Q&A for clients of The Reserve Funds

The purpose of this Q&A is to provide you with updated information on The Reserve situation. For a more detailed version of this document, Ameriprise clients may log in to My Financial Accounts. Please check back often for new updates as this situation continues to evolve. You can also contact your financial advisor or client service at (800) 862-7919.

Background

• The Reserve is an independent money market fund firm based in New York. The Reserve has relationships with many of the nation's leading corporations, endowments, pensions, municipalities and hedge funds, including over 400 financial services firms and over 30% of the Fortune 100 companies.
• The Reserve announced on Tuesday, Sept. 16, that it had reduced the net asset value of one of its funds, Reserve Primary, to less than one dollar ($.97) per share. You may have seen this event referenced in the media as "breaking the buck." All other Reserve funds that Ameriprise Financial offered remain priced at $1.00 NAV per share.
• On Wednesday, Sept. 17, The Reserve closed all Reserve funds to new deposits and stopped honoring redemption requests.
• The Reserve filed for a redemption extension beyond the normal 7 day hold period for the Primary and US Government Funds, which the SEC granted on September 22.
• On Monday, Sept. 29, The Reserve announced that a partial redemption from the Reserve Primary Fund is planned for mid-October.

Actions Taken By Ameriprise Financial on Behalf of our Clients

• Announced Sept. 24: The Reserve reported a net asset value (NAV) for The Primary Fund of $0.97 per share on September 16. Ameriprise Financial will provide up to $33 million of its own capital to mitigate client losses up to 3 cents per share should clients receive less than $1.00 per share when the fund is liquidated. Ameriprise Financial is taking this extraordinary action in recognition of the unprecedented nature of this event and the prospect that this situation will not be covered by the proposed U.S. Treasury money market guarantee program. Read the press release.
• On Thursday, Sept. 18, Ameriprise Financial submitted a request to redeem all client assets currently held in any Reserve fund offered by Ameriprise Financial to secure existing client assets.
• Because The Reserve stopped accepting new money or honoring redemptions, these funds could not serve as a sweep account. Therefore, on Thursday, Sept. 18, the Reserve Primary Fund was moved from a sweep arrangement to a security position in brokerage accounts, similar to the way other mutual funds are held.
• The Reserve US Government fund was moved to a security position on Friday Sept 19. All other Reserve fund sweep positions were moved to a security position on Monday Sept. 22.
• We took these steps to enable the set up of a new sweep account since The Reserve funds can no longer operate as sweep accounts.
• Currently, we are sweeping new money into Ameriprise Cash, which is covered by SIPC up to $100,000 per individual. Before the end of the year, we will change the sweep account for all new money coming into your account from Ameriprise Cash to the Ameriprise^® Insured Money Market Account (AIMMA). Your account may have already been changed at your request. AIMMA is a multi-bank sweep deposit product offering FDIC insurance up to $1 million per depositor in non-qualified accounts and $2.5 million per depositor in qualified accounts. There are some account types, such as business accounts, for which AIMMA is not permitted by banking rules as a sweep account. Ameriprise Cash will continue to be the sweep option for those accounts for the near future.
• On Friday, September 19, Ameriprise Financial, Inc. announced that its wholly owned subsidiaries, Ameriprise Financial Services, Inc. and Securities America Inc., had filed suit in the United States District Court, District of Minnesota, accusing Reserve Management Co. of misconduct in its administration of the Primary Fund. Ameriprise Financial asked the court to require Reserve to liquidate the Primary Fund in a fair and equitable manner that treats all investors equally.

Top Questions

About your Reserve fund holdings

• How will the partial redemption of the Reserve Primary Fund be handled? New — Sept. 30
• How do I know if I have a money market fund with The Reserve?
• When will the issue with The Reserve be resolved, and when will the money held with The Reserve be available to me?
• Will Ameriprise Financial help me access my cash, since The Reserve is not honoring redemption requests?
• Did the request to redeem my holdings from the Reserve Primary Fund lock in the losses?
• Can you tell me more about the lawsuit that Ameriprise Financial has filed against The Reserve?

About your brokerage account

• What happens to my Reserve fund assets?
• Is it safe to make new deposits into my Ameriprise brokerage account?
• Is Ameriprise Cash insured?
• What is the difference between coverage provided by FDIC and SIPC? New — Sept. 30
• What changes will I see in my account?
• Can I make trades in my brokerage account?
• Will my Ameriprise ONE^® Financial Account checking account number change?
• Can I use my Debit MasterCard, linked to my Ameriprise ONE Financial Account, to make ATM withdrawals and point-of-sale transactions?
• What about checks that I write or online bill payments that are drawn against my Ameriprise ONE Financial Account? Will they be processed? How much can I write a check for? Updated — Sept. 30

New — Sept. 30

Q: How will the partial redemption of the Reserve Primary Fund be handled?

The Reserve announced a partial redemption of the Reserve Primary Fund on Sept. 29 in this press release. According to The Reserve, the distribution is expected to occur on or about October 13, 2008. A spokesperson for The Reserve commented on the partial nature of this distribution by saying, "As we sell assets and assets mature, we plan to make future distributions."

For all partial redemptions, Ameriprise Financial will distribute proceeds on a pro-rata basis across all client accounts that hold that fund. For example, if a fund distributes a partial redemption of 25% of its holdings, you would see a sale of 25% of the shares for that fund in your account.

Back to top

Q: How do I know if I have a money market fund with The Reserve?

This information can be found on your current Ameriprise Financial^® account statement under "Mutual Funds" in the Account Holdings section. You may also call your financial advisor or client service at (800) 862-7919.

Back to top

Q: When will the issues with The Reserve be resolved, and when will the money held with The Reserve be available to me?

• The Reserve and the SEC have not published a comprehensive timetable for all funds at this point.
• On September 17, The Reserve announced that it was temporarily ceasing the payment of redemption proceeds from any of The Reserve money market funds. We continue to work aggressively with regulators to ensure client assets are returned in a fair and orderly process. Redemption proceeds will be posted to your account after they are distributed by The Reserve to Ameriprise Financial. Until that time, these assets will continue to be held as a position in your brokerage account, but are not accessible. See below for more information on accessing cash for your immediate needs.
• The Reserve has been granted an exemption by the SEC to delay redemptions from the Reserve Primary and Reserve US Government funds beyond the 7-day holding period allowed for in money market fund prospectuses. The exact length of this extension is currently unknown. We believe an extension should help facilitate a more orderly and equitable disposition of these two funds.

Back to top

Q: Will Ameriprise help me access my cash, since The Reserve is not honoring redemption requests?

• We know it is important that our clients have access to their cash assets, so we have created a process for honoring our clients' limited day-to-day liquidity needs by using our own corporate assets and liquidity. We will be evaluating this decision on a day-to-day basis based on client needs.
• Cash requests will be satisfied from the following funding sources in this order:
  • New money deposited to your account or proceeds from the sale of securities within the account.
  • Margin loans or an Overdraft Protection line of credit, if available, depending on the type of transaction. Please contact your financial advisor with specific questions.
  • Cash is made available by Ameriprise Financial on a limited basis. Please keep in mind that Ameriprise is temporarily covering clients' limited day-to-day cash needs until The Reserve fulfills our redemption request.
• Any new money deposited to your account will be accessible, since it will be held in your new sweep account (Ameriprise Cash or AIMMA).
  • If you have a Debit MasterCard linked to your Ameriprise ONE Financial Account, you may use this to access new money in your new sweep account (AIMMA or Ameriprise Cash) via ATM withdrawals or debit purchases.

Back to top

Q: Did the request to redeem my holdings from the Reserve Primary Fund lock in the losses?

While no one can predict or guarantee how this situation will be resolved, we are working very aggressively to ensure that our clients are treated fairly. Through our lawsuit against The Reserve and our efforts with regulatory authorities, elected officials and industry organizations, Ameriprise Financial is working to ensure that any distribution of redemption proceeds is conducted in a fair and equitable manner for our clients.

Back to top

Q: Can you tell me more about the lawsuit that Ameriprise Financial has filed against The Reserve?

Ameriprise Financial filed a suit against The Reserve alleging that it tipped certain institutional investors of the potential to "break the buck" which we believe, in turn, has hurt retail investors, including Ameriprise Financial clients. We are also in close contact with regulatory authorities, elected officials and industry organizations to advocate on behalf of our clients.

Back to top

Q: What happens to my Reserve fund assets?

• Your Reserve fund assets will remain in your brokerage account as a mutual fund holding until our redemption requests are fulfilled by The Reserve. These assets are not available for withdrawal, nor can they be used for the purchase of securities.
• When The Reserve distributes the assets with oversight from the SEC, the proceeds of your individual redemption will be directed to your new cash sweep account (Ameriprise Cash or AIMMA).

Back to top

Q: Is it safe to make new deposits into my Ameriprise brokerage account?

• Yes. Ameriprise Financial is no longer offering The Reserve funds as sweep options.
• In the interim, we are sweeping your new money into Ameriprise Cash, which is covered by SIPC up to $100,000 per individual.
• If you held a Reserve fund as your sweep account, Ameriprise Financial will be automatically changing your sweep account to the AIMMA. This will be completed before the end of the year. Your account may have already been changed at your request. AIMMA is a multi-bank sweep account that offers FDIC insurance, up to $1 million per depositor in non-qualified accounts and $2.5 million per depositor in qualified accounts.
• There are some account types, such as business accounts, for which AIMMA is not permitted by banking rules as a sweep account. Ameriprise Cash will continue to be the sweep option for those accounts for the near future.

Back to top

Q: Is Ameriprise Cash insured?

Ameriprise Cash is covered by SIPC up to $100,000 per individual.

Back to top

New — Sept. 30

Q. What is the difference between coverage provided by FDIC and SIPC?

• FDIC insurance covers deposits in FDIC-insured federal institutions, generally banks and savings associations. Coverage is limited to up to $100,000 per depositor for non-qualified accounts in the institution and $250,000 per depositor in qualified accounts in the institution.

• SIPC coverage is provided to customers that hold cash and securities such as stocks, bonds and mutual funds at a brokerage firm. This provides protection to customers who maintain assets at eligible brokerage firms in the event the brokerage firm fails. Generally SIPC covers up to $500,000 per individual per brokerage firm. So if you have $500,000 in deposits at a brokerage firm, and the brokerage firm fails, SIPC coverage will insure up to $400,000 in securities and $100,000 in cash.
• Read more about FDIC and SIPC coverage.

Back to top

Q: What changes will I see in my account?

• On Thursday, Sept. 18, the Reserve Primary Fund was moved from a sweep arrangement to a security position in brokerage accounts, similar to the way other mutual funds are held. The Reserve US Government Fund was moved to a security position on Friday Sept. 19. All other Reserve fund sweep positions were moved to a security position on Monday Sept. 22.
• We took these steps to enable the set up of a new sweep account since The Reserve funds can no longer operate as sweep accounts.
• As a result of these changes, your brokerage cash position will indicate a zero balance unless other cash is received in your account from deposits, dividend activity, proceeds from the sale of other securities, etc.
• Your account may reflect a debit balance for any redemptions such as checks, wires, Ameriprise ONE financial account transactions or unsettled trades. This debit balance will remain until new money is deposited, or if cash from other securities sold or redemption proceeds are received from The Reserve to pay down this amount.

Back to top

Q: Can I make trades in my brokerage account?

You can continue to sell any position in your brokerage account. These transactions are not affected by The Reserve issue. For new purchases, you can purchase securities in your account as long as you have a source of funds other than your Reserve fund shares. Your funds could come from a deposit of new money, proceeds from other transactions or your margin account. We will automatically request one (1) seven-day extension for the settlement of trades placed without a source of funding other than assets tied up in The Reserve funds.

Back to top

Q: Will my Ameriprise ONE Financial Account checking account number change?

No. There will be no impact or change to the checking account number resulting from the change of your sweep option from a Reserve fund to either Ameriprise Cash or AIMMA.

Back to top

Q: Can I use my Debit MasterCard, linked to my Ameriprise ONE Financial Account, to make ATM withdrawals and point-of-sale transactions?

Yes. To assure that clients have access to liquidity for day-to-day transactions, the Ameriprise Debit Card may be used for ATM withdrawals and for point-of-sale transactions. Lower daily dollar limits have been imposed for these transactions. The lower dollar amount limits apply to all Ameriprise ONE Financial Accounts customers, not just those linked to accounts that previously held a Reserve fund sweep.

Back to top

Updated — Sept. 30

Q: What about checks that I write or online bill payments that are drawn against my Ameriprise ONE Financial Account? Will they be processed? How much can I write checks for?

Ameriprise Financial will honor checks and online bill payments for your limited day-to-day cash needs until further notice. Checks for full redemptions will not be honored at this time.

We recommend against writing checks for large purchases while your cash is tied up in The Reserve funds. If you have concerns about the amount of a check or if you need cash for a large one-time purchase, please contact us at (800) 862-7919 to request an approval in advance and to discuss other ways to receive payments for large purchases.

Back to top