT. Q: WHAT 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 ("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 (50% of existing shares), it will continue to contact shareholders asking them to vote. These efforts cost money -- so please, vote immediately. Q: WHAT AM I BEING ASKED TO VOTE ON? Shareholders are being asked to vote on: - The merger ("Reorganization") of RiverSource New Dimensions Fund and RiverSource Large Cap Equity Fund. - Election of Board members. - An amendment to the Fund's Articles of Incorporation to permit the Board to establish the minimum account value and to change the name of the corporation to "RiverSource" consistent with the name of the fund. - An Investment Management Services Agreement ("IMS Agreement") with RiverSource Investments. We encourage you to read the full text of the proxy statement to obtain a more detailed understanding of the issues. Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN? If shareholders approve the Reorganization, it will take place shortly after the shareholder meeting. In the interim, however, it will be important for the Fund to have a properly elected Board and an IMS agreement that has been approved by shareholders. Q: WHAT DO BOARD MEMBERS DO? Board members represent the interests of the shareholders and oversee the management of the fund. Q: WHAT CHANGES ARE PROPOSED TO THE INVESTMENT MANAGEMENT SERVICES AGREEMENT? In September, the Fund's investment manager, Ameriprise Financial was spun off from its parent company, American Express Company. The investment management functions were then moved to RiverSource Investments, a wholly-owned subsidiary of Ameriprise Financial. While this transfer did not cause a termination of the IMS Agreement, or otherwise affect its terms and conditions, the Board determined that it would be prudent to give shareholders an opportunity to vote on the IMS Agreement. The IMSAgreement also clarifies the circumstances under which the Board may change an index for purposes of calculating a performance incentive adjustment. Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE? After careful consideration, the Board recommends that you vote FOR each proposal. Q: HOW DO I VOTE? You can vote in one of four ways: - By mail with the enclosed proxy card - By telephone - By web site - In person at the meeting Please refer to the enclosed voting instruction card for the telephone number and internet address. Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS? If you have questions about any of the 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. RIVERSOURCE FUNDS (formerly known as American Express Funds) Principal Executive Office 901 Marquette Avenue South, Suite 2810 Minneapolis, MN 55402-3268 NOTICE OF A REGULAR MEETING OF SHAREHOLDERS TO BE HELD FEB. 15, 2006 AXP(R) STOCK SERIES, INC. - RiverSource Stock Fund (formerly AXP Stock Fund) RiverSource Stock Fund ("Stock" or the "Selling Fund") will hold a regular shareholders' meeting at 10:00 a.m. on Feb. 15, 2006 at the IDS Center, 80 S. Eighth Street, Minneapolis, MN on the 50th floor. At the meeting, shareholders will consider the following proposals: - To approve an Agreement and Plan of Reorganization (the "Agreement") between the Selling Fund and RiverSource Disciplined Equity Fund ("Disciplined Equity" or the "Buying Fund") (formerly AXP Quantitative Large Cap Equity Fund). Under this Agreement, the Selling Fund will transfer all of its assets attributable to Classes A, B, C, I and Y to the Buying Fund in exchange for corresponding Class A, B, C, I and Y shares of the Buying Fund. These shares will be distributed proportionately to you and the other shareholders of the Selling Fund. The Buying Fund will assume the Selling Fund's liabilities. - To elect Board members. - To amend the Articles of Incorporation. - To approve an Investment Management Services Agreement ("IMS Agreement") with RiverSource Investments, LLC. - Other business as may properly come before the meeting, or any adjournment of the meeting. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 1 Please take some time to read the proxy statement. It discusses the proposals in more detail. If you were a shareholder on Dec. 16, 2005, you may vote at the meeting or any adjournment of the meeting. We hope you can attend the meeting. For those of you who cannot attend, please vote by mail, telephone or internet. Just follow the instructions on the enclosed proxy card. If you have questions, please call your advisor or call client services toll free at (877) 256-6085. It is important that you vote. The Board of Directors (the "Board") recommends that you vote FOR each of the proposals. This proxy statement was first mailed to shareholders on or about Dec. 16, 2005. By order of the Board of Directors Leslie L. Ogg, Secretary Dec. 16, 2005 RIVERSOURCE STOCK FUND -- PROXY STATEMENT 2 COMBINED PROXY STATEMENT/PROSPECTUS DATED DEC. 16, 2005 This document is a proxy statement for Stock and a prospectus for Disciplined Equity (each individually a "Fund" and collectively the "Funds"). It contains the information you should know before voting on the proposals. Please read it carefully and keep it for future reference. The address of each of the Funds is 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268. The phone number for each of the Funds is (612) 330-9283. The following information describes the proposed reorganization of the Selling Fund into the Buying Fund (the "Reorganization"). HOW THE REORGANIZATION WILL WORK - The Selling Fund will transfer all of its assets to the Buying Fund. The Buying Fund will assume the Selling Fund's liabilities. - The Buying Fund will issue shares of Classes A, B, C, I and Y to the Selling Fund in an amount equal to the value of the assets of Classes A, B, C, I and Y that it receives from the Selling Fund, less the liabilities it assumes. These shares will be distributed to the Selling Fund's shareholders in proportion to their holdings in the Selling Fund. Selling Fund shareholders will not pay any sales charge in connection with this distribution of shares. FUND INVESTMENT OBJECTIVES The investment objective for each of the Funds is as follows: SELLING FUND: The Fund seeks to provide shareholders with current income and growth of capital. BUYING FUND: The Fund seeks to provide shareholders with long-term capital growth. Please note that the Fund is not a bank deposit, is not federally insured, is not endorsed by any bank or government agency and is not guaranteed to achieve its investment objective. As with all mutual funds, the Securities and Exchange Commission (the "SEC") has not approved or disapproved these securities or passed on the adequacy of this prospectus. Any representation to the contrary is a criminal offense. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 3 WHERE TO GET MORE INFORMATION THE BUYING FUND Most recent prospectus, dated Oct. 3, Accompanying, and incorporated by reference into, this 2005. proxy statement/prospectus. Most recent annual report, for the Incorporated by reference into this proxy period ended July 31, 2005. statement/prospectus. For a copy at no charge, call toll-free (800) 862-7919 or write to the address at the bottom of this table. THE SELLING FUND Most recent prospectus, dated Nov. 29, Incorporated by reference into this proxy 2005. statement/prospectus. For a copy at no charge, call toll-free (800) 862-7919 or write to the address at the bottom of this table. Most recent annual report, for the Incorporated by reference into this proxy period ended Sept. 30, 2005. statement/prospectus. For a copy at no charge, call toll-free (800) 862-7919 or write to the address at the bottom of this table. THIS PROXY STATEMENT/PROSPECTUS Statement of Additional Information Incorporated by reference into this proxy dated the same date as this proxy statement/prospectus. For a copy at no charge, statement/prospectus. This document call toll-free (877) 256-6085 or write to contains information about both the the address at the bottom of this table. Selling Fund and the Buying Fund. To ask questions about this proxy Call toll-free (877) 256-6085 or write to: statement/prospectus. RiverSource Service Corporation, 70100 Ameriprise Financial Center, Minneapolis, MN 55474.
RIVERSOURCE STOCK FUND -- PROXY STATEMENT 4 Each of the Funds is subject to the information requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 (the "1940 Act") and files reports, proxy materials and other information with the SEC. These reports, proxy materials and other information can be inspected and copied at the Public Reference Room maintained by the SEC. Copies may be obtained, after paying a duplicating fee, by electronic request at http://www.publicinfo@sec.gov, or by writing to the Public Reference Section of the SEC, Washington, D.C. 20549-0102. In addition, copies of these documents may be viewed on-line or downloaded from the SEC's Web site at http://www.sec.gov. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 5 TABLE OF CONTENTS PAGE SECTION A -- FUND PROPOSALS PROPOSAL 1. APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION 7 SUMMARY 7 How the Reorganization Will Work 7 Comparison of the Selling Fund and the Buying Fund 7 Risk Factors 13 Tax Consequences 14 FEES AND EXPENSES 15 THE REORGANIZATION 20 Terms of the Reorganization 20 Conditions to Closing the Reorganization 20 Termination of the Agreement 21 Tax Status of the Reorganization 21 Reasons for the Proposed Reorganization and Board Deliberations 24 Boards' Determinations 26 Recommendation and Vote Required 27 PROPOSAL 2. ELECT BOARD MEMBERS 28 PROPOSAL 3. APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES OF INCORPORATION 35 PROPOSAL 4. APPROVE OR REJECT AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH RIVERSOURCE INVESTMENTS, LLC 37 SECTION B -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION 45 SECTION C -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION 48 EXHIBITS A. Form of Agreement and Plan of Reorganization A.1 B. Matters Subject to Approval at Regular Meeting of Buying Fund B.1 C. Minnesota Business Corporation Act Sections 302A.471 and 302A.473 C.1 D. Most Recent Buying Fund Prospectus D.1 E. Board Effectiveness Committee Charter E.1 F. Joint Audit Committee Charter F.1 RIVERSOURCE STOCK FUND -- PROXY STATEMENT 6 SECTION A -- FUND PROPOSALS PROPOSAL 1. APPROVE OR REJECT THE AGREEMENT AND PLAN OF REORGANIZATION SUMMARY This proxy statement/prospectus is being used by the Selling Fund to solicit proxies to vote at a meeting of shareholders. Shareholders will consider a proposal to approve the Agreement providing for the Reorganization of the Selling Fund into the Buying Fund. A form of the Agreement is included in Exhibit A. The following is a summary. More complete information appears later in this proxy statement/prospectus. You should read the entire proxy statement/prospectus and the exhibits because they contain details that are not in the summary. HOW THE REORGANIZATION WILL WORK - The Selling Fund will transfer all of its assets to the Buying Fund. The Buying Fund will assume the Selling Fund's stated liabilities. - The Buying Fund will issue shares of Classes A, B, C, I and Y to the Selling Fund in an amount equal to the value of the assets of Classes A, B, C, I and Y that it receives from the Selling Fund, less the liabilities it assumes. These shares will be distributed to the Selling Fund's shareholders in proportion to their holdings in the Selling Fund. If you already have a Buying Fund account, shares distributed in the Reorganization will be added to that account. As a result, when average cost is calculated for income tax purposes, the cost of the shares in the two accounts you owned will be combined. - As part of the Reorganization, systematic transactions (such as bank authorizations and systematic payouts) currently set up for your Selling Fund account will be transferred to your new Buying Fund account. If you do not want your systematic transactions to continue, please contact your financial advisor to make changes. - Neither the Selling Fund nor the shareholders of the Selling Fund will pay any sales charge in connection with the Reorganization. - After the Reorganization is completed, current Selling Fund shareholders will be shareholders of the Buying Fund. The Selling Fund will be terminated. COMPARISON OF THE SELLING FUND AND THE BUYING FUND Both the Selling Fund and the Buying Fund: - Are structured as a series of capital stock of an open-end management investment company organized as a Minnesota corporation. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 7 - Have RiverSource Investments, LLC (the "investment manager" or "RiverSource Investments") as an investment adviser. - Have the same policies for buying and selling shares and the same exchange rights. - Have the same distribution policies, although the Selling Fund pays dividends quarterly and the Buying Fund pays dividends annually. - Have different classes of shares: Classes A, B, C, I and Y. COMPARISON OF INVESTMENT OBJECTIVES The investment objectives for the Funds are as follows: SELLING FUND: The Fund seeks to provide shareholders with current income and growth of capital. BUYING FUND: The Fund seeks to provide shareholders with long-term capital growth. COMPARISON OF INVESTMENT STRATEGIES Although both Funds have adopted policies to invest at least 80% of net assets in common stocks, the Selling Fund may also count securities convertible into common stocks toward this 80% test. As part of its income objective, the Selling Fund may invest in income-producing equity securities and short-term debt instruments. Additionally, while the Buying Fund is run 100% as a quantitative fund, where portfolio managers select stocks based on sophisticated statistical analysis, the Selling Fund is run 50% using these same quantitative methodologies and 50% using more traditional stock picking methodologies. Prior to October 2005, a larger percentage of the Selling Fund was run using these more traditional stock picking methodologies. Detailed strategies for the Selling Fund and the Buying Fund are set forth below: STOCK (SELLING FUND): The Fund's assets primarily are invested in common stocks and securities convertible into common stocks. Under normal market conditions, at least 80% of the Fund's net assets are invested in these securities. In pursuit of its income objective, the Fund will invest in income-producing equity securities (such as convertible securities and preferred stocks) and short-term debt instruments (such as commercial paper). The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. In pursuit of the Fund's objective, the investment manager uses two different approaches to the selection of equity investments. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 8 With respect to approximately 50% of the Fund's portfolio, the investment manager uses a traditional stock selection methodology and chooses investments by: - Considering opportunities and risks by reviewing overall market conditions and industry outlook. - Identifying market trends that the investment manager believes will lead to good long-term growth potential. - Identifying companies with strong, sustainable earnings growth based on: - effective management, as demonstrated by overall performance, - competitive market position, and - financial strength. - Focusing on those companies that the investment manager considers to be blue chips. Blue chip stocks are issued by companies with a market capitalization of at least $1 billion, an established management, a history of consistent earnings and a leading position within their respective industries. - Identifying investments that contribute to portfolio diversification. - Identifying income-producing securities. In evaluating whether to sell a security, the investment manager considers, among other factors, whether: - The security is overvalued relative to other potential investments. - The security has reached the investment manager's price objective. - The company has met the investment manager's earnings and/or growth expectations. - Political, economic or other events could affect the company's performance. With respect to approximately 50% of the Fund's portfolio, the investment manager uses proprietary quantitative methods based on sophisticated statistical analysis and chooses investments by: The universe of stocks from which the investment manager selects the Fund's investments will be those included in the Fund's benchmark, the Standard & Poor's 500 Index (S&P 500 Index). Through extensive analysis of the domestic equity markets, the investment manager has identified characteristics of certain stocks that have historically outperformed their benchmarks. The Fund will hold both growth and value stocks. Characteristics used to select stocks for the Fund include: - Superior growth characteristics such as: - strong earnings growth, - positive earnings that exceed expectations published by third-party business analysts, RIVERSOURCE STOCK FUND -- PROXY STATEMENT 9 - consistency of earnings, and - strong positive price trend. - Superior value characteristics based on analysis of current stock prices relative to estimates of future prices. In selecting the stocks from the S&P 500 Index for the Fund's portfolio, the investment manager employs a rigorous process for evaluating the relationship between the risk associated with each security and its potential for positive returns. This process includes factors such as: - Limits on positions relative to the benchmark through overweighting or underweighting. - Limits on sector and industry allocations relative to the benchmark. - Limits on size of holdings relative to market liquidity. DISCIPLINED EQUITY (BUYING FUND): Under normal market conditions, at least 80% of the Fund's net assets are invested in equity securities of companies listed on U.S. exchanges with market capitalizations greater than $5 billion at the time of purchase. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. In pursuit of the Fund's objective, the investment manager will choose equity investments by employing proprietary quantitative methods based on sophisticated statistical analysis. The universe of stocks from which the investment manager selects the Fund's investments primarily will be those included in the Fund's benchmark, the S&P 500. Through extensive analysis of the domestic equity markets, the investment manager has identified characteristics of certain stocks that have historically outperformed their benchmarks. The Fund will hold both growth and value stocks. Characteristics used to select stocks for the Fund include: - Superior growth characteristics such as: - strong earnings growth, - positive earnings that exceed expectations published by third-party business analysts, - consistency of earnings, and - strong positive price trend. - Superior value characteristics based on analysis of current stock prices relative to estimates of future prices. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 10 In selecting the stocks for the Fund's portfolio, the investment manager employs a rigorous process for evaluating the relationship between the risk associated with each security and its potential for positive returns. This process includes factors such as: - Limits on positions relative to the benchmark through overweighting or underweighting. - Limits on sector and industry allocations relative to the benchmark. - Limits on size of holdings relative to market liquidity. BOTH FUNDS: - UNUSUAL MARKET CONDITIONS. During unusual market conditions, each of the Funds may temporarily invest more of its assets in money market securities than during normal market conditions. Although investing in these securities would serve primarily to avoid losses, this type of investing also could prevent the Fund from achieving its investment objective. During these times, the portfolio managers may make frequent securities trades that could result in increased fees, expenses and taxes, and decreased performance. - OTHER INVESTMENT STRATEGIES. Each Fund may invest in other securities and may use other investment strategies that are not principal investment strategies. Additionally, each Fund may use derivatives (financial instruments where the value depends upon, or is derived from, the value of something else) such as futures, options and forward contracts, to produce incremental earnings, to hedge existing positions or to increase flexibility. Just as with securities in which the Fund invests directly, derivatives are subject to a number of risks, including market, liquidity, interest rate and credit risk. In addition, a relatively small price movement in the underlying security, currency or index may result in a substantial gain or loss for the Fund using derivatives. Even though the Fund's policies permit the use of derivatives in this manner, the portfolio managers are not required to use derivatives. COMPARISON OF FUNDAMENTAL POLICIES The Buying Fund shareholders will vote on changes to the fundamental policies for the Buying Fund at a meeting scheduled to be held on the same day as the Selling Fund shareholder meeting. The proposed changes are shown in Exhibit B. If all of the proposed changes to the Buying Fund's fundamental policies are approved, the differences in investment policies will be as follows: Both Funds have substantially similar fundamental investment policies. The Buying Fund has a policy permitting borrowing money for temporary purposes in an amount not exceeding one-third of the market value of its total assets. The Selling Fund has a similar policy that applies to money or property and permits borrowing only for extraordinary or emergency purposes. The Buying Fund has a policy prohibiting the issuing of senior securities, except as RIVERSOURCE STOCK FUND -- PROXY STATEMENT 11 permitted under the 1940 Act. Even though this is not stated as a fundamental policy of the Selling Fund, the Fund is nonetheless subject to that restriction under the provisions of the 1940 Act. The Buying Fund has a policy that it will not purchase more than 10% of the outstanding voting securities of an issuer, except up to 25% of its total assets may be invested without regard to this 10% limitation. The Selling Fund has a similar policy, but does not have the 25% exception. The Buying Fund has a policy that it will not invest more than 5% of its total assets in securities of any one company, government or political subdivision thereof, except the limitation will not apply to investments in securities issued by the U.S. government, its agencies, or instrumentalities or other investment companies, and except that up to 25% of its total assets may be invested without regard to this 5% limitation. The Selling Fund has a similar policy, but does not include other investment companies in the exception. The Buying Fund has a policy permitting the Fund to lend fund securities and participate in an interfund lending program up to 33 1/3% of the value of the fund's total assets. This policy does not prohibit the Buying Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchase agreements. The Selling Fund has a policy permitting the Selling Fund to lend fund securities up to 30% of its net assets. In addition, the Selling Fund has a policy that it may make cash loans up to 5% of its total assets. The Buying Fund has a policy prohibiting loans of any part of its assets to the investment manager, its board members and officers and to the board members and officers of the Buying Fund. Even though this is not stated as the fundamental policy of the Selling Fund, the Fund is nonetheless subject to that restriction under the provisions of the 1940 Act. If shareholders of the Selling Fund approve the Reorganization, they will be subject to the fundamental investment policies of the Buying Fund. The investment manager does not believe that the differences between the fundamental investment policies will result in any material difference in the way the Funds are managed. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 12 RISK FACTORS The principal risks of investing in each of the Selling Fund and the Buying Fund are similar. However, because more of its net assets are dedicated to quantitative methodologies, the Buying Fund may have increased exposure to the potential risks of such quantitative methodologies. These risks are highlighted under Market Risk. The principal risks associated with an investment in each of the Buying Fund and the Selling Fund are shown below:
RISK STOCK DISCIPLINED EQUITY Active Management Risk x x Issuer Risk x x Market Risk x x
- ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. - ISSUER RISK. An issuer may perform poorly and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. - MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid-sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperform other mutual funds if that style falls out of favor with the market. The quantitative methodology employed by the investment manager has been extensively tested using historical securities market data, but has only recently begun to be used to manage open-end mutual funds. There can be no assurance that the methodology will enable the Fund to achieve its objective. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 13 PERFORMANCE Performance information for Class A shares of the Funds is shown below. TABLE A-1 AVERAGE ANNUAL TOTAL RETURNS AS OF SEPT. 30, 2005(a)
SINCE INCEPTION FUND 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE Stock 6.11% -3.66% 5.84% N/A N/A Disciplined Equity 8.92% N/A N/A 13.09% 4/24/2003
(a) Returns include the 5.75% Class A sales charge. TAX CONSEQUENCES The Reorganization is expected to be tax-free for federal income tax purposes and will not take place unless the Selling Fund and the Buying Fund receive a satisfactory opinion of tax counsel, substantially to that effect. Accordingly, no gain or loss is expected to be recognized by the Selling Fund or its shareholders as a direct result of the Reorganization. Prior to or after completion of the Reorganization, no major sell-offs to realign the portfolio are expected in relation to, or as a result of the Reorganization. However, the Reorganization will end the tax year of the Selling Fund, and so it will accelerate distributions from the Selling Fund for its short tax year ending on the date of the Reorganization to shareholders. Those tax year-end distributions, which are taxable, will also include any capital gains resulting from portfolio turnover prior to the implementation of the Reorganization. At any time prior to the consummation of the Reorganization a shareholder may redeem shares. This would likely result in recognition of gain or loss to the shareholder for federal income tax purposes. The tax basis and holding period of the shareholders' Selling Fund shares are expected to carry over to the shareholders' new shares in the Buying Fund. For more information about the federal income tax consequences of the Reorganization, see the section entitled "Tax Status of the Reorganization." RIVERSOURCE STOCK FUND -- PROXY STATEMENT 14 FEES AND EXPENSES The following table describes the fees and expenses, adjusted to reflect current fees, that you pay if you buy and hold shares of the Selling Fund or shares of the Buying Fund. The table also shows pro forma expenses of the Buying Fund assuming the proposed Reorganization had been effective during the most recent fiscal year, adjusted to reflect current fees. If shareholders approve the Reorganization, for a period of 12 months following implementation of the Reorganization, the investment manager and its affiliates have agreed to waive fees or to cap expenses of the Buying Fund sufficient to keep total expenses within 5 basis points (0.05%) of the Selling Fund's expense ratio at the time of the Reorganization. For a period of 5 years following the 12-month period, the investment manager and its affiliates have agreed to waive fees or to cap expenses of the Buying Fund at the median expense ratio of the Buying Fund's Lipper peer group. The level of the Buying Fund's expense cap will be reviewed and reset annually by the Buying Fund's Board. For purposes of these calculations, the expense ratio will be determined prior to application of the performance incentive adjustment. The fees and expenses below exclude the costs of this Reorganization as these will be paid by Ameriprise Financial. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 15 TABLE A-2 ACTUAL AND PRO FORMA FUND EXPENSES FOR THE MOST RECENT FISCAL YEAR SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS I CLASS Y Maximum sales charge (load) imposed on purchases(a) as a percentage of offering price 5.75% none none none none Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) none(b) 5% 1% none none
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS:
CLASS A CLASS B CLASS C CLASS I CLASS Y STOCK (SELLING FUND)(c) Management fees(d) 0.48% 0.48% 0.48% 0.48% 0.48% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00% Other expenses(e) 0.20% 0.23% 0.23% 0.10% 0.29% Total 0.93% 1.71% 1.71% 0.58% 0.77% DISCIPLINED EQUITY (BUYING FUND) Management fees(f) 0.62% 0.62% 0.62% 0.62% 0.62% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00% Other expenses(e) 0.49% 0.52% 0.52% 0.29% 0.57% Total 1.36% 2.14% 2.14% 0.91% 1.19% Fee waiver/expense reimbursement 0.09% 0.08% 0.06% 0.00% 0.11% Net expenses(g) 1.27% 2.06% 2.08% 0.91% 1.08% DISCIPLINED EQUITY - PRO FORMA WITH STOCK Management fees(f) 0.60% 0.60% 0.60% 0.60% 0.60% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% 0.00% Other expenses(i) 0.21% 0.24% 0.23% 0.09% 0.29% Total 1.06% 1.84% 1.83% 0.69% 0.89% Fee waiver/expense reimbursement 0.04% 0.04% 0.04% 0.03% 0.03% Net expenses(h) 1.02% 1.80% 1.79% 0.66% 0.86%
NOTES TO ANNUAL FUND OPERATING EXPENSES. (a) This charge may be reduced depending on the value of your total investments in RiverSource funds. (b) For Class A purchases over $1,000,000 on which no sales charge is assessed, a 1% sales charge may apply if you sell your shares within one year after purchase. (c) Stock is a feeder fund that is part of a master/feeder structure. For Stock, both in this table and the following example fund operating expenses include expenses charged by both the Fund and its master portfolio. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 16 NOTES TO ANNUAL FUND OPERATING EXPENSES (CONTINUED). (d) The management fee rate is the actual fee rate charged as of fiscal year ended Sept. 30, 2005. It includes the impact of a performance incentive adjustment fee that decreased the management fee by 0.02% for the fiscal year ended Sept. 30, 2005 for Stock. The index against which Stock's performance is measured for purposes of determining the performance incentive adjustment is the Lipper Large-Cap Core Funds Index. (e) Other expenses include an administrative services fee, a transfer agency fee, a custody fee and other nonadvisory expenses and, for Class Y shares, a shareholder service fee. The other expense ratios shown in this chart have been adjusted to reflect the new administrative fee that went into effect in Oct. 2005. (f) The management fee ratio shown reflects what the ratio would be based on the Fund's average net assets as of July 31, 2005 under the proposed management fee schedule. The ratio includes the impact of a performance incentive adjustment fee that increased the management fee by .02% for the most recent fiscal year for Disciplined Equity. The index against which Disciplined Equity's performance is measured for purposes of determining the performance incentive adjustment is the Lipper Large-Cap Core Funds Index. (g) For Disciplined Equity, the investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until July 31, 2006, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net expenses, before giving effect to any performance incentive adjustment (.02% increase for the most recent fiscal year), will not exceed 1.25% for Class A, 2.04% for Class B, 2.06% for Class C, 0.93% for Class I and 1.06% for Class Y. (h) If shareholders approve the Reorganization, the investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses for six years following implementation of the Reorganization, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, in year one, net expenses, before giving effect to any performance incentive adjustment (.02% increase for the most recent fiscal year), will not exceed 1.00% for Class A, 1.78% for Class B, 1.77% for Class C, 0.64% for Class I and 0.84% for Class Y. In years two through six after the merger, expense caps of the Buying Fund will be at the median expense ratio of the Buying Fund Lipper peer group reviewed and reset annually by the Board. (i) Other expenses include an administrative services fee, a transfer agency fee, a custody fee and other nonadvisory expenses and, for Class Y shares, a shareholder service fee. The other expense ratios shown have been adjusted to reflect the new administrative fee that went into effect in October 2005. In addition, these ratios have been adjusted to reflect closed account fees for accounts that will be closed following the Reorganization. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 17 EXAMPLE: These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods indicated under the current arrangements and if the proposed Reorganization had been in effect. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS STOCK (SELLING FUND) Class A(a) $664 $ 855 $1,061 $1,656 Class B $674(b) $ 939(b) $1,129(b) $1,817(c) Class C $274(b) $ 539 $ 929 $2,024 Class I $ 59 $ 186 $ 324 $ 729 Class Y $ 79 $ 246 $ 429 $ 958 DISCIPLINED EQUITY (BUYING FUND)(d) Class A(a) $697 $ 973 $1,270 $2,113 Class B $709(b) $1,063(b) $1,343(b) $2,272(c) Class C $311(b) $ 665 $1,145 $2,472 Class I $ 93 $ 290 $ 505 $1,124 Class Y $110 $ 367 $ 645 $1,438 DISCIPLINED EQUITY - PRO FORMA WITH STOCK(d) Class A(a) $673 $ 887 $1,119 $1,786 Class B $683(b) $ 973(b) $1,189(b) $1,945(c) Class C $282(b) $ 572 $ 988 $2,150 Class I $ 67 $ 218 $ 382 $ 859 Class Y $ 88 $ 281 $ 491 $1,098
(a) Includes a 5.75% sales charge. (b) Includes the applicable contingent deferred sales charge. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. (d) Includes new expense waivers in year 1 only. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 18 You would pay the following expenses if you did not redeem your shares.
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS STOCK (SELLING FUND) Class A(a) $664 $855 $1,061 $1,656 Class B $174 $539 $ 929 $1,817(c) Class C $174 $539 $ 929 $2,024 Class I $ 59 $186 $ 324 $ 729 Class Y $ 79 $246 $ 429 $ 958 DISCIPLINED EQUITY (BUYING FUND)(c) Class A(a) $697 $973 $1,270 $2,113 Class B $209 $663 $1,143 $2,272(b) Class C $211 $665 $1,145 $2,472 Class I $ 93 $290 $ 505 $1,124 Class Y $110 $367 $ 645 $1,438 DISCIPLINED EQUITY - PRO FORMA WITH STOCK(c) Class A(a) $673 $887 $1,119 $1,786 Class B $183 $573 $ 989 $1,945(b) Class C $182 $572 $ 988 $2,150 Class I $ 67 $218 $ 382 $ 859 Class Y $ 88 $281 $ 491 $1,098
(a) Includes a 5.75% sales charge. (b) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. (c) Includes new expense waivers for year 1 only. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 19 THE REORGANIZATION TERMS OF THE REORGANIZATION The Board has approved the Agreement, a copy of which is attached as Exhibit A. The Agreement provides for Reorganization on the following terms: - The Reorganization is scheduled to occur on the first day that the New York Stock Exchange is open for business following shareholder approval and receipt of any necessary regulatory approvals, but may occur on any later date agreed to by the Selling Fund and the Buying Fund. - The Selling Fund will transfer all of its assets to the Buying Fund and, in exchange, the Buying Fund will assume the Selling Fund's stated liabilities. - The Buying Fund will issue Class A, B, C, I and Y shares to the Selling Fund in an amount equal to the value of the assets of Classes A, B, C, I and Y that it receives from the Selling Fund, less the liabilities assumed by the Buying Fund in the transaction. These shares will immediately be distributed by the Selling Fund to its shareholders in proportion to their holdings in the Selling Fund. As a result, shareholders of the Selling Fund will become Class A, B, C, I or Y shareholders of the Buying Fund. - Neither the Selling Fund nor the shareholders of the Selling Fund will pay any sales charge in connection with the Reorganization. - The net asset value of the Selling Fund and the Buying Fund will be computed as of 3:00 p.m. Central time, on the closing date. - After the Reorganization, the Selling Fund will be terminated. CONDITIONS TO CLOSING THE REORGANIZATION The completion of the Reorganization is subject to certain conditions described in the Agreement, including: - The Selling Fund will have declared and paid a dividend that will distribute all of the Fund's taxable income, if any, to the shareholders of the Fund for the taxable years ending at or prior to the closing. - The Funds will have received any approvals, consents or exemptions from the SEC or any regulatory body necessary to carry out the Reorganization. - A registration statement on Form N-14 will have been filed with the SEC and declared effective. - The shareholders of the Selling Fund will have approved the Agreement. - The Selling Fund will have received an opinion of tax counsel that the proposed Reorganization will result in no gain or loss being recognized by any shareholder. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 20 TERMINATION OF THE AGREEMENT The Agreement and the transactions contemplated by it may be terminated and abandoned by resolutions of the Board of the Selling Fund or the Buying Fund at any time prior to closing. In the event of a termination, there will be no liability for damages on the part of either the Selling Fund or the Buying Fund or the Board members, officers or shareholders of the Selling Corporation or of the Buying Corporation. TAX STATUS OF THE REORGANIZATION The Reorganization is expected to be tax-free for federal income tax purposes and will not take place unless the Selling Fund and the Buying Fund receive a satisfactory opinion of tax counsel (which opinion will be based on certain factual representations and certain customary assumptions), to the effect that, although not entirely free from doubt, on the basis of existing provisions of the Internal Revenue Code of 1986, as amended (the "Code"): - The transfer of the Selling Fund's assets to the Buying Fund in exchange for Class A, B, C, I and Y shares of the Buying Fund and the assumption of the Selling Fund's liabilities, followed by the distribution of those Class A, B, C, I and Y shares to the Selling Fund's shareholders and the termination of the Selling Fund will be a "reorganization" within the meaning of Section 368(a)(1) of the Code, and the Selling Fund and the Buying Fund will each be a "party to the reorganization" within the meaning of Section 368(b) of the Code. - Under Section 361 of the Code, no gain or loss will be recognized by the Selling Fund upon the transfer of all of its assets to the Buying Fund or on the distribution by the Selling Fund of Class A, B, C, I and Y shares of the Buying Fund to Selling Fund shareholders in liquidation. - Under Section 354 of the Code, the shareholders of the Selling Fund will not recognize gain or loss upon the exchange of their Class A, B, C, I or Y shares of the Selling Fund solely for Buying Fund Class A, B, C, I or Y shares as part of the Reorganization. - Under Section 358 of the Code, the aggregate basis of the Class A, B, C, I or Y shares of the Buying Fund that a Selling Fund shareholder receives in the Reorganization will be the same as the aggregate basis of the Class A, B, C, I or Y shares of the Selling Fund exchanged therefor. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 21 - Under Section 1223(1) of the Code, the holding period for the Class A, B, C, I or Y shares of the Buying Fund that a Selling Fund shareholder receives in the Reorganization will include the period for which he or she held the Class A, B, C, I or Y shares of the Selling Fund exchanged therefor, provided that on the date of the exchange he or she held such Selling Fund shares as capital assets. - Under Section 1032 of the Code, no gain or loss will be recognized by the Buying Fund upon the receipt of the Selling Fund's assets solely in exchange for the issuance of Buying Fund's Class A, B, C, I and Y shares to the Selling Fund and the assumption of all of the Selling Fund's liabilities by the Buying Fund. - Under Section 362(b) of the Code, the Buying Fund's tax basis in the assets that the Buying Fund receives from the Selling Fund will be the same as the Selling Fund's tax basis in those assets immediately prior to the transfer. - Under Section 1223(2) of the Code, the Buying Fund's holding periods in the assets received from the Selling Fund will include the Selling Fund's holding periods in such assets. - Under Section 381 of the Code, the Buying Fund will succeed to and take into account the items of the Selling Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and Regulations thereunder. Tax counsel will express no view with respect to the effect of the Reorganization on any transferred asset as to which any unrealized gain or loss is required to be recognized at the end of a taxable year (or on the termination or transfer thereof) under federal income tax principles. Prior to the closing of the Reorganization, the Selling Fund will, and the Buying Fund may, declare a distribution to shareholders, which together with all previous distributions, will have the effect of distributing to shareholders all of its investment company taxable income (computed without regard to the deduction for dividends paid) and net realized capital gains (after reduction by any available capital loss carryforwards), if any, through the closing of the Reorganization. These distributions will be taxable to shareholders. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 22 A fund's ability to carry forward capital losses and use them to offset future gains may be limited. First, one fund's "pre-acquisition losses" (including capital loss carryforwards, net current-year capital losses, and unrealized losses that exceed certain thresholds) cannot be used to offset unrealized gains in another fund that are "built in" at the time of the reorganization and that exceed certain thresholds ("non-de minimis built-in gains") for five tax years. Second, a portion of a fund's pre-acquisition losses may become unavailable to offset any gains at all. Third, any remaining pre-acquisition losses will offset capital gains realized after a reorganization and thus will reduce subsequent capital gain distributions to a broader group of shareholders than would have been the case absent such reorganization. Therefore, in certain circumstances, former shareholders of a fund may pay taxes sooner, or pay more taxes, than they would have had a reorganization not occurred. The Buying Fund's ability to carry forward its own pre-acquisition losses, if any, and use them to offset future gains will technically be limited as a result of the Reorganization due to the effect of loss limitation rules under applicable tax law. The effect of this limitation will depend on the losses and gains in each fund at the time of the Reorganization. For example, based on data as of Aug. 31, 2005, such limitation would have had no impact at all as neither the Buying Fund nor the Selling Fund had pre-Reorganization "net losses" (i.e., capital loss carryforwards as of its last fiscal year end as adjusted by year-to-date realized gains or losses and all net unrealized gains). For five years beginning after the closing date, the combined fund will not be allowed to offset gains "built in" to either fund at the time of the Reorganization against capital losses (including capital loss carryforwards) built in to the other fund. The realized and unrealized gains and losses of each Fund at the time of the Reorganization will determine the extent to which the combining Funds' respective losses, both realized and unrealized, will be available to reduce gains realized by the combined Fund following the Reorganization, and consequently the extent to which the combined Fund may be required to distribute gains to its shareholders earlier than would have been the case absent the Reorganization. This description of the federal income tax consequences of the Reorganization does not take into account your particular facts and circumstances. Consult your own tax adviser about the effect of state, local, foreign, and other tax laws. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 23 REASONS FOR THE PROPOSED REORGANIZATION AND BOARD DELIBERATIONS The Board believes that the proposed Reorganization will be advantageous to Selling Fund shareholders based on its considerations of the following matters: - TERMS AND CONDITIONS OF THE REORGANIZATION. The Board considered the terms and conditions of the Reorganization as described in the previous paragraphs. - TAX CONSEQUENCES. The Board considered the tax-free nature of the Reorganization. - CONTINUITY OF INVESTMENT. The Board took into account the fact that, because the Selling Fund is substantially larger than the Buying Fund, the portfolio of the combined Fund, following the Reorganization, will be represented mostly by the current holdings of the Selling Fund. The Board also considered the compatibility of the two portfolios. While the Board recognized that the two Funds have different investment objectives (e.g., the Selling Fund, unlike the Buying Fund, seeks current income in addition to capital growth) and different approaches (as half of the Selling Fund's portfolio is managed using a different strategy than that employed for the Buying Fund), the Board took into account the general compatibility of the two portfolios in that both Funds invest primarily in a portfolio of large cap stocks and are managed using the same benchmarks. The Board also took into account, in this regard, that like the Selling Fund (and consistent with the income element of its objective), a large percentage of the Buying Fund's portfolio consists of dividend-paying stocks. - EXPENSE RATIOS. The Board considered the relative expenses of the Funds and took into account that, as of the end of each Fund's most recent fiscal year, the expense ratios for the Buying Fund were higher than the expense ratios for the Selling Fund. For example, the Selling Fund's expense ratio for Class A shares as of Sept. 30, 2005 fiscal year end, adjusted to reflect current fees after giving effect to the performance incentive adjustment was 0.93% (0.95%, before giving effect to any performance incentive adjustment). The Buying Fund's expense ratio for Class A shares as of July 31, 2005, its most recent fiscal year end, adjusted to reflect current fees, was capped at 1.25%, before giving effect to any performance adjustment (1.27% after giving effect to the performance incentive adjustment). The Board accorded weight to the fact that, if shareholders approve the Reorganization, the investment manager has agreed to cap total expenses of the Buying Fund as follows: (i) for a period of 12 months following implementation of the Reorganization, the investment manager and its affiliates will waive fees or cap expenses of the Buying Fund sufficient to keep total expenses within 5 basis points (0.05%) of the Selling Fund's expense ratio at the time of the Reorganization; and (ii) for a period of 5 years following the 12-month period, the investment RIVERSOURCE STOCK FUND -- PROXY STATEMENT 24 manager and its affiliates will waive fees or cap expenses so that the Buying Fund's expense ratio is at or below the median expense ratio of comparable funds sold through investment advisers in the Buying Fund's Lipper peer group. (For purposes of these calculations, the expense ratio will be determined prior to application of the performance incentive adjustment.) The Board further accorded weight to the fact that the Buying Fund's current expense ratio was below the median expense ratio of its Lipper peer group and that, as a result, the current pricing of the Fund was in line with the "pricing philosophy" of the RiverSource Fund family. - ECONOMIES OF SCALE. The Board believes that by combining the Funds, the shareholders continue to have available to them a Fund with a portfolio of larger capitalization stocks, but can at the same time take advantage of the economies of scale associated with a larger fund. Furthermore, a larger fund should have an enhanced ability to effect portfolio transactions on more favorable terms and should have greater investment flexibility. For example, expenses such as audit expenses and accounting expenses that are charged on a per fund basis will be reduced. In addition, if shareholders approve the Reorganization, the investment manager and its affiliates have agreed to cap total expenses of the Buying Fund as discussed in the paragraph on Expense Ratios. - COSTS. The Board considered the fact that the investment manager has agreed to bear all solicitation expenses in order to achieve shareholder approval of the Reorganization and to bear any other costs of effecting the Reorganization (i.e., the filing, closing and other costs of consummating the transaction). - DILUTION. The Board considered the fact that the Reorganization will not dilute the interests of the current shareholder because it would be effected on the basis of the relative net asset values per share of the Selling Fund and Buying Fund, respectively. Thus, a Class A shareholder of the Selling Fund will receive Class A shares of the Buying Fund equal in value to his or her Class A shares in the Selling Fund. - PERFORMANCE AND OTHER CONSIDERATIONS. The Board considered the relative performance records of the Funds. The Board took into account the better track record of the Buying Fund. The Board recognized that the Buying Fund's track record covers a brief period because the Fund has only been in operation since April 2003. While the Board was cognizant of the fact that the Buying Fund's past performance is no guarantee of its future results, it did consider that the better track record of the Buying Fund (albeit a brief history), could help attract more assets into the combined Fund and therefore could help stem the stream of outflows that have been experienced by the Selling Fund. The Board considered that reduced outflows or increased inflows could help the Selling Fund shareholders achieve further economies of scale (see "Economies of Scale"above). RIVERSOURCE STOCK FUND -- PROXY STATEMENT 25 The Board also considered the fact that the Funds are in the same Lipper and Morningstar categories and that half of the Selling Fund portfolio is managed in an identical way to the Buying Fund. In light of these commonalities, the Board accorded weight to the investment manager's belief that, absent the Reorganization, the two Funds would be likely to compete against each other for the same investor base and, thus, could draw assets away from the other Fund. The Reorganization should allow for a concentrated selling effort thereby potentially benefiting both Funds. The Board further took into account the investment manager's belief that the Selling Fund, as a stand-alone Fund, was unlikely to experience any growth in assets as a result of investor inflows (based particularly on the recent rates of monthly outflows). - POTENTIAL BENEFITS TO THE INVESTMENT MANAGER AND ITS AFFILIATES. The Board also considered the potential benefits from the Reorganization that could be realized by the investment manager and its affiliates. The Board recognized that the potential benefits to the investment manager consist principally of the elimination of expenses incurred in duplicative efforts to administer separate funds. The Board also noted, however, that shareholders of the Selling Fund will benefit over time from any decrease in overall operating expense ratios resulting from the proposed Reorganization. BOARDS' DETERMINATIONS After considering the factors described above and other relevant information, at a meeting held on Nov. 9-10, 2005, the Selling Fund Board members, including a majority of the independent Board members, found that participation in the Reorganization is in the best interests of the Selling Fund and that the interests of existing shareholders of the Fund will not be diluted as a result of the Reorganization. The Board of Directors of the Buying Fund approved the Agreement at a meeting held on Nov. 9-10, 2005. Among other factors, the Board members considered the terms of the Agreement, the provisions intended to avoid the dilution of shareholder interests and the anticipated tax consequences of the Reorganization. The Board also took into account that the Buying Fund expense ratio will decline as a result of Reorganization. The Board found that participation in the Reorganization is in the best interests of the Buying Fund and that the interests of existing shareholders of the Buying Fund will not be diluted as a result of the Reorganization. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 26 RECOMMENDATION AND VOTE REQUIRED The Board recommends that shareholders approve the proposed Agreement. The Agreement must be approved by a majority of the voting power of all shares entitled to vote. If the Agreement is not approved, the Board will consider what further action should be taken. If shareholders approve the Reorganization, it will take place shortly after the shareholder meeting. During the period between the shareholder meeting and the merger, or if the merger is not approved, it will be important for the Fund to have a properly elected Board and an IMS Agreement that has been approved by shareholders. Therefore, the Board is recommending that shareholders approve the other proposals. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 27 PROPOSAL 2. ELECT BOARD MEMBERS REFERENCE TO THE 'FUND' IN THIS PROPOSAL IS A REFERENCE TO STOCK. 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 following 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 A-3. INDEPENDENT NOMINEES
NAME, POSITION HELD WITH ADDRESS, FUND AND LENGTH PRINCIPAL OCCUPATION AGE OF SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS --------------------------------------------------------------------------------------------------------------------------------- Kathleen Blatz Board member Chief Justice, Minnesota 901 S. Marquette Ave. since January 2006 Supreme Court, 1998-2005 Minneapolis, MN 55402 Age 51
RIVERSOURCE STOCK FUND -- PROXY STATEMENT 28 INDEPENDENT NOMINEES (CONTINUED)
NAME, POSITION HELD WITH ADDRESS, FUND AND LENGTH OF PRINCIPAL OCCUPATION AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS --------------------------------------------------------------------------------------------------------------------------------- Arne H. Carlson Board member Chair, Board Services Contracts, 901 S. Marquette Ave. since 1999 Corporation (provides Executive, Minneapolis, MN 55402 administrative services Investment Review, Age 71 to boards); former Board Effectiveness Governor of Minnesota Patricia M. Flynn Board member Trustee Professor of Investment Review, 901 S. Marquette Ave. since 2004 Economics and Management, Joint Audit Minneapolis, MN 55402 Bentley College; former Age 54 Dean, McCallum Graduate School of Business, Bentley College Anne P. Jones Board member Attorney and consultant Joint Audit, Board 901 S. Marquette Ave. since 1985 Effectiveness, Minneapolis, MN 55402 Executive, Age 70 Investment Review Jeffrey Laikind Board member Former Managing Director, American Progressive 901 S. Marquette Ave. since 2005 Shikiar Asset Management Insurance Minneapolis, MN 55402 Age 70 Stephen R. Lewis, Jr. Board member President Emeritus and Valmont Industries, Inc. Contracts, 901 S. Marquette Ave. since 2002 Professor of Economics, (manufactures irrigation Investment Review, Minneapolis, MN 55402 Carleton College systems) Executive, Board Age 65 Effectiveness
RIVERSOURCE STOCK FUND -- PROXY STATEMENT 29 INDEPENDENT NOMINEES (CONTINUED)
NAME, POSITION HELD WITH ADDRESS, FUND AND LENGTH OF PRINCIPAL OCCUPATION AGE SERVICE DURING PAST FIVE YEARS OTHER DIRECTORSHIPS COMMITTEE MEMBERSHIPS --------------------------------------------------------------------------------------------------------------------------------- Catherine James Paglia Board member Director, Enterprise Asset Strategic Distribution, Contracts, Investment 901 S. Marquette Ave. since 2004 Management, Inc. (private Inc. (transportation, Review Minneapolis, MN 55402 real estate and asset distribution and Age 53 management company) logistics consultants) Vikki L. Pryor President and Chief 901 S. Marquette Ave. Executive Officer, SBLI Minneapolis, MN 55402 USA Mutual Life Insurance Age 52 Company, Inc. since 1999 Alan K. Simpson Board member Former three-term United Investment Review, 1201 Sunshine Ave. since 1997 States Senator for Wyoming Board Effectiveness Cody, Wyoming 82414 Age 74 Alison Taunton-Rigby Board member Chief Executive Officer, Hybridon, Inc. Investment Review, 901 S. Marquette Ave. since 2002 RiboNovix, Inc. since 2003 (biotechnology) Contracts Minneapolis, MN 55402 (biotechnology); former Age 61 President, Forester Biotech
RIVERSOURCE STOCK FUND -- PROXY STATEMENT 30 TABLE A-4. NOMINEE AFFILIATED WITH RIVERSOURCE INVESTMENTS
NAME, ADDRESS, AGE --------------------------------------------------------------------------------------------------------------------------------- William F. Truscott* Board member President - U.S Asset 53600 Ameriprise since 2001, Management and Chief Financial Center Vice President Investment Officer, Minneapolis, MN 55474 since 2002 Ameriprise Financial, Age 45 Inc. and 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, securityholder and/or employee of RiverSource Investments. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 31 BOARD COMMITTEES. The Board has several committees that facilitate the work of the Board. The Executive Committee has authority to act for the full Board between meetings. The Contracts Committee receives and analyzes reports covering the level and quality of services provided under contracts with the fund and advises the Board regarding actions taken on these contracts during the annual review process. The Investment Review Committee considers investment management policies and strategies; investment performance; risk management techniques; and securities trading practices and reports areas of concern to the Board. The Board Effectiveness Committee's charter, Exhibit E, requires it to make recommendations regarding nominees based on criteria approved by the Board. All members of the Committee are independent. Nominee recommendations are based on a matrix of skill sets, experience, and geographical location and each nominee must have a background that demonstrates the ability to furthering the interest of all shareholders. The Committee will consider recommendations from shareholders who write to the Boards and provide detailed information about a candidate. All candidates are processed in the same fashion; first by evaluating a candidate's detailed information against the criteria; then interviewing those candidates who best fill vacancies identified by the matrix. You may write the Board by addressing a letter to Arne H. Carlson, the independent 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 F. The Joint Audit Committee meets with the independent auditors, internal auditors and corporate officers to review and discuss audited financial statements, reports, issues, and compliance matters. This Committee reports significant issues to the Board and makes recommendations to the independent Board members regarding the selection of the independent public accountant. More information regarding this Committee and the fund's independent auditor is found in Section C. During the 12-month period ended Sept. 30, 2005, the Board met 8 times, Executive 2 times, Contracts 7 times, Investment Review 5 times, Board Effectiveness 6 times and Joint Audit 4 times. All Board members had 100% attendance except for Mr. Simpson who had 82% attendance due to serious illness in January 2005. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 32 SHAREHOLDER COMMUNICATIONS WITH THE BOARD. Shareholders may communicate directly with the Board by sending correspondence to Arne H. Carlson, Chair of the Board, RiverSource Funds, 901 Marquette Avenue South, Suite 2810, Minneapolis, MN 55402-3268. Correspondence to specific individual Board members also may be directed to the same address. Account-specific correspondence should be directed to RiverSource Funds, 70100 Ameriprise Financial Center, Minneapolis, MN 55474. BOARD MEMBER COMPENSATION. The following table shows the total compensation received by each Board member from all of the RiverSource Funds. The funds do not pay retirement benefits to Board members. Under a Deferred Compensation Plan, independent Board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of one or more designated RiverSource funds. TABLE A-5. BOARD MEMBER COMPENSATION(a)
AGGREGATE COMPENSATION FROM COMPENSATION FROM ALL RIVERSOURCE FUNDS FOR THE THE SELLING FUND DURING NOMINEE YEAR ENDED SEPT. 30, 2005 THE LAST FISCAL YEAR Flynn $143,675(c) $ 0 Jones 185,892 2,054 Lewis 204,700(d) 2,204(b) Paglia 157,708 0 Simpson 138,842 1,850 Taunton-Rigby 166,842 2,050
(a) Board members affiliated with RiverSource Investments or Board Services Corporation, a company providing administrative services to the RiverSource funds, are not paid by the RiverSource 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, which is included in the aggregate compensation shown above, 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. (b) Includes portion of compensation deferred in the amount of $889 from the Fund. (c) Includes portion of compensation deferred in the amount of $60,371 from the RiverSource funds. (d) Includes portion of compensation deferred in the amount of $54,839 from the RiverSource funds. The following table shows the dollar range of shares of all the RiverSource funds owned by the Board members and the dollar range of shares owned in the Selling Fund. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 33 TABLE A-6. BOARD MEMBER HOLDINGS* Dollar range of equity securities beneficially owned as of Sept. 30, 2005
AGGREGATE DOLLAR RANGE OF EQUITY DOLLAR RANGE OF SECURITIES OF ALL RIVERSOURCE FUNDS EQUITY SECURITIES IN NOMINEE OVERSEEN BY BOARD MEMBER THE SELLING FUND** Carlson over $100,000 None Flynn $10,001-$50,000 None Jones over $100,000 None Lewis over $100,000 None Paglia $50,001-$100,000 None Simpson $50,001-$100,000 None Taunton-Rigby over $100,000 None Truscott over $100,000 None
* Ms. Blatz, Mr. Laikind and Ms. Pryor were not Board members prior to Sept. 30, 2005 and therefore are not included in the table. ** The percentage of shares beneficially owned by all Board members and officers as a group does not exceed 1% of any class of shares of any fund. FUND OFFICERS. In addition to Mr. Truscott, the fund's other executive officers are: LESLIE L. OGG, age 67. Vice president, general counsel and secretary since 1978. President of Board Services Corporation. JEFFREY P. FOX, age 50. Treasurer since 2002. Vice President - Investment Accounting of Ameriprise Financial. PAULA R. MEYER, age 51. President since 2002. Senior Vice President - 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, RiverSource Investments or Board Services Corporation. During the last fiscal year, no officer earned more than $60,000 from any fund. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 34 PROPOSAL 3: APPROVE OR REJECT AN AMENDMENT TO THE ARTICLES OF INCORPORATION REFERENCE TO THE "FUND" IN THIS PROPOSAL IS A REFERENCE TO STOCK. The Fund is a Minnesota corporation and operates under an organizational document called the articles of incorporation. The articles of incorporation set forth various provisions relating to the authority of the fund to conduct business and the governance of the fund. The Board has approved, and recommends that shareholders approve, a proposal to amend the fund's articles of incorporation (the "Articles"). The fund's investments and investment policies will not change by virtue of the adoption of the amendment to the Articles. A. MINIMUM ACCOUNT VALUE Generally, shareholders must invest at least $2,000 to open a fund account. Section 7 of the Articles currently provides that the fund may redeem shares if an account falls below a value of $1,000. Small accounts can be costly to maintain and this provision allows the Board to close accounts that no longer meet the fund's minimum standards. However, the current provision does not allow the Board to redeem accounts if the value is higher than $1,000. In the future, there may be circumstances in which a minimum account value higher than $1,000 is in the best interest of the fund and its shareholders. As a consequence, the Board recommends that the Articles be amended to eliminate the reference to a specific dollar amount. As proposed, the amended Articles will permit the Board to establish a minimum account value that will be disclosed in the fund prospectus. The Board will be able to change the minimum account value without further action by shareholders. If the change is approved, the Articles will be amended as follows ([underline] additions are underlined [/underline] , [strikethrough] deletions are lined through)[/strikethrough] : Article III, Section 7 will be amended to read: Section 7. The Fund may redeem the shares of a shareholder if the amount invested is less than [strikethrough] $1,000 [/strikethrough] [underline] an amount determined by the Board of Directors and set forth in the current Fund prospectus. [/underline] RIVERSOURCE STOCK FUND -- PROXY STATEMENT 35 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. in anticipation of its spin off from American Express Company, its parent company. On Oct. 1, 2005, Ameriprise Financial transferred responsibility for the fund's investment advisory services to its wholly owned subsidiary, RiverSource Investments. The Board made a corresponding change to the name of the fund by substituting the name RiverSource for AXP. The fund is part of a corporation made up of one fund. The name of the corporate entity can be changed only with approval of the shareholders of all the underlying funds that make up the corporation. The Board recommends that the name of the corporate entity also be changed to include the name RiverSource instead of AXP. The change to the name of the corporation is shown in the table below. This is the first shareholder meeting since the spin off of the investment manager and the first opportunity for shareholders to consider a name change for the corporation. TABLE A-7. PROPOSED NAME OF CORPORATION
CURRENT NAME OF CORPORATION PROPOSED NAME OF CORPORATION AXP Stock Series, Inc. RiverSource Stock 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. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 36 PROPOSAL 4: APPROVE OR REJECT AN INVESTMENT MANAGEMENT SERVICES AGREEMENT WITH RIVERSOURCE INVESTMENTS, LLC REFERENCE TO THE "FUND" IN THIS PROPOSAL IS A REFERENCE TO STOCK. The fund pays fees to RiverSource Investments under an Investment Management Services Agreement (the "IMS Agreement") for investment management services. The services include providing the personnel, equipment and office facilities necessary for the management of the fund's assets. Subject to the oversight of the Board and consistent with the fund's investment policies, the investment manager decides what securities to buy, hold or sell. The investment manager also executes buy and sell orders and provides research and statistical data to support investment management activities. The Fund is part of a master/feeder structure. In this structure, the fund invests all of its assets in a master fund (the "portfolio") with the same policies as the fund. For purposes of this discussion, the portfolio is referred to as a "fund". INVESTMENT MANAGER. On Sept. 30, 2005, Ameriprise Financial became a publicly traded company and on Oct. 1, 2005 transferred the 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 vote on the arrangement and the changes described below. SUMMARY OF KEY CHANGES A. PERFORMANCE INCENTIVE ADJUSTMENT ("PIA"). The management fee 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. STANDARD OF CARE. For all funds, the investment manager will be held to a higher standard of care than under the current IMS Agreement. C. 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. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 37 D. 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 similar funds managed by RiverSource Investments is found in Section C. The fund also pays its taxes, brokerage commission and nonadvisory expenses, which include custodian fees; audit and certain legal fees; fidelity bond premiums; registration fees for shares; consultant fees; Board compensation; corporate filing fees; organizational expenses; expenses incurred in connection with lending portfolio securities; and other expenses properly payable by the fund, approved by the Board. Section C includes information on the date of the current IMS Agreement, the date it was last approved by shareholders and the reason why it was submitted to shareholders at that time. A. PERFORMANCE INCENTIVE ADJUSTMENT ("PIA") CALCULATION. The management fee includes a PIA as part of the fee. The adjustment is based on the performance of the fund compared to the performance of a Lipper Index. The proposed modification does not change the IMS Agreement but clarifies the circumstances where the Board may change the index for purposes of this calculation. The provision in the current IMS Agreement will be modified to read as follows ([underline] additions are underlined /[underline], [strikethrough] deletions are lined through [/strikethrough] ): If an Index ceases to be published for a period of more than 90 days, changes in any material respect, otherwise becomes impracticable [underline] or, in the discretion of the Board, is no longer appropriate[/underline] to use for purposes of a performance incentive adjustment, [underline] for example, if Lipper reclassifies the Fund from one peer group to another, the Board may take action it deems appropriate and in the best interests of shareholders, including: (1) discontinuance of the performance incentive adjustment until such time as it approves a substitute index, or (2) adoption of a methodology to transition to a substitute index it has approved.[/underline] [strikethrough] no adjustment will be made until such time as the Board approves a substitute index.[/strikethrough] The PIA is determined by measuring the difference in the 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. STANDARD OF CARE. The proposed IMS Agreement revises the standard of care to provide that, except for bad faith, intentional misconduct or negligence in RIVERSOURCE STOCK FUND -- PROXY STATEMENT 38 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. C. 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, unless required by law or necessary to provide services to the fund. D. 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. 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 fund. Each year, the Board determines whether to continue the IMS Agreement for the 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. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 39 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 the 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 subsidiaries) by the shareholders of the 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 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 the IMS Agreement would terminate as a result of the spin-off. Accordingly, the Board determined to renew the IMS Agreement for the interim period only and to consider a new IMS Agreement for the 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 the fund with post-spin Ameriprise Financial (or its subsidiary). 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 Agreement. As a key step in this process, independent counsel sent, on behalf of the independent members of the Board, a detailed and expansive request for information to American Express Company and Ameriprise Financial, seeking specified information thought to be relevant to the Board's consideration of the proposed contracts with post-spin Ameriprise Financial. The Board and its committees were provided with a wealth of written and oral information intended to assist them in considering the proposed contracts, including the proposed IMS Agreement. 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. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 40 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 each of the new contracts, including the proposed IMS Agreement. On Oct. 1, 2005, pursuant to an agreement between the Fund and Ameriprise Financial, the IMS Agreement was transferred to RiverSource Investments, 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 the fund. THE BOARD'S SPECIFIC CONSIDERATIONS RELATING TO THE PROPOSED IMS AGREEMENT. In carrying out its legal responsibilities associated with the consideration of he proposed IMS Agreements, the Board evaluated the following four factors: (i) the nature, extent and quality of services to be provided by RiverSource Investments; (ii) the investment performance of the fund; (iii) the costs of the services to be provided and the profits to be realized by Ameriprise Financial; and (iv) the extent to which economies of scale would be realized as the fund grows and whether the fee level reflects these economies of scale for the benefit of fund investors. NATURE, EXTENT AND QUALITY OF SERVICES TO BE PROVIDED BY POST-SPIN AMERIPRISE FINANCIAL (AND ITS SUBSIDIARIES). The Board recognized that only a few months had passed since its April 2005 determination to renew the IMS Agreement for the 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 RiverSource 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 RIVERSOURCE STOCK FUND -- PROXY STATEMENT 41 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 (including RiverSource Investments) 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 Investments) would be in a position to continue to provide a high quality of investment management services to the funds. INVESTMENT PERFORMANCE. The Board next focused on investment performance. The Board reviewed reports documenting the fund's performance over one-, three- and/or five-year periods, as well as the entire period during which its current portfolio manager has managed the fund, and compared the performance to relevant Lipper and market indices. The Board took into account its considerations in April 2005, in particular that investment performance over the past three years was below median, but that Ameriprise Financial has taken steps to address the underperformance and that the performance over the past year was above median. The Board also considered that it has received monthly performance reports for the funds. The Board and its committees concluded in September 2005 that there have been no significant deviations from April's overall performance data. COST OF SERVICES PROVIDED. The Board evaluated comparative fees and the costs of services to be provided under the current and proposed IMS Agreements, including fees charged by Ameriprise Financial (including RiverSource Investments 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 group. The Board considered that the fund's management fees would not change under the proposed IMS Agreement. 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 RIVERSOURCE STOCK FUND -- PROXY STATEMENT 42 appropriate index for the fund for the comparison of performance; (ii) the methodology for determining when the Board may change an index used to calculate the performance incentive adjustment; (iii) the periods used for averaging the fund's assets and computing investment performance; and (iv) the length of the period over which performance is computed. The Board next considered the expected profitability to RiverSource Investments and its affiliates derived from their relationship with the fund, recalling the April 2005 determination that the profitability level was appropriate. The Board noted that projected profitability of RiverSource Investments would allow it to operate effectively and, at the same time, reinvest in its businesses. The Board also considered that the proposed changes in advisory fees for certain RiverSource funds as well as 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 fund and from other business relationships that result from managing the fund. 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 the net asset levels of the fund grew and the extent to which shareholders would benefit from such growth. The Board observed that the fee schedule 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 grow. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 43 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 Agreement. 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 fund with an expectation that the current investment advisory organization would be servicing the fund. As a result of all of the foregoing, the Board determined that the fees to be paid under the 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 the fund approve the proposed IMS Agreement. The proposed IMS Agreement must be approved by the lesser of (a) a majority of the fund's outstanding shares or (b) 67% of the shares voted at the meeting, so long as more than 50% of the shares actually vote. If shareholders approve the proposed IMS Agreement, it will take effect shortly after the shareholder meeting. If the proposed IMS Agreement is not approved, the Board will consider appropriate steps to take. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 44 SECTION B -- PROXY VOTING AND SHAREHOLDER MEETING INFORMATION REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO STOCK. VOTING. You are entitled to vote based on your total dollar interest in the fund. Each dollar is entitled to one vote. For those of you who cannot come to the meeting, the Board is asking permission to vote for you. The shares will be voted as you instruct either by mail, telephone or internet. Signed proxy cards returned without instructions will be voted in favor of all proposals. In voting for Board members, you may vote all of your shares cumulatively. This means that you have the right to give each nominee an equal number of votes or divide the votes among the nominees as you wish. You have as many votes as the number of dollars you own on the record date, multiplied by the number of Board members to be elected. If you elect to withhold authority for any individual nominee or nominees, you may do so by marking the box labeled "For All Except," and by striking the name of any excepted nominee, as is further explained on the card itself. If you do withhold authority, the proxies will not vote shares equivalent to the proportionate number applicable to the names for which authority is withheld. All votes count toward a quorum, regardless of how they are voted (For, Against or Abstain). Broker non-votes will be counted toward a quorum but not toward the approval of any proposals. (Broker non-votes are shares for which the underlying owner has not voted and the broker holding the shares does not have authority to vote.) If your shares are held in an IRA account with Ameriprise Trust Company as custodian, you have the right to instruct the IRA Custodian how to vote those shares. The IRA Custodian will vote any shares for which it has not received voting instructions in proportionately the same manner -- either For, Against, or Abstain -- as other fund shareholders have voted. MASTER/FEEDER FUNDS. Stock currently is part of a master/feeder structure. The feeder fund seeks its investment objective by investing its assets in a master fund with the same policies. The master fund invests in and manages the securities. Immediately prior to the Reorganization, the Board intends to withdraw the fund's assets from the master fund. REVOKING YOUR PROXY. If you change your mind after you vote and you can attend the meeting, simply inform the Secretary at the meeting that you will be voting your shares in person. Also, if you change your mind after you vote, but cannot attend the meeting, you may change your vote or revoke it by mail, telephone or internet. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 45 SIMULTANEOUS MEETINGS. The meeting will be held simultaneously with meetings of other RiverSource mutual funds. Each proposal will be voted on separately by shareholders of a corporation or by shareholders of a fund or by a class of shares of the fund where appropriate. If any shareholder objects to the holding of simultaneous meetings, the shareholder may move for an adjournment of his or her fund's meeting to a time immediately after the simultaneous meetings so that a meeting of that fund may be held separately. If a shareholder makes this motion, the persons named as proxies will take into consideration the reasons for the objection in deciding whether to vote in favor of the adjournment. SOLICITATION OF PROXIES. The Board is asking for your vote and for you to vote as promptly as possible. The investment manager will pay the expenses of the solicitation. Supplementary solicitations may be made by mail, telephone, electronic means or personal contact. SHAREHOLDER PROPOSALS. No proposals were received from shareholders. The RiverSource funds are not required to hold regular meetings of shareholders each year. However, meetings of shareholders are held from time to time and proposals of shareholders that are intended to be presented at future shareholder meetings must be submitted in writing to the RiverSource funds in reasonable time prior to the solicitation of proxies for the meeting. DISSENTERS' RIGHT OF APPRAISAL. Under Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act, Selling Fund shareholders are entitled to assert dissenters' rights in connection with the Reorganization and obtain payment of the "fair value" of their shares, provided that they comply with the requirements of Minnesota law. A copy of the relevant provisions is attached as Exhibit C. Notwithstanding the provisions of Minnesota law, the SEC has taken the position that use of state appraisal procedures by a mutual fund would be a violation of Rule 22c-1, the forward pricing rule, under the 1940 Act. This rule states that no mutual fund may redeem its shares other than at net asset value next computed after receipt of a request for redemption. It is the SEC's position that Rule 22c-1 supersedes appraisal provisions in state statutes. In the interest of ensuring equal valuation for all shareholders, dissenters' rights will be determined in accordance with the SEC's interpretation. As a result, if any shareholder elects to exercise dissenters' rights under Minnesota law, the Selling Fund intends to submit this question to a court of competent jurisdiction. In that event, a dissenting shareholder would not receive any payment until the end of the court proceeding. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 46 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 voting power of the shares present at the meeting. The persons named as proxies will vote in favor of adjournment those shares they are entitled to vote that have voted in favor of the proposals. They will vote against any adjournment those shares that have voted against the proposals. The investment manager will pay the costs of any additional solicitation and of any adjourned meeting. A shareholder vote may be taken on one or more of the items in this proxy statement prior to adjournment if sufficient votes have been received. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 47 SECTION C -- CAPITALIZATION, OWNERSHIP OF FUND SHARES AND OTHER FUND INFORMATION REFERENCE TO THE "FUND" IN THIS SECTION IS A REFERENCE TO STOCK. This section contains the following information about the funds, their investment manager and the independent auditors: TABLE CONTENT (all information is shown for the last fiscal year unless noted otherwise) C-1 Actual and pro forma capitalization of the Selling Fund and the Buying Fund C-2 Current management fee schedule for the Fund and other RiverSource funds with similar investment objectives C-3 The fund's current fee schedule under its management agreement C-4 Payments the fund made to the investment manager and its affiliates C-5 Brokerage commissions the fund paid to a broker-dealer affiliate C-6 Information about shareholder approval of current management agreements C-7A Audit fees C-7B Audit-related, tax and other fees THE FUND'S INVESTMENT MANAGER AND DISTRIBUTOR. RiverSource Investments is the investment manager for each fund. Ameriprise Financial Services, Inc., a wholly owned subsidiary of Ameriprise Financial, is the distributor for the fund. The address for RiverSource Investments and Ameriprise Financial Services, Inc. is 200 Ameriprise Financial Center, Minneapolis, MN 55474. PRESIDENT AND BOARD OF DIRECTORS OF RIVERSOURCE INVESTMENTS. William F. Truscott is President of RiverSource Investments. The following individuals are directors of RiverSource Investments. Each director is an officer of RiverSource Investments, 200 Ameriprise Financial Center, Minneapolis, MN 55474. Directors: William F. Truscott, Ward D. Armstrong and Michelle M. Keeley. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 48 CAPITALIZATION The following table shows the capitalization of the Funds as of Sept. 30, 2005 and on a pro forma basis, assuming the proposed Reorganization had taken place. TABLE C-1. ACTUAL AND PRO FORMA CAPITALIZATION OF THE SELLING FUND AND THE BUYING FUND
NET ASSET SHARES FUND NET ASSETS VALUE PER SHARE OUTSTANDING STOCK Class A $1,465,935,660 $ 20.03 73,190,529 Class B 96,845,429 19.86 4,876,852 Class C 2,561,511 19.78 129,515 Class I 29,863,009 20.03 1,491,161 Class Y 332,418,938 20.03 16,599,166 DISCIPLINED EQUITY Class A $ 32,276,709 $ 6.79 4,753,442 Class B 9,368,502 6.71 1,396,861 Class C 215,153 6.71 32,080 Class I 90,562,547 6.83 13,259,515 Class Y 34,836 6.81 5,118 DISCIPLINED EQUITY - PRO FORMA WITH STOCK Class A $1,498,212,369 $ 6.79 220,649,710 Class B 106,213,931 6.71 15,829,861 Class C 2,776,664 6.71 413,825 Class I 120,425,556 6.83 17,631,844 Class Y 332,453,774 6.81 48,818,472
RIVERSOURCE STOCK FUND -- PROXY STATEMENT 49 OWNERSHIP OF FUND SHARES The following table provides information on shareholders who owned more than 5% of each Fund's outstanding shares as of Sept. 30, 2005. As of Sept. 30, 2005, officers and Board members of the Fund as a group owned less than 1% of the outstanding shares of the Fund. TABLE C-2. ACTUAL AND PRO FORMA OWNERSHIP OF FUND SHARES
PERCENT OF PERCENT SHARES HELD OF SHARES FOLLOWING THE FUND 5% OWNERS HELD REORGANIZATION STOCK Class A None -- -- Class B None -- -- Class C None -- -- Class I (1) 98% 24% Class Y (2) 100% 100% DISCIPLINED EQUITY Class A (3) 10% * Class B None -- -- Class C (4) 33% 3% Class I (5) 98% 74% Class Y (6) 100% *
(1) RiverSource Portfolio Builder Moderate Aggressive Fund owns 32.96%. RiverSource Portfolio Builder Moderate Fund owns 20.62%. RiverSource Portfolio Builder Aggressive Fund owns 19.55%. RiverSource Portfolio Builder Total Equity Fund owns 19.25%. RiverSource Portfolio Builder Moderate Conservative Fund owns 5.82%. (2) Ameriprise Trust Company, Minneapolis, MN owns of record 99.52%. (3) Charles Schwab & Co Inc., a brokerage firm, owns of record 10.23%. (4) Emmanual A. and Kelly D. Madeira, S. Dartmouth, MA own 8.49%. Brian L. and Mary Jane Hopp, Beldenville, WI own 7.33%. IDS Life Insurance Company, Minneapolis, MN owns 6.23%. Linda L. Lane, Bay Pines, FL owns 5.59%. Paul M. and Nikki S. Farmer, Franklin, TN own 5.03%. (5) RiverSource Portfolio Builder Moderate Aggressive Fund owns 33.04%. RiverSource Portfolio Builder Moderate Fund owns 20.50%. RiverSource Portfolio Builder Aggressive Fund owns 19.57%. RiverSource Portfolio Builder Total Equity Fund owns 19.27%. RiverSource Portfolio Builder Moderate Conservative Fund owns 5.90%. (6) Charles Schwab & Co Inc., a brokerage firm, owns of record 60.92%. IDS Life Insurance Company, Minneapolis, MN owns 39.08%. * Less than 1%. The following table shows the management fee schedule for the fund and other domestic equity funds managed by the investment manager. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 50 TABLE C-3. CURRENT MANAGEMENT FEE SCHEDULE FOR THE FUND AND OTHER RIVERSOURCE FUNDS WITH SIMILAR INVESTMENT OBJECTIVES
MANAGEMENT FEE FEE CAP OR WAIVERS(1) RETAIL FUNDS (ANNUAL RATE; IN BILLIONS) (IF APPLICABLE) ------------------------------------------------------------------------------------------------------------------ Aggressive Growth(2),(4) First $.5 - .89%; next $.5 - .865%; next $1 - .84%; 1.53% until 5/31/06 next $1 - .815%; next $3 - .79%; over $6 - .765% Disciplined Equity(2) First $1 - .60%; next $1 - .575%; next $1 - .55%; Disciplined Equity: Growth(2),(3) next $3 - .525%; next $6 - .50%; next $12 - .49%; 1.25% until 7/31/06 Large Cap Equity(2) over $24 - .48% Large Cap Value: 1.35% Large Cap Value(2) until 7/31/06 Mid Cap Growth(2) New Dimensions(2),(3) Discovery(2),(5) First $.25 - .64%; next $.25 - .615%; 1.49% until 7/31/06 next $.25 - .59%; next $.25 - .565%; next $1 - .54%; over $2 - .515% Diversified Equity First $.5 - .53%; next $.5 - .505%; next $1 - .48%; Income(2),(3) next $1 - .455%; next $3 - .43%; over $6 - .40% Equity Value(2) Stock(2),(3) Strategic Allocation(2),(3) Dividend Opportunity(2) First $.5 - .61%; next $.5 - .585%; next $1 - .56%; next $1 - .535%; next $3 - .51%; over $6 - .48% Fundamental Growth(2),(6) First $1 - .78%; next $1 - .755%; next $1 - .73%; 1.50% 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% Mid Cap Value(2) First $1 - .70%; next $1 - .675%; next $1 - .65%; next $3 - .625%; next $6 - .60%; next $12 - .59%; over $24 - .58% Select Value(2),(9) First $.5 - .78%; next $.5 - .755%; next $1 - .73%; next $1 - .705%; next $3 - .68%; over $6 - .65% Small Cap First $.25 - .74%; next $.25 - .715%; Advantage(2),(10) next $.25 - .69%; next $.25 - .665%; next $1 - .64%; over $2 - .615% Small Cap Equity(2),(5) First $.25 - .97%; next $.25 - .945%; next $.25 - 1.55% until 5/31/06 Small Cap Value(2),(11) .92%; next $.25 - .895%; over $1 - .87% 1.59% until 5/31/06 Small Cap Growth(2),(12) First $.25 - .92%; next $.25 - .895%; 1.70% until 3/31/07 next $.25 - .87%; next $.25 - .845%; next $1 - .82%; over $2 - .795% Strategy Aggressive(2),(4) First $1 - .60%; next $1 - .575%; next $1 - .55%; next $3 - .525%; over $6 - .50%
RIVERSOURCE STOCK FUND -- PROXY STATEMENT 51 (1) The information is shown for Class A shares. Fees and expenses in excess of the percentage shown will be waived. Fee caps for other classes of shares will vary slightly based on the expenses of those classes. (2) The fund has a PIA based on its performance compared to a Lipper index of comparable funds over a rolling 12-month period. (3) The fund is part of a master/feeder structure. Management fees are paid by the portfolio on behalf of the fund. (4) The fund has a subadvisory agreement with American Century Investment Management, Inc. and Turner Investment Partners, Inc. (5) The fund has subadvisory agreements with American Century Investment Management, Inc., Lord, Abbett & Co. and Wellington Management Company, LLP. (6) The fund has subadvisory agreements with Wellington Management Company, LLP and Goldman Sachs Asset Management L.P. (7) The fund has a subadvisory agreement with Davis Selected Advisers, L.P. (8) The fund has a subadvisory agreement with Lord, Abbett & Co. (9) The fund has a subadvisory agreement with Gabelli Asset Management Company. (10) The fund has a subadvisory agreement with Kenwood Capital Management LLC. (11) The fund has subadvisory agreements with Royce & Associates, LLC; Goldman Sachs Asset Management L.P.; Barrow, Hanley, Mewhinney & Strauss, Inc.; Donald Smith & Co., Inc.; and Franklin Portfolio Associates. (12) The fund has subadvisory agreements with Turner Investment Partners, Inc.; UBS Global Asset Management (Americas) Inc.; Essex Investment Management Company, LLC; and MDT Advisers, a division of Harris Bietall Sullivan & Smith, LLC. TABLE C-4. FUND PAYMENTS TO THE INVESTMENT MANAGER AND ITS AFFILIATES*
FUND ADMIN DIST IMS SERVICE TA CUSTODY Stock $712,884 $5,170,642 $9,961,824 $398,708 $2,416,594 $181,769
* The Administrative Services Agreement ("Admin") is between the fund and Ameriprise Financial. The Agreement of Distribution ("Dist") and Shareholder Service Agreement ("Service") are between the fund and Ameriprise Financial Services, Inc. The Investment Management Services Agreement ("IMS") is between the fund and RiverSource Investments. The Transfer Agent 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. TABLE C-5. BROKERAGE COMMISSIONS PAID TO BROKER-DEALER AFFILIATES
BROKER/ AMOUNT OF % OF ALL FUND DEALER COMMISSIONS COMMISSIONS Stock AEIS(1) $23,308 0.05%
(1) Wholly-owned subsidiary of Ameriprise Financial. The amount shown reflects brokerage clearing fees. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 52 TABLE C-6. DATES RELATING TO APPROVAL OF MANAGEMENT AGREEMENT
DATE LAST REASON DATE OF APPROVED BY SUBMITTED TO FUND CONTRACT SHAREHOLDERS SHAREHOLDERS Stock 12/1/02 11/13/2002 1
(1) Shareholders approved modifications to the performance incentive adjustment. THE FUND'S INDEPENDENT REGISTERED PUBLIC ACCOUNTANT. The 1940 Act provides that every registered investment company must be audited at least once each year by independent registered public accountants selected by a majority of the independent Board members. The Selling Fund's Board has selected KPMG LLP to be the Fund's independent registered public accountant for the current fiscal year. KPMG LLP, in accordance with Independence Standards Board Standard No. 1 ("ISB No. 1"), has confirmed in writing to the Board's Joint Audit Committee that they are independent accountants with respect to the Fund. The independent accountants examine the financial statements for the Fund that are set forth in the annual report to shareholders and provide other requested non-audit and tax-related services to the Fund. The Joint Audit Committee reviewed and discussed the audited financial statements with RiverSource Investments and reviewed with KPMG LLP the matters required to be discussed by SAS 61 (for example, methods used to account for significant unusual transactions). The Joint Audit Committee does not consider other non-audit services provided by KPMG LLP to be incompatible with maintaining the independence of KPMG LLP in its audits of the Fund, taking into account representations from KPMG LLP, in accordance with ISB No. 1, regarding its independence from the Fund and its related entities. Representatives of KPMG LLP are expected to be present at the meeting. They will be given the opportunity to make a statement to shareholders and are expected to be available to respond to any questions that may be raised at the meeting. JOINT AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. Pursuant to the pre-approval requirements of the Sarbanes-Oxley Act of 2002, all services to be performed by KPMG LLP for the Fund; the Fund's investment adviser; and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Fund, must be pre-approved by the Joint Audit Committee. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 53 AUDIT FEES. During the last two fiscal years, the aggregate fees paid to KPMG LLP for professional services rendered for the audit of the annual financial statements or services that are normally provided in connection with statutory and regulatory filings for the fund were as follows: TABLE C-7A. AUDIT FEES DURING THE FUND'S LAST TWO FISCAL YEARS
FUND LAST FISCAL YEAR PREVIOUS FISCAL YEAR Stock $45,000 $43,000
The following table shows aggregate fees paid by the Fund to KPMG LLP in each of the last two fiscal years for services that are not included in Table C-7A. All of the services performed were pre-approved by the Joint Audit Committee. - AUDIT-RELATED FEES. Assurance and related services that are reasonably related to the performance of the audit or review. - TAX FEES. Tax compliance, tax advice and tax planning. - ALL OTHER FEES. All other services rendered by KPMG LLP. TABLE C-7B. AUDIT-RELATED, TAX AND OTHER FEES DURING THE FUND'S LAST TWO FISCAL YEARS
AGGREGATE AGGREGATE AGGREGATE AUDIT-RELATED FEES TAX FEES OTHER FEES ------------------------------------------------------------------------------- LAST PREVIOUS LAST PREVIOUS LAST PREVIOUS FISCAL FISCAL FISCAL FISCAL FISCAL FISCAL FUND YEAR YEAR YEAR YEAR YEAR YEAR Stock $464 $502 $7,100 $6,650 $673 $0
AGGREGATE NON-AUDIT FEES TO STOCK, INVESTMENT MANAGER AND ITS AFFILIATES For the year ended Sept. 30, 2005, the aggregate non-audit fees billed for services rendered to the Fund, to the investment manager and to any entity controlling, controlled by or under common control with the investment manager that provides ongoing services to the funds was $94,152. For the year ended Sept. 30, 2004, the aggregate amount was $133,823. RIVERSOURCE STOCK FUND -- PROXY STATEMENT 54 EXHIBIT A FORM OF AGREEMENT AND PLAN OF REORGANIZATION This Agreement and Plan of Reorganization dated as of Nov. 10, 2005 (the "Agreement") is between AXP Stock Series, Inc. (the "Selling Corporation"), a Minnesota corporation, on behalf of its series, RiverSource Stock Fund (the "Selling Fund"), and AXP Growth Series, Inc. (the "Buying Corporation), a Minnesota corporation, on behalf of its series, RiverSource Disciplined Equity Fund (the "Buying Fund"), and RiverSource Investments, LLC (solely for the purposes of Section 3c and 10 of the Agreement). In consideration of their mutual promises, the parties agree as follows: 1. SHAREHOLDER APPROVAL. The Selling Fund will call a meeting of its shareholders for the purpose of approving the Agreement and the transactions it contemplates (the "Reorganization"). The Buying Fund agrees to furnish data and information, as reasonably requested, for the proxy statement to be furnished to shareholders of the Selling Fund. 2. REORGANIZATION. a. Plan of Reorganization. The Reorganization will be a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"). At the Closing, the Selling Corporation will convey all of the assets of the Selling Fund to the Buying Fund. The Buying Fund will assume all liabilities of the Selling Fund. At the Closing, the Buying Corporation will deliver shares of the Buying Fund, including fractional shares, to the Selling Corporation. The number of shares will be determined by dividing the value of the net assets of shares of the Selling Fund, computed as described in paragraph 3(a), by the net asset value of one share of the Buying Fund, computed as described in paragraph 3(b). The Selling Fund will not pay a sales charge on the receipt of Buying Fund shares in exchange for the assets of the Selling Fund. In addition, the shareholders of the Selling Fund will not pay a sales charge on distribution to them of shares of the Buying Fund. b. Closing and Effective Time of the Reorganization. The Reorganization and all related acts necessary to complete the Reorganization (the "Closing") will occur on the first day on which the New York Stock Exchange (the "NYSE") is open for business following approval of shareholders of the Selling Fund and receipt of all necessary regulatory approvals, or such later date as the parties may agree. RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.1 3. VALUATION OF NET ASSETS. a. The net asset value of shares of the Selling Fund will be computed as of the close of regular trading on the NYSE on the day of Closing (the "Valuation Date") using the valuation procedures in the Buying Fund's prospectus. b. The net asset value per share of shares of the Buying Fund will be determined as of the close of regular trading on the NYSE on the Valuation Date, using the valuation procedures in the Buying Fund's prospectus. c. At the Closing, the Selling Fund will provide the Buying Fund with a copy of the computation showing the valuation of the net asset value per share of shares of the Selling Fund on the Valuation Date. The Buying Fund will provide the Selling Fund with a copy of the computation showing the determination of the net asset value per share of shares of the Buying Fund on the Valuation Date. Both computations will be certified by an officer of RiverSource Investments, LLC, the investment manager. 4. LIQUIDATION AND DISSOLUTION OF THE SELLING FUND. a. As soon as practicable after the Valuation Date, the Selling Corporation will liquidate the Selling Fund and distribute shares of the Buying Fund to the Selling Fund's shareholders of record. The Buying Fund will establish shareholder accounts in the names of each Selling Fund shareholder, representing the respective pro rata number of full and fractional shares of the Buying Fund due to each shareholder. All issued and outstanding shares of the Selling Fund will simultaneously be cancelled on the books of the Selling Corporation. The Buying Fund or its transfer agent will establish shareholder accounts in accordance with instructions from the Selling Corporation. b. Immediately after the Valuation Date, the share transfer books of the Selling Corporation relating to the Selling Fund will be closed and no further transfer of shares will be made. c. Promptly after the distribution, the Buying Fund or its transfer agent will notify each shareholder of the Selling Fund of the number of shares distributed to the shareholder and confirm the registration in the shareholder's name. d. As promptly as practicable after the liquidation of the Selling Fund, and in no event later than twelve months from the date of the Closing, the Selling Fund will be dissolved. RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.2 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYING CORPORATION. The Buying Corporation represents and warrants to the Selling Fund as follows: a. Organization, Existence, etc. The Buying Corporation is a corporation duly organized, validly existing and in good standing under the laws of the state of Minnesota and has the power to carry on its business as it is now being conducted. b. Registration as Investment Company. The Buying Fund is a series of the Buying Corporation, registered under the Investment Company Act of 1940 (the "1940 Act") as an open-end, management investment company. c. Capitalization. The Buying Corporation has authorized capital of 10,000,000,000 shares of common stock, par value $0.01 per share. All of the outstanding shares have been duly authorized and are validly issued, fully paid and non-assessable. Since the Buying Fund is engaged in the continuous offering and redemption of its shares, the number of outstanding shares may vary daily. d. Financial Statements. The audited financial statements as of the end of the last fiscal year, and the subsequent unaudited semi-annual financial statements, if any (the "Buying Fund Financial Statements"), fairly present the financial position of the Buying Fund, and the results of its operations and changes in its net assets for the periods shown. e. Shares to be Issued Upon Reorganization. The shares to be issued in connection with the Reorganization will be duly authorized and, at the time of the Closing, will be validly issued, fully paid and non-assessable. f. Authority Relative to the Agreement. The Buying Corporation has the power to enter into and carry out the obligations described in this Agreement. The Agreement and the transactions contemplated by it have been duly authorized by the Board of Directors of the Buying Corporation and no other proceedings by the Buying Corporation or the Buying Fund are necessary. g. No Violation. The Buying Corporation is not in violation of its Articles of Incorporation or By-Laws (the "Articles") or in default in the performance of any material agreement to which it is a party. The execution of this Agreement and the completion of the transactions contemplated by it will not conflict with, or constitute a breach of, any material contract or other instrument to which the Buying Fund is subject. The transactions will not result in any violation of the provisions of the Articles or any law, administrative regulation or administrative or court decree applicable to the Buying Fund. RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.3 h. Liabilities. There are no liabilities of the Buying Fund other than: - liabilities disclosed in the Buying Fund Financial Statements, - liabilities incurred in the ordinary course of business subsequent to the date of the latest annual or semi-annual financial statements, or - liabilities previously disclosed to the Selling Fund, none of which has been materially adverse to the business, assets or results of operation of the Buying Fund. i. Litigation. There is no litigation, administrative proceeding or investigation before any court or governmental body currently pending or, to the knowledge of the Buying Fund, threatened, that would materially and adversely affect the Buying Fund, its financial condition or the conduct of its business, or that would prevent or hinder completion of the transactions contemplated by this Agreement. The Buying Fund knows of no facts that might form the basis for the institution of any such litigation, proceeding or investigation and the Buying Fund is not a party to or subject to the provisions of any order, decree or judgment. j. Contracts. Except for contracts and agreements previously disclosed to the Selling Corporation, the Buying Fund is not a party to or subject to any material contract, debt instrument, plan, lease, franchise, license or permit. k. Taxes. The Buying Fund has qualified as a regulated investment company under the Internal Revenue Code with respect to each taxable year since commencement of its operations and will qualify as a regulated investment company at all times through the Closing. As of the Closing, the Buying Fund will (i) have filed all federal and other tax returns and reports that have been required to be filed, (ii) have paid or provided for payment of all federal and other taxes shown to be due on such returns or on any assessments received, (iii) have adequately provided for all tax liabilities on its books, (iv) except as disclosed to the Selling Fund, not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and (v) except as disclosed to the Selling Fund, not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid. l. Registration Statement. The Buying Fund will file a registration statement on Form N-14 (the "Registration Statement") with the Securities and Exchange Commission under the Securities Act of 1933 (the "1933 Act") relating to the shares to be issued in the Reorganization. At the time the Registration Statement becomes RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.4 effective, at the time of the shareholders' meeting and at the Closing, the Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. However, none of the representations and warranties in this subsection apply to statements in, or omissions from, the Registration Statement made in reliance on information furnished by the Selling Fund for use in the Registration Statement. 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLING CORPORATION. The Selling Corporation represents and warrants to the Buying Fund as follows: a. Organization, Existence, etc. The Selling Corporation is a corporation duly organized, validly existing and in good standing under the laws of the state of Minnesota and has the power to carry on its business as it is now being conducted. b. Registration as Investment Company. The Selling Fund is a series of the Selling Corporation, registered under the 1940 Act as an open-end, management investment company. c. Capitalization. The Selling Corporation has authorized capital of 10,000,000,000 shares of common stock, par value $0.01 per share. All of the outstanding shares have been duly authorized and are validly issued, fully paid and non-assessable. Since the Selling Fund is engaged in the continuous offering and redemption of its shares, the number of outstanding shares may vary daily. d. Financial Statements. The audited financial statements as of the end of the last fiscal year, and the subsequent unaudited semi-annual financial statements, if any (the "Selling Fund Financial Statements"), fairly present the financial position of the Selling Fund, and the results of its operations and changes in its net assets for the periods shown. e. Authority Relative to the Agreement. The Selling Corporation has the power to enter into and to carry out its obligations under this Agreement. The Agreement and the transactions contemplated by it have been duly authorized by the Board of Directors of the Selling Corporation and no other proceedings by the Selling Corporation or the Selling Fund are necessary. f. No Violation. The Selling Corporation is not in violation of its Articles or in default in the performance of any material agreement to which it is a party. The execution of this Agreement and the completion of the transactions contemplated by it will not conflict with or constitute a breach of, any material contract to which the Selling Fund is subject. RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.5 The transactions will not result in any violation of the provisions of the Articles or any law, administrative regulation or administrative or court decree applicable to the Selling Fund. g. Liabilities. There are no liabilities of the Selling Fund other than: - liabilities disclosed in the Selling Fund Financial Statements, - liabilities incurred in the ordinary course of business subsequent to the date of the latest annual or semi-annual financial statements, or - liabilities previously disclosed to the Buying Fund, none of which has been materially adverse to the business, assets or results of operation of the Selling Fund. h. Litigation. There is no litigation, administrative proceeding or investigation before any court or governmental body currently pending or, to the knowledge of the Selling Fund, threatened, that would materially and adversely affect the Selling Fund, its financial condition or the conduct of its business, or that would prevent or hinder completion of the transactions contemplated by this Agreement. The Selling Fund knows of no facts that might form the basis for the institution of any such litigation, proceeding or investigation and is not a party to or subject to the provisions of any order, decree or judgment. i. Contracts. Except for contracts and agreements previously disclosed to the Buying Corporation, the Selling Fund is not a party to or subject to any material contract, debt instrument, plan, lease, franchise, license or permit. j. Taxes. The Selling Fund has qualified as a regulated investment company under the Internal Revenue Code with respect to each taxable year since commencement of its operations and will qualify as regulated investment company at all times through the Closing. As of the Closing, the Selling Fund will (i) have filed all federal and other tax returns and reports that have been required to be filed, (ii) have paid or provided for payment of all federal and other taxes shown to be due on such returns or on any assessments received, (iii) have adequately provided for all tax liabilities on its books, (iv) except as disclosed to the Buying Fund, not have had any tax deficiency or liability asserted against it or question with respect thereto raised, and (v) except as disclosed to the Buying Fund, not be under audit by the Internal Revenue Service or by any state or local tax authority for taxes in excess of those already paid. k. Fund Securities. All securities listed in the schedule of investments of the Selling Fund as of the Closing will be owned by the Selling Fund free and clear of any encumbrances, except as indicated in the schedule. RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.6 l. Registration Statement. The Selling Fund will cooperate with the Buying Fund and will furnish information relating to the Selling Corporation and the Selling Fund required in the Registration Statement. At the time the Registration Statement becomes effective, at the time of the shareholders' meeting and at the Closing, the Registration Statement, as it relates to the Selling Corporation or the Selling Fund, will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. However, the representations and warranties in this subsection apply only to statements in or omissions from the Registration Statement made in reliance upon information furnished by the Selling Corporation or the Selling Fund for use in the Registration Statement. 7. CONDITIONS TO OBLIGATIONS OF THE BUYING CORPORATION. The obligations of the Buying Corporation with respect to the Reorganization are subject to the satisfaction of the following conditions: a. Shareholder Approval. This Agreement will have been approved by the affirmative vote of the holders of the majority of the voting power of all Selling Fund shares entitled to vote. b. Representations, Warranties and Agreements. The Selling Corporation and the Selling Fund will have complied with this Agreement and each of the representations and warranties in this Agreement will be true in all material respects as of the Closing. An officer of the Selling Corporation will provide a certificate to the Buying Fund confirming that, as of the Closing, the representations and warranties set forth in Section 6 are true and correct and that there have been no material adverse changes in the financial condition, results of operations, business, properties or assets of the Selling Fund since the date of its last financial statement, except as otherwise indicated in any financial statements, certified by an officer of the Selling Corporation, and delivered to the Buying Fund on or prior to the last business day before the Closing. c. Regulatory Approvals. - The Registration Statement referred to in Section 5(l) will be effective and no stop orders under the 1933 Act will have been issued. - All necessary approvals, consents and exemptions from federal and state regulatory authorities will have been obtained. d. Tax Opinion. The Buying Corporation will have received the opinion of Ropes & Gray LLP dated as of the Closing, as to the federal income tax consequences of the Reorganization to the Buying Fund RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.7 and its shareholders. For purposes of rendering their opinion, Ropes & Gray LLP may rely, as to factual matters, upon the statements made in this Agreement, the proxy statement which will be distributed to the shareholders of the Selling Fund, and other written representations as an officer of the Selling Corporation will have verified as of Closing. The opinion of Ropes & Gray LLP will be to the effect that: (i) neither the Selling Fund nor the Buying Fund will recognize any gain or loss upon the transfer of the assets of the Selling Fund to, and assumption of its liabilities by, the Buying Fund in exchange for shares of the Buying Fund and upon the distribution of the shares to the Selling Fund shareholders in exchange for their shares of the Selling Fund; (ii) the shareholders of the Selling Fund who receive shares of the Buying Fund in the Reorganization will not recognize any gain or loss on the exchange of their shares of the Selling Fund for the shares of the Buying Fund; (iii) the holding period and the basis of the shares received by the Selling Fund shareholders will be the same as the holding period and the basis of the shares of the Selling Fund surrendered in the exchange; (iv) the holding period and the basis of the assets acquired by the Buying Fund will be the same as the holding period and the basis of the assets to the Selling Fund immediately prior to the Reorganization. e. Opinion of Counsel. The Buying Corporation will have received an opinion of counsel for the Selling Corporation, dated as of the Closing, to the effect that: (i) the Selling Corporation is a corporation duly organized and validly existing under the laws of the state of Minnesota; (ii) the Selling Fund is a series of the Selling Corporation, an open-end investment company registered under the 1940 Act; (iii) this Agreement and the Reorganization have been duly authorized and approved by all requisite action of the Selling Corporation and the Selling Fund and this Agreement has been duly executed by, and is a valid and binding obligation of, the Selling Corporation. f. Declaration of Dividend. The Selling Fund, prior to the Closing, has declared a dividend or dividends, which, together with all previous such dividends, shall have the effect of distributing to the Selling Fund shareholders (i) all of the excess of (x) the Selling Fund's investment income excludable from gross income under Section 103 of the Code over (y) the Selling Fund's deductions disallowed under Sections 265 and 171 of the Code, (ii) all of the Selling Fund's investment company taxable income as defined in Section 852 of the Code (in each case computed without regard to any deduction for dividends paid) and (iii) all of the Selling Fund's net capital gain realized (after reduction RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.8 for any capital loss carryover), in each case for the current taxable year (which will end on the Closing date) and any preceding taxable years for which such a dividend is eligible to be made under Section 855 of the Code. 8. CONDITIONS TO OBLIGATIONS OF THE SELLING CORPORATION. The obligations of the Selling Corporation with respect to the Reorganization are subject to the satisfaction of the following conditions: a. Shareholder Approval. This Agreement will have been approved by the affirmative vote of the holders of the majority of the voting power of all Selling Fund shares entitled to vote. b. Representations, Warranties and Agreements. The Buying Fund will have complied with this Agreement and each of the representations and warranties in this Agreement will be true in all material respects as of the Closing. An officer of the Buying Corporation will provide a certificate to the Selling Fund confirming that, as of the Closing, the representations and warranties set forth in Section 5 are true and correct and that there have been no material adverse changes in the financial condition, results of operations, business, properties or assets of the Buying Fund since the date of its last financial statement, except as otherwise indicated in any financial statements, certified by an officer of the Buying Corporation, and delivered to the Selling Fund on or prior to the last business day before the Closing. c. Regulatory Approvals. - The Registration Statement referred to in Section 5(l) will be effective and no stop orders under the 1933 Act will have been issued. - All necessary approvals, consents and exemptions from federal and state regulatory authorities will have been obtained. d. Tax Opinion. The Selling Corporation will have received the opinion of Ropes & Gray LLP dated as of the Closing, as to the federal income tax consequences of the Reorganization to the Selling Fund and its shareholders. For purposes of rendering their opinion, Ropes & Gray LLP may rely, as to factual matters, upon the statements made in this Agreement, the proxy statement which will be distributed to the shareholders of the Selling Fund, and other written representations as an officer of the Buying Corporation will have verified as of Closing. The opinion of Ropes & Gray LLP will be to the effect that: (i) neither the Selling Fund nor the Buying Fund will recognize any gain or loss upon the transfer of the assets of the Selling Fund to, and assumption of its liabilities by, the Buying Fund in exchange for shares of the Buying Fund and upon the distribution of the shares to the Selling RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.9 Fund shareholders in exchange for their shares of the Selling Fund; (ii) the shareholders of the Selling Fund who receive shares of the Buying Fund in the Reorganization will not recognize any gain or loss on the exchange of their shares of the Selling Fund for the shares of the Buying Fund; (iii) the holding period and the basis of the shares received by the Selling Fund shareholders will be the same as the holding period and the basis of the shares of the Selling Fund surrendered in the exchange; (iv) the holding period and the basis of the assets acquired by the Buying Fund will be the same as the holding period and the basis of the assets to the Selling Fund immediately prior to the Reorganization; and (v) the Buying Fund will succeed to and take into account the items of the Selling Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383, and 384 of the Code and the regulations thereunder. e. Opinion of Counsel. The Selling Corporation will have received the opinion of counsel for the Buying Corporation, dated as of the Closing, to the effect that: (i) the Buying Corporation is a corporation duly organized and validly existing under the laws of the state of Minnesota; (ii) the Buying Fund is a series of the Buying Corporation, an open-end investment company registered under the 1940 Act; (iii) this Agreement and the Reorganization have been authorized and approved by all requisite action of the Buying Corporation and the Buying Fund and this Agreement has been duly executed by, and is a valid and binding obligation of, the Buying Corporation; and (iv) the shares to be issued in the Reorganization are duly authorized and upon issuance in accordance with this Agreement will be validly issued, fully paid and non-assessable shares of the Buying Fund. 9. AMENDMENT; TERMINATION; NON-SURVIVAL OF COVENANTS, WARRANTIES AND REPRESENTATIONS. a. This Agreement may be amended in writing if authorized by the respective Boards of Directors. The Agreement may be amended at any time before or after approval by the shareholders of the Selling Fund, but after shareholder approval, no amendment shall be made that substantially changes the terms of paragraphs 2 or 3. b. At any time prior to the Closing, any of the parties may waive in writing (i) any inaccuracies in the representations and warranties made to it and (ii) compliance with any of the covenants or conditions made for its benefit. However, neither party may waive the requirement to obtain shareholder approval or the requirement to obtain a tax opinion. RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.10 c. The Selling Corporation may terminate this Agreement at any time prior to the Closing by notice to the Buying Corporation if a material condition to its performance or a material covenant of the Buying Corporation on behalf of the Buying Fund is not fulfilled on or before the date specified for its fulfillment or a material breach of this Agreement is made by the Buying Corporation on behalf of the Buying Fund and is not cured. d. The Buying Corporation may terminate this Agreement at any time prior to the Closing by notice to the Selling Corporation if a material condition to its performance or a material covenant of the Selling Corporation on behalf of the Selling Fund is not fulfilled on or before the date specified for its fulfillment or a material breach of this Agreement is made by the Selling Corporation on behalf of the Selling Fund and is not cured. e. This Agreement may be terminated by any party at any time prior to the Closing, whether before or after approval by the shareholders of the Selling Fund, without any liability on the part of either party or its respective directors, officers, or shareholders, on written notice to the other party, and shall be terminated without liability as of the close of business on Dec. 31, 2006, or a later date agreed upon by the parties, if the Closing is not on or prior to that date. f. The representations, warranties and covenants contained in this Agreement, or in any document delivered in connection with this Agreement, will survive the Reorganization. 10. EXPENSES. RiverSource Investments, LLC will pay all solicitation expenses in order to achieve shareholder approval of the Reorganization whether or not the Reorganization is completed and will bear the other costs of effecting the Reorganization. 11. GENERAL. a. Headings. The headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement. Nothing in this Agreement is intended to confer upon any other person any rights or remedies by reason of this Agreement. b. Governing Law. This Agreement will be governed by the laws of the state of Minnesota. 12. INDEMNIFICATION. Each party will indemnify and hold the other and its officers and directors (each an "Indemnitee") harmless from and against any liability or other cost and expense, in connection with the defense or disposition of any action, suit, or other proceeding, before any court or administrative or RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.11 investigative body in which the Indemnitee may be involved as a party, with respect to actions taken under this Agreement. However, no Indemnitee will be indemnified against any liability or expense arising by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the Indemnitee's position. IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed. AXP Stock Series, Inc. on behalf of RiverSource Stock Fund By ----------------------------------- Leslie L. Ogg Vice President AXP Growth Series, Inc. on behalf of RiverSource Disciplined Equity Fund By ----------------------------------- Leslie L. Ogg Vice President The undersigned is a party to this Agreement for purposes of Section 3c and 10 only. RiverSource Investments, LLC By ----------------------------------- Paula R. Meyer Senior Vice President - Mutual Funds RIVERSOURCE STOCK FUND -- PROXY STATEMENT A.12 EXHIBIT B REFERENCE TO THE "FUND" IN THIS EXHIBIT IS A REFERENCE TO DISCIPLINED EQUITY. MATTERS SUBJECT TO APPROVAL AT REGULAR MEETING OF BUYING FUND In addition to voting on proposals to elect Board members, to amend the Articles of Incorporation, and to approve the IMS Agreement, Buying Fund shareholders will consider the following: APPROVE OR REJECT CHANGES IN FUNDAMENTAL INVESTMENT POLICIES The fund has some investment policies that are fundamental. This means the policies can be changed only with the approval of shareholders. RiverSource Investments recommended to the Board that certain of those policies be modified in order to standardize the policies for all RiverSource funds and to eliminate unnecessary limitations. RiverSource Investments believes that increased standardization will help to promote operational efficiencies and facilitate monitoring of compliance with fundamental investment policies. Adoption of a new or revised policy is not intended to change current investment techniques employed for the fund. The Board recommends the following changes to the fund's fundamental investment policies: A. DIVERSIFICATION The Board recommends that the fund's fundamental policy with respect to diversification be revised to give the fund the maximum flexibility permitted by the 1940 Act. The Board recommends that shareholders vote to replace the fund's current fundamental investment policy with the following policy (additional or revised language is underlined): The fund will not invest more than 5% of its total assets in securities of any company, government, or political subdivision thereof, except the limitation will not apply to investments in securities issued or guaranteed by the U.S. government, its agencies or instrumentalities or other investment companies, and except that up to 25% of the fund's total assets may be invested without regard to this 5% limitation. RIVERSOURCE STOCK FUND -- PROXY STATEMENT B.1 The percentage limits in the proposed policy are required under the 1940 Act. The amended policy makes one change from the current policy: subject to applicable 1940 Act requirements, it would permit the fund to invest without limit in the securities of other investment companies. Pursuant to an exemptive order granted by the Securities and Exchange Commission (the "SEC"), the fund may invest up to 25% of its total assets in a non-publicly offered money market fund managed by RiverSource Investments (the "cash pool fund"). The cash pool fund is not expected to pay investment advisory, management, or transfer agent fees, although it may do so subject to the conditions of the SEC order and Board approval. The cash pool fund will incur minimal costs for services, such as custodian and auditor fees. The investment manager anticipates that making use of the cash pool fund will benefit the fund by enhancing the efficiency of cash management and by providing increased short-term investment opportunities. If the proposal is approved, the cash pool fund is expected to serve as a principal option for managing the cash positions of the fund. Future amendments to the fund's fundamental diversification policy would continue to require shareholder approval. B. LENDING The Board recommends that the fund's fundamental policies with respect to lending be replaced with the following policy: The Fund will not lend securities or participate in an interfund lending program if the total of all such loans would exceed 33 1/3% of the Fund's total assets except this fundamental investment policy shall not prohibit the Fund from purchasing money market securities, loans, loan participation or other debt securities, or from entering into repurchases agreements. Currently the fund 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, the fund has 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. RIVERSOURCE STOCK FUND -- PROXY STATEMENT B.2 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. C. BORROWING The Board recommends that the fund's fundamental policy with respect to borrowing be replaced with the following policy: The fund may not borrow money, except for temporary purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings) immediately after the borrowings. Funds typically borrow money to meet redemptions in order to avoid forced, unplanned sales of portfolio securities. This technique allows RiverSource Investments greater flexibility in managing the fund's cash flow. The current policy limits borrowing to "emergency or extraordinary purposes". In order to avoid debate over what constitutes emergency or extraordinary purposes, it is proposed to revise the policy to reflect that the purposes, whatever the circumstances, must be temporary. The fund may not use borrowing for leverage or for investment purposes. In addition, the policy for certain funds includes a prohibition on borrowing "property". The Board recommends that this prohibition be deleted in order to standardize investment policies. RIVERSOURCE STOCK FUND -- PROXY STATEMENT B.3 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. RIVERSOURCE STOCK FUND -- PROXY STATEMENT B.4 EXHIBIT C MINNESOTA BUSINESS CORPORATION ACT SECTIONS 302A.471 AND 302A.473 Minnesota law requires that we provide you with a copy of the state law on dissenters' rights. Notwithstanding the provisions of the law set out below, the SEC has taken the position that use of state appraisal procedures by a registered mutual fund such as the Fund would be a violation of Rule 22c-1, the forward pricing rule, under the 1940 Act. As a result, if any shareholder elects to exercise dissenters' rights under Minnesota law, the Fund intends to submit this question to a court of competent jurisdiction. In that event, a dissenting shareholder would not receive any payment until the end of the court proceeding. 302A.471. RIGHTS OF DISSENTING SHAREHOLDERS SUBDIVISION 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation may dissent from, and obtain payment for the fair value of the shareholder's shares in the event of, any of the following corporate actions: (a) An amendment of the articles that materially and adversely affects the rights or preferences of the shares of the dissenting shareholder in that it: (1) alters or abolishes a preferential right of the shares; (2) creates, alters, or abolishes a right in respect of the redemption of the shares, including a provision respecting a sinking fund for the redemption or repurchase of the shares; (3) alters or abolishes a preemptive right of the holder of the shares to acquire shares, securities other than shares, or rights to purchase shares or securities other than shares; (4) excludes or limits the right of a shareholder to vote on a matter, or to cumulate votes, except as the right may be excluded or limited through the authorization or issuance of securities of an existing or new class or series with similar or different voting rights; except that an amendment to the articles of an issuing public corporation that provides that section 302A.671 does not apply to a control share acquisition does not give rise to the right to obtain payment under this section; (b) A sale, lease, transfer, or other disposition of all or substantially all of the property and assets of the corporation, but not including a transaction permitted without shareholder approval in section 302A.661, subdivision 1, or a disposition in dissolution described in section 302A.725, subdivision 2, or a disposition pursuant to an order of a court, or a disposition for cash on terms requiring that all or substantially all of the net proceeds of disposition be distributed to the shareholders in accordance with their respective interests within one year after the date of disposition; RIVERSOURCE STOCK FUND -- PROXY STATEMENT C.1 (c) A plan of merger, whether under this chapter or under chapter 322B, to which the corporation is a party, except as provided in subdivision 3, and except for a plan of merger adopted under section 302A.626; (d) A plan of exchange, whether under this chapter or under chapter 322B, to which the corporation is a party as the corporation whose shares will be acquired by the acquiring corporation, except as provided in subdivision 3; or (e) Any other corporate action taken pursuant to a shareholder vote with respect to which the articles, the bylaws, or a resolution approved by the board directs that dissenting shareholders may obtain payment for their shares. SUBDIVISION 2. BENEFICIAL OWNERS. (a) A shareholder shall not assert dissenters' rights as to less than all of the shares registered in the name of the shareholder, unless the shareholder dissents with respect to all the shares that are beneficially owned by another person but registered in the name of the shareholder and discloses the name and address of each beneficial owner on whose behalf the shareholder dissents. In that event, the rights of the dissenter shall be determined as if the shares as to which the shareholder has dissented and the other shares were registered in the names of different shareholders. (b) The beneficial owner of shares who is not the shareholder may assert dissenters' rights with respect to shares held on behalf of the beneficial owner, and shall be treated as a dissenting shareholder under the terms of this section and section 302A.473, if the beneficial owner submits to the corporation at the time of or before the assertion of the rights a written consent of the shareholder. SUBDIVISION 3. RIGHTS NOT TO APPLY. (a) Unless the articles, the bylaws, or a resolution approved by the board otherwise provide, the right to obtain payment under this section does not apply to a shareholder of (1) the surviving corporation in a merger with respect to shares of the shareholder that are not entitled to be voted on the merger or (2) the corporation whose shares will be acquired by the acquiring corporation in a plan of exchange with respect to shares of the shareholder that are not entitled to be voted on the plan of exchange and are not exchanged in the plan of exchange. (b) If a date is fixed according to section 302A.445, subdivision 1, for the determination of shareholders entitled to receive notice of and to vote on an action described in subdivision 1, only shareholders as of the date fixed, and beneficial owners as of the date fixed who hold through shareholders, as provided in subdivision 2, may exercise dissenters' rights. SUBDIVISION 4. OTHER RIGHTS. The shareholders of a corporation who have a right under this section to obtain payment for their shares do not have a right at RIVERSOURCE STOCK FUND -- PROXY STATEMENT C.2 law or in equity to have a corporate action described in subdivision 1 set aside or rescinded, except when the corporate action is fraudulent with regard to the complaining shareholder or the corporation. 302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS SUBDIVISION 1. DEFINITIONS. (a) For purposes of this section, the terms defined in this subdivision have the meanings given them. (b) "Corporation" means the issuer of the shares held by a dissenter before the corporate action referred to in section 302A.471, subdivision 1 or the successor by merger of that issuer. (c) "Fair value of the shares" means the value of the shares of a corporation immediately before the effective date of the corporate action referred to in section 302A.471, subdivision 1. (d) "Interest" means interest commencing five days after the effective date of the corporate action referred to in section 302A.471, subdivision 1, up to and including the date of payment, calculated at the rate provided in section 549.09 for interest on verdicts and judgments. SUBDIVISION 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting at which any action described in section 302A.471, subdivision 1 is to be voted upon, the notice of the meeting shall inform each shareholder of the right to dissent and shall include a copy of section 302A.471 and this section and a brief description of the procedure to be followed under these sections. SUBDIVISION 3. NOTICE OF DISSENT. If the proposed action must be approved by the shareholders, a shareholder who is entitled to dissent under section 302A.471 and who wishes to exercise dissenters' rights must file with the corporation before the vote on the proposed action a written notice of intent to demand the fair value of the shares owned by the shareholder and must not vote the shares in favor of the proposed action. SUBDIVISION 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES. (a) After the proposed action has been approved by the board and, if necessary, the shareholders, the corporation shall send to all shareholders who have complied with subdivision 3 and to all shareholders entitled to dissent if no shareholder vote was required, a notice that contains: (1) The address to which a demand for payment and certificates of certificated shares must be sent in order to obtain payment and the date by which they must be received; (2) Any restrictions on transfer of uncertificated shares that will apply after the demand for payment is received; RIVERSOURCE STOCK FUND -- PROXY STATEMENT C.3 (3) A form to be used to certify the date on which the shareholder, or the beneficial owner on whose behalf the shareholder dissents, acquired the shares or an interest in them and to demand payment; and (4) A copy of section 302A.471 and this section and a brief description of the procedures to be followed under these sections. (b) In order to receive the fair value of the shares, a dissenting shareholder must demand payment and deposit certificated shares or comply with any restrictions on transfer of uncertificated shares within 30 days after the notice required by paragraph (a) was given, but the dissenter retains all other rights of a shareholder until the proposed action takes effect. SUBDIVISION 5. PAYMENT; RETURN OF SHARES. (a) After the corporate action takes effect, or after the corporation receives a valid demand for payment, whichever is later, the corporation shall remit to each dissenting shareholder who has complied with subdivisions 3 and 4 the amount the corporation estimates to be the fair value of the shares, plus interest, accompanied by: (1) The corporation's closing balance sheet and statement of income for a fiscal year ending not more than 16 months before the effective date of the corporate action, together with the latest available interim financial statements; (2) An estimate by the corporation of the fair value of the shares and a brief description of the method used to reach the estimate; and (3) A copy of section 302A.471 and this section, and a brief description of the procedure to be followed in demanding supplemental payment. (b) The corporation may withhold the remittance described in paragraph (a) from a person who was not a shareholder on the date the action dissented from was first announced to the public or who is dissenting on behalf of a person who was not a beneficial owner on that date. If the dissenter has complied with subdivisions 3 and 4, the corporation shall forward to the dissenter the materials described in paragraph (a), a statement of the reason for withholding the remittance, and an offer to pay to the dissenter the amount listed in the materials if the dissenter agrees to accept that amount in full satisfaction. The dissenter may decline the offer and demand payment under subdivision 6. Failure to do so entitles the dissenter only to the amount offered. If the dissenter makes demand, subdivision 7 and 8 apply. (c) If the corporation fails to remit payment within 60 days of the deposit of certificates or the imposition of transfer restrictions on uncertificated shares, it shall return all deposited certificates and cancel all transfer restrictions. However, the corporation may again give notice under subdivision 4 and require deposit or restrict transfer at a later time. RIVERSOURCE STOCK FUND -- PROXY STATEMENT C.4 SUBDIVISION 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the amount remitted under subdivision 5 is less than the fair value of the shares plus interest, the dissenter may give written notice to the corporation of the dissenter's own estimate of the fair value of the shares, plus interest, within 30 days after the corporation mails the remittance under subdivision 5, and demand payment of the difference. Otherwise, a dissenter is entitled only to the amount remitted by the corporation. SUBDIVISION 7. PETITION; DETERMINATION. If the corporation receives a demand under subdivision 6, it shall, within 60 days after receiving the demand, either pay to the dissenter the amount demanded or agreed to by the dissenter after discussion with the corporation or file in a court a petition requesting that the court determine the fair value of the shares, plus interest. The petition shall be filed in the county in which the registered office of the corporation is located, except that a surviving foreign corporation that receives a demand relating to the shares of a constituent domestic corporation shall file the petition in the county in this state in which the last registered office of the constituent corporation was located. The petition shall name as parties all dissenters who have demanded payment under subdivision 6 and who have not reached agreement with the corporation. The corporation shall, after filing the petition, serve all parties with a summons and copy of the petition under the rules of civil procedure. Nonresidents of this state may be served by registered or certified mail or by publication as provided by law. Except as otherwise provided, the rules of civil procedures apply to this proceeding. The jurisdiction of the court is plenary and exclusive. The court may appoint appraisers, with powers and authorities the court deems proper, to receive evidence on and recommend the amount of the fair value of the shares. The court shall determine whether the shareholder or shareholders in question have fully complied with the requirements of this section, and shall determine the fair value of the shares, taking into account any and all factors the court finds relevant, computed by any method or combination of methods that the court, in its discretion, sees fit to use, whether or not used by the corporation or by a dissenter. The fair value of the shares as determined by the court is binding on all shareholders, wherever located. A dissenter is entitled to judgment in cash for the amount by which the fair value of the shares as determined by the court, plus interest, exceeds the amount, if any, remitted under subdivision 5, but shall not be liable to the corporation for the amount, if any, by which the amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair value of the shares as determined by the court, plus interest. RIVERSOURCE STOCK FUND -- PROXY STATEMENT C.5 SUBDIVISION 8. COSTS; FEES; EXPENSES. (a) The court shall determine the costs and expenses of a proceeding under subdivision 7, including the reasonable expenses and compensation of any appraisers appointed by the court, and shall assess those costs and expenses against the corporation, except that the court may assess part or all of those costs and expenses against a dissenter whose action in demanding payment under subdivision 6 is found to be arbitrary, vexatious, or not in good faith. (b) If the court finds that the corporation has failed to comply substantially with this section, the court may assess all fees and expenses of any experts or attorneys as the court deems equitable. These fees and expenses may also be assessed against a person who has acted arbitrarily, vexatiously, or not in good faith in bringing the proceeding, and may be awarded to a party injured by those actions. (c) The court may award, in its discretion, fees and expenses to an attorney for the dissenters out of the amount awarded to the dissenters, if any. RIVERSOURCE STOCK FUND -- PROXY STATEMENT C.6 EXHIBIT D Prospectus [RIVERSOURCE INVESTMENT(SM) LOGO] RIVERSOURCE(SM) DISCIPLINED EQUITY FUND PROSPECTUS OCT. 3, 2005 - RIVERSOURCE DISCIPLINED EQUITY FUND (FORMERLY AXP(R) QUANTITATIVE LARGE CAP EQUITY FUND) SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense. You may qualify for sales charge discounts on purchases of Class A shares. Please notify your financial advisor or investment professional if you have other accounts holding shares of RiverSource funds to determine whether you qualify for a sales charge discount. See "Buying and Selling Shares" for more information. NOT FDIC INSURED - MAY LOSE VALUE - NO BANK GUARANTEE RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.1 TABLE OF CONTENTS THE FUND D. 3 Objective D. 3 Principal Investment Strategies D. 3 Principal Risks D. 4 Past Performance D. 5 Fees and Expenses D. 8 Other Investment Strategies and Risks D. 9 Fund Management and Compensation D. 11 BUYING AND SELLING SHARES D. 16 Transactions Through Unaffiliated Financial Intermediaries D. 16 Valuing Fund Shares D. 17 Investment Options D. 18 Purchasing Shares D. 20 Sales Charges D. 23 Exchanging/Selling Shares D. 29 DISTRIBUTIONS AND TAXES D. 34 Dividends and Capital Gain Distributions D. 34 Reinvestments D. 34 Taxes D. 35 FINANCIAL HIGHLIGHTS D. 36 CORPORATE REORGANIZATION On Sept. 30, 2005, Ameriprise Financial, Inc. (Ameriprise Financial) (formerly American Express Financial Corporation), was spun off to shareholders of its parent corporation, American Express Company (American Express), and is now a separate public company, trading under the ticker symbol AMP. Ameriprise Financial provides administrative services to the Fund and is the parent company of the Fund's investment manager, RiverSource Investments, LLC; the Fund's distributor, Ameriprise Financial Services, Inc. (formerly American Express Financial Advisors, Inc.); the Fund's transfer agent, RiverSource Service Corporation (formerly American Express Client Service Corporation); and the Fund's custodian, Ameriprise Trust Company (formerly American Express Trust Company). On Oct. 1, 2005, the Fund changed its name, such that it no longer is branded AXP(R). The Fund now bears the RiverSource(SM) brand. Ameriprise Financial and its subsidiaries are no longer affiliated with American Express. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.2 THE FUND OBJECTIVE RiverSource Disciplined Equity Fund (the Fund) seeks to provide shareholders with long-term capital growth. Because any investment involves risk, achieving this objective cannot be guaranteed. PRINCIPAL INVESTMENT STRATEGIES Under normal market conditions, at least 80% of the Fund's net assets are invested in equity securities of companies listed on U.S. exchanges with market capitalizations greater than $5 billion at the time of purchase. The Fund will provide shareholders with at least 60 days' notice of any change in the 80% policy. In pursuit of the Fund's objective, the investment manager (RiverSource Investments, LLC) will choose equity investments by employing proprietary quantitative methods based on sophisticated statistical analysis. The universe of stocks from which the investment manager selects the Fund's investments primarily will be those included in the Fund's benchmark, the S&P 500. Through extensive analysis of the domestic equity markets, the investment manager has identified characteristics of certain stocks that have historically outperformed their benchmarks. The Fund will hold both growth and value stocks. Characteristics used to select stocks for the Fund include: - Superior growth characteristics such as: - strong earnings growth, - positive earnings that exceed expectations published by third-party business analysts, - consistency of earnings, and - strong positive price trend. - Superior value characteristics based on analysis of current stock prices relative to estimates of future prices. In selecting the stocks for the Fund's portfolio, the investment manager employs a rigorous process for evaluating the relationship between the risk associated with each security and its potential for positive returns. This process includes factors such as: - Limits on positions relative to the benchmark through overweighting or underweighting. - Limits on sector and industry allocations relative to the benchmark. - Limits on size of holdings relative to market liquidity. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.3 PRINCIPAL RISKS This Fund is designed for investors with above-average risk tolerance. Please remember that with any mutual fund investment you may lose money. Principal risks associated with an investment in the Fund include: ACTIVE MANAGEMENT RISK. The Fund is actively managed and its performance therefore will reflect in part the ability of the portfolio managers to make investment decisions that are suited to achieving the Fund's investment objective. Due to its active management, the Fund could underperform other mutual funds with similar investment objectives. ISSUER RISK. An issuer may perform poorly, and therefore, the value of its stocks and bonds may decline. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, or other factors. MARKET RISK. The market value of securities may fall or fail to rise. Market risk may affect a single issuer, sector of the economy, industry, or the market as a whole. The market value of securities may fluctuate, sometimes rapidly and unpredictably. This risk is generally greater for small and mid-sized companies, which tend to be more vulnerable to adverse developments. In addition, focus on a particular style, for example, investment in growth or value securities, may cause the Fund to underperform other mutual funds if that style falls out of favor with the market. The quantitative methodology employed by the investment manager has been extensively tested using historical securities market data, but has only recently begun to be used to manage open-end mutual funds. There can be no assurance that the methodology will enable the Fund to achieve its objective. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.4 PAST PERFORMANCE The following bar chart and table provide some illustration of the risks of investing in the Fund by showing, respectively: - how the Fund's performance has varied for each full calendar year shown on the bar chart, and - how the Fund's average annual total returns compare to recognized indexes shown on the table. Both the bar chart and the table assume that all distributions have been reinvested. The performance of different classes varies because of differences in sales charges and other fees and expenses. How the Fund has performed in the past (before and after taxes) does not indicate how the Fund will perform in the future. Performance reflects any fee waivers/expense caps in effect for the periods reported. In the absence of such fee waivers/expense caps, performance would have been lower. See "Fees and Expenses" for any current fee waivers/expense caps. BAR CHART. Class A share information is shown in the bar chart; the sales charge for Class A shares is not reflected in the bar chart. TABLE. The table shows total returns from hypothetical investments in Class A, Class B, Class C and Class Y shares of the Fund. These returns are compared to the indexes shown for the same periods. For purposes of the performance calculation in the table we assumed: - the maximum sales charge for Class A shares, - sales at the end of the period and deduction of the applicable contingent deferred sales charge (CDSC) for Class B and Class C shares, - no sales charge for Class Y shares, and - no adjustments for taxes paid by an investor on the reinvested income and capital gains. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.5 AFTER-TAX RETURNS After-tax returns are shown only for Class A shares. After-tax returns for the other classes will vary. After-tax returns are calculated using the highest historical individual federal marginal income tax rate and do not reflect the impact of state and local taxes. Actual after-tax returns will depend on your tax situation and most likely will differ from the returns shown in the table. If you hold your shares in a tax-deferred account, such as a 401(k) plan or an IRA, the after-tax returns do not apply to you since you will not incur taxes until you begin to withdraw from your account. The return after taxes on distributions for a period may be the same as the return before taxes for the same period if there were no distributions or if the distributions were small. The return after taxes on distributions and sale of Fund shares for a period may be greater than the return before taxes for the same period if there was a tax loss realized on sale of Fund shares. The benefit of the tax loss (since it can be used to offset other gains) may result in a higher return. [CHART] CLASS A SHARE PERFORMANCE (BASED ON CALENDAR YEARS) 2004 +9.96%
During the period shown in the bar chart, the highest return for a calendar quarter was +9.77% (quarter ended Dec. 31, 2004) and the lowest return for a calendar quarter was -3.05% (quarter ended Sept. 30, 2004). The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart; if reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The Fund's Class A year-to-date return at June 30, 2005 was -0.15%. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.6 AVERAGE ANNUAL TOTAL RETURNS (FOR PERIODS ENDED DEC. 31, 2004)
SINCE 1 YEAR INCEPTION RiverSource Disciplined Equity: Class A Return before taxes +3.64% +15.85%(a) Return after taxes on distributions +2.89% +14.94%(a) Return after taxes on distributions and sale of fund shares +2.65% +13.16%(a) Class B Return before taxes +4.16% +16.92%(a) Class C Return before taxes +8.16% +19.05%(a) Class Y Return before taxes +10.26% +20.23%(a) S&P 500 Index (reflects no deduction for fees, expenses or taxes) +10.88% +20.32%(b) Lipper Large-Cap Core Funds Index +8.29% +17.00%(b)
(a) Inception date is April 24, 2003. (b) Measurement period started May 1, 2003. The Standard & Poor's 500 Index (S&P 500 Index), an unmanaged index of common stocks, is frequently used as a general measure of market performance. The index reflects reinvestment of all distributions and changes in market prices, but excludes brokerage commissions or other fees. The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap core funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. See "Fund Management and Compensation" for more information. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.7 FEES AND EXPENSES Fund investors pay various expenses. The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund. Expenses are based on the Fund's most recent fiscal year, adjusted to reflect current fees. SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CLASS A CLASS B CLASS C CLASS Y Maximum sales charge (load) imposed on purchases(a) (as a percentage of offering price) 5.75% none none none Maximum deferred sales charge (load) imposed on sales (as a percentage of offering price at time of purchase) none(b) 5% 1% none
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS: CLASS A CLASS B CLASS C CLASS Y Management fees(c) 0.62% 0.62% 0.62% 0.62% Distribution (12b-1) fees 0.25% 1.00% 1.00% 0.00% Other expenses(d) 0.49% 0.52% 0.52% 0.57% Total 1.36% 2.14% 2.14% 1.19% Fee waiver/expense reimbursement 0.09% 0.08% 0.06% 0.11% Net expenses(e) 1.27% 2.06% 2.08% 1.08%
(a) This charge may be reduced depending on the value of your total investments in RiverSource funds. See "Sales Charges." (b) For Class A purchases over $1,000,000 on which no sales charge is assessed, a 1% sales charge may apply if you sell your shares within one year after purchase. (c) Includes the impact of a performance incentive adjustment fee that increased the management fee by 0.02% for the most recent fiscal year. The index against which the Fund's performance is measured for purposes of determining the performance incentive adjustment is the Lipper Large-Cap Core Funds Index. See "Fund Management and Compensation" for more information. (d) Other expenses include an administrative services fee, a transfer agency fee, a custody fee and other nonadvisory expenses and, for Class Y shares, a shareholder service fee. (e) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until July 31, 2006, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net expenses, before giving effect to any performance incentive adjustment, will not exceed 1.25% for Class A; 2.04% for Class B; 2.06% for Class C and 1.06% for Class Y. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.8 EXAMPLES These examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. These examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. These examples also assume that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $697 $ 973 $1,270 $2,113 Class B $709(b) $1,063(b) $1,343(b) $2,272(c) Class C $311(b) $ 665 $1,145 $2,472 Class Y $110 $ 367 $ 645 $1,438
(a) Includes a 5.75% sales charge. (b) Includes the applicable CDSC. (c) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS Class A(a) $697 $973 $1,270 $2,113 Class B $209 $663 $1,143 $2,272(b) Class C $211 $665 $1,145 $2,472 Class Y $110 $367 $ 645 $1,438
(a) Includes a 5.75% sales charge. (b) Based on conversion of Class B shares to Class A shares in the ninth year of ownership. OTHER INVESTMENT STRATEGIES AND RISKS OTHER INVESTMENT STRATEGIES. In addition to the principal investment strategies previously described, the Fund may invest in other securities and may use other investment strategies that are not principal investment strategies. Additionally, the Fund may use derivatives (financial instruments where the value depends upon, or is derived from, the value of something else) such as futures, options and forward contracts, to produce incremental earnings, to hedge existing positions or to increase flexibility. Just as with securities in which the Fund invests directly, derivatives are subject to a number of risks, including market, liquidity, interest rate and credit risk. In addition, a relatively small price movement in the underlying security, currency or index may result in a substantial gain or loss for the Fund using derivatives. Even though the Fund's policies permit the use of derivatives in this manner, the portfolio managers are not required to use derivatives. For more information on strategies and RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.9 holdings, and the risks of such strategies, including other derivative instruments that the Fund may use, see the Fund's Statement of Additional Information (SAI) and its annual and semiannual reports. UNUSUAL MARKET CONDITIONS. During unusual market conditions, the Fund may temporarily invest more of its assets in money market securities than during normal market conditions. Although investing in these securities would serve primarily to avoid losses, this type of investing also could prevent the Fund from achieving its investment objective. During these times, the portfolio managers may make frequent securities trades that could result in increased fees, expenses and taxes, and decreased performance. PORTFOLIO TURNOVER. Trading of securities may produce capital gains, which are taxable to shareholders when distributed. Active trading may also increase the amount of commissions or mark-ups paid to broker-dealers that the Fund pays when it buys and sells securities. The Fund's historical portfolio turnover rate, which measures how frequently the Fund buys and sells investments, is shown in the "Financial Highlights." SECURITIES TRANSACTION COMMISSIONS. Securities transactions involve the payment by the Fund of brokerage commissions to broker-dealers, on occasion as compensation for research or brokerage services (commonly referred to as "soft dollars"), as the portfolio managers buy and sell securities for the Fund in pursuit of its objective. A description of the policies governing the Fund's securities transactions and the dollar value of brokerage commissions paid by the Fund are set forth in the SAI. The brokerage commissions set forth in the SAI do not include implied commissions or mark-ups (implied commissions) paid by the Fund for principal transactions (transactions made directly with a dealer or other counterparty), including most fixed income securities and certain derivatives. In addition, brokerage commissions do not reflect other elements of transaction costs, including the extent to which the Fund's purchase and sale transactions may cause the market to move and change the market price for an investment. Although brokerage commissions and implied commissions are not reflected in the expense table under "Fees and Expenses," they are reflected in the total return of the Fund. DIRECTED BROKERAGE. The Fund's Board of Directors (Board) has adopted a policy prohibiting the investment manager, or any subadviser, from considering sales of shares of the Fund as a factor in the selection of broker-dealers through which to execute securities transactions. Additional information regarding securities transactions can be found in the SAI. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.10 FUND MANAGEMENT AND COMPENSATION INVESTMENT MANAGER RiverSource Investments, LLC (the investment manager or RiverSource Investments), 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, is the investment manager to the RiverSource funds, and is a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Ameriprise Financial is a financial planning and financial services company that has been offering solutions for clients' asset accumulation, income management and protection needs for more than 110 years. In addition to managing investments for all of the RiverSource funds, RiverSource Investments manages investments for itself and its affiliates. For institutional clients, RiverSource Investments and its affiliates provide investment management and related services, such as separate account asset management, institutional trust and custody, and employee benefit plan administration, as well as other investment products. For all of its clients, RiverSource Investments seeks to allocate investment opportunities in an equitable manner over time. See the SAI for more information. The Fund pays RiverSource Investments a fee for managing its assets. Under the Investment Management Services Agreement (Agreement), the fee for the most recent fiscal year was 0.62% of the Fund's average daily net assets, including an adjustment under the terms of a performance incentive arrangement. The adjustment is computed by comparing the Fund's performance to the performance of an index of comparable funds published by Lipper Inc. The index against which the Fund's performance is currently measured for purposes of the performance incentive adjustment is the Lipper Large-Cap Core Funds Index. In certain circumstances, the Fund's Board may approve a change in the index. The maximum adjustment (increase or decrease) is 0.12% of the Fund's average net assets on an annual basis. Under the Agreement, the Fund also pays taxes, brokerage commissions, and nonadvisory expenses. A discussion regarding the basis for the Board approving the Agreement is available in the Fund's most recent shareholder report. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.11 PORTFOLIO MANAGER(S). The portfolio managers responsible for the Fund's day-to-day management are: Dimitris J. Bertsimas, Senior Portfolio Manager - Managed the Fund since 2003. - Joined RiverSource Investments (previously American Express Financial Corporation (AEFC)) as a portfolio manager in 2002. - Co-founded Dynamic Ideas, LLC, a consulting firm specializing in the development of quantitative tools for the asset management industry, where he served as Managing Partner, 1999 to 2002. Currently, Boeing Professor of Operations Research, Sloan School of Management and the Operations Research Center, MIT. - Began investment career as a consultant to asset managers in 1993; became portfolio manager in 2002. - MS and Ph.D., MIT. Gina K. Mourtzinou, Portfolio Manager - Managed the Fund since 2003. - Joined RiverSource Investments (previously AEFC) as a portfolio manager in 2002. - Co-founded Dynamic Ideas, LLC, a consulting firm specializing in the development of quantitative tools for the asset management industry, where she served as Vice President of Research and Analytics, 1999 to 2002. - Began investment career as a consultant to asset managers in 1996; became portfolio manager in 2002. - Ph.D., MIT. The SAI provides additional information about portfolio manager compensation, management of other accounts and ownership of shares in the Fund. ADDITIONAL SERVICES AND COMPENSATION As described above, RiverSource Investments receives compensation for acting as the Fund's investment manager. RiverSource Investments and its affiliates also receive compensation for providing other services to the Fund. ADMINISTRATION SERVICES. Ameriprise Financial, 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474, provides or compensates others to provide administrative services to the RiverSource funds. These services include administrative, accounting, treasury, and other services. Fees paid by the Fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.12 CUSTODY SERVICES. Ameriprise Trust Company, 200 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (the custodian or Ameriprise Trust Company), provides custody services to all but a limited number of the RiverSource funds, for which U.S. Bank National Association provides custody services. In addition, Ameriprise Trust Company is paid for certain transaction fees and out-of-pocket expenses incurred while providing services to the funds. Fees paid by the Fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." DISTRIBUTION SERVICES. Ameriprise Financial Services, Inc., 70100 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (the distributor or Ameriprise Financial Services), provides underwriting and distribution services to the RiverSource funds. Under the Distribution Agreement and related distribution and shareholder servicing plan(s), the distributor receives distribution and shareholder servicing fees. The distributor pays a portion of these fees to financial advisors and retains a portion of these fees to support its distribution and shareholder servicing activity. For third party sales, the distributor re-allows a portion of these fees to the financial intermediaries that sell Fund shares and provide services to shareholders, and retains a portion of these fees to support its distribution and shareholder servicing activity. Fees paid by the Fund for these services are set forth under "Distribution (12b-1) fees" in the expense table under "Fees and Expenses." More information on how these fees are used is set forth under "Investment Options" and in the SAI. The distributor also administers any sales charges paid by an investor at the time of purchase or at the time of sale (deferred sales charge). See "Shareholder Fees (fees paid directly from your investment)" under "Fees and Expenses" for the scheduled sales charge of each share class. See "Buying and Selling Shares" for variations in the scheduled sales charges, and for how these sales charges are used by the distributor. See "Other Investment Strategies and Risks" for Fund policy regarding directed brokerage. TRANSFER AGENCY SERVICES. RiverSource Service Corporation, 70100 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (the transfer agent or RiverSource Service Corporation), provides or compensates others to provide transfer agency services to the RiverSource funds. The RiverSource funds pay the transfer agent a fee, which varies by share class, as set forth in the SAI and reimburses the transfer agent for its out-of-pocket expenses incurred while providing these transfer agency services to the funds. Fees paid by the Fund for these services are included under "Other expenses" in the expense table under "Fees and Expenses." RiverSource funds are primarily sold through Ameriprise Financial Services which is allocated a portion of these fees for providing services to Fund shareholders. RiverSource Service Corporation may also pay a portion of these fees to other financial intermediaries that provide sub-recordkeeping and other services to Fund shareholders. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.13 The SAI provides additional information about the services provided and the fee schedules for the agreements set forth above. PAYMENTS TO FINANCIAL INTERMEDIARIES RiverSource Investments and its affiliates may make additional cash payments out of their own resources to financial intermediaries, such as broker-dealers, banks, qualified plan administrators and recordkeepers, or other institutions, including inter-company allocation of resources to affiliated broker-dealers such as Ameriprise Financial Services (financial intermediaries) in connection with the sale of shares of the Fund and/or the provision of services to the Fund or its shareholders. These payments may create an incentive for the financial intermediary, its employees or registered representatives to recommend or sell shares of the Fund to its customers. These payments and inter-company allocations are in addition to any 12b-1 distribution and/or shareholder service fees or other amounts paid by the Fund under distribution or shareholder servicing plans, or paid by the Fund for shareholder account maintenance, sub-accounting or recordkeeping services provided directly by the financial intermediary providing such services. In exchange for these payments and inter-company allocations, RiverSource Investments and its affiliates may receive preferred access to registered representatives of a financial intermediary (for example, the ability to make presentations in branch offices or at conferences) or preferred access to customers of the financial intermediary (for example, the ability to advertise or directly interact with the financial intermediary's customers in order to sell the Fund). These arrangements are sometimes referred to as "revenue sharing payments." In some cases, these arrangements may create an incentive for a financial intermediary or its representatives to recommend or sell shares of a fund and may create a conflict of interest between a financial intermediary's financial interest and its duties to its customers. Please contact the financial intermediary through which you are purchasing shares of the Fund for details about any payments it may receive in connection with the sale of Fund shares or the provision of services to the Fund. These payments and inter-company allocations are usually calculated based on a percentage of fund sales, and/or as a percentage of fund assets attributable to a particular financial intermediary. These payments may also be negotiated based on other criteria or factors including, but not limited to, the financial intermediary's affiliation with the investment manager, its reputation in the industry, its ability to attract and retain assets, its access to target markets, its customer relationships and the scope and quality of services it provides. The amount of payment or inter-company allocation may vary by financial intermediary and by type of sale (e.g., purchases of different share classes or purchases of the Fund through a qualified plan or through a wrap program), and may be significant. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.14 From time to time, RiverSource Investments and its affiliates may make other payments, including non-cash compensation, to financial intermediaries or their representatives in the form of gifts of nominal value, occasional meals, tickets, or other entertainment, support for due diligence trips, educational meetings or conference sponsorships, support for recognition programs, and other forms of non-cash compensation permissible under regulations to which these financial intermediaries and their representatives are subject. ADDITIONAL MANAGEMENT INFORMATION MANAGER OF MANAGER EXEMPTION. The Fund operates under an order from the Securities and Exchange Commission that permits RiverSource Investments, subject to the approval of the Board, to appoint a subadviser or change the terms of a subadvisory agreement for the Fund without first obtaining shareholder approval. The order permits the Fund to add or change unaffiliated subadvisers or the fees paid to subadvisers from time to time without the expense and delays associated with obtaining shareholder approval of the change. AFFILIATED FUNDS-OF-FUNDS. RiverSource Investments also serves as investment manager to the RiverSource Portfolio Builder Funds (Portfolio Builder Funds), a group of six funds-of-funds that provide asset-allocation services to shareholders by investing in shares of other RiverSource funds, including the Fund. The Fund may experience relatively large purchases or redemptions from the Portfolio Builder Funds. Although RiverSource Investments seeks to minimize the impact of these transactions by structuring them over a reasonable period of time, the Fund may experience increased expenses as it buys and sells securities to manage transactions for the Portfolio Builder Funds. In addition, because the Portfolio Builder Funds may own a substantial portion of the Fund, a redemption by the Portfolio Builder Funds could cause the Fund's expense ratio to increase as the Fund's fixed costs would be spread over a smaller asset base. RiverSource Investments monitors expense levels and is committed to offering funds that are competitively priced. RiverSource Investments will report to the Fund's Board on the steps it has taken to manage any potential conflicts. FUND HOLDINGS DISCLOSURE. The Fund's Board has adopted policies and procedures that govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the securities owned by the Fund. A description of these policies and procedures is included in the Fund's SAI. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.15 BUYING AND SELLING SHARES TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES Where authorized by the distributor, shares of the Fund may be available through certain 401(k) or other qualified plans, banks, broker-dealers or other institutions (financial intermediaries). These financial intermediaries may charge you additional fees for the services they provide and they may have different policies not described in this prospectus. Some policy differences may include different minimum investment amounts, exchange privileges, fund choices and cutoff times for investments. Additionally, recordkeeping, transaction processing and payments of distributions relating to your account may be performed by the financial intermediaries or their representatives through whom shares are held. Since the Fund may not have a record of your transactions, you should always contact the financial intermediary through whom you purchased the Fund to make changes to or give instructions concerning your account or to obtain information about your account. The Fund and the distributor are not responsible for the failure of one of these financial intermediaries to carry out its obligations to its customers. AVAILABILITY AND TRANSFERABILITY OF FUND SHARES. Please consult your investment professional or financial intermediary to determine availability of the Fund. Currently, RiverSource funds may be purchased or sold through affiliated broker-dealers of RiverSource Investments, including Ameriprise Financial Services and Securities America, Inc. (Securities America), and through a limited number of unaffiliated institutions. If you set up an account at another financial intermediary, you will not be able to transfer RiverSource fund holdings to that account unless that institution has obtained a selling agreement with the distributor of the RiverSource funds. If you set up an account with an unaffiliated financial intermediary that does not have, and is unable to obtain, such a selling agreement, you must either maintain your position with Ameriprise Financial Services or Securities America, find another financial intermediary with such a selling agreement, or sell your shares, paying any applicable deferred sales charge. Please be aware that transactions in taxable accounts would generate a taxable event and may result in an increased income tax liability. For more information, please call RiverSource Service Corporation at (888) 791-3380. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.16 The public offering price for Class A shares of the Fund is the net asset value (NAV) plus a sales charge, and for Class B, C, and Y shares, the NAV. Orders in good form are priced at the NAV next determined after you place your order. Good form or good order means that your instructions have been received in the form required by the distributor. This may include, for example, providing the fund name and account number, the amount of the transaction and all required signatures. For more information, refer to the sections on "Purchasing Shares" and "Exchanging/Selling Shares," or contact your financial advisor or investment professional. If you buy or sell shares through an authorized financial intermediary, consult that firm to determine its procedures for accepting and processing orders. The financial intermediary may charge a fee for its services. VALUING FUND SHARES The NAV is the value of a single share of the Fund. The NAV is determined by dividing the value of the Fund's assets, minus any liabilities, by the number of shares outstanding. The NAV is calculated as of the close of business on the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time, on each day that the NYSE is open. The Fund's securities are valued primarily on the basis of market quotations obtained from outside pricing services approved and monitored under procedures adopted by the Board. Certain short-term securities with maturities of 60 days or less are valued at amortized cost. When reliable market quotations are not readily available, securities are priced at fair value based on procedures adopted by the Board. These procedures are also used when the value of a security held by the Fund is materially affected by events that occur after the close of the primary market on which the security is traded but prior to the time as of which the Fund's NAV is determined. Valuing securities at fair value involves reliance on judgment. The fair value of a security is likely to differ from any available quoted or published price. Foreign investments are valued in U.S. dollars. Some of the Fund's securities may be listed on foreign exchanges that trade on weekends or other days when the Fund does not price its shares. In that event, the NAV of the Fund's shares may change on days when shareholders will not be able to purchase or sell the Fund's shares. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.17 INVESTMENT OPTIONS 1. CLASS A shares are sold to the public with a sales charge at the time of purchase and an annual distribution and shareholder servicing (12b-1) fee of 0.25%. 2. CLASS B shares are sold to the public with a contingent deferred sales charge (CDSC) and an annual distribution and shareholder servicing (12b-1) fee of 1.00%. 3. CLASS C shares are sold to the public without a sales charge at the time of purchase and with an annual distribution and shareholder servicing (12b-1) fee of 1.00%. Class C shares redeemed within one year after purchase may be subject to a CDSC. 4. CLASS Y shares are sold to qualifying institutional investors without a sales charge or distribution fee, but with a separate shareholder servicing fee of 0.10%. Please see the SAI for information on eligibility requirements to purchase Class Y shares. The distribution and shareholder servicing fees for Class A, Class B and Class C shares are subject to the requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended, and are used to reimburse the distributor for certain expenses it incurs in connection with distributing the Fund's shares and providing services to Fund shareholders. These expenses include payment of distribution and shareholder servicing fees to financial intermediaries that sell shares of the Fund. Financial intermediaries receive shareholder servicing fees equal to 0.25% of the average daily net assets of Class A, Class B and Class C shares sold and held through them. For Class A and Class B shares, the distributor begins to pay these fees immediately after purchase. For Class C shares, the distributor begins to pay these fees one year after purchase. Financial intermediaries also receive distribution fees equal to 0.75% of the average daily net assets of Class C shares sold and held through them, which the distributor begins to pay one year after purchase. For Class B shares, the Fund's distributor retains the 0.75% distribution fee in order to finance the payment of sales commissions to financial intermediaries that sell Class B shares, and to pay for other distribution related expenses. Financial intermediaries may compensate their financial advisors and investment professionals with the shareholder servicing and distribution fees paid to them by the distributor. The shareholder servicing fees for Class Y shares are used to reimburse the distributor for providing services and assistance to shareholders regarding ownership of their shares or their accounts. The Fund also offers an additional class of shares, Class I, exclusively to certain institutional investors. Class I shares are made available through a separate prospectus supplement provided to investors eligible to purchase the shares. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.18 INVESTMENT OPTIONS SUMMARY The Fund offers different classes of shares. There are differences among the fees and expenses for each class. Not everyone is eligible to buy every class. After determining which classes you are eligible to buy, decide which class best suits your needs. Your financial advisor or investment professional can help you with this decision. The following table shows the key features of each class:
CLASS A CLASS B CLASS C CLASS Y -------------------------------------------------------------------------------------------------------- AVAILABILITY Available to all Available to all Available to all Limited to investors. investors. investors. qualifying institutional investors. INITIAL SALES CHARGE Yes. Payable at No. Entire No. Entire No. Entire time of purchase. purchase price is purchase price is purchase price is Lower sales charge invested in shares invested in shares invested in shares for larger of the Fund. of the Fund. of the Fund. investments. DEFERRED SALES CHARGE On purchases over Maximum 5% CDSC 1% CDSC may apply None. $1,000,000, 1% during the first if you sell your CDSC may apply if year decreasing shares within one you sell your to 0% after six year after shares within one years. purchase. year after purchase. 12b-1 DISTRIBUTION FEE Yes. Yes. Yes. Yes. AND/OR SHAREHOLDER 0.25% 1.00% 1.00% 0.10% SERVICE FEE* CONVERSION TO CLASS A N/A Yes, automatically No. No. in ninth year of ownership.
* The Fund has adopted a plan under Rule 12b-1 of the Investment Company Act of 1940, as amended, that allows it to pay distribution and shareholder servicing-related expenses for the sale of Class A, Class B and Class C shares. The Fund has also adopted a separate shareholder servicing plan to pay for servicing-related expenses related to Class Y shares. Because these fees are paid out of the Fund's assets on an on-going basis, over time, these fees will increase the cost of your investment and may cost you more than paying other types of distribution (sales) or servicing charges. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.19 SHOULD YOU PURCHASE CLASS A, CLASS B OR CLASS C SHARES? If your investments in RiverSource funds total $100,000 or more, Class A shares may be the better option because the sales charge is reduced for larger purchases. If you qualify for a waiver of the sales charge, Class A shares will be the best option. If you invest less than $100,000, consider how long you plan to hold your shares. Class B shares have a higher annual distribution fee than Class A shares and a CDSC for six years. Class B shares convert to Class A shares in the ninth year of ownership. Class B shares purchased through reinvested dividends and distributions also will convert to Class A shares in the same proportion as the other Class B shares. Class C shares also have a higher annual distribution fee than Class A shares. Class C shares have no sales charge if you hold the shares for longer than one year. Unlike Class B shares, Class C shares do not convert to Class A. As a result, you will pay a 1% distribution fee for as long as you hold Class C shares. If you choose a deferred sales charge option (Class B or Class C), you should consider the length of time you intend to hold your shares. To help you determine which investment is best for you, consult your financial advisor or investment professional. For more information, see the SAI. PURCHASING SHARES Financial intermediaries are required by law to obtain certain personal information from each person who opens an account in order to verify the identity of the person. As a result, when you open an account you will be asked to provide your name, permanent street address, date of birth, and Social Security or Employer Identification number. You may also be asked for other identifying documents or information. If you do not provide this information, the Fund, or the financial intermediary through which you are investing in the Fund, may not be able to open an account for you. If the Fund or if the financial intermediary through which you are investing in the Fund is unable to verify your identity, your account may be closed, or other steps may be taken, as deemed appropriate. TO PURCHASE SHARES WITH A FINANCIAL INTERMEDIARY OTHER THAN AMERIPRISE FINANCIAL SERVICES, PLEASE CONSULT YOUR FINANCIAL INTERMEDIARY. SEE "TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES" FOR MORE INFORMATION. THE FOLLOWING SECTION EXPLAINS POLICIES OF THE RIVERSOURCE FUNDS AND HOW YOU CAN PURCHASE FUND SHARES FROM AMERIPRISE FINANCIAL SERVICES. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.20 If you do not have an existing RiverSource fund account with Ameriprise Financial Services, you will need to establish a brokerage account. Your financial advisor or investment professional will help you fill out and submit an application. Once your account is set up, you can choose among several convenient ways to invest. When you purchase, your order will be priced at the next NAV calculated after your order is accepted by the Fund. If your application does not specify which class of shares you are purchasing, we will assume you are investing in Class A shares. IMPORTANT: When you open an account, you must provide your correct Taxpayer Identification Number (TIN), which is either your Social Security or Employer Identification number. If you do not provide and certify the correct TIN, you could be subject to backup withholding of 28% of taxable distributions and proceeds from certain sales and exchanges. You also could be subject to further penalties, such as: - a $50 penalty for each failure to supply your correct TIN, - a civil penalty of $500 if you make a false statement that results in no backup withholding, and - criminal penalties for falsifying information. You also could be subject to backup withholding, if the IRS notifies us to do so, because you failed to report required interest or dividends on your tax return. HOW TO DETERMINE THE CORRECT TIN
FOR THIS TYPE OF ACCOUNT: USE THE SOCIAL SECURITY OR EMPLOYER IDENTIFICATION NUMBER OF: Individual or joint account The individual or one of the owners listed on the joint account Custodian account of a minor The minor (Uniform Gifts/Transfers to Minors Act) A revocable living trust The grantor-trustee (the person who puts the money into the trust) An irrevocable trust, pension trust or The legal entity (not the personal representative or trustee, estate unless no legal entity is designated in the account title) Sole proprietorship or single-owner LLC The owner Partnership or multi-member LLC The partnership Corporate or LLC electing corporate The corporation status on Form 8832 Association, club or tax-exempt The organization organization
RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.21 For details on TIN requirements, contact your financial advisor or investment professional to obtain a copy of Form W-9, "Request for Taxpayer Identification Number and Certification." You also may obtain the form on the Internet at www.irs.gov. METHODS OF PURCHASING SHARES BY MAIL Once your account has been established, send your check to: AMERIPRISE FINANCIAL SERVICES 70200 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 MINIMUM AMOUNTS Initial investment: $2,000* Additional investments: $500** Account balances: $300 Qualified account balances: none If your Fund account balance falls below $300 for any reason, including a market decline, you will be asked to increase it to $300 or establish a scheduled investment plan. If you do not do so within 30 days, your shares may be automatically redeemed and the proceeds mailed to you. * $1,000 for tax qualified accounts. ** $100 minimum add-on for existing mutual fund accounts outside of a brokerage account. BY SCHEDULED INVESTMENT PLAN MINIMUM AMOUNTS Initial investment: $2,000* Additional investments: $100** Account balances: none (on a scheduled investment plan with monthly payments) If your Fund account balance is below $2,000, you must make payments at least monthly. * $100 for accounts outside of a brokerage account. ** $50 minimum per payment for qualified accounts outside of a brokerage account. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.22 BY WIRE OR ELECTRONIC FUNDS TRANSFER Please contact your financial advisor or investment professional for specific instructions. Minimum wire purchase amount: $1,000 or new account minimum, as applicable. BY TELEPHONE If you have a brokerage account, you may use the money in your account to make initial and subsequent purchases. To place your order, call: (800) 297-7378 for brokerage accounts (800) 967-4377 for wrap accounts SALES CHARGES CLASS A -- INITIAL SALES CHARGE ALTERNATIVE Your purchase price for Class A shares is generally the NAV plus a front-end sales charge. Sales charges vary depending on the amount of your purchase. The distributor receives the sales charge and re-allows a portion of the sales charge to the financial intermediary through which you purchased the shares. The distributor retains the balance of the sales charge. Sales charge* for Class A shares:
AS A % OF AS A % OF MAXIMUM RE-ALLOWANCE TOTAL MARKET VALUE PURCHASE PRICE** NET AMOUNT INVESTED AS A % OF PURCHASE PRICE Up to $49,999 5.75% 6.10% 5.00% $50,000-$99,999 4.75 4.99 4.00 $100,000-$249,999 3.50 3.63 3.00 $250,000-$499,999 2.50 2.56 2.15 $500,000-$999,999 2.00 2.04 1.75 $1,000,000 or more*** 0.00 0.00 0.00
* Because of rounding in the calculation of the offering price, the portion of the sales charge retained by the distributor may vary and the actual sales charge you pay may be more or less than the sales charge calculated using these percentages. ** Offering price includes the sales charge. *** Although there is no sales charge for purchases with a total market value over $1,000,000, and therefore no re-allowance, the distributor may pay a sales commission to a financial intermediary making a sale with a total market value of $1,000,000 to $3,000,000, a sales commission up to 1.00%; $3,000,000 to $10,000,000, a sales commission up to 0.50%; and $10,000,000 or more, a sales commission up to 0.25%. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.23 RIGHTS OF ACCUMULATION YOU MAY BE ABLE TO REDUCE THE SALES CHARGE ON CLASS A SHARES, BASED ON THE COMBINED MARKET VALUE OF YOUR ACCOUNTS. The current market values of the following investments are eligible to be added together for purposes of determining the sales charge on your purchase: - Your current investment in this Fund, and - Previous investments you and members of your primary household group have made in Class A, Class B or Class C shares in this and other RiverSource funds, provided your investment was subject to a sales charge. - Your primary household group consists of you, your spouse or domestic partner, and your unmarried children under age 21 sharing a mailing address. For purposes of this policy a domestic partner is an individual who shares your primary residence and with whom you own joint property. If you or any member of your primary household group elects to separate from the primary household group (for example, by asking that account statements be sent to separate addresses), your assets will no longer be combined for purposes of reducing your sales charge. The following accounts are eligible to be included in determining the sales charge on your purchase: - Individual or joint accounts held outside of a brokerage account; - Individual or joint accounts held through a brokerage account; - Roth and traditional IRAs, SEPs, SIMPLEs and TSCAs, provided they are invested in Class A, Class B or Class C shares that are subject to a sales charge; - UGMA/UTMA accounts for which you, your spouse, or your domestic partner is parent or guardian of the minor child; - Revocable trust accounts for which you or a member of your primary household group, individually, is the beneficiary; - Accounts held in the name of your, your spouse's, or your domestic partner's sole proprietorship or single owner limited liability company or S corporation; and - Qualified retirement plan assets, provided that you are the sole owner of the business sponsoring the plan, are the sole participant (other than a spouse) in the plan, and have no intention of adding participants to the plan. The following accounts are NOT eligible to be included in determining the sales charge on your purchase: - Accounts of pension and retirement plans with multiple participants, such as 401(k) plans (which are combined to reduce the sales charge for the entire pension or retirement plan and therefore are not used to reduce the sales charge for your individual accounts); RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.24 - Investments in Class A shares where the sales charge is waived, for example, purchases through wrap accounts, including Ameriprise Strategic Portfolio Service ADVANTAGE (SPS); - Investments in Class D, Class E, or Class Y shares; - Investments in 529 plans, donor advised funds, variable annuities, variable life insurance products, wrap accounts or managed separate accounts; and - Charitable and irrevocable trust accounts. If you purchase RiverSource fund shares through different channels or different financial intermediaries, and you want to include those assets toward a reduced sales charge, you must inform Ameriprise Financial Services, your financial advisor or investment professional in writing about the other accounts when placing your purchase order. When placing your purchase order, you must provide your most recent account statement and contact information regarding the other accounts. A financial intermediary other than Ameriprise Financial Services may require additional information. UNLESS YOU PROVIDE AMERIPRISE FINANCIAL SERVICES, YOUR FINANCIAL ADVISOR OR YOUR INVESTMENT PROFESSIONAL IN WRITING WITH INFORMATION ABOUT ALL OF THE ACCOUNTS THAT MAY COUNT TOWARD A SALES CHARGE REDUCTION, THERE CAN BE NO ASSURANCE THAT YOU WILL RECEIVE ALL OF THE REDUCTIONS FOR WHICH YOU MAY BE ELIGIBLE. For more information on rights of accumulation, please see the SAI. LETTER OF INTENT (LOI) Generally, if you intend to invest $50,000 or more over a period of 13 months, you may be able to reduce the front-end sales charges for investments in Class A shares by completing and filing a LOI form. The LOI becomes effective only after the form is processed in good order by the distributor. An LOI can be backdated up to a maximum of 90 days. If the LOI is backdated, you may include prior investments in Class A shares that were charged a front-end sales load toward the LOI commitment amount. If the LOI is backdated, the 13 month period begins on the date of the earliest purchase included in the LOI. HOLDINGS MORE THAN 90 DAYS OLD. Purchases made more than 90 days before your LOI is processed by the distributor will not be counted towards the commitment amount of the LOI and cannot be used as the starting point for the LOI. While these purchases cannot be included in an LOI, they may help you obtain a reduced sales charge on future purchases as described in "Rights of Accumulation." RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.25 NOTIFICATION OBLIGATION. If purchasing shares in a brokerage account or through a financial intermediary, you must request the reduced sales charge when you buy shares. If you do not complete and file the LOI form, or do not request the reduced sales charge at the time of purchase, you will not be eligible for the reduced sales charge. For more details on LOIs, please contact your financial advisor, investment professional or see the SAI. WAIVERS OF THE SALES CHARGE FOR CLASS A SHARES Sales charges do not apply to: - current or retired Board members, officers or employees of the Fund or Ameriprise Financial or its subsidiaries, their spouses or domestic partners, children and parents. - current or retired Ameriprise Financial Services financial advisors, employees of financial advisors, their spouses or domestic partners, children and parents. - portfolio managers employed by subadvisers of the RiverSource funds, including their spouses or domestic partners, children and parents. - registered representatives and other employees of financial intermediaries having a sub-distribution agreement with the distributor, including their spouses, domestic partners, children and parents. - qualified employee benefit plans offering participants daily access to RiverSource funds. Eligibility must be determined in advance. For assistance, please contact your financial advisor or investment professional. Participants in certain qualified plans where the initial sales charge is waived may be subject to a deferred sales charge of up to 4%. - shareholders who have at least $1 million in RiverSource funds. If the investment is sold within one year after purchase, a CDSC of 1% may be charged. - direct rollovers from Ameriprise Retirement Services, provided that the rollover involves a transfer of Class Y shares in this Fund to Class A shares in this Fund. - purchases made: - with dividend or capital gain distributions from this Fund or from the same class of another RiverSource fund, - through or under a wrap fee product or other investment product sponsored by the distributor or another authorized broker-dealer, investment advisor, bank or investment professional, - within a segregated separate account offered by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.26 - through American Express Personal Trust Services' Asset-Based pricing alternative, provided by American Express Bank, FSB. - shareholders whose original purchase was in a Strategist fund merged into a RiverSource fund in 2000. Policies related to reducing or waiving the sales charge may be modified or withdrawn at any time. UNLESS YOU PROVIDE AMERIPRISE FINANCIAL SERVICES, YOUR FINANCIAL ADVISOR OR INVESTMENT PROFESSIONAL WITH INFORMATION IN WRITING ABOUT ALL OF THE FACTORS THAT MAY COUNT TOWARD A WAIVER OF THE SALES CHARGE, THERE CAN BE NO ASSURANCE THAT YOU WILL RECEIVE ALL OF THE WAIVERS FOR WHICH YOU MAY BE ELIGIBLE. You also may view this information about sales charges and breakpoints free of charge on the Fund's website. Go to www.riversource.com/investments and click on the hyperlink "Sales Charge Discount Information." CLASS B AND CLASS C -- CONTINGENT DEFERRED SALES CHARGE (CDSC) ALTERNATIVE FOR CLASS B, the CDSC is based on the sale amount and the number of years -- including the year of purchase -- between purchase and sale. The following table shows how CDSC percentages on sales decline:
IF THE SALE IS MADE DURING THE: THE CDSC PERCENTAGE RATE IS:* First year 5% Second year 4% Third year 4% Fourth year 3% Fifth year 2% Sixth year 1% Seventh year 0%
* Because of rounding in the calculation, the portion of the CDSC retained by the distributor may vary and the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. Although there is no front-end sales charge when you buy Class B shares, the distributor pays a sales commission of 4% to financial intermediaries that sell Class B shares. A portion of this commission may, in turn, be paid to your financial advisor. The distributor receives any CDSC imposed when you sell your Class B shares. Purchases made prior to May 21, 2005 age on a calendar year basis. Purchases made beginning May 21, 2005 age on a daily basis. For example, a purchase made on Nov. 12, 2004 will complete its first year on Dec. 31, 2004 under calendar year aging. However, a purchase made on Nov. 12, 2005 will complete its first year on Nov. 11, 2006 under daily aging. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.27 For Class B shares purchased prior to May 21, 2005, those shares will convert to Class A shares in the ninth calendar year of ownership. For Class B shares purchased beginning May 21, 2005, those shares will convert to Class A shares one month after the completion of the eighth year of ownership. FOR CLASS C, a 1% CDSC may be charged if you sell your shares within one year after purchase. Although there is no front-end sales charge when you buy Class C shares, the distributor pays a sales commission of 1% to financial intermediaries that sell Class C shares. A portion of this commission may, in turn, be paid to your financial advisor. The distributor receives any CDSC imposed when you sell your Class C shares. For both Class B and Class C, if the amount you sell causes the value of your investment to fall below the cost of the shares you have purchased, the CDSC will be based on the lower of the cost of those shares purchased or market value. Because the CDSC is imposed only on sales that reduce your total purchase payments, you do not have to pay a CDSC on any amount that represents appreciation in the value of your shares, income earned by your shares, or capital gains. In addition, the CDSC on your sale, if any, will be based on your oldest purchase payment. The CDSC on the next amount sold will be based on the next oldest purchase payment. EXAMPLE Assume you had invested $10,000 in Class B shares and that your investment had appreciated in value to $12,000 after 3 1/2 years, including reinvested dividends and capital gain distributions. You could sell up to $2,000 worth of shares without paying a CDSC ($12,000 current value less $10,000 purchase amount). If you sold $2,500 worth of shares, the CDSC would apply to the $500 representing part of your original purchase price. The CDSC rate would be 3% because the sale was made during the fourth year after the purchase. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.28 WAIVERS OF THE CDSC FOR CLASS B SHARES The CDSC will be waived on sales of shares: - in the event of the shareholder's death, - held in trust for an employee benefit plan, or - held in IRAs or certain qualified plans if Ameriprise Trust Company is the custodian, such as Keogh plans, tax-sheltered custodial accounts or corporate pension plans, provided that the shareholder is: - at least 59 1/2 years old AND - taking a retirement distribution (if the sale is part of a transfer to an IRA or qualified plan, or a custodian-to-custodian transfer, the CDSC will not be waived) OR - selling under an approved substantially equal periodic payment arrangement. WAIVERS OF THE CDSC FOR CLASS C SHARES The CDSC will be waived on sales of shares in the event of the shareholder's death. EXCHANGING/SELLING SHARES TO SELL OR EXCHANGE SHARES HELD WITH FINANCIAL INTERMEDIARIES OTHER THAN AMERIPRISE FINANCIAL SERVICES, PLEASE CONSULT YOUR FINANCIAL INTERMEDIARY. SEE "TRANSACTIONS THROUGH UNAFFILIATED FINANCIAL INTERMEDIARIES" FOR MORE INFORMATION. THE FOLLOWING SECTION EXPLAINS POLICIES OF THE RIVERSOURCE FUNDS ON HOW YOU CAN EXCHANGE OR SELL SHARES HELD WITH AMERIPRISE FINANCIAL SERVICES. EXCHANGES You may exchange your Fund shares at no charge for shares of the same class of any other publicly offered RiverSource fund. Exchanges into RiverSource Tax-Exempt Money Market Fund may only be made from Class A shares. For complete information on the other fund, including fees and expenses, read that fund's prospectus carefully. Your exchange will be priced at the next NAV calculated after your transaction request is received in good order. MARKET TIMING IS FREQUENT OR SHORT-TERM TRADING BY CERTAIN SHAREHOLDERS INTENDED TO PROFIT AT THE EXPENSE OF OTHER SHAREHOLDERS BY SELLING SHARES OF A FUND SHORTLY AFTER PURCHASE. MARKET TIMING MAY ADVERSELY IMPACT A FUND'S PERFORMANCE BY PREVENTING THE INVESTMENT MANAGER FROM FULLY INVESTING THE ASSETS OF THE FUND, DILUTING THE VALUE OF SHARES HELD BY LONG-TERM SHAREHOLDERS, OR INCREASING THE FUND'S TRANSACTION COSTS. SEE "VALUING FUND SHARES" FOR A DISCUSSION OF THE FUND'S POLICY ON FAIR VALUE PRICING, WHICH IS INTENDED, IN PART, TO REDUCE THE FREQUENCY AND EFFECT OF MARKET TIMING. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.29 THE FUND'S BOARD HAS ADOPTED A POLICY THAT IS DESIGNED TO DETECT AND DETER MARKET TIMING. THE FUND SEEKS TO ENFORCE THIS POLICY AS FOLLOWS: - The Fund tries to distinguish market timing from trading that it believes is not harmful, such as periodic rebalancing for purposes of asset allocation or dollar cost averaging. Under the Fund's procedures, there is no set number of transactions in the Fund that constitutes market timing. Even one purchase and subsequent sale by related accounts may be market timing. Generally, the Fund seeks to restrict the exchange privilege of an investor who makes more than three exchanges into or out of the Fund in any 90-day period. Accounts held by a retirement plan or an institution for the benefit of its participants or clients, which typically engage in daily transactions, are not subject to this limit. The Fund seeks the assistance of financial intermediaries in applying similar restrictions on the sub-accounts of their participants or clients. - If an investor's trading activity is determined to be market timing or otherwise harmful to existing shareholders, the Fund reserves the right to modify or discontinue the investor's exchange privilege or reject the investor's purchases or exchanges, including purchases or exchanges accepted by a financial intermediary. The Fund may treat accounts it believes to be under common control as a single account for these purposes, although it may not be able to identify all such accounts. - Although the Fund does not knowingly permit market timing, it cannot guarantee that it will be able to identify and restrict all short-term trading activity. The Fund receives purchase and sale orders through financial intermediaries where market timing activity may not always be successfully detected. Other exchange policies: - Exchanges must be made into the same class of shares of the new fund. - If your exchange creates a new account, it must satisfy the minimum investment amount for new purchases. - Once we receive your exchange request, you cannot cancel it. - Shares of the new fund may not be used on the same day for another exchange. - If your shares are pledged as collateral, the exchange will be delayed until written approval is received from the secured party. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.30 SELLING SHARES You may sell your shares at any time. The payment will be mailed within seven days after your request is received in good order. When you sell shares, the amount you receive may be more or less than the amount you invested. Your sale price will be the next NAV calculated after your request is received in good order, minus any applicable CDSC. REPURCHASES. You can change your mind after requesting a sale and use all or part of the proceeds to purchase new shares in the same account from which you sold. If you reinvest in Class A, you will purchase the new shares at NAV rather than the offering price on the date of a new purchase. If you reinvest in Class B or Class C, any CDSC you paid on the amount you are reinvesting also will be reinvested. To take advantage of this waiver, you must send a written request within 90 days of the date your sale request was processed and include your account number. This privilege may be limited or withdrawn at any time and use of this option may have tax consequences. The Fund reserves the right to redeem in kind. For more details and a description of other sales policies, please see the SAI. If you decide to sell your shares within 30 days of a telephoned-in address change, a written request is required. IMPORTANT: Payments sent by a bank authorization, check or money order that are not guaranteed may take up to ten days to clear. This may cause your scheduled arrangement or unscheduled request to fail to process if the requested amount includes unguaranteed funds. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.31 WAYS TO REQUEST AN EXCHANGE OR SALE OF SHARES BY REGULAR OR EXPRESS MAIL AMERIPRISE FINANCIAL SERVICES 70200 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 Include in your letter: - your account number - the name of the fund(s) - the class of shares to be exchanged or sold - your Social Security number or Employer Identification number - the dollar amount or number of shares you want to exchange or sell - specific instructions regarding delivery or exchange destination - signature(s) of registered account owner(s) (All signatures may be required. Contact your financial advisor or Ameriprise Financial Services for more information.) - any paper certificates of shares you hold Payment will be mailed to the address of record and made payable to the names listed on the account, unless your request specifies differently and is signed by all owners. The express mail delivery charges you pay will vary depending on domestic or international delivery instructions. BY TELEPHONE (800) 297-7378 for brokerage accounts (800) 967-4377 for wrap accounts (800) 862-7919 for non-brokerage/wrap accounts - Reasonable procedures will be used to confirm authenticity of telephone exchange or sale requests. - Telephone exchange and sale privileges automatically apply to all accounts except custodial, corporate or qualified retirement accounts. You may request that these privileges NOT apply by writing the distributor. Each registered owner must sign the request. - Acting on your instructions, your financial advisor may conduct telephone transactions on your behalf. - Telephone privileges may be modified or discontinued at any time. MINIMUM SALE AMOUNT: $100 MAXIMUM SALE AMOUNT: $100,000 RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.32 BY WIRE You can wire money from your account to your bank account. Contact your financial advisor or Ameriprise Financial Services at the above numbers for additional information. - Minimum amount: $1,000 - Pre-authorization is required. - A service fee may be charged against your account for each wire sent. BY SCHEDULED PAYOUT PLAN - Minimum payment: $100* - Contact your financial advisor or the Ameriprise Financial Services to set up regular payments. - Purchasing new shares while under a payout plan may be disadvantageous because of the sales charges. * Minimum is $50 in a non-brokerage/wrap account. ELECTRONIC TRANSACTIONS The ability to initiate transactions via the internet may be unavailable or delayed at certain times (for example, during periods of unusual market activity). The Fund and the distributor are not responsible for any losses associated with unexecuted transactions. In addition, the Fund and the distributor are not responsible for any losses resulting from unauthorized transactions if reasonable security measures are followed to validate the investor's identity. The Fund may modify or discontinue electronic privileges at any time for any shareholder without prior notice as deemed necessary and in the best interests of the Fund. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.33 DISTRIBUTIONS AND TAXES As a shareholder you are entitled to your share of the Fund's net income and net gains. The Fund distributes dividends and capital gains to qualify as a regulated investment company and to avoid paying corporate income and excise taxes. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS The Fund's net investment income is distributed to you as DIVIDENDS. Dividends may be composed of qualifying dividend income, which is eligible for preferential tax rates under current tax law, as well as other ordinary dividend income, which may include non-qualifying dividends, interest income and short-term capital gains. Capital gains are realized when a security is sold for a higher price than was paid for it. Each realized capital gain or loss is long-term or short-term depending on the length of time the Fund held the security. Realized capital gains and losses offset each other. The Fund offsets any net realized capital gains by any available capital loss carryovers. Net short-term capital gains are included in net investment income. Net realized long-term capital gains, if any, are distributed by the end of the calendar year as CAPITAL GAIN DISTRIBUTIONS. REINVESTMENTS Dividends and capital gain distributions are automatically reinvested in additional shares in the same class of the Fund, unless: - you request distributions in cash, or - you direct the Fund to invest your distributions in the same class of any publicly offered RiverSource fund for which you have previously opened an account. We reinvest the distributions for you at the next calculated NAV after the distribution is paid. If you choose cash distributions, you will receive cash only for distributions declared after your request has been processed. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.34 TAXES Distributions are subject to federal income tax and may be subject to state and local taxes in the year they are declared. You must report distributions on your tax returns, even if they are reinvested in additional shares. If you buy shares shortly before the record date of a distribution, you may pay taxes on money earned by the Fund before you were a shareholder. You will pay the full pre-distribution price for the shares, then receive a portion of your investment back as a distribution, which may be taxable. For tax purposes, an exchange is considered a sale and purchase, and may result in a gain or loss. A sale is a taxable transaction. If you sell shares for less than their cost, the difference is a capital loss. If you sell shares for more than their cost, the difference is a capital gain. Your gain may be short term (for shares held for one year or less) or long term (for shares held for more than one year). You may not create a tax loss, based on paying a sales charge, by exchanging shares within 91 days of purchase. If you buy Class A shares and within 91 days exchange into another fund, you may not include the sales charge in your calculation of tax gain or loss on the sale of the first fund you purchased. The sales charge may be included in the calculation of your tax gain or loss on a subsequent sale of the second fund you purchased. For more information, see the SAI. Selling shares held in an IRA or qualified retirement account may subject you to federal taxes, penalties and reporting requirements. Please consult your tax advisor. IMPORTANT: This information is a brief and selective summary of some of the tax rules that apply to this Fund. Because tax matters are highly individual and complex, you should consult a qualified tax advisor. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.35 FINANCIAL HIGHLIGHTS THE FINANCIAL HIGHLIGHTS TABLES ARE INTENDED TO HELP YOU UNDERSTAND THE FUND'S FINANCIAL PERFORMANCE. CERTAIN INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE FUND SHARE. THE TOTAL RETURNS IN THE TABLES REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED OR LOST ON AN INVESTMENT IN THE FUND (ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THIS INFORMATION HAS BEEN AUDITED BY KPMG LLP, WHOSE REPORT, ALONG WITH THE FUND'S FINANCIAL STATEMENTS, IS INCLUDED IN THE ANNUAL REPORT WHICH, IF NOT INCLUDED WITH THIS PROSPECTUS, IS AVAILABLE UPON REQUEST. CLASS A
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003(b) PER SHARE INCOME AND CAPITAL CHANGES(a) Net asset value, beginning of period $ 5.95 $ 5.44 $ 5.00 ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04 .02 .01 Net gains (losses) (both realized and unrealized) .90 .63 .43 ------------------------------------------------------------------------------------------------------------ Total from investment operations .94 .65 .44 ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.03) (.02) -- Distributions from realized gains (.16) (.12) -- ------------------------------------------------------------------------------------------------------------ Total distributions (.19) (.14) -- ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 6.70 $ 5.95 $ 5.44 ------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 28 $ 13 $ 8 ------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c),(d) 1.25% 1.13% 1.22%(e) ------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets .84% .65% .81%(e) ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 64% 64% 17% ------------------------------------------------------------------------------------------------------------ Total return(f) 15.95% 11.99% 8.80%(g) ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from April 24, 2003 (when shares became publicly available) to July 31, 2003. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class A would have been 1.35%, 1.91% and 7.39% for the periods ended July 31, 2005, 2004 and 2003, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.36 CLASS B
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003(b) PER SHARE INCOME AND CAPITAL CHANGES(a) Net asset value, beginning of period $ 5.90 $ 5.43 $5.00 ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02 (.02) -- Net gains (losses) (both realized and unrealized) .86 .61 .43 ------------------------------------------------------------------------------------------------------------ Total from investment operations .88 .59 .43 ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Distributions from realized gains (.16) (.12) -- ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 6.62 $ 5.90 $5.43 ------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ 9 $ 3 $ 1 ------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c),(d) 2.04% 1.95% 2.01%(e) ------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets .06% (.16%) (.08%)(e) ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 64% 64% 17% ------------------------------------------------------------------------------------------------------------ Total return(f) 15.03% 10.95% 8.60%(g) ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from April 24, 2003 (when shares became publicly available) to July 31, 2003. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class B would have been 2.13%, 2.73% and 8.18% for the periods ended July 31, 2005, 2004 and 2003, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.37 CLASS C
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003(b) PER SHARE INCOME AND CAPITAL CHANGES(a) Net asset value, beginning of period $ 5.90 $ 5.43 $5.00 ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 (.02) -- Net gains (losses) (both realized and unrealized) .87 .61 .43 ------------------------------------------------------------------------------------------------------------ Total from investment operations .88 .59 .43 ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Distributions from realized gains (.16) (.12) -- ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 6.62 $ 5.90 $5.43 ------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ -- $ -- $ -- ------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c),(d) 2.06% 1.95% 2.01%(e) ------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets .02% (.17%) (.05%)(e) ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 64% 64% 17% ------------------------------------------------------------------------------------------------------------ Total return(f) 15.03% 10.96% 8.60%(g) ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from April 24, 2003 (when shares became publicly available) to July 31, 2003. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class C would have been 2.13%, 2.73% and 8.20% for the periods ended July 31, 2005, 2004 and 2003, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.38 CLASS Y
FISCAL PERIOD ENDED JULY 31, 2005 2004 2003(b) PER SHARE INCOME AND CAPITAL CHANGES(a) Net asset value, beginning of period $ 5.95 $ 5.45 $5.00 ------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .05 .03 .01 Net gains (losses) (both realized and unrealized) .91 .61 .44 ------------------------------------------------------------------------------------------------------------ Total from investment operations .96 .64 .45 ------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.04) (.02) -- Distributions from realized gains (.16) (.12) -- ------------------------------------------------------------------------------------------------------------ Total distributions (.20) (.14) -- ------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 6.71 $ 5.95 $5.45 ------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $ -- $ -- $ -- ------------------------------------------------------------------------------------------------------------ Ratio of expenses to average daily net assets(c),(d) 1.06% .98% 1.01%(e) ------------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average daily net assets 1.03% .78% .90%(e) ------------------------------------------------------------------------------------------------------------ Portfolio turnover rate (excluding short-term securities) 64% 64% 17% ------------------------------------------------------------------------------------------------------------ Total return(f) 16.25% 11.87% 9.00%(g) ------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from April 24, 2003 (when shares became publicly available) to July 31, 2003. (c) Expense ratio is based on total expenses of the Fund before reduction of earnings credits on cash balances. (d) Ameriprise Financial waived/reimbursed the Fund for certain expenses. Had Ameriprise Financial not done so, the annual ratios of expenses for Class Y would have been 1.18%, 1.76% and 7.20% for the periods ended July 31, 2005, 2004 and 2003, respectively. (e) Adjusted to an annual basis. (f) Total return does not reflect payment of a sales charge. (g) Not annualized. RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.39 This Fund, along with the other RiverSource funds, is distributed by Ameriprise Financial Services, Inc. and can be purchased from Ameriprise Financial Services or from a limited number of other authorized financial intermediaries. The Fund can be found under the "RiverSource" banner in most mutual fund quotations. Additional information about the Fund and its investments is available in the Fund's SAI, and annual and semiannual reports to shareholders. In the Fund's annual report, you will find a discussion of market conditions and investment strategies that significantly affected the Fund's performance during its most recent fiscal year. The SAI is incorporated by reference in this prospectus. For a free copy of the SAI, the annual report, or the semiannual report, or to request other information about the Fund or make a shareholder inquiry, contact your financial advisor, investment professional or Ameriprise Financial Services. Ameriprise Financial Services 70100 Ameriprise Financial Center Minneapolis, MN 55474 (800) 862-7919 TTY: (800) 846-4852 RiverSource Investments Website address: riversource.com/investments You may review and copy information about the Fund, including the SAI, at the Securities and Exchange Commission's (Commission) Public Reference Room in Washington, D.C. (for information about the public reference room call 1-202-942-8090). Reports and other information about the Fund are available on the EDGAR Database on the Commission's Internet site at www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing to the Public Reference Section of the Commission, Washington, D.C. 20549-0102. Investment Company Act File #811-2111 TICKER SYMBOL CLASS A: AQEAX CLASS B: -- CLASS C: -- CLASS I: ALEIX CLASS Y: -- [RIVERSOURCE(SM) INVESTMENTS LOGO] RIVERSOURCE INVESTMENTS 200 AMERIPRISE FINANCIAL CENTER MINNEAPOLIS, MN 55474 S-6263-99 E (10/05) RIVERSOURCE STOCK FUND -- PROXY STATEMENT D.40 EXHIBIT E BOARD EFFECTIVENESS COMMITTEE CHARTER RESOLVED, That the Board Effectiveness Committee be composed of the independent members appointed annually by the Board and the Chair of the Board; RESOLVED, That one member shall be appointed to Chair the Committee and the Committee shall meet upon call of the Chair; RESOLVED, That the Committee will make recommendations to the Board on: - The responsibilities and duties of the Board; - The criteria to be used to determine the size and structure of the Boards and the background and characteristics of independent Board members; - The persons to serve as Board members based on approved criteria whenever necessary to fill a vacancy or in conjunction with a regular meeting of shareholders in which nominees are required to be submitted for a vote of shareholders; - The annual evaluation of the Board's performance and the attendance of members; and - The compensation to be paid to independent members; and further RESOLVED, That the Committee shall be assigned such further areas of responsibility as appropriate to assist the Board in meeting its fiduciary duties in an efficient and effective manner. RIVERSOURCE STOCK FUND -- PROXY STATEMENT E.1 EXHIBIT F 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 compensations from the Fund except compensations for service as a member of the Board and Board committees. At least one member of the Committee shall be an "audit committee financial expert." An "audit committee financial expert" means a person who has the following attributes: - An understanding of generally accepted accounting principles and financial statements; - The ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves; - Experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant's financial statements, or experience actively supervising one or more persons engaged in such activities; - An understanding of internal controls and procedures for financial reporting; and - An understanding of audit committee functions. A person shall have acquired such attributes through: - Education and experience as a principal financial officer, principal accounting officer, controller, public accountant, or auditor or experience in one or more positions that involve the performance of similar functions; - Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor, or person performing similar functions; RIVERSOURCE STOCK FUND -- PROXY STATEMENT F.1 - Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing, or evaluation of financial statements; or - Other relevant experience. The Board shall determine "audit committee financial experts" annually. PURPOSES OF THE COMMITTEE The Committee is to assist independent members of the Boards in fulfilling their oversight responsibilities to the shareholders, potential shareholders and investment community relating to the reliability of financial reporting, the effectiveness and efficiency of operations, the work done by external auditors, the adequacy of internal controls, and the compliance with applicable laws and regulations by: - Overseeing the accounting and financial reporting processes of the Fund and its internal control over financial reporting and, as the Committee deems appropriate, to inquire into the internal control over financial reporting of certain third-party service providers; - Overseeing, or, as appropriate, assisting Board oversight of, the quality and integrity of the Fund's financial statements and the independent audit thereof; - Overseeing, or, as appropriate, assisting Board oversight of, the Fund's compliance with legal and regulatory requirements that relate to the Fund's accounting and financial reporting, internal control over financial reporting and independent audits; and - Approving prior to appointment the engagement of the Fund's independent auditor (Auditor) and, in connection therewith, to review and evaluate the qualifications, independence and performance of the Fund's Auditor. The Auditor for the Fund shall report directly to the Committee. DUTIES AND POWERS To carry out its purposes, the Committee shall have the following duties and powers: - Recommend the Auditor that the Committee believes is qualified to examine and report on the financial statements to the independent members of the Board within 90 days before or after the fiscal year end of the Fund; - Meet with representatives of the Auditor to: - Review and evaluate matters potentially affecting its independence and capabilities by: - Approving prior to appointment the professional services the Auditor requests to perform for American Express Financial Corporation and any of its subsidiaries that provide services to the Fund; RIVERSOURCE STOCK FUND -- PROXY STATEMENT F.2 - Considering the controls applied by the Auditor and measures taken by American Express Financial Corporation to assure that all items requiring pre-approval are identified and referred to the Committee in a timely fashion; and - Evaluating the auditor's independence by receiving a report on business relationships at each meeting setting forth the work it has been engaged to do for American Express Company or its subsidiaries. - Consider the scope of the annual audit and any special audits and review and approve the estimated fees to be charged; - Consider the information and comments from the Auditor with respect to the Fund's accounting and financial reporting policies, procedures and internal controls over financial reporting; the responses to the comments by American Express Financial Corporation; and possible improvements that can be made in the quality of the Fund's accounting and financial reporting; - Meet with representatives of American Express Enterprise Risk and Assurance Services to: - Discuss its responsibility to the Fund with respect to its review of operations of American Express Financial Corporation and affiliates to the extent they pertain to the registered investment companies; - Consider its authority, including the support it receives from American Express Financial Corporation's senior management and American Express Company's General Auditor; - Discuss whether it complies with the Institute of Internal Auditors' "Standard for the Professional Practice of Internal Auditing;" - Review its budget, staffing and proposed audit plans each year; and - Review reports issued by American Express Enterprise Risk and Assurance Services that pertain to American Express Financial Corporation's operations related to the registered investment companies. - Encourage open lines of communications among the Committee, the Auditor, and American Express Enterprise Risk and Assurance Services to: - Consider information and comments from the Auditor with respect to the Fund's financial statements, including any adjustments to such statements recommended by the Auditor and to review the opinion of the Auditor; - Resolve any disagreements between American Express Financial Corporation and the Auditor; - Review, in connection with required certifications of Form N-CSR, any significant deficiencies in the design or operations of internal control over financial reporting or material weaknesses therein and any reported evidence of fraud involving any person who has a significant role in the RIVERSOURCE STOCK FUND -- PROXY STATEMENT F.3 Fund's internal control over financial reporting; - Establish procedures for the receipt, retention and treatment of complaints received by the Fund relating to accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of American Express Financial Corporation of concerns about accounting or auditing matters, and address reports from attorneys or auditors of possible violations of federal or state laws or fiduciary duty; - Investigate or initiate an investigation of reports of improprieties or suspected improprieties in connection with the Fund's accounting or financial reporting; - Consider the adequacy and effectiveness of internal controls, including the controls over computerized information systems, through discussions with the Auditor, American Express Enterprise Risk and Assurance Services and appropriate American Express Financial Corporation managers who provide reports to the Committee and elicit their recommendations for improving or identifying particular areas where new or more detailed controls or procedures are desirable giving particular emphasis to the adequacy of internal controls for exposing any payments, transactions, or procedures that might be deemed illegal or otherwise improper; - Request to be informed about all new or changed accounting principles and disclosure practices on a timely basis and inquire regarding the judgment and reasoning regarding the appropriateness, not just the acceptability, of the changes or proposed changes; - Report the work of the Committee to the Board as frequently as the Committee deems appropriate; - Review and assess the adequacy of the Committee's charter at least annually and recommend any changes to the Board; - Meet at least once a year in a private meeting with each of the three following groups: the Auditor, the American Express Financial Corporation's management personnel responsible for the financial statements and recordkeeping of the Fund, the Senior Vice President - Enterprise Risk and Assurance Services for American Express Financial Corporation, and the General Auditor and Chief Operational Risk Officer for American Express Company; - Consider such other matters as any Board or Committee deems appropriate and perform such additional tasks as directed by resolution of any Board; - Conduct its own investigations into issues related to its responsibilities and is authorized to employ such professional and technical assistance as it deems necessary. RIVERSOURCE STOCK FUND -- PROXY STATEMENT F.4 The Committee shall have the resources and authority appropriate to discharge its responsibilities, including appropriate funding, as determined by the Committee, for payment of compensation to the Auditor for the purpose of conducting the audit and rendering their audit report, the authority to retain and compensate special counsel and other experts or consultants as the Committee deems necessary, and the authority to obtain specialized training for Committee members, at the expense of the Fund, as appropriate. The Committee may delegate any portion of its authority, including the authority to grant pre-approvals of audit and permitted non-audit services to one or more members. Any decisions of the member to grant pre-approvals shall be presented to the Committee at its next regularly scheduled meeting. ROLE AND RESPONSIBILITIES The function of the Committee is oversight; it is American Express Financial Corporation's responsibility to maintain appropriate systems for accounting and internal control over financial reporting, and the Auditor's responsibility to plan and carry out a proper audit. Specifically, American Express Financial Corporation is responsible for: (1) the preparation, presentation and integrity of the Fund's financial statements; (2) the maintenance of appropriate accounting and financial reporting principles and policies; and (3) the maintenance of internal control over financial reporting and other procedures designed to assure compliance with accounting standards and related laws and regulations. The Auditor is responsible for planning and carrying out an audit consistent with applicable legal and professional standards and the terms of their engagement letter. Nothing in the Charter shall be construed to reduce the responsibilities or liabilities of the Fund's service providers, including the Auditor. Although the Committee is expected to take a detached and questioning approach to the matters that come before it, the review of a Fund's financial statements by the Committee is not an audit, nor does the Committee's review substitute for the responsibilities of American Express Financial Corporation's for preparing, or the Auditor for auditing, the financial statements. Members of the Committee are not employees of the Fund and, in serving on this Committee, are not, and do not hold themselves out to be, acting as accountants or auditors. As such, it is not the duty or responsibility of the Committee or its members to conduct "field work" or other types of auditing or accounting reviews or procedures. RIVERSOURCE STOCK FUND -- PROXY STATEMENT F.5 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. OPERATIONS The Board shall adopt and approve this Charter and may amend it on the Board's own motion. The Committee shall review this Charter at least annually and recommend to the full Board any changes the Committee deems appropriate. The Committee may select one of its members to be the chair and may select a vice chair. A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. The action of a majority of the members of the Audit Committee present at a meeting at which a quorum is present shall be the action of the Committee. The Committee shall meet on a regular basis and at least four times annually and is empowered to hold special meetings as circumstances require. The Chairperson or a majority of the members shall be authorized to call a meeting of the Committee or meetings may be fixed in advance by the Committee. The agenda shall be prepared under the direction and control of the Chairperson. The Committee shall ordinarily meet in person; however, members may attend telephonically, and the Committee may act by written consent, to the extent permitted by law and by the Fund's bylaws. The Committee shall have the authority to meet privately and to admit non-members individually. The Committee may also request to meet with internal legal counsel and compliance personnel of American Express Financial Corporation and with entities that provide significant accounting or administrative services to the Fund to discuss matters relating to the Fund's accounting and compliance as well as other Fund-related matters. The Committee shall prepare and retain minutes of its meetings and appropriate documentation of decisions made outside of meetings by delegated authority. The Committee shall evaluate its performance at least annually. RIVERSOURCE STOCK FUND -- PROXY STATEMENT F.6 S-6389 A (12/05)
ezVote(SM)Consolidated Proxy Card RIVERSOURCE(SM) FUNDS formerly known as American Express(R) Funds This form is your EzVote Consolidated Proxy. P.O. BOX 9132 It reflects all of your accounts registered to HINGHAM, MA 02043-9132 the same Social Security or Tax I.D. number at this address. By voting and signing the Consolidated Proxy Card, you are voting all of these accounts in the same manner as indicated on the reverse side of the form.
999 999 999 999 99 <- RIVERSOURCE(SM) FUNDS (formerly known as AMERICAN EXPRESS FUNDS) AXP STOCK SERIES, INC. PROXY FOR THE REGULAR MEETING OF SHAREHOLDERS RIVERSOURCE STOCK FUND FEBRUARY 15, 2006 Your fund will hold a shareholders' meeting in the Galaxy Room on the 50th floor of the IDS Center, 80 South Eight 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 recommends that you vote FOR each proposal. The undersigned hereby appoints Arne H. Carlson and Leslie L. Ogg or either 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 Stock EZ - DH IF VOTING THE CONSOLIDATED PROXY CARD DO NOT SIGN, DATE OR RETURN THE INDIVIDUAL BALLOTS
THREE EASY WAYS TO VOTE To vote by Telephone To vote by Internet To vote by Mail 1) Read the proxy statement and have the 1) Read the proxy statement and have 1) Read the Proxy Statement. Consolidated Proxy Card at hand. Consolidated Proxy Card at hand. 2) Check the appropriate boxes on the 2) Call 1-888-221-0697. 2) Go to www.proxyweb.com reverse side. 3) Follow the recorded instructions. 3) Follow the on-line directions. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided.
IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR CARD.
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 Stock EZ - DH
ezVote(SM)Consolidated Proxy Card Please fill in box(es) as shown using black or blue ink or number 2 pencil. [X] PLEASE DO NOT USE FINE POINT PENS.
To vote FOR on all Proposals, MARK this box (no other vote is necessary) [ ] FOR AGAINST ABSTAIN 1. Approve the Agreement and Plan of Reorganization. [ ] [ ] [ ] 1. 2. ELECTION OF BOARD MEMBERS. FOR WITHHOLD FOR ALL ALL ALL EXCEPT (01) Kathleen Blatz (05) Jeffrey Laikind (09) Alan K. Simpson (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 [ ] [ ] [ ] 2. (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 below.) FOR AGAINST ABSTAIN 3. Approve an Amendment to the Articles of Incorporation. [ ] [ ] [ ] 3. 4. Approve an Investment Management Services Agreement with RiverSource Investments, LLC. [ ] [ ] [ ] 4. PLEASE SIGN AND DATE ON THE REVERSE SIDE. AMPF Stock EZ - DH IF VOTING THE CONSOLIDATED PROXY CARD DO NOT SIGN, DATE OR RETURN THE INDIVIDUAL BALLOTS INDIVIDUAL BALLOTS NOTE: IF YOU HAVE USED THE CONSOLIDATED BALLOT ABOVE, DO NOT VOTE THE INDIVIDUAL BALLOTS BELOW.
000 0000000000 000 0 000 0000000000 000 0 JOHN Q. PUBLIC JOHN Q. PUBLIC 123 MAIN STREET 123 MAIN STREET ANYTOWN, MA 02030 999 999 999 999 99 ANYTOWN, MA 02030 999 999 999 999 99 RIVERSOURCE STOCK FUND RIVERSOURCE STOCK FUND FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 1. Approve the Agreement 1. Approve the Agreement and Plan of and Plan of Reorganization. [ ] [ ] [ ] Reorganization. [ ] [ ] [ ] 2. ELECTION OF BOARD 2. ELECTION OF BOARD MEMBERS. FOR WITHHOLD FOR ALL MEMBERS. FOR WITHHOLD FOR ALL (See Nominee list on ALL ALL EXCEPT* (See Nominee list on ALL ALL EXCEPT* consolidated ballot.) consolidated ballot.) *EXCEPT____________________ [ ] [ ] [ ] *EXCEPT____________________ [ ] [ ] [ ] FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 3. Amend the Articles of 3. Amend the Articles of Incorporation. [ ] [ ] [ ] Incorporation. [ ] [ ] [ ] 4. Approve Investment 4. Approve Investment Management Services Management Services Agreement. [ ] [ ] [ ] Agreement. [ ] [ ] [ ]
AMPF Stock EZ - DH AXP(R) STOCK SERIES, INC. - RiverSource(SM) Stock Fund (formerly AXP Stock Fund) PROXY STATEMENT Dec. 16, 2005 HERE IS A BRIEF OVERVIEW OF THE CHANGES BEING RECOMMENDED FOR YOUR RIVERSOURCE MUTUAL FUND. WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT. Q: WHAT 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 ("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 (50% of existing shares), it will continue to contact shareholders asking them to vote. These efforts cost money -- so please, vote immediately. Q: WHAT AM I BEING ASKED TO VOTE ON? Shareholders are being asked to vote on: - The merger ("Reorganization") of RiverSource Stock Fund and RiverSource Disciplined Equity Fund. - Election of Board members. - An amendment to the Fund's Articles of Incorporation to permit the Board to establish the minimum account value and to change the name of the corporation to "RiverSource" consistent with the name of the fund. - An Investment Management Services Agreement ("IMS Agreement") with RiverSource Investments. We encourage you to read the full text of the proxy statement to obtain a more detailed understanding of the issues. Q: IF APPROVED, WHEN WILL THE REORGANIZATION HAPPEN? If shareholders approve the Reorganization, it will take place shortly after the shareholder meeting. In the interim, however, it will be important for the Fund to have a properly elected Board and an IMS Agreement that has been approved by shareholders. Q: WHAT DO BOARD MEMBERS DO? Board members represent the interests of the shareholders and oversee the management of the Fund. Q: WHAT CHANGES ARE PROPOSED TO THE INVESTMENT MANAGEMENT SERVICES AGREEMENT? 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. The IMS Agreement also clarifies the circumstances under which the Board may change an index for purposes of calculating a performance incentive adjustment. Q: HOW DOES THE BOARD RECOMMEND THAT I VOTE? After careful consideration, the Board recommends that you vote FOR each proposal. Q: HOW DO I VOTE? You can vote in one of four ways: - By mail with the enclosed proxy card - By telephone - By web site - In person at the meeting Please refer to the enclosed voting instruction card for the telephone number and internet address. Q: WHOM SHOULD I CALL IF I HAVE QUESTIONS? If you have questions about any of the 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. Statement of Additional Information Dec. 16, 2005 AXP(R) Growth Series, Inc. RiverSource Large Cap Equity Fund This Statement of Additional Information ("SAI") consists of this cover page and incorporates by reference the following described documents, each of which has been previously filed and accompanies this Statement of Additional Information. 1. RiverSource Large Cap Equity Fund's most recent SAI, dated Nov. 29, 2005. 2. RiverSource Large Cap Equity Fund's most recent annual report, for the period ended July 31, 2005. 3. RiverSource New Dimensions Fund's most recent SAI, dated Nov. 29, 2005. 4. RiverSource New Dimensions Fund's most recent annual report, for the period ended July 31, 2005. This SAI is not a prospectus. It should be read in conjunction with the proxy statement/prospectus, which may be obtained by calling (877) 256-6085 or writing RiverSource Service Corporation, 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Large Cap Equity Fund (Buying Fund) RiverSource New Dimensions Fund (Selling Fund) Introduction to Proposed Fund Merger July 31, 2005 The accompanying unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two funds at and for the 12-month period ending July 31, 2005. These statements have been derived from financial statements prepared for RiverSource Large Cap Equity Fund and RiverSource New Dimensions Fund as of July 31, 2005. RiverSource Large Cap Equity Fund invests primarily in equity securities with a market capitalization greater than $5 billion at the time of purchase. RiverSource New Dimensions Fund invests all of its assets in Growth Trends Portfolio, a series of Growth Trust, an open-end investment company that has the same objectives as the Fund. The Portfolio invests primarily in common stocks showing potential for significant growth and operating in areas where economic or technological changes are occurring. Under the proposed Agreement and Plan of Reorganization, Class A shares of the RiverSource New Dimensions Fund would be exchanged for Class A shares of the RiverSource Large Cap Equity Fund. Class B shares of the RiverSource New Dimensions Fund would be exchanged for Class B shares of the RiverSource Large Cap Equity Fund. Class C shares of the RiverSource New Dimensions Fund would be exchanged for Class C shares of the RiverSource Large Cap Equity Fund. Class I shares of the RiverSource New Dimensions Fund would be exchanged for Class I shares of the RiverSource Large Cap Equity Fund. Class Y shares of the RiverSource New Dimensions Fund would be exchanged for Class Y shares of the RiverSource Large Cap Equity Fund. The pro forma combining statements have been prepared to give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource Large Cap Equity Fund, as if the transaction had occurred at the beginning of the fiscal year ending July 31, 2005. 2 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund RiverSource Large Cap Equity Fund (Buying Fund) RiverSource New Dimensions Fund (Selling Fund) Pro forma combining
Statement of assets and liabilities RiverSource RiverSource Large Cap New Dimensions Pro forma Pro forma July 31, 2005 (Unaudited) Equity Fund Fund Adjustments Combined Assets Investments in securities, at cost (Note 2) $1,496,044,828 $ -- $ 10,117,675,481(a) $11,613,720,309 -------------- --------------- ---------------- --------------- Investments in securities, at value* (Note 2) $1,593,969,074 $ -- $ 11,599,049,973(a) $13,193,019,047 Investment in Portfolio (Note 2) -- 11,522,269,040 (11,522,269,040)(a) -- Foreign currency holdings (identified cost $5,524 for RiverSource New Dimensions Fund) (Note 2) -- -- 6,033(a) 6,033 Capital shares receivable 183,393 936,935 -- 1,120,328 Expense reimbursement receivable from Ameriprise Financial (Note 2) 854,035 -- (854,035)(b) -- Dividends and accrued interest receivable (Note 2) 1,474,567 -- 6,564,311(a) 8,038,878 Receivable for investment securities sold (Note 2) 25,448,033 -- 134,153,505(a) 159,601,538 -------------- --------------- ---------------- --------------- Total assets 1,621,929,102 11,523,205,975 216,650,747 13,361,785,824 -------------- --------------- ---------------- --------------- Liabilities Disbursements in excess of cash on demand deposit (Note 2) 574,129 -- 3,209,619(a) 3,783,748 Capital shares payable 233,627 975,810 -- 1,209,437 Payable for investment securities purchased (Note 2) 32,555,009 -- 139,724,399(a) 172,279,408 Payable upon return of securities loaned (Note 2) 34,147,000 -- 64,419,582(a) 98,566,582 Accrued investment management services fee (Note 2) 25,327 -- 1,729,086(a),(c) 1,754,413 Accrued distribution fee 20,384 104,227 -- 124,611 Accrued service fee 1 7,072 -- 7,073 Accrued transfer agency fee 5,066 7,488 611,071(h),(i) 623,625 Accrued administrative services fee (Note 2) 2,066 11,218 3,249,409(d) 3,262,693 Other accrued expenses (Note 2) 290,046 737,043 691,017(a), 1,718,106 (b), (e), (f), (g) Options contracts written, at value (premiums received $6,283,012 for RiverSource New Dimensions Fund) (Note 2) -- -- 9,529,493(a) 9,529,493 -------------- --------------- ---------------- --------------- Total liabilities 67,852,655 1,842,858 223,163,676 292,859,189 -------------- --------------- ---------------- --------------- Net assets applicable to outstanding capital stock $1,554,076,447 $11,521,363,117 $ (6,512,929) $13,068,926,635 ============== =============== ================ =============== Represented by Capital stock -- $.01 par value (Note 3) $ 2,973,060 $ 4,847,114 $ 17,107,578 $ 24,927,752 Additional paid-in capital (Note 3) 2,430,766,764 9,354,954,421 (17,107,578) 11,768,613,607 Undistributed (excess of distributions over) net investment income (Note 2) 4,353,601 19,084,775 (6,512,929) 16,925,447 Accumulated net realized gain (loss) (981,941,224) 664,348,286 -- (317,592,938) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 97,924,246 1,478,128,521 -- 1,576,052,767 -------------- --------------- ---------------- --------------- Total -- representing net assets applicable to outstanding capital stock $1,554,076,447 $11,521,363,117 $ (6,512,929) $13,068,926,635 ============== =============== ================ =============== Net assets applicable to outstanding shares: Class A $1,030,109,387 $ 6,845,241,780 $ (3,869,557) $ 7,871,481,610 Class B $ 471,864,336 $ 2,003,569,556 $ (1,132,601) $ 2,474,301,291 Class C $ 9,284,115 $ 45,662,322 $ (25,813) $ 54,920,624 Class I $ 42,610,172 $ 69,748,064 $ (39,428) $ 112,318,808 Class Y $ 208,437 $ 2,557,141,395 $ (1,445,530) $ 2,555,904,302 Shares outstanding (Note 3): Class A shares 195,824,050 285,315,473 -- 1,496,465,157 Class B shares 91,616,485 88,486,457 -- 480,439,195 Class C shares 1,799,299 2,019,120 -- 10,643,584 Class I shares 8,026,676 2,889,590 -- 21,154,479 Class Y shares 39,442 106,000,741 -- 484,072,750 Net asset value per share of outstanding capital stock: Class A $ 5.26 $ 23.99 $ -- $ 5.26 Class B $ 5.15 $ 22.64 $ -- $ 5.15 Class C $ 5.16 $ 22.61 $ -- $ 5.16 Class I $ 5.31 $ 24.14 $ -- $ 5.31 Class Y $ 5.28 $ 24.12 $ -- $ 5.28 -------------- --------------- ---------------- --------------- * Including securities on loan, at value (Note 2) $ 32,867,866 $ -- $ 60,816,462(a) $ 93,684,328 -------------- --------------- ---------------- ---------------
See accompanying notes to pro forma financial statements. 3 -- AXP Fixed Income Series, Inc. -- RiverSource Large Cap Equity Fund RiverSource Large Cap Equity Fund (Buying Fund) RiverSource New Dimensions Fund (Selling Fund)Pro forma combining
Statement of operations RiverSource RiverSource Large Cap New Dimensions Pro forma Pro forma Year ended July 31, 2005 (Unaudited) Equity Fund Fund Adjustments Combined Investment income Income: Dividends $ 31,753,996 $ 233,044,387 $ -- $ 264,798,383 Interest 871,611 12,020,030 -- 12,891,641 Fee income from securities lending 227,206 320,444 -- 547,650 Less foreign taxes withheld (304,627) (442,235) -- (746,862) ------------ -------------- ------------ -------------- Total income 32,548,186 244,942,626 -- 277,490,812 ------------ -------------- ------------ -------------- Expenses: Expenses allocated from Portfolio (Note 2) -- 62,533,534 (62,533,534)(a) -- Investment management services fee (Note 2) 9,680,873 -- 62,457,211(a),(c) 72,138,084 Distribution fee Class A 2,866,767 20,565,923 -- 23,432,690 Class B 5,272,525 24,839,333 -- 30,111,858 Class C 101,520 559,396 -- 660,916 Transfer agency fee 3,572,606 22,354,541 775,248(h),(i) 26,702,395 Incremental transfer agency fee Class A 253,892 1,352,830 (93,656)(i) 1,513,066 Class B 214,592 1,005,784 (69,861)(i) 1,150,515 Class C 4,181 26,158 (660)(i) 29,679 Service fee -- Class Y 3,664 2,800,648 -- 2,804,312 Administrative services fees and expenses (Note 2) 860,387 4,756,123 3,249,409(d) 8,865,919 Custodian fees (Note 2) 296,060 -- 803,940(a),(e) 1,100,000 Compensation of board members (Note 2) 17,545 32,620 39,835(a),(f) 90,000 Printing and postage 626,976 3,426,659 -- 4,053,635 Registration fees 42,760 92,530 -- 135,290 Audit fees (Note 2) 30,000 12,500 7,500(a),(g) 50,000 Other (Note 2) 67,503 233,261 499,085(a) 799,849 ------------ -------------- ------------ -------------- Total expenses 23,911,851 144,591,840 5,134,517 173,638,208 Expenses waived/reimbursed by RiverSource Investments, LLC (Note 2) (859,581) (522,229) 1,381,810(b) -- ------------ -------------- ------------ -------------- 23,052,270 144,069,611 6,516,327 173,638,208 Earnings credits on cash balances (Note 2) (59,729) -- (3,398)(a) (63,127) ------------ -------------- ------------ -------------- Total net expenses 22,992,541 144,069,611 6,512,929 173,575,081 ------------ -------------- ------------ -------------- Investment income (loss) -- net 9,555,645 100,873,015 (6,512,929) 103,915,731 ------------ -------------- ------------ -------------- Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions 81,303,618 757,404,472 -- 838,708,090 Foreign currency transactions (8,433) (554,419) -- (562,852) Futures contracts -- (1,726,839) -- (1,726,839) Options contracts written -- (427,448) -- (427,448) ------------ -------------- ------------ -------------- Net realized gain (loss) on investments 81,295,185 754,695,766 -- 835,990,951 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 128,747,672 158,658,167 -- 287,405,839 ------------ -------------- ------------ -------------- Net gain (loss) on investments and foreign currencies 210,042,857 913,353,933 -- 1,123,396,790 ------------ -------------- ------------ -------------- Net increase (decrease) in net assets resulting from operations $ 219,598,502 $1,014,226,948 $ (6,512,929) $1,227,312,521 ============= ============== ============ ==============
See accompanying notes to pro forma financial statements. 4 -- AXP Fixed Income Series, Inc. -- RiverSource Large Cap Equity Fund RiverSource Large Cap Equity Fund (Buying Fund) RiverSource New Dimensions Fund (Selling Fund) Notes to Pro Forma Financial Statements (Unaudited as to July 31, 2005) 1. BASIS OF COMBINATION The unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two funds at and for the 12-month period ending July 31, 2005. These statements have been derived from financial statements prepared for the RiverSource Large Cap Equity Fund and RiverSource New Dimensions Fund as of July 31, 2005. Each Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The primary investments of each Fund are as follows: RiverSource Large Cap Equity Fund invests primarily in equity securities with a market capitalization greater than $5 billion at the time of purchase. RiverSource New Dimensions Fund invests all of its assets in Growth Trends Portfolio, a series of Growth Trust, an open-end investment company that has the same objectives as the Fund. The Portfolio invests primarily in common stocks showing potential for significant growth and operating in areas where economic or technological changes are occurring. The pro forma statements give effect to the proposed transfer of the assets and liabilities of RiverSource New Dimensions Fund in exchange for Class A, B, C, I and Y shares of RiverSource Large Cap Equity Fund under U.S. generally accepted accounting principles. The pro forma statements also reflect changes needed regarding the change in structure of RiverSource New Dimensions Fund. Finally, the pro forma statements reflect estimates for the combined RiverSource Large Cap Equity Fund based on the increased asset level of the merger and associated economies of scale, adjusted to reflect current fees. The pro forma combining statements should be read in conjunction with the historical financial statements of the funds incorporated by reference in the Statement of Additional Information. The pro forma statement of operations give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource Large Cap Equity Fund, as if the transaction had occurred at the beginning of the year presented. 2. PRO FORMA ADJUSTMENTS (a) To reflect adjustments needed regarding the change in structure of RiverSource New Dimensions Fund from a feeder fund presentation into a reporting format comparable with the accounting survivor. (b) To adjust for the termination of the agreement that RiverSource Investments and its affiliates would waive certain fees and absorb certain expenses. (c) To reflect the increase in investment management services fee due to the Reorganization. The Performance Incentive Adjustment (PIA) for RiverSource New Dimensions Fund was removed and a new PIA adjustment was calculated based on the RiverSource New Dimensions Fund average net assets as of July 31, 2005 and the RiverSource Large Cap Equity Fund PIA rate. The adjustment also includes the impact of a special management fee waiver that will be in effect until August 2006 on the merged fund. This special management fee waiver is estimated to reduce the management fee ratio by approximately 0.02%. (d) To reflect the net increase in administrative services fees due to the Reorganization and the revised administrative services agreement. (e) To reflect the decrease in custodian fees due to the Reorganization. (f) To adjust for the change in the compensation of board members due to the Reorganization. (g) To reflect the reduction in audit fees due to the Reorganization. (h) To adjust for closed account fees for each RiverSource New Dimensions Fund account that will be closed on the system as a result of this merger. (i) To reflect the anticipated reduction in the transfer agent fees due to the RiverSource Large Cap Equity Fund and RiverSource New Dimensions Fund accounts that will be combined as a result of the merger. 5 -- AXP Fixed Income Series, Inc. -- RiverSource Large Cap Equity Fund 3. CAPITAL SHARES The pro forma net asset value per share assumes the issuance of additional Class A, Class B, Class C, Class I and Class Y shares of RiverSource Large Cap Equity Fund if the reorganization were to have taken place on July 31, 2005. The pro forma number of Class A shares outstanding of 1,496,465,157 consists of 1,300,641,107 shares assumed to be issued to Class A shareholders of the RiverSource New Dimensions Fund, plus 195,824,050 Class A shares of the RiverSource Large Cap Equity Fund outstanding as of July 31, 2005. The pro forma number of Class B shares outstanding of 480,439,195 consists of 388,822,710 shares assumed to be issued to Class B shareholders of the RiverSource New Dimensions Fund, plus 91,616,485 Class B shares of the RiverSource Large Cap Equity Fund outstanding as of July 31, 2005. The pro forma number of Class C shares outstanding of 10,643,584 consists of 8,844,285 shares assumed to be issued to Class C shareholders of the RiverSource New Dimensions Fund, plus 1,799,299 Class C shares of the RiverSource Large Cap Equity Fund outstanding as of July 31, 2005. The pro forma number of Class I shares outstanding of 21,154,479 consists of 13,127,803 shares assumed to be issued to Class I shareholders of the RiverSource New Dimensions Fund, plus 8,026,676 Class I shares of the RiverSource Large Cap Equity Fund outstanding as of July 31, 2005. The pro forma number of Class Y shares outstanding of 484,072,750 consists of 484,033,308 shares assumed to be issued to Class Y shareholders of the RiverSource New Dimensions Fund, plus 39,442 Class Y shares of the RiverSource Large Cap Equity Fund outstanding as of July 31, 2005. 6 -- AXP Fixed Income Series, Inc. -- RiverSource Large Cap Equity Fund COMBINED INVESTMENTS IN SECURITIES RiverSource Large Cap Equity Fund JULY 31, 2005 (Unaudited) (Percentages represent value of investments compared to net assets) COMMON STOCKS (97.5%)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a) RIVERSOURCE GROWTH RIVER SOURCE GROWTH LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED ------------------------------------- ------------ ------------ ------------ ------------ ------------- ------------- AEROSPACE & DEFENSE (6.2%) Boeing 132,630 5,439,893 5,572,523 $ 8,754,907 $ 359,087,337 $ 367,842,244 Empresa Brasileira de Aeronautica ADR 119,302 -- 119,302(c) 3,858,227 -- 3,858,227 General Dynamics 12,727 -- 12,727 1,466,023 -- 1,466,023 Goodrich 116,774 -- 116,774 5,166,082 -- 5,166,082 Honeywell Intl 210,201 -- 210,201 8,256,695 -- 8,256,695 Lockheed Martin 137,816 2,057,720 2,195,536 8,599,718 128,401,728 137,001,446 Northrop Grumman 80,844 1,000,000 1,080,844 4,482,800 55,450,000 59,932,800 United Technologies 158,889 4,368,984 4,527,873 8,055,672 221,507,489 229,563,161 ------------------------------------------ Total 48,640,124 764,446,554 813,086,678 ------------------------------------------------------------------------------------------------------------------------------- AUTO COMPONENTS (--%) Johnson Controls 8,639 -- 8,639 496,224 -- 496,224 Lear 11,436 -- 11,436 489,118 -- 489,118 ------------------------------------------ Total 985,342 -- 985,342 ------------------------------------------------------------------------------------------------------------------------------- AUTOMOBILES (--%) Ford Motor 85,134 -- 85,134 914,339 -- 914,339 General Motors 64,760 -- 64,760(e) 2,384,463 -- 2,384,463 Harley-Davidson 13,137 -- 13,137 698,757 -- 698,757 ------------------------------------------ Total 3,997,559 -- 3,997,559 ------------------------------------------------------------------------------------------------------------------------------- BEVERAGES (2.2%) Coca-Cola 18,776 -- 18,776 821,638 -- 821,638 Coca-Cola Enterprises 42,291 -- 42,291 993,839 -- 993,839 PepsiCo 245,882 5,000,000 5,245,882 13,407,945 272,650,000 286,057,945 ------------------------------------------ Total 15,223,422 272,650,000 287,873,422 ------------------------------------------------------------------------------------------------------------------------------- BIOTECHNOLOGY (4.5%) Amgen 162,488 3,463,407 3,625,895(b) 12,958,418 276,206,708 289,165,126 Biogen Idec 68,514 800,000 868,514(b,d) 2,691,915 31,432,000 34,123,915 Genentech 65,830 1,000,000 1,065,830(b,d) 5,880,594 89,330,000 95,210,594 Genzyme -- 1,100,000 1,100,000(b) -- 81,851,000 81,851,000 Gilead Sciences 53,201 1,800,000 1,853,201(b) 2,383,937 80,658,000 83,041,937 ------------------------------------------ Total 23,914,864 559,477,708 583,392,572 ------------------------------------------------------------------------------------------------------------------------------- BUILDING PRODUCTS (0.1%) American Standard Companies 27,504 361,948 389,452 1,217,877 16,027,057 17,244,934 Masco 44,839 -- 44,839 1,520,491 -- 1,520,491 ------------------------------------------ Total 2,738,368 16,027,057 18,765,425 ------------------------------------------------------------------------------------------------------------------------------- CAPITAL MARKETS (2.1%) Bank of New York 107,433 -- 107,433(b) 3,306,788 -- 3,306,788 Charles Schwab -- 17,272,001 17,272,001 -- 236,626,414 236,626,414 E*TRADE Financial 107,034 -- 107,034 1,660,097 -- 1,660,097 Franklin Resources 74,301 -- 74,301 6,005,007 -- 6,005,007 Investors Financial Services 207,410 -- 207,410 7,139,052 -- 7,139,052 Legg Mason 11,332 -- 11,332 1,157,564 -- 1,157,564 Lehman Brothers Holdings 50,518 -- 50,518 5,310,957 -- 5,310,957 Merrill Lynch & Co 52,867 -- 52,867 3,107,522 -- 3,107,522 Morgan Stanley 191,367 -- 191,367 10,152,019 -- 10,152,019 National Financial Partners 10,574 -- 10,574 478,474 -- 478,474 Nomura Holdings 97,200 -- 97,200(c) 1,150,616 -- 1,150,616 State Street 88,509 -- 88,509 4,402,438 -- 4,402,438 ------------------------------------------ Total 43,870,534 236,626,414 280,496,948 -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities. 7 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a) RIVERSOURCE GROWTH RIVER SOURCE GROWTH LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED ------------------------------------- ------------ ------------ ------------ ------------ ------------- ------------- CHEMICALS (1.7%) Dow Chemical 195,329 -- 195,329 $ 9,366,026 $ -- $ 9,366,026 Eastman Chemical 18,408 -- 18,408 1,019,619 -- 1,019,619 El du Pont de Nemours & Co 41,999 4,829,004 4,871,003 1,792,517 206,101,891 207,894,408 Lyondell Chemical 46,581 -- 46,581 1,301,473 -- 1,301,473 Monsanto 54,927 -- 54,927 3,700,432 -- 3,700,432 RPM Intl 27,333 -- 27,333 512,494 -- 512,494 ------------------------------------------ Total 17,692,561 206,101,891 223,794,452 ------------------------------------------------------------------------------------------------------------------------------- COMMERCIAL BANKS (2.5%) Bank of America 632,640 5,000,000 5,632,640 27,583,104 218,000,000 245,583,104 Commerce Bancorp 108,171 842,027 950,198(e) 3,670,242 28,569,976 32,240,218 Fifth Third Bancorp 26,291 -- 26,291 1,133,142 -- 1,133,142 ICICI Bank ADR 38,269 -- 38,269(c) 1,010,684 -- 1,010,684 PNC Financial Services Group 82,245 -- 82,245 4,508,671 -- 4,508,671 Regions Financial 23,288 -- 23,288 783,408 -- 783,408 US Bancorp 160,442 522,018 682,460 4,822,887 15,691,861 20,514,748 Wachovia 199,329 -- 199,329 10,042,195 -- 10,042,195 Wells Fargo & Co 230,404 -- 230,404 14,132,981 -- 14,132,981 Western Alliance Bancorp 304 -- 304(b) 9,394 -- 9,394 ------------------------------------------ Total 67,696,708 262,261,837 329,958,545 ------------------------------------------------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES (0.2%) Avery Dennison 20,285 -- 20,285 1,149,551 -- 1,149,551 Career Education 15,200 -- 15,200(b) 589,608 -- 589,608 Cendant 693,946 -- 693,946 14,822,687 -- 14,822,687 Waste Management -- 424,994 424,994 -- 11,950,831 11,950,831 ------------------------------------------ Total 16,561,846 11,950,831 28,512,677 ------------------------------------------------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (4.6%) CIENA 658,925 -- 658,925(b) 1,475,992 -- 1,475,992 Cisco Systems 606,218 10,912,340 11,518,558(b) 11,609,075 208,971,311 220,580,386 Corning 94,665 -- 94,665(b) 1,803,368 -- 1,803,368 Motorola 291,050 15,843,471 16,134,521 6,164,439 335,564,715 341,729,154 Nokia ADR 1,064,288 756,166 1,820,454(c) 16,975,394 12,060,848 29,036,242 QUALCOMM 55,709 -- 55,709 2,199,948 -- 2,199,948 ------------------------------------------ Total 40,228,216 556,596,874 596,825,090 ------------------------------------------------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS (7.6%) Apple Computer -- 5,500,000 5,500,000(b,d) -- 234,575,000 234,575,000 Brocade Communications Systems 330,190 -- 330,190 1,479,251 -- 1,479,251 Dell 543,394 5,163,772 5,707,166(b) 21,991,156 208,977,853 230,969,009 EMC 626,589 21,116,129 21,742,718(b) 8,578,003 289,079,806 297,657,809 Hewlett-Packard 519,650 -- 519,650 12,793,783 -- 12,793,783 Intl Business Machines 151,477 -- 151,477 12,642,270 -- 12,642,270 NCR -- 5,371,843 5,371,843(b) -- 186,456,671 186,456,671 SanDisk -- 429,661 429,661(b) -- 14,531,135 14,531,135 ------------------------------------------ Total 57,484,463 933,620,465 991,104,928 ------------------------------------------------------------------------------------------------------------------------------- CONSUMER FINANCE (0.1%) Capital One Financial 98,291 -- 98,291 8,109,007 -- 8,109,007 First Marblehead 41,434 -- 41,434(b) 1,439,832 -- 1,439,832 MBNA 185,929 -- 185,929 4,677,974 -- 4,677,974 ------------------------------------------ Total 14,226,813 -- 14,226,813 ------------------------------------------------------------------------------------------------------------------------------- CONTAINERS & PACKAGING (--%) Temple-Inland 57,494 -- 57,494 2,287,686 -- 2,287,686 ------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTORS (--%) Genuine Parts 8,142 -- 8,142 372,822 -- 372,822 -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities. 8 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a) RIVERSOURCE GROWTH RIVER SOURCE GROWTH LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED ------------------------------------- ------------ ------------ ------------ ------------ ------------- ------------- DIVERSIFIED FINANCIAL SERVICES (2.5%) CapitalSource -- 1,200,151 1,200,151(b,e) $ -- $ 23,498,957 $ 23,498,957 Citigroup 595,194 4,393,640 4,988,834 25,890,939 191,123,340 217,014,279 Consumer Discretionary Select Sector SPDR Fund 148,564 -- 148,564 5,149,228 -- 5,149,228 Energy Select Sector SPDR Fund 285,008 -- 285,008(e) 13,566,381 -- 13,566,381 Health Care Select Sector SPDR Fund 276,173 -- 276,173 8,762,969 -- 8,762,969 Industrial Select Sector SPDR Fund 291,477 -- 291,477(e) 8,898,793 -- 8,898,793 iShares Dow Jones US Healthcare Sector Index Fund 141,848 -- 141,848 8,916,565 -- 8,916,565 JPMorgan Chase & Co 414,710 -- 414,710 14,572,909 -- 14,572,909 Materials Select Sector SPDR Fund 332,618 -- 332,618(e) 9,526,180 -- 9,526,180 Utilities Select Sector SPDR Fund 348,316 -- 348,316(e) 11,240,157 -- 11,240,157 ------------------------------------------ Total 106,524,121 214,622,297 321,146,418 ------------------------------------------------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES (1.7%) ALLTEL 93,518 -- 93,518 6,218,947 -- 6,218,947 BellSouth 188,312 -- 188,312 5,197,411 -- 5,197,411 Citizens Communications 39,163 -- 39,163 514,602 -- 514,602 KT ADR 63,547 -- 63,547(c) 1,406,931 -- 1,406,931 MCI 138,857 -- 138,857 3,543,631 -- 3,543,631 SBC Communications 581,756 -- 581,756 14,223,934 -- 14,223,934 Sprint Nextel 2,659,750 4,000,000 6,659,750 71,547,274 107,600,000 179,147,274 Telewest Global 601,498 -- 601,498(b,c) 13,437,465 -- 13,437,465 Verizon Communications 107,110 -- 107,110 3,666,375 -- 3,666,375 ------------------------------------------ Total 119,756,570 107,600,000 227,356,570 ------------------------------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES (0.1%) Entergy 42,775 -- 42,775 3,333,884 -- 3,333,884 Exelon 113,730 -- 113,730 6,086,830 -- 6,086,830 FPL Group 37,773 -- 37,773 1,628,772 -- 1,628,772 PPL 27,194 -- 27,194 1,674,607 -- 1,674,607 Southern 120,771 -- 120,771 4,225,777 -- 4,225,777 TXU 9,907 -- 9,907 858,342 -- 858,342 Xcel Energy 49,501 -- 49,501 960,814 -- 960,814 ------------------------------------------ Total 18,769,026 -- 18,769,026 ------------------------------------------------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT (--%) Emerson Electric 19,489 -- 19,489 1,282,376 -- 1,282,376 ------------------------------------------------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS (--%) Flextronics Intl 177,295 -- 177,295(b,c) 2,400,575 -- 2,400,575 Solectron 418,329 -- 418,329(b) 1,606,383 -- 1,606,383 ------------------------------------------ Total 4,006,958 -- 4,006,958 ------------------------------------------------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (3.1%) Cooper Cameron 18,622 -- 18,622(b) 1,321,790 -- 1,321,790 GlobalSantaFe -- 295,746 295,746 -- 13,305,613 13,305,613 Halliburton 86,399 2,000,000 2,086,399 4,842,663 112,100,000 116,942,663 Schlumberger 48,563 1,500,000 1,548,563 4,066,666 125,610,000 129,676,666 Transocean 49,698 2,500,000 2,549,698(b) 2,804,458 141,075,000 143,879,458 Weatherford Intl 31,022 -- 31,022(b) 1,963,072 -- 1,963,072 ------------------------------------------ Total 14,998,649 392,090,613 407,089,262 ------------------------------------------------------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (1.5%) CVS 121,638 -- 121,638 3,774,427 -- 3,774,427 Safeway -- 5,718,860 5,718,860 -- 138,968,298 138,968,298 Wal-Mart Stores 291,079 -- 291,079 14,364,749 -- 14,364,749 Whole Foods Market -- 300,000 300,000 -- 40,953,000 40,953,000 ------------------------------------------ Total 18,139,176 179,921,298 198,060,474 -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities. 9 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a) RIVERSOURCE GROWTH RIVER SOURCE GROWTH LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED ------------------------------------- ------------ ------------ ------------ ------------ ------------- ------------- FOOD PRODUCTS (0.1%) General Mills 50,591 -- 50,591 $ 2,398,013 $ -- $ 2,398,013 Kellogg 235,450 -- 235,450 10,668,240 -- 10,668,240 ------------------------------------------ Total 13,066,253 -- 13,066,253 ------------------------------------------------------------------------------------------------------------------------------- GAS UTILITIES (--%) ONEOK 48,928 -- 48,928 1,710,034 -- 1,710,034 ------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES (2.3%) Alcon 9,300 550,000 559,300(c,d) 1,065,315 63,002,500 64,067,815 Baxter Intl 189,390 -- 189,390 7,437,346 -- 7,437,346 Boston Scientific 84,706 -- 84,706(b) 2,452,239 -- 2,452,239 Guidant 99,243 -- 99,243 6,827,918 -- 6,827,918 Hospira 40,635 -- 40,635(b) 1,554,289 -- 1,554,289 Medtronic 102,643 2,809,717 2,912,360 5,536,563 151,556,135 157,092,698 St. Jude Medical -- 1,300,000 1,300,000(b) -- 61,633,000 61,633,000 ------------------------------------------ Total 24,873,670 276,191,635 301,065,305 ------------------------------------------------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES (4.1%) Aetna 21,998 -- 21,998 1,702,645 -- 1,702,645 AmerisourceBergen 16,474 -- 16,474 1,182,668 -- 1,182,668 Cardinal Health 170,032 -- 170,032 10,130,507 -- 10,130,507 Caremark Rx -- 2,996,491 2,996,491(b) -- 133,583,569 133,583,569 CIGNA 16,885 -- 16,885 1,802,474 -- 1,802,474 HCA 242,155 1,037,600 1,279,755 11,926,134 51,101,800 63,027,934 HealthSouth 196,272 -- 196,272(b) 1,052,018 -- 1,052,018 Magellan Health Services 69,925 -- 69,925(b) 2,504,714 -- 2,504,714 McKesson 21,072 -- 21,072 948,240 -- 948,240 Medco Health Solutions 76,317 -- 76,317(b) 3,696,795 -- 3,696,795 UnitedHealth Group 157,393 5,866,983 6,024,376 8,231,654 306,843,211 315,074,865 WellPoint 6,526 -- 6,526(b) 461,649 -- 461,649 ------------------------------------------ Total 43,639,498 491,528,580 535,168,078 ------------------------------------------------------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE (2.2%) Applebee's Intl 64,208 -- 64,208 1,702,154 -- 1,702,154 Carnival Unit -- 3,600,000 3,600,000 -- 188,640,000 188,640,000 GTECH Holdings 32,726 -- 32,726 980,471 -- 980,471 Royal Caribbean Cruises -- 593,200 593,200 -- 26,960,940 26,960,940 Starbucks -- 1,200,000 1,200,000(b) -- 63,060,000 63,060,000 ------------------------------------------ Total 2,682,625 278,660,940 281,343,565 ------------------------------------------------------------------------------------------------------------------------------- HOUSEHOLD DURABLES (2.1%) Centex 5,650 -- 5,650 417,987 -- 417,987 DR Horton -- 424,590 424,590 -- 17,442,157 17,442,157 Fortune Brands 6,614 -- 6,614 625,354 -- 625,354 Harman Intl Inds 1,881 -- 1,881 161,672 -- 161,672 Leggett & Platt 21,366 -- 21,366 540,346 -- 540,346 Pulte Homes 5,796 2,637,442 2,643,238 542,622 246,917,320 247,459,942 Sony 53,100 -- 53,100(c) 1,752,522 -- 1,752,522 Tempur-Pedic Intl 164,977 -- 164,977(b) 2,839,254 -- 2,839,254 ------------------------------------------ Total 6,879,757 264,359,477 271,239,234 ------------------------------------------------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (3.2%) Colgate-Palmolive 98,478 -- 98,478 5,213,425 -- 5,213,425 Procter & Gamble 360,305 6,771,048 7,131,353 20,043,767 376,673,400 396,717,167 Spectrum Brands 610,210 -- 610,210(b) 18,916,510 -- 18,916,510 ------------------------------------------ Total 44,173,702 376,673,400 420,847,102 ------------------------------------------------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES (3.1%) 3M 20,624 -- 20,624 1,546,800 -- 1,546,800 General Electric 578,112 10,698,829 11,276,941 19,944,864 369,109,601 389,054,465 Tyco Intl 554,264 -- 554,264(c) 16,888,424 -- 16,888,424 ------------------------------------------ Total 38,380,088 369,109,601 407,489,689 -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities. 10 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a) RIVERSOURCE GROWTH RIVER SOURCE GROWTH LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED ------------------------------------- ------------ ------------ ------------ ------------ ------------- ------------- INSURANCE (0.4%) ACE 243,468 -- 243,468(c) $ 11,250,656 $ -- $ 11,250,656 AFLAC 47,433 -- 47,433 2,139,228 -- 2,139,228 Allstate 20,165 -- 20,165 1,235,308 -- 1,235,308 American Intl Group 455,744 -- 455,744 27,435,789 -- 27,435,789 Assurant 21,150 -- 21,150 781,493 -- 781,493 Chubb 64,770 -- 64,770 5,752,871 -- 5,752,871 Endurance Specialty Holdings 36,019 -- 36,019(c) 1,404,741 -- 1,404,741 First American 27,136 -- 27,136 1,192,627 -- 1,192,627 Hartford Financial Services Group 33,324 -- 33,324 2,684,915 -- 2,684,915 Montpelier Re Holdings 12,101 -- 12,101(c) 434,668 -- 434,668 State Auto Financial 77,788 -- 77,788 2,446,433 -- 2,446,433 United America Indemnity Cl A 9,883 -- 9,883(b,c) 181,155 -- 181,155 ------------------------------------------ Total 56,939,884 -- 56,939,884 ------------------------------------------------------------------------------------------------------------------------------- INTERNET & Catalog Retail (0.9%) Amazon.com -- 300,000 300,000(b) -- 13,551,000 13,551,000 eBay 115,102 2,364,395 2,479,497(b) 4,808,962 98,784,423 103,593,385 ------------------------------------------ Total 4,808,962 112,335,423 117,144,385 ------------------------------------------------------------------------------------------------------------------------------- INTERNET SOFTWARE & Services (1.9%) Google Cl A 34,413 331,914 366,327(b) 9,902,685 95,511,573 105,414,258 Yahoo! 64,892 4,183,556 4,248,448(b,e) 2,163,499 139,479,757 141,643,256 ------------------------------------------ Total 12,066,184 234,991,330 247,057,514 ------------------------------------------------------------------------------------------------------------------------------- IT SERVICES (0.9%) Accenture Cl A 65,124 -- 65,124(b,c) 1,630,705 -- 1,630,705 Affiliated Computer Services Cl A 65,566 -- 65,566(b) 3,276,333 -- 3,276,333 Automatic Data Processing 21,183 -- 21,183 940,737 -- 940,737 First Data 7,613 500,000 507,613 313,199 20,570,000 20,883,199 Fiserv -- 239,216 239,216(b) -- 10,614,014 10,614,014 Infosys Technologies ADR 8,257 1,000,000 1,008,257(c,e) 587,733 71,180,000 71,767,733 Ness Technologies 42,993 -- 42,993(b,c) 429,930 -- 429,930 Paychex 36,092 -- 36,092 1,259,972 -- 1,259,972 Satyam Computer Services ADR 20,765 -- 20,765(c) 593,464 -- 593,464 ------------------------------------------ Total 9,032,073 102,364,014 111,396,087 ------------------------------------------------------------------------------------------------------------------------------- LEISURE EQUIPMENT & Products (--%) Mattel 51,659 -- 51,659 963,440 -- 963,440 ------------------------------------------------------------------------------------------------------------------------------- MACHINERY (0.1%) Caterpillar 62,655 -- 62,655 3,377,731 -- 3,377,731 Illinois Tool Works 23,710 -- 23,710 2,030,762 -- 2,030,762 Ingersoll-Rand Cl A 11,944 -- 11,944(c) 933,662 -- 933,662 ITT Inds 8,804 -- 8,804 936,746 -- 936,746 ------------------------------------------ Total 7,278,901 -- 7,278,901 ------------------------------------------------------------------------------------------------------------------------------- MEDIA (2.7%) Clear Channel Communications 25,453 -- 25,453 830,786 -- 830,786 Comcast Cl A 339,366 -- 339,366(b) 10,428,717 -- 10,428,717 Comcast Special Cl A 105,129 7,914,044 8,019,173(b) 3,153,870 237,421,320 240,575,190 DreamWorks Animation SKG Cl AF -- 538,415 538,415(b) -- 12,679,673 12,679,673 EchoStar Communications Cl A 32,363 -- 32,363 929,465 -- 929,465 Gannett 12,256 -- 12,256 894,198 -- 894,198 Liberty Global Cl A 46,713 -- 46,713(b) 2,216,065 -- 2,216,065 Liberty Media Cl A 482,881 -- 482,881(b) 4,244,524 -- 4,244,524 McGraw-Hill Companies 17,243 -- 17,243 793,350 -- 793,350 News Corp Cl A 120,527 -- 120,527 1,974,232 -- 1,974,232 NTL 712,427 -- 712,427(b) 47,469,011 -- 47,469,011 Omnicom Group 8,406 -- 8,406 713,417 -- 713,417
See accompanying notes to combined investments in securities. 11 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a) RIVERSOURCE GROWTH RIVER SOURCE GROWTH LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED ------------------------------------- ------------ ------------ ------------ ------------ ------------- ------------- MEDIA (cont.) Reader's Digest Assn 33,909 -- 33,909 $ 550,682 $ -- $ 550,682 Time Warner 361,370 -- 361,370(b) 6,150,517 -- 6,150,517 Tribune 72,919 -- 72,919 2,661,544 -- 2,661,544 Univision Communications Cl A 14,712 -- 14,712(b) 416,055 -- 416,055 Viacom Cl B 231,973 -- 231,973 7,768,776 -- 7,768,776 Vivendi Universal ADR 346,059 -- 346,059(c) 10,997,755 -- 10,997,755 Walt Disney 208,297 -- 208,297 5,340,735 -- 5,340,735 ------------------------------------------ Total 107,533,699 250,100,993 357,634,692 ------------------------------------------------------------------------------------------------------------------------------- METALS & MINING (0.1%) Alcan 31,738 -- 31,738(c) 1,072,110 -- 1,072,110 Alcoa 79,085 -- 79,085 2,218,334 -- 2,218,334 Barrick Gold 3,921 -- 3,921(c) 96,065 -- 96,065 Coeur d'Alene Mines 804,721 -- 804,721(b) 2,856,760 -- 2,856,760 Glamis Gold 48,447 -- 48,447(b,c) 846,369 -- 846,369 Harmony Gold Mining ADR 72,268 -- 72,268(c) 592,598 -- 592,598 Kinross Gold 111,924 -- 111,924(b,c) 622,297 -- 622,297 Newmont Mining 168,531 -- 168,531 6,328,338 -- 6,328,338 PAN American Silver 6,200 -- 6,200(b,c) 98,270 -- 98,270 Stillwater Mining 48,183 -- 48,183(b) 393,173 -- 393,173 ------------------------------------------ Total 15,124,314 -- 15,124,314 ------------------------------------------------------------------------------------------------------------------------------- MULTI-UTILITIES & UNREGULATED POWER (1.8%) Dominion Resources 77,642 3,100,000 3,177,642 5,734,638 228,966,000 234,700,638 Duke Energy 43,153 -- 43,153 1,274,740 -- 1,274,740 ------------------------------------------ Total 7,009,378 228,966,000 235,975,378 ------------------------------------------------------------------------------------------------------------------------------- MULTILINE RETAIL (5.0%) Dollar General 30,530 -- 30,530 620,370 -- 620,370 Federated Dept Stores 39,067 1,319,845 1,358,912 2,964,013 100,136,640 103,100,653 JC Penney 83,224 -- 83,224 4,672,195 -- 4,672,195 Kohl's 96,668 -- 96,668(b) 5,447,242 -- 5,447,242 Nordstrom -- 4,800,000 4,800,000 -- 177,648,000 177,648,000 Target 98,138 6,000,000 6,098,138 5,765,608 352,500,000 358,265,608 ------------------------------------------ Total 19,469,428 630,284,640 649,754,068 ------------------------------------------------------------------------------------------------------------------------------- OFFICE ELECTRONICS (0.2%) Xerox 103,982 1,517,773 1,621,755(b) 1,373,602 20,049,781 21,423,383 ------------------------------------------------------------------------------------------------------------------------------- OIL & GAS (7.0%) Anadarko Petroleum 108,326 -- 108,326 9,570,602 -- 9,570,602 Apache -- 3,151,001 3,151,001 -- 215,528,468 215,528,468 BP ADR 70,751 -- 70,751(c) 4,661,076 -- 4,661,076 Burlington Resources 10,437 400,000 410,437 669,116 25,644,000 26,313,116 Chesapeake Energy -- 1,020,682 1,020,682 -- 26,650,007 26,650,007 Chevron 293,190 -- 293,190 17,007,952 -- 17,007,952 ConocoPhillips 320,951 2,942,107 3,263,058 20,088,323 184,146,477 204,234,800 Devon Energy 38,197 -- 38,197 2,142,470 -- 2,142,470 Exxon Mobil 588,282 4,408,270 4,996,552 34,561,568 258,985,863 293,547,431 Marathon Oil 32,585 -- 32,585 1,901,661 -- 1,901,661 Murphy Oil -- 1,200,000 1,200,000 -- 63,648,000 63,648,000 Newfield Exploration 52,031 -- 52,031(b) 2,210,797 -- 2,210,797 Occidental Petroleum 16,023 -- 16,023 1,318,372 -- 1,318,372 Royal Dutch Shell Cl A ADR 21,960 -- 21,960(b,c) 1,345,709 -- 1,345,709 Suncor Energy -- 1,000,000 1,000,000(c) -- 48,900,000 48,900,000 Valero Energy 24,935 -- 24,935 2,064,119 -- 2,064,119 ------------------------------------------ Total 97,541,765 823,502,815 921,044,580 -------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities. 12 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a) RIVERSOURCE GROWTH RIVER SOURCE GROWTH LARGE CAP TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA EQUITY FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED ------------------------------------- ------------ ------------ ------------ ------------ ------------- ------------- PAPER & FOREST PRODUCTS (--%) Bowater 50,701 -- 50,701 $ 1,714,201 $ -- $ 1,714,201 Intl Paper 75,200 -- 75,200 2,376,320 -- 2,376,320 Weyerhaeuser 24,409 -- 24,409 1,683,733 -- 1,683,733 ------------------------------------------ Total 5,774,254 -- 5,774,254 ------------------------------------------------------------------------------------------------------------------------------- PERSONAL PRODUCTS (0.2%) Avon Products 189,783 -- 189,783 6,207,802 -- 6,207,802 Gillette 346,990 -- 346,990 18,622,953 -- 18,622,953 ------------------------------------------ Total 24,830,755 -- 24,830,755 ------------------------------------------------------------------------------------------------------------------------------- PHARMACEUTICALS (7.1%) Abbott Laboratories 156,775 2,500,000 2,656,775 7,310,418 116,575,000 123,885,418 AstraZeneca 19,021 -- 19,021(c) 859,585 -- 859,585 Bristol-Myers Squibb 268,789 -- 268,789 6,714,349 -- 6,714,349 Eli Lilly & Co 51,687 600,000 651,687 2,911,012 33,792,000 36,703,012 GlaxoSmithKline ADR 59,322 -- 59,322(c) 2,814,236 -- 2,814,236 IVAX 200 -- 200(b) 5,096 -- 5,096 Johnson & Johnson 281,978 4,544,890 4,826,868 18,035,313 290,691,164 308,726,477 Merck & Co 179,853 -- 179,853 5,586,234 -- 5,586,234 Novartis ADR 146,528 2,500,000 2,646,528(c) 7,137,379 121,775,000 128,912,379 Pfizer 1,128,684 5,394,772 6,523,456 29,910,125 142,961,458 172,871,583 Roche Holding ADR 32,920 -- 32,920(c) 4,464,695 -- 4,464,695 Schering-Plough 259,205 3,200,084 3,459,289 5,396,648 66,625,749 72,022,397 Sepracor -- 1,000,000 1,000,000(b) -- 52,350,000 52,350,000 Wyeth 141,770 -- 141,770 6,485,978 -- 6,485,978 ------------------------------------------ Total 97,631,068 824,770,371 922,401,439 ------------------------------------------------------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUST (0.1%) Apartment Investment & Management Cl A 31,892 -- 31,892 1,403,248 -- 1,403,248 Equity Office Properties Trust 100,035 -- 100,035 3,546,240 -- 3,546,240 HomeBanc 360,044 -- 360,044 3,261,999 -- 3,261,999 Jer Investors Trust 30,271 -- 30,271(b) 559,408 -- 559,408 ------------------------------------------ Total 8,770,895 -- 8,770,895 ------------------------------------------------------------------------------------------------------------------------------- ROAD & RAIL (--%) Norfolk Southern 24,962 -- 24,962 928,836 -- 928,836 ------------------------------------------------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (4.3%) Analog Devices 72,157 -- 72,157 2,828,554 -- 2,828,554 Applied Materials 68,848 -- 68,848 1,270,934 -- 1,270,934 ASML Holding 31,984 -- 31,984(b,c) 562,918 -- 562,918 ATI Technologies 42,191 -- 42,191(b,c) 531,185 -- 531,185 Broadcom Cl A 108,532 -- 108,532(b) 4,641,914 -- 4,641,914 Credence Systems 69,912 -- 69,912(b) 761,342 -- 761,342 Cypress Semiconductor 157,828 -- 157,828(b) 2,266,410 -- 2,266,410 Freescale Semiconductor Cl A 292,496 -- 292,496(b) 7,464,498 -- 7,464,498 Freescale Semiconductor Cl B 143,448 -- 143,448(b) 3,693,786 -- 3,693,786 Intel 719,479 12,847,325 13,566,804 19,526,660 348,676,401 368,203,061 Linear Technology 47,007 -- 47,007 1,826,692 -- 1,826,692 Maxim Integrated Products 15,453 -- 15,453 647,017 -- 647,017 MEMC Electronic Materials 104,056 -- 104,056(b) 1,767,911 -- 1,767,911 Texas Instruments 228,088 5,000,000 5,228,088 7,244,075 158,800,000 166,044,075 ------------------------------------------ Total 55,033,896 507,476,401 562,510,297 ------------------------------------------------------------------------------------------------------------------------------- SOFTWARE (3.7%) Adobe Systems 3,883 -- 3,883 115,092 -- 115,092 Amdocs -- 380,295 380,295(b,c) -- 11,290,959 11,290,959 Autodesk -- 2,500,000 2,500,000 -- 85,475,000 85,475,000 Cadence Design Systems 118,643 -- 118,643(b) 1,908,966 -- 1,908,966
See accompanying notes to combined investments in securities. 13 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund COMMON STOCKS (continued)
ISSUER SHARES SHARES SHARES VALUE(a) VALUE(a) VALUE(a) RIVERSOURCE LARGE CAP GROWTH RIVER SOURCE GROWTH EQUITY TRENDS PRO FORMA LARGE CAP TRENDS PRO FORMA FUND PORTFOLIO COMBINED EQUITY FUND PORTFOLIO COMBINED ------------------------------------ ----------- ------------ ---------- --------------- --------------- --------------- SOFTWARE (cont.) Citrix Systems 4,510 -- 4,510(b) $ 107,473 $ -- $ 107,473 Compuware 19,746 -- 19,746(b) 166,459 -- 166,459 Electronic Arts 39,090 -- 39,090(b) 2,251,584 -- 2,251,584 Macromedia 12,986 -- 12,986(b) 521,388 -- 521,388 Mercury Interactive 64,752 -- 64,752(b) 2,549,286 -- 2,549,286 Microsoft 755,127 11,239,975 11,995,102 19,338,802 287,855,759 307,194,561 Novell 43,447 -- 43,447(b) 264,158 -- 264,158 Oracle 471,834 -- 471,834(b) 6,407,506 -- 6,407,506 Siebel Systems 309,488 -- 309,488 2,599,699 -- 2,599,699 Symantec 147,649 2,880,000 3,027,649(b) 3,243,849 63,273,600 66,517,449 ------------------------------------------------- Total 39,474,262 447,895,318 487,369,580 ---------------------------------------------------------------------------------------------------------------------------------- SPECIALTY RETAIL (1.5%) AutoZone 3,207 -- 3,207(b) 312,490 -- 312,490 Advance Auto Parts -- 561,009 561,009(b) -- 38,687,181 38,687,181 Bed Bath & Beyond 14,246 -- 14,246(b) 653,891 -- 653,891 Best Buy 29,035 -- 29,035 2,224,081 -- 2,224,081 Circuit City Stores 12,197 -- 12,197 222,595 -- 222,595 Gap 51,591 -- 51,591 1,089,086 -- 1,089,086 Home Depot 162,683 -- 162,683 7,078,338 -- 7,078,338 Lowe's Companies 34,159 2,218,498 2,252,657 2,262,009 146,908,937 149,170,946 PETCO Animal Supplies 61,558 -- 61,558(b) 1,715,621 -- 1,715,621 Staples 36,218 -- 36,218 824,684 -- 824,684 ------------------------------------------------- Total 16,382,795 185,596,118 201,978,913 ---------------------------------------------------------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS (--%) Coach 14,525 -- 14,525(b) 509,973 -- 509,973 Nike Cl B 12,580 -- 12,580 1,054,204 -- 1,054,204 ------------------------------------------------- Total 1,564,177 -- 1,564,177 ---------------------------------------------------------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE (0.3%) BankAtlantic Bancorp Cl A 23,957 -- 23,957 429,789 -- 429,789 Countrywide Financial 352,161 -- 352,161 12,677,796 -- 12,677,796 Fannie Mae 195,176 -- 195,176 10,902,531 -- 10,902,531 Freddie Mac 149,968 -- 149,968 9,489,975 -- 9,489,975 Washington Mutual 36,843 -- 36,843 1,565,091 -- 1,565,091 ------------------------------------------------- Total 35,065,182 -- 35,065,182 ---------------------------------------------------------------------------------------------------------------------------------- TOBACCO (0.9%) Altria Group 320,988 1,500,000 1,820,988 21,493,356 100,440,000 121,933,356 ---------------------------------------------------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (0.3%) Hutchison Telecommunications Intl ADR 105,422 -- 105,422(b,c) 1,796,391 -- 1,796,391 Millicom Intl Cellular 63,718 -- 63,718(b,c) 1,353,370 -- 1,353,370 NeuStar Cl A 19,532 -- 19,532(b) 546,896 -- 546,896 Nextel Communications Cl A 778,974 -- 778,974(b) 27,108,296 -- 27,108,296 Orascom Telecom GDR 93,426 -- 93,426(c) 4,542,372 -- 4,542,372 Turkcell Iletisim Hizmetleri ADR 83,247 -- 83,247(c) 1,145,479 -- 1,145,479 Vodafone Group ADR 267,704 -- 267,704(c) 6,914,794 -- 6,914,794 ------------------------------------------------- Total 43,407,598 -- 43,407,598 ---------------------------------------------------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $11,164,245,420) $ 1,504,302,535 $11,239,290,676 $12,743,593,211 ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined investments in securities. 14 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund SHORT-TERM SECURITIES (3.4%)(f)
ISSUER EFFECTIVE AMOUNT AMOUNT VALUE(a) VALUE(a) VALUE(a) YIELD PAYABLE PAYABLE AT AT MATURITY MATURITY RIVERSOURCE GROWTH RIVERSOURCE GROWTH LARGE CAP TRENDS LARGE CAP TRENDS PRO FORMA EQUITY FUND PORTFOLIO EQUITY FUND PORTFOLIO COMBINED ------------------------------------ ----------- ------------ ---------- --------------- --------------- --------------- U.S. GOVERNMENT AGENCY (0.1%) Federal Home Loan Bank Disc Nt 8/19/2005 3.21% $ 15,000,000 $ --(g) $ 14,972,001 $ -- $ 14,972,001 COMMERCIAL PAPER (3.3%) Alpine Securitization 8/4/2005 3.27 -- 20,000,000(g) -- 19,989,100 19,989,100 Barton Capital 8/3/2005 3.27 -- 43,500,000(g) -- 43,480,243 43,480,243 8/10/2005 3.28 -- 30,000,000(g) -- 29,967,200 29,967,200 8/11/2005 3.28 -- 25,000,000(g) -- 24,970,389 24,970,389 Beta Finance 8/10/2005 3.28 -- 20,000,000 -- 19,978,133 19,978,133 CAFCO LLC 8/1/2005 3.30 -- 13,300,000(g) -- 13,296,343 13,296,343 Chariot Funding LLC 8/26/2005 3.45 15,000,000 -- 14,959,867 -- 14,959,867 Citibank Credit Card Dakota Nts 8/1/2005 3.30 -- 12,200,000(g) -- 12,196,645 12,196,645 Citigroup Funding 8/1/2005 3.31 19,800,000 24,500,000 19,794,538 24,493,242 44,287,780 FCAR Owner Trust I 8/4/2005 3.27 10,000,000 -- 9,994,550 -- 9,994,550 HSBC Finance 8/1/2005 3.31 -- 30,000,000 -- 29,991,724 29,991,724 Natl Australia Funding 8/08/2005 3.27 10,000,000 --(g) 9,990,917 -- 9,990,917 8/09/2005 3.26 -- 30,000,000(g) -- 29,970,116 29,970,116 Park Avenue Receivables 8/25/2005 3.42 -- 30,000,000(g) -- 29,923,275 29,923,275 Scaldis Capital LLC 8/15/2005 3.36 -- 25,000,000(g) -- 24,960,452 24,960,452 Sheffield Receivables 8/01/2005 3.30 -- 11,700,000(g) -- 11,696,783 11,696,783 8/22/2005 3.41 20,000,000 --(g) 19,954,666 -- 19,954,666 Societe Generale North America 8/12/2005 3.28 -- 25,000,000 -- 24,968,111 24,968,111 Windmill Funding 8/23/2005 3.41 -- 20,000,000(g) -- 19,952,778 19,952,778 ------------------------------------------------- 74,694,538 359,834,534 434,529,072 ---------------------------------------------------------------------------------------------------------------------------------- TOTAL SHORT-TERM SECURITIES (Cost: $449,542,440) $ 89,666,539 359,834,534 $ 449,501,073 ---------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (PRIOR TO PRO FORMA ADJUSTMENTS) (Cost: $11,613,787,860)(h) $ 1,593,969,074 $11,599,125,210 $13,193,094,284 ---------------------------------------------------------------------------------------------------------------------------------- Pro forma Adjustments(i) -- (75,237) (75,237) ---------------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (AFTER PRO FORMA ADJUSTMENTS) (Cost: $11,613,720,309)(i) $ 1,593,969,074 $11,599,049,973 $13,193,019,047 ----------------------------------------------------------------------------------------------------------------------------------
15 -- AXP Growth Series, Inc. -- RiverSource Large Cap Equity Fund NOTES TO COMBINED INVESTMENTS IN SECURITIES (a) Securities are valued by procedures described in Note 1 to the financial statements in the annual report. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At July 31, 2005, the value of foreign securities represented 3.5% of net assets. (d) At July 31, 2005, securities valued at $213,766,821 were held to cover open call options written as follows:
ISSUER EXERCISE EXPIRATION CONTRACTS PRICE DATE VALUE(a) -------------------------------- ---------- ------------ ---------- ----------- Alcon 3,000 120.00 Aug. 2005 $ 232,500 Apple Computer 13,750 47.50 Sept. 2005 687,500 Biogen Idec 7,999 35.00 Aug. 2005 3,559,555 Genentech 10,000 85.00 Aug. 2005 5,050,000 ----------------------------------------------------------------------------------- Total value $ 9,529,555 -----------------------------------------------------------------------------------
(e) At July 31, 2005, security was partially or fully on loan. (f) Cash collateral received from security lending activity is invested in short-term securities and represents 2.4% of net assets. 1.0% of net assets is the Portfolio's cash equivalent position. (g) Commercial paper sold within terms of a private placement memorandum, exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "accredited investors." This security has been determined to be liquid under guidelines established by the Fund's Board of Directors. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At July 31, 2005, the value of these securities amounted to $305,320,908 or 2.3% of net assets. (h) At July 31, 2005, the cost of securities for federal income tax purposes and the aggregate gross unrealized appreciation and depreciation based on that cost was:
RIVERSOURCE GROWTH LARGE CAP TRENDS PRO FORMA PRO FORMA EQUITY FUND PORTFOLIO ADJUSTMENTS COMBINED --------------- ---------------- ----------- ---------------- Cost of securities for federal income tax purposes: $ 1,524,155,705 $ 10,140,479,002 $ (67,551) $ 11,664,567,156 Unrealized appreciation $ 98,862,905 $ 1,673,893,157 $ -- $ 1,772,756,062 Unrealized depreciation (29,049,536) (215,246,949) -- (244,296,485) ------------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation $ 69,813,369 $ 1,458,646,208 $ -- $ 1,528,459,577 -------------------------------------------------------------------------------------------------------------------------
(i) To reflect the portion of the Growth Trends Portfolio net assets not owned by RiverSource New Dimensions Fund. (Cost decreased $67,551). The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. S-6393-20 A (12/05) Statement of Additional Information Dec. 16, 2005 AXP(R) Growth Series, Inc. RiverSource(SM) Disciplined Equity Fund This Statement of Additional Information ("SAI") consists of this cover page and incorporates by reference the following described documents, each of which has been previously filed and accompanies this SAI. 1. RiverSource Disciplined Equity Fund's most recent SAI, dated Nov. 29, 2005. 2. RiverSource Disciplined Equity Fund's most recent annual report, for the period ended July 31, 2005. 3. RiverSource Stock Fund's most recent SAI, dated Nov. 29, 2005. 4. RiverSource Stock Fund's most recent annual report, for the period ended Sept. 30, 2005. This SAI is not a prospectus. It should be read in conjunction with the proxy statement/prospectus, which may be obtained by calling (877) 256-6085 or writing RiverSource Service Corporation, 70100 Ameriprise Financial Center, Minneapolis, MN 55474. RiverSource Disciplined Equity Fund (Buying Fund) RiverSource Stock Fund (Selling Fund) Introduction to Proposed Fund Merger July 31, 2005 The accompanying unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two funds at and for the 12-month period ending July 31, 2005. These statements have been derived from financial statements prepared for RiverSource Disciplined Equity Fund and RiverSource Stock Fund as of July 31, 2005. RiverSource Disciplined Equity Fund invests primarily in equity securities of companies listed on U.S. exchanges with market capitalizations greater than $5 billion at the time of purchase. RiverSource Stock Fund invests all of its assets in Equity Portfolio, a series of Growth and Income Trust, an open-end investment company that has the same objectives as the Fund. The Portfolio invests primarily in income-producing equity securities (such as convertible securities and preferred stocks) and short-term debt instruments (such as commercial paper). Under the proposed Agreement and Plan of Reorganization, Class A shares of the RiverSource Stock Fund would be exchanged for Class A shares of the RiverSource Disciplined Equity Fund. Class B shares of the RiverSource Stock Fund would be exchanged for Class B shares of the RiverSource Disciplined Equity Fund. Class C shares of the RiverSource Stock Fund would be exchanged for Class C shares of the RiverSource Disciplined Equity Fund. Class I shares of the RiverSource Stock Fund would be exchanged for Class I shares of the RiverSource Disciplined Equity Fund. Class Y shares of the RiverSource Stock Fund would be exchanged for Class Y shares of the RiverSource Disciplined Equity Fund. The pro forma combining statements have been prepared to give effect to the proposed transaction on the historical operations of the accounting survivior, RiverSource Disciplined Equity Fund, as if the transaction had occurred at the beginning of the fiscal year ending July 31, 2005. -------------------------------------------------------------------------------- 2 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
RiverSource Disciplined Equity Fund (Buying Fund) RiverSource Stock Fund (Selling Fund) Pro forma combining Statement of assets and liabilities RiverSource Disciplined RiverSource Pro forma Pro forma July 31, 2005 (Unaudited) Equity Fund Stock Fund Adjustments Combined Assets Investments in securities, at cost (Note 2) $119,896,748 $ -- $ 1,846,110,248(a) $1,966,006,996 ------------ -------------- --------------- -------------- Investments in securities, at value* (Note 2) $126,040,421 $ -- $ 2,012,913,955(a) $2,138,954,376 Investment in Portfolio (Note 2) -- 1,992,779,515 (1,992,779,515)(a) -- Cash in bank on demand deposit 63,008 -- -- 63,008 Capital shares receivable 43,455 256,603 -- 300,058 Dividends and accrued interest receivable (Note 2) 194,530 -- 2,281,794(a) 2,476,324 Receivable for investment securities sold (Note 2) 5,782,959 -- 387,479,818(a) 393,262,777 Receivable from RiverSource Investments, LLC (Note 2) -- -- 895,413(g) 895,413 Reclaims receivable (Note 2) -- -- 116,418(a) 116,418 ------------ -------------- --------------- -------------- Total assets 132,124,373 1,993,036,118 410,907,883 2,536,068,374 ------------ -------------- --------------- -------------- Liabilities Disbursements in excess of cash on demand deposit (Note 2) -- -- 190,233(a) 190,233 Capital shares payable 10,711 46,713 -- 57,424 Payable for investment securities purchased (Note 2) 12,666,426 -- 395,292,092(a) 407,958,518 Payable upon return of securities loaned (Note 2) -- -- 14,399,570(a) 14,399,570 Accrued investment management services fee (Note 2) 1,976 -- 3,012,191(a),(b) 3,014,167 Accrued distribution fee 455 13,667 -- 14,122 Accrued service fee -- 981 -- 981 Accrued transfer agency fee 141 2,594 196,318(h),(i) 199,053 Accrued administrative services fee (Note 2) 165 1,856 437,435(c) 439,456 Other accrued expenses (Note 2) 69,384 78,367 35,243(a),(d),(e),(f) 182,994 ------------ -------------- --------------- -------------- Total liabilities 12,749,258 144,178 413,563,082 426,456,518 ------------ -------------- --------------- -------------- Net assets applicable to outstanding capital stock $119,375,115 $1,992,891,940 $ (2,655,199) $2,109,611,856 ============ ============== =============== ============== Represented by Capital stock -- $.01 par value (Note 3) $ 177,771 $ 1,005,753 $ 1,965,989 $ 3,149,513 Additional paid-in capital (Note 3) 109,222,972 1,898,118,891 (1,965,989) 2,005,375,874 Undistributed (excess of distributions over) net investment income (Note 2) 503,820 1,395,678 (2,655,199) (755,701) Accumulated net realized gain (loss) 3,326,879 (74,432,089) -- (71,105,210) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 6,143,673 166,803,707 -- 172,947,380 Total -- representing net assets applicable to outstanding capital stock $119,375,115 $1,992,891,940 $ (2,655,199) $2,109,611,856 Net assets applicable to outstanding shares: Class A $ 28,058,336 $1,486,995,734 $ (1,981,175) $1,513,072,895 Class B $ 9,287,787 $ 120,111,527 $ (160,029) $ 129,239,285 Class C $ 188,938 $ 2,635,680 $ (3,512) $ 2,821,106 Class I $ 81,805,703 $ 27,195,584 $ (36,234) $ 108,965,053 Class Y $ 34,351 $ 355,953,415 $ (474,249) $ 355,513,517 Shares outstanding (Note 3): Class A shares 4,189,337 75,000,985 -- 225,833,301 Class B shares 1,402,057 6,114,383 -- 19,521,619 Class C shares 28,519 134,706 -- 426,127 Class I shares 12,152,084 1,371,437 -- 16,187,649 Class Y shares 5,118 17,953,802 -- 52,982,639 Net asset value per share of outstanding capital stock: Class A $ 6.70 $ 19.83 $ -- $ 6.70 Class B $ 6.62 $ 19.64 $ -- $ 6.62 Class C $ 6.62 $ 19.57 $ -- $ 6.62 Class I $ 6.73 $ 19.83 $ -- $ 6.73 Class Y $ 6.71 $ 19.83 $ -- $ 6.71 ------------ -------------- --------------- -------------- * Including securities on loan, at value (Note 2) $ -- $ -- $ 13,841,900(a) $ 13,841,900 ------------ -------------- --------------- --------------
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 3 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
RiverSource Disciplined Equity Fund (Buying Fund) RiverSource Stock Fund (Selling Fund) Pro forma combining Statement of operations RiverSource Disciplined RiverSource Pro forma Pro forma Year ended July 31, 2005 (Unaudited) Equity Fund Stock Fund Adjustments Combined Investment income Income: Dividends $1,295,906 $ 46,394,768 $ -- $ 47,690,674 Interest 73,221 1,282,770 -- 1,355,991 Fee income from securities lending 90,203 -- 90,203 Less foreign taxes withheld -- (33,646) -- (33,646) ---------- ------------ ------------ ------------ Total income 1,369,127 47,734,095 -- 49,103,222 ---------- ------------ ------------ ------------ Expenses: Expenses allocated from Portfolio (Note 2) -- 10,304,529 (10,304,529)(a) -- Investment management services fee (Note 2) 408,720 -- 12,988,850(a),(b) 13,397,570 Distribution fee Class A 44,025 3,890,578 -- 3,934,603 Class B 51,693 1,362,137 -- 1,413,830 Class C 1,420 29,438 -- 30,858 Transfer agency fee 40,155 2,294,097 196,673(h),(i) 2,530,925 Incremental transfer agency fee Class A 3,114 152,294 (250)(i) 155,158 Class B 2,060 48,873 (105)(i) 50,828 Class C 71 989 -- 1,060 Service fee -- Class Y 30 417,217 -- 417,247 Administrative services fees and expenses (Note 2) 29,441 721,402 437,435(c) 1,188,278 Custodian fees (Note 2) 27,540 -- 152,460(a),(d) 180,000 Compensation of board members (Note 2) 8,604 11,915 (2,519)(a),(e) 18,000 Printing and postage 37,795 310,306 -- 348,101 Registration fees 57,489 48,106 -- 105,595 Audit fees (Note 2) 20,500 10,750 3,750(a),(f) 35,000 Other (Note 2) 5,942 32,224 79,518(a) 117,684 ---------- ------------ ------------ ------------ Total expenses 738,599 19,634,855 3,551,283 23,924,737 Expenses waived/reimbursed by RiverSource Investments, LLC (Note 2) (23,127) -- (895,413)(g) (918,540) ---------- ------------ ------------ ------------ 715,472 19,634,855 2,655,870 23,006,197 Earnings credits on cash balances (4,727) (73,177) (671)(a) (78,575) ---------- ------------ ------------ ------------ Total net expenses 710,745 19,561,678 2,655,199 22,927,622 ---------- ------------ ------------ ------------ Investment income (loss) -- net 658,382 28,172,417 (2,655,199) 26,175,600 ---------- ------------ ------------ ------------ Realized and unrealized gain (loss) -- net Net realized gain (loss) on: Security transactions 3,680,690 209,199,006 -- 212,879,696 Futures contracts 115,625 877,992 -- 993,617 ---------- ------------ ------------ ------------ Net realized gain (loss) on investments 3,796,315 210,076,998 -- 213,873,313 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 5,439,579 5,638,974 -- 11,078,553 ---------- ------------ ------------ ------------ Net gain (loss) on investments and foreign currencies 9,235,894 215,715,972 -- 224,951,866 ---------- ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations $9,894,276 $243,888,389 $ (2,655,199) $251,127,466 ========== ============ ============ ============
See accompanying notes to financial statements. -------------------------------------------------------------------------------- 4 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund RiverSource Disciplined Equity Fund (Buying Fund) RiverSource Stock Fund (Selling Fund) Notes to Pro Forma Financial Statements (Unaudited as to July 31, 2005) 1. BASIS OF COMBINATION The unaudited pro forma combining statement of assets and liabilities and the statement of operations reflect the accounts of the two funds at and for the 12-month period ending July 31, 2005. These statements have been derived from financial statements prepared for the RiverSource Disciplined Equity Fund and RiverSource Stock Fund as of July 31, 2005. Each Fund is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. The primary investments of each Fund are as follows: RiverSource Disciplined Equity Fund invests primarily in equity securities of companies listed on U.S. exchanges with market capitalizations greater than $5 billion at the time of purchase. RiverSource Stock Fund invests all of its assets in Equity Portfolio, a series of Growth and Income Trust, an open-end investment company that has the same objectives as the Fund. The Portfolio invests primarily in income-producing equity securities (such as convertible securities and preferred stocks) and short-term debt instruments (such as commercial paper). The pro forma statements give effect to the proposed transfer of the assets and liabilities of RiverSource Stock Fund in exchange for Class A, B, C, I and Y shares of RiverSource Disciplined Equity Fund under U.S. generally accepted accounting principles. The pro forma statements also reflect changes needed regarding the change in structure of RiverSource Stock Fund. Finally, the pro forma statements reflect estimates for the combined RiverSource Disciplined Equity Fund based on the increased asset level of the merger and associated economies of scale, adjusted to reflect current fees. The pro forma combining statements should be read in conjunction with the historical financial statements of the funds incorporated by reference in the Statement of Additional Information. The pro forma statement of operations give effect to the proposed transaction on the historical operations of the accounting survivor, RiverSource Disciplined Equity Fund, as if the transaction had occurred at the beginning of the year presented. 2. PRO FORMA ADJUSTMENTS (a) To reflect adjustments needed regarding the change in structure of RiverSource Stock Fund from a feeder fund presentation into a reporting format comparable with the accounting survivor. (b) To reflect the increase in investment management service fee due to the Reorganization. The Performance Incentive Adjustment (PIA) for RiverSource Stock Fund was removed and a new PIA adjustment was calculated based on the RiverSource Stock Fund average net assets as of July 31, 2005 and the RiverSource Disciplined Equity Fund PIA rate. (c) To reflect the increase in administrative services fees due to the Reorganization and to include the impact of the revised administrative services agreement. (d) To reflect the decrease in custodian fees due to the Reorganization. (e) To adjust for the change in the compensation of board members due to the Reorganization. (f) To reflect the reduction in audit fees due to the Reorganization. (g) To adjust the expense reimbursement to include the impact of the agreement by RiverSource Investments, LLC and its affiliates to waive certain fees and to absorb certain expenses following the merger. (h) To adjust for closed account fees for each RiverSource Stock Fund account that will be closed on the system as a result of this merger. (i) To reflect the anticipated reduction in the transfer agent fees due to the RiverSource Disciplined Equity Fund and RiverSource Stock Fund accounts that will be combined as a result of the merger. -------------------------------------------------------------------------------- 5 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund 3. CAPITAL SHARES The pro forma net asset value per share assumes the issuance of additional Class A, Class B, Class C, Class I and Class Y shares of RiverSource Disciplined Equity Fund if the reorganization were to have taken place on July 31, 2005. The pro forma number of Class A shares outstanding of 225,833,301 consists of 221,643,964 shares assumed to be issued to Class A shareholders of the RiverSource Stock Fund, plus 4,189,337 Class A shares of the RiverSource Disciplined Equity Fund outstanding as of July 31, 2005. The pro forma number of Class B shares outstanding of 19,521,619 consists of 18,119,562 shares assumed to be issued to Class B shareholders of the RiverSource Stock Fund, plus 1,402,057 Class B shares of the RiverSource Disciplined Equity Fund outstanding as of July 31, 2005. The pro forma number of Class C shares outstanding of 426,127 consists of 397,608 shares assumed to be issued to Class C shareholders of the RiverSource Stock Fund, plus 28,519 Class C shares of the RiverSource Disciplined Equity Fund outstanding as of July 31, 2005. The pro forma number of Class I shares outstanding of 16,187,649 consists of 4,035,565 shares assumed to be issued to Class I shareholders of the RiverSource Stock Fund, plus 12,152,084 Class I shares of the RiverSource Disciplined Equity Fund outstanding as of July 31, 2005. The pro forma number of Class Y shares outstanding of 52,982,639 consists of 52,977,521 shares assumed to be issued to Class Y shareholders of the RiverSource Stock Fund, plus 5,118 Class Y shares of the RiverSource Disciplined Equity Fund outstanding as of July 31, 2005. -------------------------------------------------------------------------------- 6 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund Combined Investments in Securities RiverSource Disciplined Equity Fund July 31, 2005 (Unaudited) (Percentages represent value of investments compared to net assets)
Common Stocks (98.6%) Issuer Shares Shares Shares Value(a) Value(a) Value(a) RiverSource RiverSource Disciplined Equity Pro forma Disciplined Equity Pro forma Equity Fund Portfolio Combined Equity Fund Portfolio Combined Aerospace & Defense (2.6%) Boeing -- 200,000 200,000 $-- $13,202,000 $13,202,000 General Dynamics -- 2,866 2,866 -- 330,135 330,135 Honeywell Intl -- 220,000 220,000 -- 8,641,600 8,641,600 Lockheed Martin 3,104 176,732 179,836 193,690 11,028,077 11,221,767 Rockwell Collins 6,474 55,762 62,236 315,931 2,721,186 3,037,117 United Technologies 17,742 361,500 379,242 899,519 18,328,049 19,227,568 Total 1,409,140 54,251,047 55,660,187 Air Freight & Logistics (0.3%) FedEx 8,070 11,782 19,852 678,607 990,748 1,669,355 United Parcel Service Cl B 8,119 68,175 76,294 592,443 4,974,730 5,567,173 Total 1,271,050 5,965,478 7,236,528 Auto Components (0.1%) Dana -- 30,576 30,576 -- 480,349 480,349 Delphi -- 111,477 111,477 -- 590,828 590,828 Johnson Controls 2,710 25,635 28,345 155,662 1,472,474 1,628,136 Total 155,662 2,543,651 2,699,313 Automobiles (0.7%) Ford Motor 59,497 512,472 571,969 638,998 5,503,949 6,142,947 General Motors 19,047 151,189 170,236 701,310 5,566,779 6,268,089 Harley-Davidson 7,703 51,295 58,998 409,723 2,728,381 3,138,104 Total 1,750,031 13,799,109 15,549,140 Beverages (1.8%) Coca-Cola 54,536 480,104 534,640 2,386,495 21,009,351 23,395,846 Constellation Brands Cl A -- 74,283 74,283(b) -- 2,035,354 2,035,354 PepsiCo -- 234,777 234,777 -- 12,802,390 12,802,390 Total 2,386,495 35,847,095 38,233,590 Biotechnology (0.6%) Amgen -- 150,000 150,000(b) -- 11,962,500 11,962,500 Genzyme -- 9,841 9,841(b) -- 732,269 732,269 Gilead Sciences 8,252 -- 8,252(b) 369,772 -- 369,772 Total 369,772 12,694,769 13,064,541 Building Products (0.1%) Masco 5,949 33,875 39,824 201,731 1,148,701 1,350,432 Capital Markets (1.8%) Bear Stearns Companies 2,977 13,037 16,014 303,981 1,331,208 1,635,189 Franklin Resources 11,019 94,915 105,934 890,557 7,671,030 8,561,587 Goldman Sachs Group -- 150,000 150,000 -- 16,122,000 16,122,000 Janus Capital Group -- 64,951 64,951 -- 975,564 975,564 Lehman Brothers Holdings 6,573 61,553 68,126 691,019 6,471,067 7,162,086 Merrill Lynch & Co 3,855 34,591 38,446 226,597 2,033,259 2,259,856 Morgan Stanley 2,267 11,877 14,144 120,264 630,075 750,339 Total 2,232,418 35,234,203 37,466,621
See accompanying notes to combined investments in securities. -------------------------------------------------------------------------------- 7 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued) Issuer Shares Shares Shares Value(a) Value(a) Value(a) RiverSource RiverSource Disciplined Equity Pro forma Disciplined Equity Pro forma Equity Fund Portfolio Combined Equity Fund Portfolio Combined Chemicals (0.5%) Dow Chemical 11,766 118,658 130,424 $564,180 $5,689,651 $6,253,831 Monsanto 7,987 68,798 76,785 538,084 4,634,921 5,173,005 Total 1,102,264 10,324,572 11,426,836 Commercial Banks (2.4%) Bank of America 15,071 292,510 307,581 657,096 12,753,436 13,410,532 Comerica 3,962 21,570 25,532 242,078 1,317,927 1,560,005 KeyCorp 5,983 43,553 49,536 204,858 1,491,255 1,696,113 Natl City 18,078 172,364 190,442 667,258 6,361,955 7,029,213 PNC Financial Services Group 10,111 98,614 108,725 554,285 5,406,019 5,960,304 Regions Financial 1,911 -- 1,911 64,286 -- 64,286 US Bancorp -- 220,000 220,000 -- 6,613,200 6,613,200 Wachovia 2,649 27,465 30,114 133,457 1,383,687 1,517,144 Wells Fargo & Co -- 220,000 220,000 -- 13,494,800 13,494,800 Total 2,523,318 48,822,279 51,345,597 Commercial Services & Supplies (--%) Equifax -- 27,434 27,434 -- 998,598 998,598 Communications Equipment (1.4%) Cisco Systems -- 1,000,000 1,000,000(b) -- 19,150,000 19,150,000 Comverse Technology 9,884 71,637 81,521(b) 249,966 1,811,700 2,061,666 Motorola -- 360,000 360,000 -- 7,624,800 7,624,800 Tellabs 11,862 102,379 114,241(b) 115,299 995,124 1,110,423 Total 365,265 29,581,624 29,946,889 Computers & Peripherals (3.6%) Apple Computer 29,129 222,057 251,186(b) 1,242,353 9,470,731 10,713,084 Dell -- 360,000 360,000(b) -- 14,569,200 14,569,200 EMC -- 580,000 580,000(b) -- 7,940,200 7,940,200 Gateway 29,177 251,317 280,494(b) 116,124 1,000,242 1,116,366 Hewlett-Packard 21,708 700,000 721,708 534,451 17,233,999 17,768,450 Intl Business Machines -- 150,000 150,000 -- 12,519,000 12,519,000 Lexmark Intl Cl A 1,816 15,641 17,457(b) 113,863 980,691 1,094,554 NCR 10,017 72,884 82,901(b) 347,690 2,529,804 2,877,494 Network Appliance 12,591 107,784 120,375(b) 321,196 2,749,570 3,070,766 QLogic 19,572 145,178 164,750(b) 607,711 4,507,777 5,115,488 Total 3,283,388 73,501,214 76,784,602 Construction & Engineering (--%) Fluor -- 13,516 13,516 -- 862,321 862,321 Consumer Finance (0.8%) MBNA 14,538 79,188 93,726 365,776 1,992,370 2,358,146 Providian Financial 7,465 52,700 60,165(b) 141,089 996,030 1,137,119 SLM 2,933 245,259 248,192 151,020 12,628,386 12,779,406 Total 657,885 15,616,786 16,274,671 Distributors (0.1%) Genuine Parts 4,854 28,762 33,616 222,265 1,317,012 1,539,277 Diversified Financial Services (2.7%) CIT Group 4,009 34,530 38,539 176,957 1,524,154 1,701,111 Citigroup 65,559 784,686 850,245 2,851,817 34,133,841 36,985,658 iShares MSCI EAFE Index Fund 56,400 37,800 94,200 3,042,216 2,038,932 5,081,148 Moody's -- 20,581 20,581 -- 973,687 973,687 Technology Select Sector Index Fund 23,600 587,000 610,600 497,016 12,362,220 12,859,236 Total 6,568,006 51,032,834 57,600,840
See accompanying notes to combined investments in securities. -------------------------------------------------------------------------------- 8 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued) Issuer Shares Shares Shares Value(a) Value(a) Value(a) RiverSource RiverSource Disciplined Equity Pro forma Disciplined Equity Pro forma Equity Fund Portfolio Combined Equity Fund Portfolio Combined Diversified Telecommunication Services (4.8%) AT&T 40,392 386,118 426,510 $799,762 $7,645,136 $8,444,898 BellSouth 84,339 740,435 824,774 2,327,756 20,436,006 22,763,762 SBC Communications 118,859 1,023,783 1,142,642 2,906,102 25,031,494 27,937,596 Sprint 45,198 656,354 701,552 1,215,826 17,655,923 18,871,749 Verizon Communications 69,594 599,438 669,032 2,382,202 20,518,763 22,900,965 Total 9,631,648 91,287,322 100,918,970 Electric Utilities (3.6%) Allegheny Energy 7,515 49,289 56,804(b) 214,178 1,404,737 1,618,915 American Electric Power 8,425 61,522 69,947(b) 326,048 2,380,901 2,706,949 CenterPoint Energy 9,851 81,337 91,188 135,353 1,117,570 1,252,923 DTE Energy -- 7,313 7,313 -- 343,711 343,711 Edison Intl 4,888 31,102 35,990 199,821 1,271,450 1,471,271 Exelon 29,458 253,735 283,193 1,576,591 13,579,897 15,156,488 FPL Group 5,382 51,979 57,361 232,072 2,241,334 2,473,406 PG&E 10,993 108,523 119,516 413,667 4,083,720 4,497,387 PPL -- 220,000 220,000 -- 13,547,600 13,547,600 Southern -- 360,000 360,000 -- 12,596,400 12,596,400 TECO Energy 9,536 99,311 108,847 180,803 1,882,937 2,063,740 TXU 11,741 181,955 193,696 1,017,240 15,764,582 16,781,822 Xcel Energy -- 51,961 51,961 -- 1,008,563 1,008,563 Total 4,295,773 71,223,402 75,519,175 Electrical Equipment (0.6%) American Power Conversion 6,587 72,997 79,584 185,161 2,051,946 2,237,107 Rockwell Automation 7,068 195,320 202,388 364,072 10,060,933 10,425,005 Total 549,233 12,112,879 12,662,112 Electronic Equipment & Instruments (0.2%) Jabil Circuit 3,704 31,906 35,610(b) 115,528 995,148 1,110,676 Sanminia-SCI -- 787,345 787,345(b) -- 3,763,509 3,763,509 Total 115,528 4,758,657 4,874,185 Energy Equipment & Services (2.2%) Baker Hughes -- 290,000 290,000 -- 16,396,600 16,396,600 Halliburton 13,539 218,157 231,696 758,861 12,227,700 12,986,561 Noble 5,789 46,055 51,844 388,905 3,093,975 3,482,880 Schlumberger -- 70,000 70,000 -- 5,861,800 5,861,800 Transocean 13,356 123,396 136,752(b) 753,679 6,963,236 7,716,915 Total 1,901,445 44,543,311 46,444,756 Food & Staples Retailing (3.6%) Albertson's 9,051 82,337 91,388 192,877 1,754,601 1,947,478 Costco Wholesale -- 290,000 290,000 -- 13,331,300 13,331,300 CVS -- 492,478 492,478 -- 15,281,592 15,281,592 Kroger 18,677 183,056 201,733(b) 370,738 3,633,662 4,004,400 Safeway 14,936 129,805 144,741 362,945 3,154,262 3,517,207 SYSCO 4,436 42,579 47,015 159,962 1,535,399 1,695,361 Wal-Mart Stores 58,504 653,918 712,422 2,887,173 32,270,853 35,158,026 Total 3,973,695 70,961,669 74,935,364 Food Products (1.4%) Archer-Daniels-Midland 28,840 248,411 277,251 661,590 5,698,548 6,360,138 Hershey -- 23,734 23,734 -- 1,515,891 1,515,891 Kellogg -- 220,000 220,000 -- 9,968,200 9,968,200 WM Wrigley Jr -- 152,640 152,640 -- 10,858,810 10,858,810 Total 661,590 28,041,449 28,703,039
See accompanying notes to combined investments in securities. -------------------------------------------------------------------------------- 9 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued) Issuer Shares Shares Shares Value(a) Value(a) Value(a) RiverSource RiverSource Disciplined Equity Pro forma Disciplined Equity Pro forma Equity Fund Portfolio Combined Equity Fund Portfolio Combined Health Care Equipment & Supplies (2.1%) Becton, Dickinson & Co 3,982 24,737 28,719 $220,483 $1,369,688 $1,590,171 Biomet 2,427 -- 2,427 92,542 -- 92,542 Guidant -- 20,378 20,378 -- 1,402,006 1,402,006 Medtronic 10,087 461,088 471,175 544,093 24,871,087 25,415,180 Stryker -- 290,000 290,000 -- 15,686,100 15,686,100 Zimmer Holdings 2,417 -- 2,417(b) 199,064 -- 199,064 Total 1,056,182 43,328,881 44,385,063 Health Care Providers & Services (5.9%) Aetna 10,729 245,058 255,787 830,425 18,967,489 19,797,914 Cardinal Health 9,078 78,195 87,273 540,867 4,658,858 5,199,725 Caremark Rx 6,863 59,112 65,975(b) 305,953 2,635,213 2,941,166 CIGNA 9,990 86,047 96,037 1,066,433 9,185,517 10,251,950 Express Scripts -- 20,594 20,594(b) -- 1,077,066 1,077,066 HCA 9,971 85,883 95,854 491,072 4,229,738 4,720,810 Humana 8,427 78,257 86,684(b) 335,816 3,118,541 3,454,357 McKesson -- 39,892 39,892 -- 1,795,140 1,795,140 Medco Health Solutions 2,805 24,159 26,964(b) 135,874 1,170,262 1,306,136 Quest Diagnostics -- 39,405 39,405 -- 2,023,053 2,023,053 Tenet Healthcare 11,188 69,745 80,933(b) 135,822 846,704 982,526 UnitedHealth Group 55,138 1,134,922 1,190,060 2,883,716 59,356,421 62,240,137 WellPoint 13,851 119,305 133,156(b) 979,820 8,439,636 9,419,456 Total 7,705,798 117,503,638 125,209,436 Hotels, Restaurants & Leisure (3.0%) Carnival Unit -- 220,000 220,000 -- 11,528,000 11,528,000 Darden Restaurants 4,418 50,646 55,064 153,305 1,757,416 1,910,721 Harrrah's Entertainment 8,056 219,387 227,443 634,329 17,274,532 17,908,861 Marriott Intl Cl A 7,230 343,387 350,617 495,038 23,511,708 24,006,746 Starbucks 5,346 30,445 35,791(b) 280,932 1,599,885 1,880,817 Starwood Hotels & Resorts Worldwide Unit 6,800 18,082 24,882 430,576 1,144,952 1,575,528 Wendy's Intl -- 22,198 22,198 -- 1,147,637 1,147,637 Yum! Brands 6,453 55,583 62,036 337,815 2,909,770 3,247,585 Total 2,331,995 60,873,900 63,205,895 Household Durables (1.2%) Black & Decker 2,610 4,818 7,428 235,709 435,114 670,823 Centex 7,611 73,255 80,866 563,062 5,419,405 5,982,467 DR Horton 22,231 191,481 213,712 913,249 7,866,039 8,779,288 KB HOME 5,316 53,290 58,606 435,434 4,364,984 4,800,418 Pulte Homes 3,146 29,157 32,303 294,529 2,729,678 3,024,207 Stanley Works -- 4,742 4,742 -- 232,026 232,026 Whirlpool 1,247 21,968 23,215 99,735 1,757,001 1,856,736 Total 2,541,718 22,804,247 25,345,965 Household Products (1.6%) Kimberly-Clark 3,802 38,134 41,936 242,416 2,431,424 2,673,840 Procter & Gamble -- 580,000 580,000 -- 32,265,400 32,265,400 Total 242,416 34,696,824 34,939,240 Industrial Conglomerates (2.7%) 3M 14,197 122,286 136,483 1,064,775 9,171,450 10,236,225 General Electric -- 1,000,000 1,000,000 -- 34,500,000 34,500,000 Textron 3,415 166,504 169,919 253,291 12,349,602 12,602,893 Total 1,318,066 56,021,052 57,339,118
See accompanying notes to combined investments in securities. -------------------------------------------------------------------------------- 10 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued) Issuer Shares Shares Shares Value(a) Value(a) Value(a) RiverSource RiverSource Disciplined Equity Pro forma Disciplined Equity Pro forma Equity Fund Portfolio Combined Equity Fund Portfolio Combined Insurance (3.3%) ACE -- 12,982 12,982(c) $-- $599,898 $599,898 Allstate 15,708 354,851 370,559 962,272 21,738,172 22,700,444 Ambac Financial Group 4,537 43,792 48,329 325,938 3,146,017 3,471,955 Aon 11,958 88,882 100,840 304,212 2,261,158 2,565,370 Chubb -- 74,009 74,009 -- 6,573,479 6,573,479 Jefferson-Pilot 2,029 14,239 16,268 101,795 714,371 816,166 Lincoln Natl 6,281 62,101 68,382 303,372 2,999,478 3,302,850 Loews 4,520 38,931 43,451 378,008 3,255,800 3,633,808 Marsh & McLennan Companies 9,979 95,414 105,393 289,092 2,764,144 3,053,236 MBIA 5,309 53,750 59,059 322,469 3,264,775 3,587,244 Prudential Financial 11,757 106,840 118,597 786,543 7,147,596 7,934,139 Safeco 1,299 18,055 19,354 71,367 991,942 1,063,309 St. Paul Travelers Companies -- 150,000 150,000 -- 6,603,000 6,603,000 Torchmark 3,597 22,084 25,681 188,015 1,154,331 1,342,346 UnumProvident 9,896 76,942 86,838 189,508 1,473,439 1,662,947 Total 4,222,591 64,687,600 68,910,191 Internet & Catalog Retail (0.6%) eBay 12,445 315,571 328,016(b) 519,952 13,184,556 13,704,508 Internet Software & Services (0.6%) Google Cl A -- 25,000 25,000(b) -- 7,194,000 7,194,000 Yahoo! -- 140,000 140,000(b) -- 4,667,600 4,667,600 Total -- 11,861,600 11,861,600 IT Services (0.6%) Affiliated Computer Services Cl A 2,305 19,858 22,163(b) 115,181 992,304 1,107,485 Automatic Data Processing 5,141 45,453 50,594 228,311 2,018,568 2,246,879 Computer Sciences 2,552 21,983 24,535(b) 116,831 1,006,382 1,123,213 Convergys 11,645 108,755 120,400(b) 169,435 1,582,385 1,751,820 Electronic Data Systems 19,225 139,532 158,757 395,457 2,870,173 3,265,630 Sabre Holdings Cl A 6,183 53,261 59,444 118,714 1,022,611 1,141,325 SunGard 3,167 27,877 31,044(b) 113,664 1,000,506 1,114,170 Unisys 17,838 153,647 171,485(b) 115,412 994,096 1,109,508 Total 1,373,005 11,487,025 12,860,030 Leisure Equipment & Products (0.3%) Eastman Kodak 15,799 115,450 131,249 422,466 3,087,133 3,509,599 Mattel 8,419 120,252 128,671 157,014 2,242,700 2,399,714 Total 579,480 5,329,833 5,909,313 Machinery (2.2%) Caterpillar 13,374 663,574 676,948 720,993 35,773,274 36,494,267 Ingersoll-Rand Cl A -- 12,923 12,923(c) -- 1,010,191 1,010,191 ITT Inds -- 71,487 71,487 -- 7,606,217 7,606,217 PACCAR 4,329 14,299 18,628 312,640 1,032,674 1,345,314 Total 1,033,633 45,422,356 46,455,989 Media (0.8%) Comcast Special Cl A -- 290,000 290,000(b) -- 8,700,000 8,700,000 Walt Disney 13,238 341,048 354,286 339,422 8,744,471 9,083,893 Total 339,422 17,444,471 17,783,893 Metals & Mining (1.1%) Freeport-McMoRan Copper & Gold Cl B 4,687 22,697 27,384 188,792 914,235 1,103,027 Nucor 4,197 10,550 14,747 232,724 584,998 817,722 Peabody Energy -- 150,000 150,000 -- 9,861,000 9,861,000 Phelps Dodge 3,550 94,853 98,403 377,898 10,097,102 10,475,000 Total 799,414 21,457,335 22,256,749
See accompanying notes to combined investments in securities. -------------------------------------------------------------------------------- 11 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued) Issuer Shares Shares Shares Value(a) Value(a) Value(a) RiverSource RiverSource Disciplined Equity Pro forma Disciplined Equity Pro forma Equity Fund Portfolio Combined Equity Fund Portfolio Combined Multi-Utilities & Unregulated Power (1.3%) AES 31,821 316,844 348,665(b) $510,727 $5,085,346 $5,596,073 CMS Energy 10,719 111,348 122,067(b) 169,789 1,763,752 1,933,541 Constellation Energy Group -- 23,442 23,442 -- 1,411,443 1,411,443 Dominion Resources -- 22,059 22,059 -- 1,629,278 1,629,278 Duke Energy 24,072 286,053 310,125 711,087 8,450,006 9,161,093 Public Service Enterprise Group 7,731 82,300 90,031 497,103 5,291,890 5,788,993 Sempra Energy 2,652 35,742 38,394 112,710 1,519,035 1,631,745 Total 2,001,416 25,150,750 27,152,166 Multiline Retail (3.2%) Dollar General 7,198 81,264 88,462 146,263 1,651,284 1,797,547 Family Dollar Stores -- 38,890 38,890 -- 1,003,362 1,003,362 Federated Dept Stores 5,958 51,315 57,273 452,033 3,893,269 4,345,302 Kohl's -- 150,000 150,000(b) -- 8,452,500 8,452,500 May Dept Stores 12,818 124,726 137,544 526,179 5,120,002 5,646,181 Nordstrom 9,150 376,390 385,540 338,642 13,930,194 14,268,836 Sears Holdings 4,466 9,929 14,395(b) 688,791 1,531,411 2,220,202 Target -- 510,000 510,000 -- 29,962,501 29,962,501 Total 2,151,908 65,544,523 67,696,431 Oil & Gas (9.6%) Amerada Hess 2,404 9,921 12,325 283,335 1,169,289 1,452,624 Anadarko Petroleum 5,403 28,997 34,400 477,355 2,561,885 3,039,240 Apache 2,021 20,376 22,397 138,236 1,393,718 1,531,954 BG Group ADR -- 290,000 290,000(c) -- 12,084,300 12,084,300 Chevron 60,101 517,671 577,772 3,486,459 30,030,095 33,516,554 ConocoPhillips 7,228 200,211 207,439 452,401 12,531,206 12,983,607 Devon Energy 19,319 147,924 167,243 1,083,603 8,297,057 9,380,660 El Paso 37,470 227,662 265,132 449,640 2,731,944 3,181,584 EnCana -- 600,000 600,000(c) -- 24,810,000 24,810,000 EOG Resources 7,649 29,258 36,907 467,354 1,787,664 2,255,018 Exxon Mobil 92,215 1,234,287 1,326,502 5,417,630 72,514,361 77,931,991 Kerr-McGee -- 14,959 14,959 -- 1,199,861 1,199,861 Kinder Morgan 4,504 38,796 43,300 400,225 3,447,413 3,847,638 Marathon Oil 2,863 31,607 34,470 167,085 1,844,585 2,011,670 Occidental Petroleum -- 25,800 25,800 -- 2,122,824 2,122,824 Sunoco -- 13,301 13,301 -- 1,672,335 1,672,335 Unocal 8,370 72,091 80,461 542,795 4,675,101 5,217,896 Valero Energy 6,815 47,307 54,122 564,146 3,916,073 4,480,219 Total 13,930,264 188,789,711 202,719,975 Pharmaceuticals (7.4%) Abbott Laboratories 6,212 72,778 78,990 289,666 3,393,638 3,683,304 Bristo-Myers Squibb 65,709 565,979 631,688 1,641,411 14,138,155 15,779,566 Johnson & Johnson 62,672 1,119,822 1,182,494 4,008,500 71,623,815 75,632,315 Merck & Co 81,218 699,563 780,781 2,522,631 21,728,427 24,251,058 Pfizer -- 642,764 642,764 -- 17,033,246 17,033,246 Roche Holding ADR -- 220,000 220,000(c) -- 14,995,904 14,995,904 Wyeth 10,467 82,097 92,564 478,865 3,755,938 4,234,803 Total 8,941,073 146,669,123 155,610,196 Real Estate Investment Trust (0.2%) Apartment Investment & Management Cl A -- 18,334 18,334 -- 806,696 806,696 Archstone-Smith Trust 3,635 24,478 28,113 154,488 1,040,315 1,194,803 EquityResidential -- 25,291 25,291 -- 1,021,756 1,021,756 ProLogis 3,989 22,920 26,909 181,738 1,044,236 1,225,974 Total 336,226 3,913,003 4,249,229
See accompanying notes to combined investments in securities. -------------------------------------------------------------------------------- 12 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued) Issuer Shares Shares Shares Value(a) Value(a) Value(a) RiverSource RiverSource Disciplined Equity Pro forma Disciplined Equity Pro forma Equity Fund Portfolio Combined Equity Fund Portfolio Combined Road & Rail (1.4%) Burlington Northern Santa Fe 16,941 130,240 147,181 $919,049 $7,065,520 $7,984,569 CSX 6,339 357,916 364,255 288,678 16,299,495 16,588,173 Norfolk Southern 15,036 74,244 89,280 559,490 2,762,619 3,322,109 Union Pacific -- 10,324 10,324 -- 725,880 725,880 Total 1,767,217 26,853,514 28,620,731 Semiconductors & Semiconductor Equipment (1.1%) Advanced Micro Devices 13,354 96,742 110,096(b) 268,148 1,942,579 2,210,727 Applied Micro Circuits -- 361,162 361,162(b) -- 1,087,098 1,087,098 Intel -- 614,449 614,449 -- 16,676,145 16,676,145 LSI Logic 11,706 100,831 112,537(b) 114,251 984,111 1,098,362 NVIDIA 11,473 82,546 94,019(b) 310,459 2,233,695 2,544,154 Total 692,858 22,923,628 23,616,486 Software (3.4%) Adobe Systems 17,128 96,834 113,962 507,674 2,870,160 3,377,834 Autodesk 9,357 41,982 51,339 319,916 1,435,365 1,755,281 Citrix Systems -- 41,974 41,974(b) -- 1,000,240 1,000,240 Compuware 28,997 301,837 330,834(b) 244,445 2,544,486 2,788,931 Microsoft 69,193 1,470,039 1,539,232 1,772,033 37,647,699 39,419,732 Oracle 113,833 867,629 981,462(b) 1,545,852 11,782,402 13,328,254 SAP ADR -- 200,000 200,000(c) -- 8,564,000 8,564,000 Symantec 11,891 71,785 83,676(b) 261,245 1,577,116 1,838,361 Total 4,651,165 67,421,468 72,072,633 Specialty Retail (2.8%) AutoNation -- 46,675 46,675(b) -- 1,007,713 1,007,713 Best Buy 4,212 130,053 134,265 322,639 9,962,060 10,284,699 Home Depot 46,869 743,978 790,847 2,039,271 32,370,483 34,409,754 Lowe's Companies -- 150,000 150,000 -- 9,933,000 9,933,000 Office Depot -- 46,048 46,048(b) -- 1,306,842 1,306,842 Staples 12,394 87,982 100,376 282,211 2,003,350 2,285,561 Total 2,644,121 56,583,448 59,227,569 Textiles, Apparel & Luxury Goods (0.3%) Coach -- 28,636 28,636(b) -- 1,005,410 1,005,410 Liz Claiborne -- 15,157 15,157 -- 630,683 630,683 Nike Cl B 4,448 47,341 51,789 372,742 3,967,175 4,339,917 VF -- 16,538 16,538 -- 976,404 976,404 Total 372,742 6,579,672 6,952,414 Thrifts & Mortgage Finance (1.8%) Countrywide Financial 6,048 55,068 61,116 217,728 1,982,448 2,200,176 Fannie Mae 31,160 268,396 299,556 1,740,598 14,992,601 16,733,199 Freddie Mac 10,326 88,943 99,269 653,429 5,628,313 6,281,742 MGIC Investment 3,110 28,521 31,631 213,284 1,955,970 2,169,254 Washington Mutual 24,008 206,790 230,798 1,019,860 8,784,439 9,804,299 Total 3,844,899 33,343,771 37,188,670 Tobacco (3.6%) Altria Group 104,032 971,495 1,075,527 6,965,982 65,051,305 72,017,287 Reynolds American -- 2,388 2,388 -- 198,944 198,944 UST 6,330 66,297 72,627 291,307 3,050,988 3,342,295 Total 7,257,289 68,301,237 75,558,526
See accompanying notes to combined investments in securities. -------------------------------------------------------------------------------- 13 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund
Common Stocks (continued) Issuer Shares Shares Shares Value(a) Value(a) Value(a) RiverSource RiverSource Disciplined Equity Pro forma Disciplined Equity Pro forma Equity Fund Portfolio Combined Equity Fund Portfolio Combined Trading Companies & Distributors (--%) WW Grainger 2,096 -- 2,096 $130,623 $-- $130,623 Wireless Telecommunication Services (0.4%) Nextel Communications Cl A 21,414 203,961 225,375(b) 745,207 7,097,843 7,843,050 Total Common Stocks (Cost: $1,907,986,283) $119,158,282 $1,961,744,991 $2,080,903,273 Short-Term Securities (2.8%) Issuer Effective Amount payable Amount payable Value(a) Value(a) Value(a) yield at maturity at maturity RiverSource RiverSource Disciplined Equity Disciplined Equity Pro forma Equity Fund Portfolio Equity Fund Portfolio Combined U.S. Government Agencies (0.8%) Federal Home Loan Bank Disc Nt 8/12/2005 3.22% $-- $10,000,000 $-- $9,987,478 $9,987,478 Federal Natl Mtge Assn Disc Nt 8/22/2005 3.28 2,600,000 -- 2,594,332 -- 2,594,332 9/7/2005 3.26 3,300,000 -- 3,288,083 -- 3,288,083 Total 5,882,415 9,987,478 15,869,893 Commercial Paper (2.0%) Amsterdam Funding 8/1/2005 3.30 -- 13,200,000 -- 13,196,370 13,196,370 CAFCO 8/1/2005 3.30 -- 13,100,000 -- 13,096,398 13,096,398 HSBC Finance 8/1/2005 3.31 1,000,000 -- 999,724 -- 999,724 Morgan Stanley 8/12/2005 3.33 -- 5,000,000 -- 4,993,525 4,993,525 Ranger Funding 8/16/2005 3.36 -- 10,000,000 -- 9,983,250 9,983,250 Total 999,724 41,269,543 42,269,267 Total Short-Term Securities (Cost: $58,144,483) $6,882,139 $51,257,021 $58,139,160 Total Investments in Securities (prior to pro forma adjustments) (Cost: $1,966,130,766)(d) $126,040,421 $2,013,002,012 $2,139,042,433 Pro forma Adjustments(e) -- (88,057) (88,057) Total Investments in Securities (after pro forma adjustments) (Cost: $1,966,006,996)(e) $126,040,421 $2,012,913,955 $2,138,954,376
See accompanying notes to combined investments in securities. -------------------------------------------------------------------------------- 14 -- AXP Growth Series, Inc. -- RiverSource Disciplined Equity Fund Notes To Combined Investments in Securities (a) Securities are valued by procedures described in Note 1 to the financial statements in the annual report. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At July 31, 2005, the value of foreign securities represented 2.9% of net assets. (d) At July 31, 2005, the approximate cost of securities for federal income tax purposes and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
RiverSource Disciplined Equity Pro forma Pro forma Equity Fund Portfolio Adjustments Combined Cost of securities for federal income tax purposes: $119,897,000 $1,846,234,000 $(124,000) $1,966,007,000 Unrealized appreciation $ 7,961,000 $ 192,545,000 $ 36,000 $ 200,542,000 Unrealized depreciation (1,818,000) (25,777,000) -- (27,595,000) ------------ -------------- --------- -------------- Net unrealized appreciation $ 6,143,000 $ 166,768,000 $ 36,000 $ 172,947,000 ------------ -------------- --------- --------------
(e) To reflect the portion of the Equity Portfolio net assets not owned by RiverSource Stock Fund. (Cost decreased $123,770). The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. S-6389-20 A (12/05) PART C. OTHER INFORMATION Item 15. Indemnification The Articles of Incorporation of the registrant provide that the Fund shall indemnify any person who was or is a party or is threatened to be made a party, by reason of the fact that she or he is or was a director, officer, employee or agent of the Fund, or is or was serving at the request of the Fund as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, to any threatened, pending or completed action, suit or proceeding, wherever brought, and the Fund may purchase liability insurance and advance legal expenses, all to the fullest extent permitted by the laws of the State of Minnesota, as now existing or hereafter amended. The By-laws of the registrant provide that present or former directors or officers of the Fund made or threatened to be made a party to or involved (including as a witness) in an actual or threatened action, suit or proceeding shall be indemnified by the Fund to the full extent authorized by the Minnesota Business Corporation Act, all as more fully set forth in the By-laws filed as an exhibit to this registration statement. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Any indemnification hereunder shall not be exclusive of any other rights of indemnification to which the directors, officers, employees or agents might otherwise be entitled. No indemnification shall be made in violation of the Investment Company Act of 1940. Item 16. Exhibits (1)(a) Articles of Incorporation, as amended November 10, 1988, filed as Exhibit 1 to Post-Effective Amendment No. 38 to Registration Statement No. 2-38355, are incorporated by reference. (1)(b) Articles of Amendment, dated June 16, 1999, filed electronically as Exhibit (a)(2) to Post-Effective Amendment No. 67 to Registration Statement No. 2-38355, are incorporated by reference. (1)(c) Articles of Amendment, dated November 14, 2002, filed electronically as Exhibit (a)(3) to Registrant's Post-Effective Amendment No. 74 to Registration Statement No. 2-38355, are incorporated by reference. (2) By-laws, as amended January 11, 2001 filed electronically as Exhibit (b) to Post-Effective Amendment No. 67 to Registration Statement No. 2-38355, are incorporated by reference. (3) Not applicable. (4) Form of Agreement and Plan of Reorganization is included herein as Exhibit A to Part A of this Registration Statement. (5) Not applicable. (6)(a) Investment Management Services Agreement, dated December 1, 2002, between Registrant, on behalf of AXP Large Cap Equity Fund and AXP Large Cap Value Fund, and American Express Financial Corporation, filed electronically as Exhibit (d)(11) to Registrant's Post-Effective Amendment No. 74 to Registration Statement No. 2-38355, is incorporated by reference. (6)(b) Investment Management Services Agreement, dated January 9, 2003, between Registrant, on behalf of AXP Quantitative Large Cap Equity Fund, and American Express Financial Corporation filed electronically as Exhibit (d)(9) to Registrant's Post-Effective Amendment No. 74 to Registration Statement No. 2-38355, is incorporated by reference. (6)(c) Investment Management Services Transfer Agreement, dated Sept. 29, 2005, between Ameriprise Financial, Inc. (fka American Express Financial Corporation) and RiverSource Investments, LLC.(1) (7) Distribution Agreement dated Oct. 1, 2005, between Registrant and Ameriprise Financial Services, Inc.(2) (8) All employees are eligible to participate in a profit sharing plan. Entry into the plan is Jan. 1 or July 1. The Registrant contributes each year an amount up to 15 percent of their annual salaries, the maximum deductible amount permitted under Section 404(a) of the Internal Revenue Code. (9)(a) Custodian Agreement dated Oct. 1, 2005, between Registrant and Ameriprise Trust Company.(3) (9)(b) Custodian Agreement between American Express Trust Company and The Bank of New York dated May 13, 1999, filed electronically as Exhibit (g)(3) to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 33 to Registration Statement No. 2-93745, filed on or about May 28, 1999 is incorporated by reference. (9)(c) Custodian Agreement First Amendment between American Express Trust Company and The Bank of New York, dated December 1, 2000, filed electronically as Exhibit (g)(4) to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 37 to Registration Statement No. 2-93745, filed on or about May 28, 2002 is incorporated by reference. (9)(d) Custodian Agreement Second Amendment between American Express Trust Company and The Bank of New York, dated June 7, 2001, filed electronically as Exhibit (g)(5) to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 37 to Registration Statement No. 2-93745, filed on or about May 28, 2002 is incorporated by reference. (9)(e) Custodian Agreement Amendment between American Express Trust Company and The Bank of New York, dated January 31, 2002, filed electronically as Exhibit (g)(6) to AXP Precious Metals Fund, Inc. Post-Effective Amendment No. 37 to Registration Statement No. 2-93745, filed on or about May 28, 2002 is incorporated by reference. (9)(f) Custodian Agreement Amendment between American Express Trust Company and The Bank of New York, dated April 29, 2003, filed electronically as Exhibit (g)(8) to Registrant's Post-Effective Amendment No. 7 to Registration Statement No. 333-57852, filed on or about May 22, 2003, is incorporated by reference. (10)(a) Plan and Agreement of Distribution (for Class A and Class B Shares), dated Oct. 1, 2005, between Registrant and Ameriprise Financial Services, Inc.(8) (10)(b) Plan and Agreement of Distribution (for Class C Shares), dated Oct. 1, 2005, between Registrant and Ameriprise Financial Services, Inc.(9) (10)(c) Amended 18f-3 Plan, dated as of May 26, 2004, filed electronically on or about July 29, 2004 as Exhibit (n) to AXP Discovery Series, Inc. Post-Effective Amendment No. 49 to Registration Statement No. 2-72174 is incorporated by reference. (11) Opinion and consent of counsel as to the legality of the securities being registered filed electronically on or about Oct. 14, 2005 as Exhibit (11) to Registration Statement No. 333-129013 is incorporated by reference. (12) Tax opinion to be filed by amendment. (13)(a) Administrative Services Agreement, dated Oct. 1, 2005, between Registrant and Ameriprise Financial, Inc. (4) (13)(b) Class Y Shareholder Service Agreement, dated Oct. 1, 2005, between Registrant and Ameriprise Financial Services, Inc. (5) (13)(c) Transfer Agency Agreement, dated Oct. 1, 2005, between Registrant and RiverSource Service Corporation. (6) (13)(d) License Agreement, dated Oct. 1, 2005, between Ameriprise Financial Inc. and the RiverSource funds.(7) (13)(e) License Agreement, dated June 17, 1999, between American Express Funds and American Express Company filed electronically on or about Sept. 23, 1999 as Exhibit (h)(4) to AXP Stock Fund, Inc.'s Post-Effective Amendment No. 98 to Registration Statement No. 2-11358, is incorporated by reference. (13)(f) Addendum to Schedule A and Schedule B of the License Agreement between the American Express Funds and American Express Company, dated June 23, 2004, filed electronically on or about June 28, 2004 as Exhibit (h)(2) to AXP Variable Portfolio - Select Series, Inc. Pre-Effective Amendment No. 1 to Registration Statement No. 333-113780 is incorporated by reference. (13)(g) License Agreement, dated Oct. 1, 2005, between Ameriprise Financial, Inc. and AXP Dimensions Series, Inc., AXP Growth Series, Inc. and AXP Variable Portfolio - Investment Series, Inc. filed electronically on or about Oct. 27, 2005 as Exhibit (h)(9) to AXP Variable Portfolio - Investment Series, Inc. Post-Effective Amendment No. 57 to Registration Statement No. 2-73115 is incorporated by reference. (13)(h) Master Fee Waiver Agreement, dated Dec. 1, 2005, between Ameriprise Financial, Inc., RiverSource Investments, LLC, Ameriprise Financial Services, Inc. and RiverSource Funds filed electronically on or about Dec. 5, 2005 as Exhibit (13)(g) to AXP Tax-Exempt Series, Inc. Pre-Effective Amendment No. 1 to Registration Statement No. 333-128983 is incorporated by reference. (14)(a) Consent of Independent Registered Public Accounting Firm is filed electronically herewith. (14)(b) Consent of Independent Registered Public Accounting Firm is filed electronically herewith. (15) Financial Statements: Not applicable. (16)(a) Directors'/Trustees' Power of Attorney to sign this Registration Statement and its amendments, dated Nov. 11, 2004, filed electronically on or about Oct. 14, 2005 as Exhibit (16)(a) to Registration Statement No. 333-129013. (16)(b) Trustees' Power of Attorney to sign to this Registration Statement and its amendments, dated Nov. 11, 2004, filed electronically on or about Oct. 14, 2005 as Exhibit (16)(b) to Registration Statement No. 333-129013. (17)(a) Code of Ethics adopted under Rule 17j-1 for Registrant filed electronically on or about March 28, 2005 as Exhibit (p)(1) to AXP Selected Series, Inc.'s Post-Effective Amendment No. 42 to Registration Statement No. 2-93745 is incorporated by reference. (17)(b) Code of Ethics adopted under Rule 17j-1 for Registrant's investment adviser and principal underwriter, dated Oct. 26, 2005, filed electronically on or about Nov. 22, 2005 as Exhibit (p)(2) to AXP Equity Series, Inc. Post-Effective Amendment No. 100 to Registration Statement No. 2-13188 is incorporated by reference. (17)(c) Prospectus, dated Oct. 17, 2005, for RiverSource New Dimensions Fund filed electronically as Exhibit (17)(c) to Registration Statement No. 333-129013. (17)(d) Prospectus, dated Nov. 29, 2005, for RiverSource Stock Fund is filed electronically herewith. (17)(e) Prospectus, dated Oct. 3, 2005, for RiverSource Large Cap Equity Fund filed electronically as Exhibit (17)(e) to Registration Statement No. 333-129013. (17)(f) Prospectus, dated Oct. 3, 2005, for RiverSource Disciplined Equity Fund filed electronically as Exhibit (17)(f) to Registration Statement No. 333-129013. (17)(g) Statement of Additional Information, dated Nov. 29, 2005, for RiverSource New Dimensions Fund, for RiverSource Stock Fund, for RiverSource Large Cap Equity Fund and for RiverSource Disciplined Equity Fund is filed electronically herewith. (17)(h) Annual Report for the period ended July 31, 2005 for RiverSource New Dimensions Fund is filed electronically herewith. (17)(i) Annual Report for the period ended July 31, 2005 for RiverSource Large Cap Equity Fund is filed electronically herewith. (17)(j) Annual Report for the period ended July 31, 2005 for RiverSource Disciplined Equity Fund is filed electronically herewith. (17)(k) Annual Report for the period ended Sept. 30, 2005 for RiverSource Stock Fund is filed electronically herewith. -------------------- (1) Incorporated by reference to Exhibit (d)(3) of AXP Fixed Income Series, Inc. Post-Effective Amendment No. 59 to Registration Statement No. 2-51586 filed on or about Oct. 27, 2005. (2) Incorporated by reference to Exhibit (e) of AXP Fixed Income Series, Inc. Post-Effective Amendment No. 59 to Registration Statement No. 2-51586 filed on or about Oct. 27, 2005. (3) Incorporated by reference to Exhibit (g)(1) of AXP Variable Portfolio - Investment Series, Inc. Post-Effective Amendment No. 57 to Registration Statement No. 2-73115 filed on or about Oct. 27, 2005. (4) Incorporated by reference to Exhibit (h)(1) of AXP Fixed Income Series, Inc. Post-Effective Amendment No. 59 to Registration Statement No. 2-51586 filed on or about Oct. 27, 2005. (5) Incorporated by reference to Exhibit (h)(4) of AXP Fixed Income Series, Inc. Post-Effective Amendment No. 59 to Registration Statement No. 2-51586 filed on or about Oct. 27, 2005. (6) Incorporated by reference to Exhibit (h)(6) of AXP Fixed Income Series, Inc. Post-Effective Amendment No. 59 to Registration Statement No. 2-51586 filed on or about Oct. 27, 2005. (7) Incorporated by reference to Exhibit (h)(7) of AXP Fixed Income Series, Inc. Post-Effective Amendment No. 59 to Registration Statement No. 2-51586 filed on or about Oct. 27, 2005. (8) Incorporated by reference to Exhibit (m)(1) of AXP Fixed Income Series, Inc. Post-Effective Amendment No. 59 to Registration Statement No. 2-51586 filed on or about Oct. 27, 2005. (9) Incorporated by reference to Exhibit (m)(2) of AXP Fixed Income Series, Inc. Post-Effective Amendment No. 59 to Registration Statement No. 2-51586 filed on or about Oct. 27, 2005. Item 17. Undertakings. (1) The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. (3) The Registrant undertakes to file by Post-Effective Amendment an Opinion of Counsel supporting the tax consequences of the proposed reorganization within a reasonable time after receipt of such opinion. SIGNATURES As required by the Securities Act of 1933, as amended, this Amendment to the Registration Statement has been signed on behalf of the Registrant, in the city of Minneapolis, and State of Minnesota on the 5th day of Dec., 2005. AXP GROWTH SERIES, INC. By /s/ Paula R. Meyer --------------------- Paula R. Meyer, President By /s/ Jeffrey P. Fox ------------------ Jeffrey P. Fox, Treasurer As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on the 5th day of Dec., 2005. Signature Capacity /s/ Arne H. Carlson* Chair of the Board --------------------- Arne H. Carlson /s/ Patricia M. Flynn* Director ------------------------ Patricia M. Flynn /s/ Anne P. Jones* Director ------------------- Anne P. Jones /s/ Stephen R. Lewis, Jr.* Director ----------------------------- Stephen R. Lewis, Jr. /s/ Catherine James Paglia* Director ----------------------------- Catherine James Paglia /s/ Alan K. Simpson* Director --------------------- Alan K. Simpson /s/ Alison Taunton-Rigby* Director --------------------------- Alison Taunton-Rigby /s/ William F. Truscott* Director ------------------------- William F. Truscott * Signed pursuant to Directors' Power of Attorney dated Nov. 11, 2004, filed electronically as Exhibit (16)(a) to Registration Statement No. 333-129013, by: /s/ Leslie L. Ogg --------------------- Leslie L. Ogg SIGNATURES As required by the Securities Act of 1933, as amended, this Amendment to the Registration Statement has been signed on behalf of the Registrant, in the city of Minneapolis, and State of Minnesota on the 5th day of Dec., 2005. GROWTH TRUST By /s/ Paula R. Meyer --------------------- Paula R. Meyer, President By /s/ Jeffrey P. Fox ------------------ Jeffrey P. Fox, Treasurer As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on the 5th day of Dec., 2005. Signature Capacity /s/ Arne H. Carlson* Chair of the Board --------------------- Arne H. Carlson /s/ Patricia M. Flynn* Director ------------------------ Patricia M. Flynn /s/ Anne P. Jones* Director ------------------- Anne P. Jones /s/ Stephen R. Lewis, Jr.* Director ----------------------------- Stephen R. Lewis, Jr. /s/ Catherine James Paglia* Director ----------------------------- Catherine James Paglia /s/ Alan K. Simpson* Director --------------------- Alan K. Simpson /s/ Alison Taunton-Rigby* Director --------------------------- Alison Taunton-Rigby /s/ William F. Truscott* Director ------------------------- William F. Truscott * Signed pursuant to Trustees' Power of Attorney dated Nov. 11, 2004, filed electronically as Exhibit (16)(b) to Registration Statement No. 333-129013, by: /s/ Leslie L. Ogg --------------------- Leslie L. Ogg