UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-2111
RIVERSOURCE LARGE CAP SERIES, INC.
(Exact name of registrant as specified in charter)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
(Address of principal executive offices) (Zip code)
Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474
(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 671-1947
Date of fiscal year end: 7/31
Date of reporting period: 7/31
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
DISCIPLINED EQUITY FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2009
(Prospectus also enclosed)
RIVERSOURCE DISCIPLINED EQUITY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 26
Statement of Operations............ 28
Statements of Changes in Net
Assets........................... 30
Financial Highlights............... 32
Notes to Financial Statements...... 42
Report of Independent Registered
Public Accounting Firm........... 59
Federal Income Tax Information..... 61
Board Members and Officers......... 62
Approval of Investment Management
Services Agreement............... 66
Proxy Voting....................... 69
</Table>
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RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Disciplined Equity Fund (the Fund) Class A shares declined 23.19%
(excluding sales charge) for the 12 months ended July 31, 2009.
> The Fund underperformed the unmanaged Standard & Poor's 500 Index (S&P 500
Index), which fell 19.96% during the same period.
> The Fund also underperformed the Lipper Large-Cap Core Funds Index,
representing the Fund's peer group, which declined 18.83%, for the same
period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS 4/24/03
- ----------------------------------------------------------------------
RiverSource Disciplined Equity
Fund
Class A (excluding sales
charge) -23.19% -8.30% -1.02% +2.36%
- ----------------------------------------------------------------------
S&P 500 Index (unmanaged) -19.96% -6.16% -0.14% +3.32%
- ----------------------------------------------------------------------
Lipper Large-Cap Core Funds
Index -18.83% -5.36% +0.03% +2.84%
- ----------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. 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 returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 4/24/03) -23.19% -8.30% -1.02% +2.36%
- -----------------------------------------------------------------------
Class B (inception 4/24/03) -23.68% -9.00% -1.78% +1.55%
- -----------------------------------------------------------------------
Class C (inception 4/24/03) -23.66% -8.95% -1.74% +1.59%
- -----------------------------------------------------------------------
Class I (inception 7/15/04) -22.90% -7.94% -0.64% -0.73%
- -----------------------------------------------------------------------
Class R2 (inception 12/11/06) -23.30% N/A N/A -13.34%
- -----------------------------------------------------------------------
Class R3 (inception 12/11/06) -23.17% N/A N/A -13.15%
- -----------------------------------------------------------------------
Class R4 (inception 4/24/03) -23.05% -8.14% -0.82% +2.54%
- -----------------------------------------------------------------------
Class R5 (inception 12/11/06) -22.91% N/A N/A -12.89%
- -----------------------------------------------------------------------
Class W (inception 12/1/06) -23.21% N/A N/A -12.66%
- -----------------------------------------------------------------------
With sales charge
Class A (inception 4/24/03) -27.61% -10.09% -2.19% +1.40%
- -----------------------------------------------------------------------
Class B (inception 4/24/03) -27.35% -9.78% -2.10% +1.55%
- -----------------------------------------------------------------------
Class C (inception 4/24/03) -24.39% -8.95% -1.74% +1.59%
- -----------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 5.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R3, Class R4, Class R5 and
Class W shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available
to qualifying institutional investors only. Class W shares are offered through
qualifying discretionary accounts.
* For classes with less than 10 years performance
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
- --------------------------------------------------------------------------------
4 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Dear Shareholder,
RiverSource Disciplined Equity Fund (the Fund) Class A shares declined 23.19%
(excluding sales charge) for the 12 months ended July 31, 2009. The Fund
underperformed the unmanaged Standard & Poor's 500 Index (S&P 500 Index), which
fell 19.96%, as well as the Lipper Large-Cap Core Funds Index, representing the
Fund's peer group, which declined 18.83%, for the same period.
SIGNIFICANT PERFORMANCE FACTORS
Early in the annual period, financial markets worldwide came under great stress
amid a deepening economic downturn. Data showed that the U.S. economy shrank by
6.2% in the fourth quarter of 2008, the largest contraction in 25 years.
Consumer confidence fell, and unemployment increased. Gross Domestic Product
(GDP) continued to decline, shrinking 6.4% during the first quarter of 2009.
Equities, both in the U.S. and around the globe, sold off, posting major
declines not seen since the 1930s. In unprecedented efforts to mitigate the
crisis, governments worldwide passed massive stimulus packages and debated
strategies to
SECTOR DIVERSIFICATION(1) (at July 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Consumer Discretionary 12.7%
- ------------------------------------------------
Consumer Staples 11.5%
- ------------------------------------------------
Energy 13.6%
- ------------------------------------------------
Financials 16.8%
- ------------------------------------------------
Health Care 18.7%
- ------------------------------------------------
Industrials 5.9%
- ------------------------------------------------
Information Technology 12.6%
- ------------------------------------------------
Materials 3.2%
- ------------------------------------------------
Telecommunication Services 1.9%
- ------------------------------------------------
Utilities 3.1%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of July
31, 2009. The Fund's composition is subject to change.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
calm investor fears. Beginning in March 2009, economic conditions began to
stabilize, with many indicators less negative than they had been in prior
months. For example, GDP declined far less than expected during the second
quarter, with a comparatively modest contraction of 1%. Certain key drivers in
the housing market appeared to turn the corner. Unemployment indicators also
gave reason for cautious optimism. Such "green shoots" provided a boost to the
equity markets, which subsequently rallied strongly through July 2009. Most
major U.S. equity indices were in positive territory year-to-date through July
31, 2009, though it was not enough to outweigh the decline of the first five
months of the fiscal year.
The Fund's performance was primarily driven by the three quantitative-based
investment themes we employ in selecting stocks for the Fund's
portfolio -- momentum, value and quality. During the 12-month period, the
quality theme outperformed the S&P 500 Index, but not enough to offset the
combined underperformance of the value and momentum themes. The quality theme is
intended to serve, in part, as a defensive measure during equity market
corrections when investor risk aversion increases, and it indeed did that,
taking a strong lead, especially during the challenging first half of the fiscal
year. The momentum theme is designed, in part, to capture investor sentiment
over the near to mid term. This theme performed well during the first half of
the annual period
TOP TEN HOLDINGS (at July 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Chevron 4.7%
- ------------------------------------------------
Pfizer 4.2%
- ------------------------------------------------
Johnson & Johnson 3.5%
- ------------------------------------------------
Procter & Gamble 3.1%
- ------------------------------------------------
McDonald's 2.5%
- ------------------------------------------------
Home Depot 2.1%
- ------------------------------------------------
Bank of America 2.1%
- ------------------------------------------------
Wal-Mart Stores 2.0%
- ------------------------------------------------
Intel 2.0%
- ------------------------------------------------
IBM 1.7%
- ------------------------------------------------
</Table>
Excludes cash & cash equivalents.
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
- --------------------------------------------------------------------------------
6 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
but subsequently was challenged when the equity markets started to rally and
investor sentiment became increasingly difficult to gauge. The value theme,
which favors cheaper P/E stocks, was negatively impacted primarily by exposure
to financials and consumer discretionary stocks. It is worth noting that the
value theme did start to rebound in March. While history does not guarantee
future performance, it may serve as a useful guide. Thus, looking at history,
the value theme has rebounded sharply following periods of significant
underperformance. As such, in the last months of the period, we began to place
greater emphasis on the value theme in the Fund. It is important to remember
that the themes we use take turns in leading performance over time,
demonstrating the advantages of employing style diversification. Such variance
in performance supports our research indicating that the style diversification
provided by the three very different quantitative-based themes is a significant
investment advantage over the long term, even though the Fund may experience
underperformance in the short term.
Following a specific, disciplined process, we do not make sector or industry
bets based on economic or equity market outlooks. That said, the Fund's
quantitative-based themes led to a bias toward higher quality stocks due to
market volatility. This bias helped results, as higher quality outperformed
lower quality during the annual period as a whole. The Fund's themes also
positioned the equity portfolio toward mega-cap, or the largest cap, stocks.
This helped the Fund's results as well.
During the 12-month period, the quality theme outperformed the S&P 500 Index,
but not enough to offset the combined underperformance of the value and
momentum themes.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
Conversely, the Fund's quantitative-based themes led to various sector
weightings that, together, detracted from results. Sizable weightings in
financials and materials hurt most, as these were among the weakest performing
sectors of the S&P 500 Index during the period. Having only modest positions in
the information technology and telecommunication services sectors, which
outpaced the S&P 500 Index during the annual period, hurt as well. Partially
offsetting these negatives was the positive effect of a significant allocation
to the relatively stronger performing health care sector.
Because we use a bottom-up approach, it is not surprising that most of the
Fund's results were due to stock selection. Specifically, stock selection in the
financials and information technology sectors detracted. This more than offset
the combined effect of strong stock selection in health care and energy.
Among individual holdings, pharmaceutical giant PFIZER, selected by the quality
and value themes, contributed most to the Fund's return. Other top contributors
included home improvement retailer HOME DEPOT, liked by the quality theme,
leading discount retailer WAL-MART STORES, a quality and momentum pick,
pharmaceutical company JOHNSON & JOHNSON, selected by the quality and momentum
themes, and pharmaceutical manufacturer GILEAD SCIENCES, a quality theme pick.
Stocks that detracted most from the Fund's return included two financials
companies, each selected by the value theme -- namely, CITIGROUP and FANNIE MAE.
Other poor performers during the annual period were each selected by the
momentum theme -- namely chemicals firm MONSANTO, leading fast-food chain
MCDONALD'S, and personal computer, audio and video products manufacturer APPLE.
At the end of July, the Fund's largest individual stock holdings were energy
company CHEVRON, a quality and value pick, Pfizer, Johnson & Johnson,
diversified consumer products giant PROCTER & GAMBLE, chosen by the momentum
theme, and McDonald's.
CHANGES TO THE FUND'S PORTFOLIO
As a result of quantitative theme-driven stock selection during the period, the
Fund's sector allocations changed somewhat. For example, the Fund's already
significant exposure to consumer discretionary, relative to the
- --------------------------------------------------------------------------------
8 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
S&P 500 Index, increased further. The Fund's allocation to utilities also
increased, although this remained a more modest weighting than that of the S&P
500 Index. The Fund's sizable position in financials decreased but remained
greater than that of the benchmark index. Each of these changes in sector
allocation was reflective of our enhanced emphasis on the value theme in the
Fund, as mentioned above.
We are continuously looking for ways to improve our investment process and to
enhance the efficacy of the quantitative-based themes we use in the Fund. Thus,
in addition to placing greater emphasis on the value theme, we also made
enhancements to it by including more quality factors in an effort to reduce
volatility.
Our risk models limit the size of individual holdings, as well as sector and
industry allocations, relative to the S&P 500 Index. For instance, the
portfolio's weightings by sector and industry are limited to no more than 6%
overweighted or underweighted relative to the S&P 500 Index. We also apply
additional risk measures that impose constraints on market capitalization,
price, quality, turnover, transaction costs and other variables.
OUR FUTURE STRATEGY
Following a strong rally that sent equity markets into positive territory for
the first seven months of 2009, investors at the end of July were faced with the
question -- where do we go from here? In our view, the equity markets were
closer to fair value at the end of July than they were three months prior.
Corporate earnings were anemic, but, in many cases, better than expectations.
However, even with glimmers of positive news, the economy remained in a weakened
state. We believe the real uncertainty is determining what catalyst is going to
sustain the upward trend in the equity markets. The answer, in our opinion, is
that investors will need to see real improvement or growth in both the economy
and corporate earnings. We continue to believe that just such a scenario is
likely to materialize in the fourth quarter of 2009, as the effects of massive
government intervention take hold.
Given this view, we are positioning the Fund's portfolio to take advantage of a
recovery, investing in those areas we consider attractive from both a valuation
and growth perspective. At the same time, consistent with our
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
disciplined and calculated low turnover approach, we remain focused on the long
term and maintain the Fund's diversification across sectors and securities. We
intend to continue seeking optimal returns for the Fund through the style
diversification offered by the various themes within our well-tested
quantitative investment model. We are convinced of the merit of our
multifaceted, disciplined approach to managing risk in the portfolio and believe
this combination of style diversification and rigorous risk management will
allow us to maintain the quality of the Fund's portfolio in whatever market
conditions lie ahead.
<Table>
(PHOTO - ) (PHOTO - )
Dimitris Bertsimas, Ph.D. Gina Mourtzinou, Ph.D.
Senior Portfolio Manager Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
10 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Disciplined Equity Fund Class A shares (from 4/24/03
to 7/31/09) as compared to the performance of two widely cited performance
indices, the Standard & Poor's 500 Index (S&P 500 Index) and the Lipper Large-
Cap Core Funds Index. In comparing the Fund's Class A shares to these indices,
you should take into account the fact that the Fund's performance reflects the
maximum sales charge of 5.75%, while such charges are not reflected in the
performance of the indices. Returns for the Fund include the reinvestment of any
distributions paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2009
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS 4/24/03
RIVERSOURCE DISCIPLINED EQUITY FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $7,239 $7,268 $8,952 $10,910
- -------------------------------------------------------------------------------------------
Average annual total return -27.61% -10.09% -2.19% +1.40%
- -------------------------------------------------------------------------------------------
S&P 500 INDEX(1)
Cumulative value of $10,000 $8,004 $8,263 $9,930 $12,270
- -------------------------------------------------------------------------------------------
Average annual total return -19.96% -6.16% -0.14% +3.32%
- -------------------------------------------------------------------------------------------
LIPPER LARGE-CAP CORE FUNDS INDEX(2)
Cumulative value of $10,000 $8,117 $8,477 $10,015 $11,914
- -------------------------------------------------------------------------------------------
Average annual total return -18.83% -5.36% +0.03% +2.84%
- -------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
12 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE DISCIPLINED EQUITY
FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE DISCIPLINED
EQUITY FUND
CLASS A LIPPER LARGE-CAP
(INCLUDES SALES S&P 500 CORE FUNDS
CHARGE) INDEX(1) INDEX(2)
----------------------- ------------------ ------------------
4/24/03 $ 9,425 $10,000 $10,000
4/03 9,482 10,063 10,054
7/03 10,255 10,917 10,813
10/03 10,934 11,634 11,412
1/04 11,890 12,579 12,231
4/04 11,581 12,364 11,992
7/04 11,485 12,354 11,894
10/04 11,851 12,730 12,201
1/05 12,521 13,361 12,765
4/05 12,342 13,146 12,480
7/05 13,316 14,089 13,387
10/05 13,216 13,838 13,257
1/06 14,255 14,747 14,192
4/06 14,506 15,172 14,533
7/06 14,149 14,846 14,056
10/06 15,367 16,099 15,199
1/07 16,152 16,886 15,907
4/07 16,674 17,482 16,446
7/07 16,402 17,239 16,328
10/07 17,470 18,441 17,482
1/08 15,604 16,495 15,713
4/08 15,846 16,665 15,850
7/08 14,203 15,328 14,677
10/08 11,063 11,786 11,206
1/09 9,083 10,125 9,690
4/09 9,565 10,781 10,457
7/09 10,910 12,270 11,914
</Table>
(1) The 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.
(2) 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended July 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2009 JULY 31, 2009 THE PERIOD(a) EXPENSE RATIO
- -----------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,201.10 $5.05(c) .92%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.34 $4.63(c) .92%
- -----------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,199.40 $9.16(c) 1.67%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.60 $8.40(c) 1.67%
- -----------------------------------------------------------------------------------------------
Class C
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,197.70 $9.21(c) 1.68%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.55 $8.45(c) 1.68%
- -----------------------------------------------------------------------------------------------
Class I
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,202.80 $2.86(c) .52%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.34 $2.62(c) .52%
- -----------------------------------------------------------------------------------------------
Class R2
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,201.10 $6.91(c) 1.26%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.65 $6.34(c) 1.26%
- -----------------------------------------------------------------------------------------------
Class R3
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,201.10 $5.82(c) 1.06%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.65 $5.34(c) 1.06%
- -----------------------------------------------------------------------------------------------
Class R4
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,203.30 $4.12(c) .75%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.19 $3.78(c) .75%
- -----------------------------------------------------------------------------------------------
Class R5
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,203.90 $2.91(c) .53%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.29 $2.67(c) .53%
- -----------------------------------------------------------------------------------------------
Class W
- -----------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,201.70 $5.32(c) .97%
- -----------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.09 $4.89(c) .97%
- -----------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 182/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended July 31, 2009: +20.11%
for Class A, +19.94% for Class B, +19.77% for Class C, +20.28% for Class I,
+20.11% for Class R2, +20.11% for Class R3, +20.33% for Class R4, +20.39%
for Class R5 and +20.17% for Class W.
(c) RiverSource Investments, LLC (the Investment Manager) and its affiliates
have contractually agreed to waive certain fees and to absorb certain
expenses until Sept. 30, 2010, unless sooner terminated at the discretion of
the Fund's Board, such that net expenses (excluding fees and expenses of
acquired funds), before giving effect to any performance incentive
adjustment, will not exceed 1.02% for Class A, 1.80% for Class B, 1.78% for
Class C, 0.57% for Class I, 1.37% for Class R2, 1.12% for Class R3, 0.87%
for Class R4, 0.62% for Class R5 and 1.02% for Class W. Any amounts waived
will not be reimbursed by the Fund. This change was effective Aug. 1, 2009.
Had this change been in place for the entire six month period ended July 31,
2009, the actual expenses paid would have been $4.88 for Class A, $9.10 for
Class B, $9.04 for Class C, $2.42 for Class I, $6.53 for Class R2, $5.43 for
Class R3, $4.06 for Class R4, $2.69 for Class R5 and $4.83 for Class W; the
hypothetical expenses paid would have been $4.48 for Class A, $8.35 for
Class B, $8.30 for Class C, $2.22 for Class I, $5.99 for Class R2, $4.99 for
Class R3, $3.73 for Class R4, $2.47 for Class R5 and $4.43 for Class W.
- --------------------------------------------------------------------------------
16 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (99.5%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (0.9%)
General Dynamics 160,075 $8,866,554
ITT 30,221 1,492,917
Northrop Grumman 98,612 4,396,123
United Technologies 47,748 2,600,834
---------------
Total 17,356,428
- -------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.6%)
CH Robinson Worldwide 53,839(e) 2,935,841
FedEx 122,780(e) 8,329,395
---------------
Total 11,265,236
- -------------------------------------------------------------------------------------
AUTOMOBILES (0.8%)
Ford Motor 1,518,855(b,e) 12,150,840
Harley-Davidson 144,208(e) 3,259,101
---------------
Total 15,409,941
- -------------------------------------------------------------------------------------
BEVERAGES (2.4%)
Brown-Forman Cl B 23,048 1,012,960
Coca-Cola 568,927 28,355,321
Coca-Cola Enterprises 101,259 1,902,657
Pepsi Bottling Group 37,220 1,263,619
PepsiCo 213,360 12,108,180
---------------
Total 44,642,737
- -------------------------------------------------------------------------------------
BIOTECHNOLOGY (2.4%)
Amgen 598,120(b) 37,268,858
Biogen Idec 78,595(b,e) 3,737,192
Cephalon 67,893(b) 3,981,924
---------------
Total 44,987,974
- -------------------------------------------------------------------------------------
BUILDING PRODUCTS (--%)
Masco 40,969(e) 570,698
- -------------------------------------------------------------------------------------
CAPITAL MARKETS (2.8%)
Bank of New York Mellon 364,440 9,963,790
E*TRADE Financial 256,004(b,e) 384,006
Goldman Sachs Group 43,786 7,150,254
Morgan Stanley 966,909 27,556,906
State Street 113,373 5,702,662
T Rowe Price Group 28,175(e) 1,316,054
---------------
Total 52,073,672
- -------------------------------------------------------------------------------------
CHEMICALS (1.5%)
CF Inds Holdings 19,865 1,568,143
Dow Chemical 830,856 17,589,222
Eastman Chemical 23,070 1,145,656
EI du Pont de Nemours & Co 125,659 3,886,633
PPG Inds 66,308(e) 3,646,940
---------------
Total 27,836,594
- -------------------------------------------------------------------------------------
COMMERCIAL BANKS (1.8%)
BB&T 105,917 2,423,381
Comerica 97,304(e) 2,319,727
Fifth Third Bancorp 125,838 1,195,461
First Horizon Natl 235,100(b,e) 2,837,953
Huntington Bancshares 363,386(e) 1,486,249
KeyCorp 447,532 2,586,735
Marshall & Ilsley 169,248(e) 1,022,258
PNC Financial Services Group 331,882(e) 12,166,793
SunTrust Banks 346,043(e) 6,747,839
Wells Fargo & Co 56,909(e) 1,391,994
---------------
Total 34,178,390
- -------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.2%)
Avery Dennison 38,795 1,036,990
RR Donnelley & Sons 145,223 2,018,600
---------------
Total 3,055,590
- -------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (1.2%)
Cisco Systems 305,004(b) 6,713,138
Motorola 248,544(e) 1,779,575
QUALCOMM 297,886 13,765,312
---------------
Total 22,258,025
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
COMPUTERS & PERIPHERALS (3.5%)
Dell 817,705(b,e) $10,940,892
Hewlett-Packard 250,866(e) 10,862,498
IBM 324,962(e) 38,322,768
Lexmark Intl Cl A 132,699(b,e) 1,921,482
QLogic 13,002(b) 169,676
Western Digital 103,138(b) 3,119,925
---------------
Total 65,337,241
- -------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (0.2%)
Fluor 75,474(e) 3,985,027
- -------------------------------------------------------------------------------------
CONSUMER FINANCE (0.4%)
American Express 172,642(e) 4,890,948
SLM 210,091(b) 1,867,709
---------------
Total 6,758,657
- -------------------------------------------------------------------------------------
DISTRIBUTORS (0.1%)
Genuine Parts 54,416(e) 1,927,415
- -------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (0.4%)
Apollo Group Cl A 76,630(b) 5,290,536
H&R Block 118,386 1,975,862
---------------
Total 7,266,398
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (4.9%)
Bank of America 3,198,568 47,306,821
CIT Group 293,875(e) 255,671
Citigroup 4,105,214(e) 13,013,528
JPMorgan Chase & Co 757,743 29,286,767
NASDAQ OMX Group 60,814(b) 1,285,000
---------------
Total 91,147,787
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.6%)
CenturyTel 110,200 3,459,178
Qwest Communications Intl 209,793(e) 809,801
Verizon Communications 821,988(e) 26,361,155
---------------
Total 30,630,134
- -------------------------------------------------------------------------------------
ELECTRIC UTILITIES (1.6%)
Edison Intl 63,363 2,047,892
FirstEnergy 62,780(e) 2,586,536
Northeast Utilities 90,561(e) 2,083,809
Pinnacle West Capital 60,565 1,935,657
Progress Energy 165,271 6,518,288
Southern 462,270(e) 14,515,278
---------------
Total 29,687,460
- -------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.2%)
Emerson Electric 95,562(e) 3,476,546
- -------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (0.8%)
Corning 625,708 10,637,036
Tyco Electronics 224,407(c) 4,818,018
---------------
Total 15,455,054
- -------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (1.8%)
Baker Hughes 135,996 5,507,838
BJ Services 209,513(e) 2,970,894
Diamond Offshore Drilling 28,896(e) 2,596,884
ENSCO Intl 113,928 4,316,732
Halliburton 345,824 7,639,252
Nabors Inds 60,736(b,c,e) 1,033,727
Natl Oilwell Varco 197,191(b) 7,087,045
Noble 28,668(e) 970,698
Smith Intl 50,852 1,277,911
Weatherford Intl 50,008(b,c) 938,150
---------------
Total 34,339,131
- -------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (2.9%)
Safeway 87,714 1,660,426
SUPERVALU 79,252(e) 1,175,307
Walgreen 155,755 4,836,193
Wal-Mart Stores 919,181(e) 45,848,748
---------------
Total 53,520,674
- -------------------------------------------------------------------------------------
FOOD PRODUCTS (0.7%)
Archer-Daniels-Midland 238,361 7,179,433
Dean Foods 78,322(b,e) 1,659,643
JM Smucker 17,300 865,519
Sara Lee 284,976 3,032,145
---------------
Total 12,736,740
- -------------------------------------------------------------------------------------
GAS UTILITIES (0.1%)
Questar 71,190 2,354,253
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.5%)
Becton Dickinson & Co 52,477(e) 3,418,876
CR Bard 14,194(e) 1,044,253
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HEALTH CARE EQUIPMENT & SUPPLIES (CONT.)
St. Jude Medical 55,599(b,e) $2,096,638
Varian Medical Systems 52,680(b,e) 1,858,024
---------------
Total 8,417,791
- -------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (2.6%)
Aetna 172,943 4,664,273
Cardinal Health 71,711(e) 2,387,976
CIGNA 231,465(e) 6,573,606
Coventry Health Care 53,822(b) 1,237,906
DaVita 54,848(b,e) 2,725,946
Laboratory Corp of America Holdings 15,461(b,e) 1,038,825
McKesson 79,240(e) 4,053,126
Quest Diagnostics 141,992(e) 7,755,603
UnitedHealth Group 661,415 18,559,304
---------------
Total 48,996,565
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (3.4%)
Intl Game Technology 10,202(e) 201,490
McDonald's 1,051,246 57,881,604
Starbucks 200,438(b,e) 3,547,753
Wyndham Worldwide 46,479 648,382
---------------
Total 62,279,229
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.5%)
Black & Decker 29,679(e) 1,115,930
Centex 121,143 1,321,670
DR Horton 125,815(e) 1,458,196
KB Home 36,839(e) 614,843
Leggett & Platt 50,216 871,248
Lennar Cl A 85,838 1,016,322
Pulte Homes 234,906(e) 2,670,881
Stanley Works 13,005 522,151
---------------
Total 9,591,241
- -------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (5.0%)
Clorox 106,476 6,496,101
Colgate-Palmolive 212,124(e) 15,366,263
Procter & Gamble 1,274,897(e) 70,769,532
---------------
Total 92,631,896
- -------------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
Constellation Energy Group 53,355 1,531,289
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (1.8%)
General Electric 2,098,708(e) 28,122,688
Textron 114,451 1,538,221
Tyco Intl 140,606(c) 4,249,113
---------------
Total 33,910,022
- -------------------------------------------------------------------------------------
INSURANCE (6.5%)
ACE 95,219(c) 4,671,444
AFLAC 138,963(e) 5,261,139
Allstate 913,087(e) 24,571,172
Ambac Financial Group 288,197(e) 216,148
American Intl Group 76,843(e) 1,009,717
Aon 120,741 4,763,232
Assurant 63,505 1,620,648
Chubb 121,628 5,616,781
Cincinnati Financial 84,839(e) 2,048,862
Genworth Financial Cl A 479,180(e) 3,306,342
Hartford Financial Services Group 200,394(e) 3,304,497
Lincoln Natl 120,907 2,562,019
MBIA 209,475(b,e) 877,700
MetLife 452,015(e) 15,345,909
Principal Financial Group 205,611 4,872,981
Progressive 439,138(b) 6,841,770
Prudential Financial 167,059 7,395,702
Torchmark 66,836(e) 2,610,614
Travelers Companies 412,497 17,766,246
Unum Group 120,100 2,254,277
XL Capital Cl A 210,930(c,e) 2,969,894
---------------
Total 119,887,094
- -------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL (0.2%)
Amazon.com 43,867(b,e) 3,762,034
- -------------------------------------------------------------------------------------
IT SERVICES (0.9%)
Affiliated Computer Services Cl A 40,010(b) 1,896,874
Automatic Data Processing 194,388(e) 7,240,953
Computer Sciences 62,990(b) 3,034,228
Fiserv 21,653(b) 1,026,569
MasterCard Cl A 12,360 2,398,211
Total System Services 17,806 261,392
---------------
Total 15,858,227
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
LEISURE EQUIPMENT & PRODUCTS (0.2%)
Brunswick 100,213(e) $719,529
Eastman Kodak 232,404(e) 690,240
Mattel 105,280(e) 1,850,823
---------------
Total 3,260,592
- -------------------------------------------------------------------------------------
MACHINERY (1.3%)
Caterpillar 94,651(e) 4,170,323
Eaton 65,942 3,423,709
Illinois Tool Works 143,612(e) 5,823,467
Ingersoll-Rand 296,096(c) 8,551,251
Manitowoc 41,277(e) 255,092
Parker Hannifin 58,170(e) 2,575,768
---------------
Total 24,799,610
- -------------------------------------------------------------------------------------
MEDIA (0.9%)
CBS Cl B 436,992(e) 3,578,964
Gannett 320,740(e) 2,245,180
Meredith 14,134 374,127
New York Times Cl A 109,515(e) 861,883
News Corp Cl A 626,585 6,472,623
Viacom Cl B 129,942(b) 3,009,457
---------------
Total 16,542,234
- -------------------------------------------------------------------------------------
METALS & MINING (1.7%)
AK Steel Holding 60,180 1,183,741
Alcoa 279,008(e) 3,281,134
Allegheny Technologies 79,189 2,144,438
Freeport-McMoRan Copper & Gold 155,338 9,366,881
Newmont Mining 133,305 5,512,162
Nucor 123,510 5,492,490
United States Steel 92,659(e) 3,683,195
---------------
Total 30,664,041
- -------------------------------------------------------------------------------------
MULTILINE RETAIL (0.8%)
Family Dollar Stores 137,895 4,332,661
JC Penney 50,077 1,509,822
Kohl's 125,196(b,e) 6,078,266
Macy's 150,908(e) 2,099,130
---------------
Total 14,019,879
- -------------------------------------------------------------------------------------
MULTI-UTILITIES (1.3%)
Consolidated Edison 169,575(e) 6,674,472
PG&E 288,969(e) 11,665,678
SCANA 63,730 2,252,856
Xcel Energy 157,291(e) 3,136,383
---------------
Total 23,729,389
- -------------------------------------------------------------------------------------
OFFICE ELECTRONICS (0.1%)
Xerox 141,007(e) 1,154,847
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (11.6%)
Apache 87,692 7,361,743
Chesapeake Energy 197,230 4,228,611
Chevron 1,536,755(e) 106,758,370
ConocoPhillips 614,200 26,846,682
Hess 119,440 6,593,088
Marathon Oil 443,894 14,315,582
Massey Energy 59,718(e) 1,588,499
Murphy Oil 90,076 5,242,423
Occidental Petroleum 415,067(e) 29,610,880
Peabody Energy 57,691(e) 1,910,149
Pioneer Natural Resources 4,948 141,265
Sunoco 88,046(e) 2,173,856
Tesoro 98,048 1,283,448
Valero Energy 270,491(e) 4,868,838
Williams Companies 197,809 3,301,432
---------------
Total 216,224,866
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (13.1%)
Allergan 91,982(e) 4,914,598
Bristol-Myers Squibb 373,524(e) 8,120,412
Forest Laboratories 200,439(b) 5,177,339
Johnson & Johnson 1,305,656(e) 79,501,394
King Pharmaceuticals 160,404(b,e) 1,454,864
Merck & Co 579,260(e) 17,383,593
Mylan 53,769(b,e) 709,213
Pfizer 6,000,725(e) 95,591,548
Schering-Plough 828,999 21,976,763
Wyeth 198,650 9,247,158
---------------
Total 244,076,882
- -------------------------------------------------------------------------------------
ROAD & RAIL (0.5%)
Norfolk Southern 150,763(e) 6,520,500
Ryder System 54,245(e) 1,905,627
---------------
Total 8,426,127
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.6%)
Intel 2,372,592(e) $45,672,396
MEMC Electronic Materials 93,761(b) 1,652,069
NVIDIA 95,822(b) 1,238,978
---------------
Total 48,563,443
- -------------------------------------------------------------------------------------
SOFTWARE (3.5%)
BMC Software 25,174(b) 856,671
Intuit 183,652(b) 5,454,464
Microsoft 905,374 21,294,396
Oracle 1,507,562 33,362,348
Symantec 280,447(b,e) 4,187,074
---------------
Total 65,154,953
- -------------------------------------------------------------------------------------
SPECIALTY RETAIL (4.7%)
Abercrombie & Fitch Cl A 101,072(e) 2,889,648
AutoNation 59,842(b,e) 1,237,533
AutoZone 11,990(b,e) 1,841,304
Bed Bath & Beyond 83,342(b,e) 2,896,135
Best Buy 119,762(e) 4,475,506
Gap 286,082 4,668,858
Home Depot 1,870,876(d,e) 48,530,524
Limited Brands 114,145 1,477,036
Lowe's Companies 241,001(e) 5,412,882
Office Depot 149,209(b) 678,901
O'Reilly Automotive 115,195(b,e) 4,683,829
RadioShack 40,362(e) 626,015
Sherwin-Williams 83,436(e) 4,818,429
Staples 28,256(e) 593,941
TJX Companies 76,140(e) 2,758,552
---------------
Total 87,589,093
- -------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (0.7%)
Coach 90,078 2,665,408
Jones Apparel Group 116,009 1,596,284
Liz Claiborne 229,550(e) 725,378
Nike Cl B 98,329 5,569,355
VF 25,276 1,635,104
---------------
Total 12,191,529
- -------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.4%)
Fannie Mae 1,336,093(e) 774,934
Freddie Mac 794,150(b,e) 492,373
MGIC Investment 154,094(e) 1,017,020
People's United Financial 278,210 4,520,913
---------------
Total 6,805,240
- -------------------------------------------------------------------------------------
TOBACCO (0.5%)
Altria Group 193,824(e) 3,397,735
Lorillard 74,440 5,487,717
---------------
Total 8,885,452
- -------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (0.1%)
Fastenal 47,200(e) 1,678,904
- -------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.2%)
Sprint Nextel 1,090,011(b) 4,360,044
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $2,382,220,494) $1,847,250,315
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL
RECEIVED FOR SECURITIES ON
LOAN (22.8%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND (8.8%)
JPMorgan Prime Money Market Fund 163,102,188 $163,102,188
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ASSET-BACKED COMMERCIAL PAPER (2.2%)
Belmont Funding LLC
08-03-09 0.48% $9,999,600 9,999,600
Ebbets Funding LLC
08-03-09 0.50 9,999,028 9,999,028
Tasman Funding
08-20-09 0.95 9,993,667 9,993,667
Versailles Commercial Paper LLC
08-06-09 0.75 9,992,708 9,992,708
---------------
Total 39,985,003
- -------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (10.4%)
Banco Espanol de Credito Madrid
08-05-09 0.34 3,000,000 3,000,000
Banco Espirito Santo e Comm London
08-24-09 0.62 10,494,036 10,494,036
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
INVESTMENTS OF CASH COLLATERAL
RECEIVED FOR SECURITIES
ON LOAN (CONTINUED)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
CERTIFICATES OF DEPOSIT (CONT.)
Banco Popular Espanol
09-04-09 0.76% $6,990,580 $6,990,580
09-23-09 0.63 3,995,699 3,995,699
Banco Santander-Madrid
10-13-09 0.45 10,000,000 10,000,000
Bank of Nova Scotia Singapore
10-30-09 0.40 15,000,000 15,000,000
Caisse de Depots et Consignment Paris
10-19-09 0.43 9,988,785 9,988,785
Caixa Geral Dep London
10-26-09 0.57 5,000,000 5,000,000
Credit Indusrial et Comm London
10-13-09 0.52 14,980,094 14,980,094
DZ Bank London
08-31-09 0.34 4,498,598 4,498,598
Fortis Bank Brussels
08-06-09 0.33 8,800,000 8,800,000
ING Bank Amsterdam
10-26-09 0.43 2,996,635 2,996,635
ING Bank London
10-13-09 0.50 10,000,000 10,000,000
MIT
08-18-09 0.42 10,000,000 10,000,000
Mizuho London
10-29-09 0.49 4,500,000 4,500,000
Monte de Pasch London
08-13-09 0.71 12,000,103 12,000,103
Nederlandse Waterschapsbank
10-20-09 0.40 9,989,788 9,989,788
Raiffeisen ZentralBank Oest Vienna
08-10-09 0.50 12,000,000 12,000,000
San Paolo Imi Ireland
10-07-09 0.40 9,990,010 9,990,010
Sumitomo Mutsui Banking Brussels
08-17-09 0.42 12,000,000 12,000,000
Svenska Singapore
10-15-09 0.45 6,000,000 6,000,000
Unicredito Italiano NY
08-13-09 0.42 12,000,000 12,000,000
---------------
Total 194,224,328
- -------------------------------------------------------------------------------------
COMMERCIAL PAPER (1.4%)
Citigroup Global Markets
08-03-09 0.35 12,999,115 12,999,115
Royal Bank of Scotland Group
09-10-09 0.47 12,988,968 12,988,968
---------------
Total 25,988,083
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $423,299,602) $423,299,602
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $2,805,520,096)(f) $2,270,549,917
=====================================================================================
</Table>
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2009
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------
S&P 500 Index 26 $6,398,600 Sept. 2009 $156,110
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
22 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2009, the
value of foreign securities represented 1.5% of net assets.
(d) At July 31, 2009, investments in securities included securities valued at
$1,089,480 that were partially pledged as collateral to cover initial
margin deposits on open stock index futures contracts.
(e) At July 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(f) At July 31, 2009, the cost of securities for federal income tax purposes
was $2,816,745,826 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $125,830,595
Unrealized depreciation (672,026,504)
------------------------------------------------------------
Net unrealized depreciation $(546,195,909)
------------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) requires
disclosure regarding the inputs and valuation techniques used to measure fair
value and any changes in valuation inputs or techniques. In addition,
investments shall be disclosed by major category.
SFAS 157 establishes a fair value hierarchy for inputs used in measuring fair
value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. When a valuation uses multiple inputs from
varying levels of the hierarchy, the hierarchy level is determined based on the
lowest level input or inputs that are significant to the fair value measurement
in its entirety. The input levels are not necessarily an indication of the risk
or liquidity associated with investments at that level. For example, certain
U.S. government securities are generally high quality and liquid, however, they
are reflected as Level 2 because the inputs used to determine fair value may not
always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
- --------------------------------------------------------------------------------
24 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable inputs and/or significant assumptions by the Fund
Administrator. Inputs used in a valuation model may include, but are not limited
to, financial statement analysis, discount rates and estimated cash flows, and
comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of July 31, 2009:
<Table>
<Caption>
FAIR VALUE AT JULY 31, 2009
------------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ------------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a) $1,847,250,315 $-- $-- $1,847,250,315
- ------------------------------------------------------------------------------------------------
Total Equity Securities 1,847,250,315 -- -- 1,847,250,315
- ------------------------------------------------------------------------------------------------
Other
Investments of Cash
Collateral Received
for Securities on
Loan(b) 163,102,188 260,197,414 -- 423,299,602
- ------------------------------------------------------------------------------------------------
Total Other 163,102,188 260,197,414 -- 423,299,602
- ------------------------------------------------------------------------------------------------
Investments in Securities 2,010,352,503 260,197,414 -- 2,270,549,917
Other Financial
Instruments(c) 156,110 -- -- 156,110
- ------------------------------------------------------------------------------------------------
Total $2,010,508,613 $260,197,414 $-- $2,270,706,027
- ------------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of
Investments.
(b) Asset categories for Investments of Cash Collateral are identified in the
Portfolio of Investments.
(c) Other Financial Instruments are derivative instruments, which are valued at
the unrealized appreciation (depreciation) on the instrument. Derivative
descriptions are located in the Investments in Derivatives section of the
Portfolio of Investments.
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 25
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
JULY 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $2,382,220,494) $1,847,250,315
Investments of cash collateral received for securities on loan
(identified cost $423,299,602) 423,299,602
- ---------------------------------------------------------------------------------
Total investments in securities (identified cost $2,805,520,096) 2,270,549,917
Capital shares receivable 6,111,767
Dividends and accrued interest receivable 3,511,575
Receivable for investment securities sold 10,820,508
Variation margin receivable on futures contracts 3,300
- ---------------------------------------------------------------------------------
Total assets 2,290,997,067
- ---------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash 1,495,177
Capital shares payable 8,923,671
Payable for investment securities purchased 5,569
Payable upon return of securities loaned 423,299,602
Accrued investment management services fees 29,863
Accrued distribution fees 10,277
Accrued transfer agency fees 6,979
Accrued administrative services fees 2,743
Accrued plan administration services fees 610
Other accrued expenses 221,514
- ---------------------------------------------------------------------------------
Total liabilities 433,996,005
- ---------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $1,857,001,062
- ---------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 4,315,444
Additional paid-in capital 3,059,738,140
Undistributed net investment income 43,755,766
Accumulated net realized gain (loss) (716,033,681)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (534,774,607)
- ---------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $1,857,001,062
- ---------------------------------------------------------------------------------
*Including securities on loan, at value $ 412,162,060
- ---------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
26 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $692,099,784 160,878,551 $4.30(1)
Class B $ 15,588,211 3,653,826 $4.27
Class C $ 2,105,003 496,767 $4.24
Class I $331,846,856 76,648,563 $4.33
Class R2 $ 2,840 661 $4.30
Class R3 $ 2,842 661 $4.30
Class R4 $ 89,590,579 20,740,477 $4.32
Class R5 $ 2,848 661 $4.31
Class W $725,762,099 169,124,201 $4.29
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $4.56. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 27
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED JULY 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 57,729,318
Income distributions from affiliated money market fund 287,177
Income from securities lending 4,640,131
Less foreign taxes withheld (4,218)
- --------------------------------------------------------------------------------
Total income 62,652,408
- --------------------------------------------------------------------------------
Expenses:
Investment management services fees 9,909,438
Distribution fees
Class A 1,808,099
Class B 231,197
Class C 20,366
Class R2 14
Class R3 7
Class W 2,229,343
Transfer agency fees
Class A 1,101,653
Class B 39,844
Class C 3,303
Class R2 1
Class R3 1
Class R4 44,957
Class R5 1
Class W 1,783,474
Administrative services fees 1,094,618
Plan administration services fees
Class R2 7
Class R3 7
Class R4 224,783
Compensation of board members 63,662
Custodian fees 78,695
Printing and postage 103,575
Registration fees 40,545
Professional fees 73,362
Other 69,025
- --------------------------------------------------------------------------------
Total expenses 18,919,977
Expenses waived/reimbursed by the Investment Manager and its
affiliates (152,182)
Earnings and bank fee credits on cash balances (7,886)
- --------------------------------------------------------------------------------
Total net expenses 18,759,909
- --------------------------------------------------------------------------------
Investment income (loss) -- net 43,892,499
- --------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
28 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(691,507,031)
Futures contracts (19,910,603)
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments (711,417,634)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (44,531,092)
- --------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (755,948,726)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(712,056,227)
- --------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 29
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 43,892,499 $ 44,172,325
Net realized gain (loss) on investments (711,417,634) 103,837,007
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (44,531,092) (641,572,651)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (712,056,227) (493,563,319)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (9,214,426) (11,230,396)
Class C (7,117) (4,379)
Class I (5,438,440) (5,698,153)
Class R2 (33) (28)
Class R3 (42) (40)
Class R4 (1,326,570) (1,390,578)
Class R5 (49) (54)
Class W (10,297,303) (14,867,518)
Net realized gain
Class A (24,419,810) (68,772,061)
Class B (803,415) (3,058,960)
Class C (70,547) (169,022)
Class I (10,144,769) (24,176,366)
Class R2 (97) (244)
Class R3 (96) (244)
Class R4 (2,985,348) (7,584,972)
Class R5 (96) (244)
Class W (30,699,663) (74,056,615)
- --------------------------------------------------------------------------------------------------
Total distributions (95,407,821) (211,009,874)
- --------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
30 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 28,702,122 $ 40,810,167
Class B shares 2,141,651 5,505,096
Class C shares 553,812 976,461
Class I shares 101,166,985 120,762,575
Class R4 shares 11,162,166 25,111,692
Class W shares 333,646,211 1,465,443,768
Reinvestment of distributions at net asset value
Class A shares 31,091,644 74,058,485
Class B shares 793,672 3,022,150
Class C shares 73,505 167,943
Class I shares 15,582,928 29,873,023
Class R4 shares 4,311,918 8,975,550
Class W shares 40,996,838 88,923,836
Conversions from Class B to Class A
Class A shares 4,943,185 8,929,996
Class B shares (4,943,185) (8,929,996)
Payments for redemptions
Class A shares (154,038,553) (215,746,354)
Class B shares (8,152,830) (15,187,353)
Class C shares (569,142) (1,059,851)
Class I shares (70,748,251) (108,422,258)
Class R4 shares (18,348,722) (37,030,416)
Class W shares (632,276,771) (622,614,805)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (313,910,817) 863,569,709
- --------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (1,121,374,865) 158,996,516
Net assets at beginning of year 2,978,375,927 2,819,379,411
- --------------------------------------------------------------------------------------------------
Net assets at end of year $ 1,857,001,062 $2,978,375,927
- --------------------------------------------------------------------------------------------------
Undistributed net investment income $ 43,755,766 $ 26,278,639
- --------------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $5.88 $7.22 $6.74 $6.70 $5.95
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .09(b) .09(b) .08(b) .06 .04
Net gains (losses) (both realized and
unrealized) (1.47) (1.00) .97 .35 .90
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (1.38) (.91) 1.05 .41 .94
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.05) (.06) (.06) (.06) (.03)
Distributions from realized gains (.15) (.37) (.51) (.31) (.16)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.20) (.43) (.57) (.37) (.19)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.30 $5.88 $7.22 $6.74 $6.70
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $692 $1,067 $1,410 $1,368 $28
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .96% .96% 1.05% 1.05% 1.35%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .95% .96% 1.03% 1.02% 1.25%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.11% 1.35% 1.13% .95% .84%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62% 137% 64%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (23.19%) (13.40%) 15.92% 6.25% 15.95%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $5.80 $7.12 $6.65 $6.62 $5.90
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06(b) .04(b) .03(b) .01 .02
Net gains (losses) (both realized and
unrealized) (1.44) (.99) .96 .34 .86
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (1.38) (.95) .99 .35 .88
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income -- -- (.01) (.01) --
Distributions from realized gains (.15) (.37) (.51) (.31) (.16)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.15) (.37) (.52) (.32) (.16)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.27 $5.80 $7.12 $6.65 $6.62
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $16 $35 $62 $73 $9
- ----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.73% 1.72% 1.82% 1.85% 2.13%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.71% 1.72% 1.79% 1.82% 2.04%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.35% .59% .37% .20% .06%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62% 137% 64%
- ----------------------------------------------------------------------------------------------------------
Total return(g) (23.68%) (14.07%) 15.18% 5.42% 15.03%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $5.78 $7.11 $6.65 $6.62 $5.90
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06(b) .04(b) .03(b) .01 .01
Net gains (losses) (both realized and
unrealized) (1.44) (.99) .96 .35 .87
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (1.38) (.95) .99 .36 .88
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.01) (.01) (.02) (.02) --
Distributions from realized gains (.15) (.37) (.51) (.31) (.16)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.16) (.38) (.53) (.33) (.16)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.24 $5.78 $7.11 $6.65 $6.62
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2 $3 $3 $3 $--
- ----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.72% 1.72% 1.81% 1.84% 2.13%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.71% 1.72% 1.79% 1.81% 2.06%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.35% .59% .36% .20% .02%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62% 137% 64%
- ----------------------------------------------------------------------------------------------------------
Total return(g) (23.66%) (14.11%) 15.14% 5.51% 15.03%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $5.93 $7.27 $6.78 $6.73 $5.96
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .11(b) .11(b) .11(b) .08 .04
Net gains (losses) (both realized and
unrealized) (1.49) (.99) .97 .36 .92
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (1.38) (.88) 1.08 .44 .96
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.07) (.09) (.08) (.08) (.03)
Distributions from realized gains (.15) (.37) (.51) (.31) (.16)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.22) (.46) (.59) (.39) (.19)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.33 $5.93 $7.27 $6.78 $6.73
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $332 $391 $441 $252 $82
- ----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .56% .61% .70% .72% .91%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .56% .61% .67% .70% .91%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.51% 1.69% 1.47% 1.41% 1.19%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62% 137% 64%
- ----------------------------------------------------------------------------------------------------------
Total return (22.90%) (12.98%) 16.29% 6.73% 16.29%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 35
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(h)
Net asset value, beginning of period $5.88 $7.21 $7.57
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .08 .08 .03
Net gains (losses) (both realized and
unrealized) (1.47) (1.00) .20
- ------------------------------------------------------------------------------------
Total from investment operations (1.39) (.92) .23
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.04) (.04) (.08)
Distributions from realized gains (.15) (.37) (.51)
- ------------------------------------------------------------------------------------
Total distributions (.19) (.41) (.59)
- ------------------------------------------------------------------------------------
Net asset value, end of period $4.30 $5.88 $7.21
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(c),(d) 1.32% 1.41% 1.49%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(f) 1.16% 1.16% 1.48%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) 1.92% 1.15% .55%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62%
- ------------------------------------------------------------------------------------
Total return (23.30%) (13.51%) 3.31%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
36 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(h)
Net asset value, beginning of period $5.89 $7.22 $7.57
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .09 .09 .04
Net gains (losses) (both realized and
unrealized) (1.47) (.99) .20
- ------------------------------------------------------------------------------------
Total from investment operations (1.38) (.90) .24
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.06) (.06) (.08)
Distributions from realized gains (.15) (.37) (.51)
- ------------------------------------------------------------------------------------
Total distributions (.21) (.43) (.59)
- ------------------------------------------------------------------------------------
Net asset value, end of period $4.30 $5.89 $7.22
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(c),(d) 1.10% 1.15% 1.24%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(f) .94% .90% 1.22%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) 2.11% 1.41% .81%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62%
- ------------------------------------------------------------------------------------
Total return (23.17%) (13.26%) 3.46%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 37
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $5.91 $7.25 $6.76 $6.71 $5.95
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(b) .10(b) .09(b) .07 .05
Net gains (losses) (both realized and
unrealized) (1.48) (1.00) .98 .36 .91
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (1.38) (.90) 1.07 .43 .96
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.06) (.07) (.07) (.07) (.04)
Distributions from realized gains (.15) (.37) (.51) (.31) (.16)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.21) (.44) (.58) (.38) (.20)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.32 $5.91 $7.25 $6.76 $6.71
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $90 $126 $158 $224 $--
- ----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(c),(d) .86% .91% .95% .87% 1.18%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(f) .78% .84% .87% .84% 1.06%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.28% 1.47% 1.29% 1.10% 1.03%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62% 137% 64%
- ----------------------------------------------------------------------------------------------------------
Total return (23.05%) (13.26%) 16.15% 6.48% 16.25%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
38 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(h)
Net asset value, beginning of period $5.90 $7.24 $7.57
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .11 .11 .06
Net gains (losses) (both realized and
unrealized) (1.48) (1.00) .20
- ------------------------------------------------------------------------------------
Total from investment operations (1.37) (.89) .26
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.07) (.08) (.08)
Distributions from realized gains (.15) (.37) (.51)
- ------------------------------------------------------------------------------------
Total distributions (.22) (.45) (.59)
- ------------------------------------------------------------------------------------
Net asset value, end of period $4.31 $5.90 $7.24
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(c),(d) .58% .66% .75%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(f) .58% .66% .74%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) 2.48% 1.66% 1.28%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62%
- ------------------------------------------------------------------------------------
Total return (22.91%) (13.09%) 3.76%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 39
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(k)
Net asset value, beginning of period $5.86 $7.22 $7.46
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .09 .08 .03
Net gains (losses) (both realized and
unrealized) (1.47) (1.00) .32
- ------------------------------------------------------------------------------------
Total from investment operations (1.38) (.92) .35
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.04) (.07) (.08)
Distributions from realized gains (.15) (.37) (.51)
- ------------------------------------------------------------------------------------
Total distributions (.19) (.44) (.59)
- ------------------------------------------------------------------------------------
Net asset value, end of period $4.29 $5.86 $7.22
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $726 $1,355 $745
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(c),(d) 1.01% 1.06% 1.18%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(f) 1.01% 1.06% 1.13%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) 2.07% 1.22% .59%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 61% 58% 62%
- ------------------------------------------------------------------------------------
Total return (23.21%) (13.52%) 5.01%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
40 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the years ended July 31, 2009 and 2008.
(g) Total return does not reflect payment of a sales charge.
(h) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(i) Not annualized.
(j) Adjusted to an annual basis.
(k) For the period from Dec. 1, 2006 (inception date) to July 31, 2007.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
RiverSource Disciplined Equity Fund (the Fund) is a series of RiverSource Large
Cap Series, Inc. and is registered under the Investment Company Act of 1940, as
amended (the 1940 Act) as a diversified, open-end management investment company.
RiverSource Large Cap Series, Inc. has 10 billion authorized shares of capital
stock that can be allocated among the separate series as designated by the
Fund's Board of Directors (the Board). The 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.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class
R4, Class R5 and Class W shares.
- - Class A shares are offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are offered without
a front-end sales charge or CDSC to qualifying institutional investors.
- - Class W shares are offered without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At July 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares and the Investment Manager owned 100% of
Class R2, Class R3 and Class R5 shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
- --------------------------------------------------------------------------------
42 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the
Investment Manager, as administrator to the Fund, will fair value foreign
securities pursuant to procedures adopted by the Board, including utilizing a
third party pricing service to determine these fair values. These procedures
take into account multiple factors, including movements in the U.S. securities
markets, to determine a good faith estimate that reasonably reflects the current
market conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund
- --------------------------------------------------------------------------------
44 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FUTURES TRANSACTIONS
The Fund may buy and sell financial futures contracts traded on any U.S. or
foreign exchange to produce incremental earnings, hedge existing positions or
protect against market changes in the value of equities, interest rates or
foreign currencies. The Fund may also buy and write put and call options on
these futures contracts. A futures contract represents a commitment for the
future purchase or sale of an asset at a specified price on a specified date.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Upon entering into futures contracts, the Fund bears the risk of interest rates,
exchange rates or securities prices moving unexpectedly, in which case, the Fund
may not achieve the anticipated benefits of the futures contracts and may
realize a loss. Additional risks include counterparty credit risk, the
possibility of an
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
illiquid market, and that a change in the value of the contract or option may
not correlate with changes in the value of the underlying securities.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT JULY 31, 2009
<Table>
<Caption>
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------------ -------------------------------------
STATEMENT OF ASSETS STATEMENT OF ASSETS
RISK EXPOSURE AND LIABILITIES AND LIABILITIES
CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE
- ------------------------------------------------------------------------------------------------
Equity contracts Net assets -- unrealized
appreciation $156,110* N/A N/A
- ------------------------------------------------------------------------------------------------
Total $156,110 N/A
- ------------------------------------------------------------------------------------------------
</Table>
* Includes cumulative appreciation (depreciation) of futures contracts as
reported in the Futures Contracts Outstanding table following the Portfolio
of Investments. Only the current day's variation margin is reported in
receivables or payables in the Statement of Assets and Liabilities.
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR
ENDED JULY 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN OR (LOSS) ON DERIVATIVES RECOGNIZED IN
INCOME
- -------------------------------------------------------------------
RISK EXPOSURE CATEGORY FUTURES
- -------------------------------------------------------------------
Equity contracts $(19,910,603)
- -------------------------------------------------------------------
Total $(19,910,603)
- -------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION) ON
DERIVATIVES RECOGNIZED IN INCOME
- -----------------------------------------------------------------
RISK EXPOSURE CATEGORY FUTURES
- -----------------------------------------------------------------
Equity contracts $156,110
- -----------------------------------------------------------------
Total $156,110
- -----------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FUTURES
The gross notional amount of long contracts was $6.4 million at July 31, 2009.
The monthly average gross notional contract amount for these contracts was
- --------------------------------------------------------------------------------
46 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
$15.9 million for the year ended July 31, 2009. The fair value of such contracts
on July 31, 2009 is set forth in the table above.
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.60% to 0.375% as the Fund's net assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
determined monthly by measuring the percentage difference over a rolling 12-
month period between the annualized performance of one Class A share of the Fund
and the annualized performance of the Lipper Large-Cap Core Funds Index. In
certain circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than 0.50%,
the adjustment will be zero. The adjustment decreased the management fee by
$2,025,724 for the year ended July 31, 2009. The management fee for the year
ended July 31, 2009 was 0.48% of the Fund's average daily net assets, including
the adjustment under the terms of the performance incentive arrangement.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.06% to 0.03% as the
Fund's net assets increase. The fee for the year ended July 31, 2009 was 0.05%
of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended July 31,
2009, other expenses paid to this company were $16,630.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R2, Class R3, Class R4 and Class R5 shares and an annual
asset-based fee at a rate of 0.20% of the Fund's average daily net assets
attributable to Class W shares. The Transfer Agent charges an annual fee of $5
per inactive account, charged on a pro rata basis for the 12 month period from
the date the account becomes inactive. These fees are included in the transfer
agency fees in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A, Class R3 and Class W shares, a fee at an annual rate of up to 0.50%
of the Fund's average daily net assets attributable to Class R2 shares and a fee
at an annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class B and Class C shares. For Class B and Class C shares, of
the 1.00% fee, up to 0.75% is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $744,000 and $25,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of Apr. 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
- --------------------------------------------------------------------------------
48 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $245,382 for Class A, $15,805 for Class B and $215
for Class C for the year ended July 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class A............................................. 0.95%
Class B............................................. 1.71
Class C............................................. 1.71
Class R2............................................ 1.16
Class R3............................................ 0.94
Class R4............................................ 0.78
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A........................................... $75,872
Class B........................................... 4,491
Class C........................................... 214
Class R4.......................................... 70,770
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2........................................... $ 5
Class R3........................................... 5
Class R4........................................... 825
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Under an agreement which was effective until July 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would not
exceed the following percentage of the class' average daily net assets:
<Table>
Class A............................................. 1.05%
Class B............................................. 1.81
Class C............................................. 1.81
Class I............................................. 0.72
Class R2............................................ 1.52
Class R3............................................ 1.27
Class R4............................................ 0.88
Class R5............................................ 0.77
Class W............................................. 1.17
</Table>
Effective Aug. 1, 2009, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Sept. 30, 2010,
unless sooner terminated at the discretion of the Board, such that net expenses
(excluding fees and expenses of acquired funds*), before giving effect to any
performance incentive adjustment, will not exceed the following percentage of
the class' average daily net assets:
<Table>
Class A............................................. 1.02%
Class B............................................. 1.80
Class C............................................. 1.78
Class I............................................. 0.57
Class R2............................................ 1.37
Class R3............................................ 1.12
Class R4............................................ 0.87
Class R5............................................ 0.62
Class W............................................. 1.02
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
BANK FEE CREDITS
During the year ended July 31, 2009, the Fund's transfer agency fees were
reduced by $7,886 as a result of bank fee credits from overnight cash balances.
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period from Aug. 1, 2008 to Dec. 15, 2008, the Fund paid custodian
- --------------------------------------------------------------------------------
50 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
fees amounting to $80,093 to Ameriprise Trust Company, a subsidiary of
Ameriprise Financial.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,261,156,051 and $1,636,186,451, respectively, for the
year ended July 31, 2009. Realized gains and losses are determined on an
identified cost basis.
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
- -----------------------------------------------------------------
CLASS A
Sold 6,821,872 6,053,873
Converted from Class B shares* 1,149,578 1,555,748
Reinvested distributions 7,831,648 10,923,080
Redeemed (36,445,132) (32,329,627)
- -----------------------------------------------------------------
Net increase (decrease) (20,642,034) (13,796,926)
- -----------------------------------------------------------------
CLASS B
Sold 499,210 826,089
Reinvested distributions 200,930 449,725
Converted to Class A shares* (1,160,372) (1,577,738)
Redeemed (1,988,665) (2,320,136)
- -----------------------------------------------------------------
Net increase (decrease) (2,448,897) (2,622,060)
- -----------------------------------------------------------------
CLASS C
Sold 128,711 150,658
Reinvested distributions 18,704 25,066
Redeemed (132,782) (161,175)
- -----------------------------------------------------------------
Net increase (decrease) 14,633 14,549
- -----------------------------------------------------------------
CLASS I
Sold 23,916,807 17,804,029
Reinvested distributions 3,905,496 4,380,209
Redeemed (17,233,065) (16,813,974)
- -----------------------------------------------------------------
Net increase (decrease) 10,589,238 5,370,264
- -----------------------------------------------------------------
CLASS R4
Sold 2,764,051 3,752,567
Reinvested distributions 1,083,396 1,317,996
Redeemed (4,474,270) (5,442,436)
- -----------------------------------------------------------------
Net increase (decrease) (626,823) (371,873)
- -----------------------------------------------------------------
</Table>
* Automatic conversion of Class B to Class A shares based on the original
purchase.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
- -----------------------------------------------------------------
CLASS W
Sold 79,709,796 213,069,694
Reinvested distributions 10,352,737 13,134,983
Redeemed (152,063,288) (98,243,751)
- -----------------------------------------------------------------
Net increase (decrease) (62,000,755) 127,960,926
- -----------------------------------------------------------------
</Table>
7. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement (the Agreement) with JPMorgan Chase Bank, National Association
(JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments and any uninvested cash
collateral balance are disclosed in the Statement of Assets and Liabilities
along with the related obligation to return the collateral upon the return of
the securities loaned. At July 31, 2009, securities valued at $412,162,060 were
on loan, secured by cash collateral of $423,299,602 invested in short-term
securities or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$4,423,300 earned from securities lending from Dec. 1, 2008 through July 31,
- --------------------------------------------------------------------------------
52 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
2009 is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement pursuant to which the
Fund agreed to reimburse the Investment Manager for expenses incurred by it in
connection with the lending program. Expenses paid to the Investment Manager as
securities lending agent were $8,054 through Nov. 30, 2008 and are included in
other expenses in the Statement of Operations. Cash collateral received on
loaned securities had been invested in an affiliated money market fund. Income
of $216,831 earned from securities lending from Aug. 1, 2008 through Nov. 30,
2008 is included in the Statement of Operations.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $554,957,606 and $584,117,647,
respectively, for the year ended July 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund had no invested
balance in RiverSource Short-Term Cash Fund at July 31, 2009.
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
16, 2008, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $475 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $175 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $650 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the federal funds rate plus 0.75%. Each
borrowing under the credit facility matures no later than 60 days after the date
of borrowing. The Fund also pays a commitment fee equal to its pro rata share of
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
the amount of the credit facility at a rate of 0.06% per annum, in addition to
an upfront fee equal to its pro rata share of 0.02% of the amount of the credit
facility. The Fund had no borrowings during the year ended July 31, 2009.
Under the prior credit facility which was effective until Oct. 15, 2008, the
Fund had entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow
for the temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The credit facility agreement, which was a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permitted collective borrowings up to $500 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matured no later
than 60 days after the date of borrowing. The Fund also paid a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum.
10. FEDERAL TAX INFORMATION
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of futures contracts, re-
characterization of REIT distributions, post-October losses and losses deferred
due to wash sales. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $131,392
and accumulated net realized loss has been decreased by $131,392.
- --------------------------------------------------------------------------------
54 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31,
2009 2008
-------------------------- --------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME CAPITAL GAIN INCOME CAPITAL GAIN
- -------------------------------------------------------------------------------
Class A $ 9,215,872 $24,418,364 $29,513,520 $50,488,937
Class B 48 803,367 813,265 2,245,695
Class C 7,121 70,543 49,313 124,088
Class I 5,439,041 10,144,168 12,125,488 17,749,071
Class R2 33 97 93 179
Class R3 42 96 105 179
Class R4 1,326,747 2,985,171 3,407,046 5,568,504
Class R5 49 96 119 179
Class W 10,299,120 30,697,846 34,555,495 54,368,638
</Table>
At July 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income................. $ 43,787,870
Undistributed accumulated long-term gain...... $ --
Accumulated realized loss..................... $(704,651,841)
Unrealized appreciation (depreciation)........ $(546,188,551)
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$63,499,369 at July 31, 2009, that if not offset by capital gains will expire in
2017.
Because the measurement periods for a regulated investment company's income are
different for excise tax purposes versus income tax purposes, special rules are
in place to protect the amount of earnings and profits needed to support excise
tax distributions. As a result, the Fund is permitted to treat net capital
losses realized between Nov. 1, 2008 and its fiscal year end (post-October loss)
as occurring on the first day of the following tax year. At July 31, 2009, the
Fund had a post-October loss of $641,152,469 that is treated for income tax
purposes as occurring on Aug. 1, 2009.
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 55
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
11. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Sept. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
12. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the
- --------------------------------------------------------------------------------
56 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four Seligman Funds. This settlement
resolved all outstanding matters between the Seligman Parties and the NYAG. In
addition to the foregoing matter, the New York staff of the SEC indicated in
September 2005 that it was considering recommending to the Commissioners of the
SEC the instituting of a formal action against Seligman and Seligman Advisors,
Inc. relating to frequent trading
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 57
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
in the Seligman Funds. Seligman responded to the staff in October 2005 that it
believed that any action would be both inappropriate and unnecessary, especially
in light of the fact that Seligman had previously resolved the underlying issue
with the Independent Directors of the Seligman Funds and made recompense to the
affected Seligman Funds. There have been no further developments with the SEC on
this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
58 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE DISCIPLINED EQUITY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Disciplined Equity Fund (the Fund)
(one of the portfolios constituting the RiverSource Large Cap Series, Inc.) as
of July 31, 2009, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Fund for the periods presented through
July 31, 2006, were audited by other auditors whose report dated September 20,
2006, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2009, by correspondence with the custodian and
brokers, or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 59
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Disciplined Equity Fund of the RiverSource Large Cap
Series, Inc. at July 31, 2009, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 21, 2009
- --------------------------------------------------------------------------------
60 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended July 31, 2009.
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 100%
Dividends Received Deduction for corporations................ 100%
U.S. Government Obligations.................................. 0.00%
CAPITAL GAIN DISTRIBUTION - the Fund designates $69,119,748 to be taxed as
long-term capital gain.
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 61
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
62 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 63
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 43 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
64 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 43 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Kenwood Capital Management LLC, Ameriprise Certificate
New York, NY 10010 Company, RiverSource Service Corporation and Seligman
Age 58 Data Corp. since 2009; Chief Compliance Officer for
each of the Seligman funds since 2004 and all funds in
the RiverSource Family of Funds since 2009; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 65
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2009, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, most notably, the large
investment made in the acquisition of J. & W. Seligman & Co. Incorporated,
including its portfolio management operations, personnel and infrastructure
(including the addition of two new offices in New York City and Palo Alto).
Further, in connection with the Board's evaluation of the overall package of
services provided by RiverSource Investments, the Board considered the quality
of the administrative and transfer agency services provided by RiverSource
Investments' affiliates to the Fund. The Board also reviewed the financial
condition of RiverSource Investments (and its affiliates) and each entity's
ability to carry out its responsibilities under the IMS
- --------------------------------------------------------------------------------
66 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Agreement. Further, the Board considered RiverSource Investments' ability to
retain key personnel and its expectations in this regard. The Board also
discussed the acceptability of the terms of the IMS Agreement (including the
relatively broad scope of services required to be performed by RiverSource
Investments). The Board concluded that the services being performed under the
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance was appropriate in light
of the particular management style and the exceptionally challenging market
conditions involved. The Board noted that the investment management team uses a
quantitative investment process to manage the Fund and that, after extensive
research and in response to changing market conditions, the investment
management team implemented changes to the quantitative investment process.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability. They also reviewed information in the
report comparing the fees charged to the Fund by RiverSource Investments to fees
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 67
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
charged to other client accounts (with similar investment strategies to those of
the Fund).
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund (excluding the effect of a performance incentive
adjustment, if applicable), with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) approximated the peer group's median expense ratio. The Board also
considered the Fund's performance incentive adjustment and noted its continued
appropriateness.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 8, 2009, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
- --------------------------------------------------------------------------------
68 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 ANNUAL REPORT 69
RIVERSOURCE DISCIPLINED EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Fund Distributors, Inc., Member
FINRA, and managed by RiverSource Investments, LLC.
RiverSource is part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6263 J (9/09)
</Table>
Annual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
GROWTH FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2009
RIVERSOURCE GROWTH FUND SEEKS TO PROVIDE SHAREHOLDERS
WITH LONG-TERM CAPITAL GROWTH.
<Table>
(SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 10
Fund Expenses Example.............. 12
Portfolio of Investments........... 15
Statement of Assets and
Liabilities...................... 21
Statement of Operations............ 23
Statements of Changes in Net
Assets........................... 25
Financial Highlights............... 27
Notes to Financial Statements...... 36
Report of Independent Registered
Public Accounting Firm........... 55
Federal Income Tax Information..... 57
Board Members and Officers......... 58
Approval of Investment Management
Services Agreement............... 62
Proxy Voting....................... 65
Results of Meeting of
Shareholders..................... 66
</Table>
At a shareholder meeting on June 2, 2009, shareholders approved the merger of
RiverSource Growth Fund into Seligman Growth Fund, Inc. As of the close of
business on Sept. 11, 2009, the Fund was merged into Seligman Growth Fund,
Inc.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Growth Fund (the Fund) Class A shares declined 20.17% (excluding
sales charge) for the fiscal year ended July 31, 2009.
> The Fund underperformed its benchmark, the Russell 1000(R) Growth Index
(Russell Index), which fell 17.57%, and its peer group as represented by the
Lipper Large-Cap Growth Funds Index, which declined 19.48% for the same
period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
RiverSource Growth Fund
Class A (excluding sales
charge) -20.17% -8.29% -1.44% -5.56%
- ----------------------------------------------------------------------
Russell 1000 Growth Index
(unmanaged) -17.57% -2.64% +0.70% -3.21%
- ----------------------------------------------------------------------
Lipper Large-Cap Growth Funds
Index -19.48% -3.41% +0.49% -3.73%
- ----------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. 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 returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
3/1/72) -20.17% -8.29% -1.44% -5.56% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -20.75% -9.00% -2.20% -6.29% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -20.76% -8.99% -2.19% N/A -9.66%
- ---------------------------------------------------------------------------
Class I (inception
3/4/04) -19.69% -7.83% -0.95% N/A -1.99%
- ---------------------------------------------------------------------------
Class R2 (inception
12/11/06) -20.17% N/A N/A N/A -12.85%
- ---------------------------------------------------------------------------
Class R3 (inception
12/11/06) -19.98% N/A N/A N/A -12.64%
- ---------------------------------------------------------------------------
Class R4 (inception
3/20/95) -19.91% -8.04% -1.20% -5.37% N/A
- ---------------------------------------------------------------------------
Class R5 (inception
12/11/06) -19.70% N/A N/A N/A -12.37%
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) -20.04% N/A N/A N/A -12.26%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
3/1/72) -24.76% -10.08% -2.60% -6.12% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -24.56% -9.89% -2.58% -6.29% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -21.52% -8.99% -2.19% N/A -9.66%
- ---------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum initial sales charge of 5.75%.
Class B share performance reflects a contingent deferred sales charge (CDSC)
applied as follows: first year 5%; second year 4%; third and fourth years 3%;
fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R3, Class R4, Class R5 and
Class W shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available
to qualifying institutional investors only. Class W shares are offered through
qualifying discretionary accounts.
* For classes with less than 10 years performance.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
- --------------------------------------------------------------------------------
4 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
In November 2008, Erik Voss was named portfolio manager of the RiverSource
Growth Fund and is responsible for day-to-day management of the Fund.
Dear Shareholder,
RiverSource Growth Fund (the Fund) Class A shares declined 20.17%, excluding
sales charge, for the fiscal year ended July 31, 2009. The Fund underperformed
its benchmark, the Russell 1000(R) Growth Index (Russell Index), which fell
17.57%, and its peer group as represented by the Lipper Large-Cap Growth Funds
Index, which declined 19.48% for the same period.
SIGNIFICANT PERFORMANCE FACTORS
The Fund's fiscal year was a tale of two markets. The first half, from August
2008 through January 2009, was dominated by extremely difficult market
conditions. As the credit markets froze and global economies weakened, virtually
every segment of the equity markets suffered steep
SECTOR DIVERSIFICATION(1) (at July 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Consumer Discretionary 12.9%
- ------------------------------------------------
Consumer Staples 8.5%
- ------------------------------------------------
Energy 4.5%
- ------------------------------------------------
Financials 6.1%
- ------------------------------------------------
Health Care 15.1%
- ------------------------------------------------
Industrials 10.5%
- ------------------------------------------------
Information Technology 34.5%
- ------------------------------------------------
Materials 4.1%
- ------------------------------------------------
Telecommunication Services 0.9%
- ------------------------------------------------
Utilities 0.4%
- ------------------------------------------------
Other(2) 2.5%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of July
31, 2009. The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
declines. During this period, the Fund had larger allocations to consumer
discretionary, financial and telecommunications stocks than the Russell Index.
All three areas performed poorly as credit became increasingly unavailable. Key
detractors during the period included media companies SIRIUS XM RADIO and VIRGIN
MEDIA, financial stocks KKR PRIVATE INVESTORS and APOLLO MANAGEMENT and
telecommunications company VODAFONE. Contributing positively to the Fund's
results were its smaller positions in energy, industrials and technology, as
compared to the Russell Index.
The Fund performed significantly better in the second half of the fiscal year,
both on an absolute basis and compared to the Russell Index. When my team began
managing the Fund in November we reduced or eliminated large positions in
several stocks that, in our view, did not trade enough to provide sufficient
liquidity or depended on merger and acquisition opportunities to perform well.
During the second half, we also adjusted sector weightings, reducing the
telecommunications services allocation and increasing the information technology
and financials positions.
The Fund's technology positioning was particularly beneficial when the market
rallied in March. Leading contributors during the second half of
TOP TEN HOLDINGS (at July 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Hewlett-Packard 4.2%
- ------------------------------------------------
Apple 3.3%
- ------------------------------------------------
Oracle 3.0%
- ------------------------------------------------
CVS Caremark 2.6%
- ------------------------------------------------
QUALCOMM 2.5%
- ------------------------------------------------
Philip Morris Intl 2.5%
- ------------------------------------------------
MasterCard Cl A 2.5%
- ------------------------------------------------
McDonald's 2.2%
- ------------------------------------------------
Coinstar 2.1%
- ------------------------------------------------
Rovi 2.0%
- ------------------------------------------------
</Table>
Excludes cash & cash equivalents.
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
the fiscal year included software companies MACROVISION SOLUTIONS and ORACLE.
Both have business models that generate stable, recurring revenue. Semiconductor
companies MARVELL TECHNOLOGY GROUP and MICROSEMI also added to relative return.
MARVELL TECHNOLOGY GROUP benefits as personal computer and cell phone sales
increase, while MICROSEMI has a strong market in military programs and other
high reliability devices such as pacemakers.
Positioning in the consumer discretionary sector was also advantageous during
the second half of the fiscal year. The Fund's position in VIRGIN MEDIA added to
relative return. ROYAL CARIBBEAN CRUISES also had a positive impact on the
Fund's results as consumer spending began to stabilize. Within the consumer
discretionary sector, the Fund's holdings of for-profit education company APOLLO
GROUP underperformed. The stock is generally viewed as a defensive holding and,
consequently, did not keep pace with the strong rally. The Fund had less
exposure to specialty retail stocks than the Russell Index, a disadvantage as
the retail sector performed well amid the market advance.
Beginning in March, we increased the Fund's weighting in financial stocks to an
overweight position, as compared to the Russell Index. The timing was opportune.
Financial stocks had suffered the sharpest declines in the downturn and
recovered strongly in the rally that lasted from mid-March through the end of
the Fund's fiscal year. Our emphasis was on insurance companies including
PRUDENTIAL FINANCIAL, AFLAC and PRINCIPAL FINANCIAL GROUP. In our view, all have
strong recurring business models, but the market's
The Fund's technology positioning was particularly beneficial when the market
rallied in March.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
perception of them was tarnished by the credit market difficulties. Recent
performance suggests they have overcome that perception.
Within the materials sector, the portfolio was underweight in areas such as
industrial gases, which performed very poorly as the market declined, but
rebounded sharply in the second half. Having a smaller industrials position than
the Russell Index was also disadvantageous in the second half of the fiscal
year. Like materials, the industrials sector was among the weakest sectors in
the first half and then bounced back strongly in the second half. Within the
industrials sector, the Fund's holdings of BOEING underperformed due to a delay
in the first scheduled flight of its new 787 jet.
For the full fiscal year, stock selection in the consumer discretionary,
financials and telecommunication services sectors detracted from the Fund's
return. Underweights in energy and industrials were advantageous. Positioning in
the information technology and materials sectors also had a positive impact,
mainly due to effective stock selection.
CHANGES TO THE FUND'S PORTFOLIO
When we took over the Fund's management in November, we repositioned the
portfolio in keeping with our investment philosophy. We eliminated or reduced
large individual stock positions and adjusted large sector overweights and
underweights.
The Fund's current positioning focuses on companies in three areas:
1. Companies that we expect to benefit from spending on infrastructure and
other areas targeted by federal stimulus spending. Examples include
electrical equipment company ABB, which could benefit from upgrades or
expansion of the nation's electrical grid, Canadian fertilizer company
POTASH, which could benefit from an agriculture spending recovery and
CISCO, F5 NETWORKS and BROCADE COMMUNICATIONS SYSTEMS which could all
benefit from money spent to increase Internet speed.
2. Companies that we believe are positioned to benefit from a steady but slow
economic recovery. Examples include COINSTAR, which owns Redbox, an
inexpensive and rapidly growing kiosk-based DVD rental business, and APOLLO
GROUP, which has seen
- --------------------------------------------------------------------------------
8 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
fundamentals improve in each of the last two quarters as people strive to
upgrade their skills for the difficult job market.
3. Companies that we believe are positioned to benefit if credit availability
and economic activity return to more historically normal levels. Examples
include insurance companies as well as other financial providers such as
MASTERCARD and BANK OF AMERICA. The portfolio is also overweight in
homebuilders who may benefit as economic activity and home sales rates
stabilize.
To summarize the Fund's positioning at the end of the fiscal year: weightings in
the information technology, energy, financials, consumer discretionary and
materials sectors were larger than those of the Russell Index, while weightings
in consumer staples, utilities and health care were smaller. In general, the
portfolio is tilted toward stocks that may benefit from an economic recovery,
with greater emphasis on companies that have more predictable, recurring revenue
streams.
The portfolio's turnover rate for the fiscal year was 169%. The portfolio was
repositioned during the Fund's fiscal year with the portfolio management change.
(PHOTO - ERIK J. VOSS)
Erik J. Voss
Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 9
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Growth Fund Class A shares (from 8/1/99 to 7/31/09) as
compared to the performance of two widely cited performance indices, the Russell
1000 Growth Index and the Lipper Large-Cap Growth Funds Index. In comparing the
Fund's Class A shares to these indices, you should take into account the fact
that the Fund's performance reflects the maximum sales charge of 5.75%, while
such charges are not reflected in the performance of the indices. Returns for
the Fund include the reinvestment of any distributions paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2009
1 YEAR 3 YEARS 5 YEARS 10 YEARS
RIVERSOURCE GROWTH FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $7,524 $7,271 $8,766 $5,319
- ------------------------------------------------------------------------------------------
Average annual total return -24.76% -10.08% -2.60% -6.12%
- ------------------------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX(1)
Cumulative value of $10,000 $8,243 $9,229 $10,355 $7,219
- ------------------------------------------------------------------------------------------
Average annual total return -17.57% -2.64% +0.70% -3.21%
- ------------------------------------------------------------------------------------------
LIPPER LARGE-CAP GROWTH FUNDS INDEX(2)
Cumulative value of $10,000 $8,052 $9,011 $10,247 $6,127
- ------------------------------------------------------------------------------------------
Average annual total return -19.48% -3.41% +0.49% -3.73%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
10 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE GROWTH FUND LINE
GRAPH)
<Table>
<Caption>
RIVERSOURCE GROWTH
FUND CLASS LIPPER LARGE-CAP
A (INCLUDES RUSSELL 1000 GROWTH FUNDS
SALES CHARGE) GROWTH INDEX(1) INDEX(2)
------------------ --------------- -----------------
7/31/99 $9,425 $10,000 $10,000
10/99 9,858 10,701 10,660
1/00 11,317 11,867 11,931
4/00 12,648 12,704 12,400
7/00 12,348 12,437 12,207
10/00 11,347 11,699 11,604
1/01 9,952 10,327 10,275
4/01 8,137 8,608 8,618
7/01 7,145 8,078 8,009
10/01 5,819 7,027 6,932
1/02 6,364 7,552 7,430
4/02 5,843 6,878 6,916
7/02 5,036 5,756 5,768
10/02 4,988 5,649 5,641
1/03 4,785 5,410 5,339
4/03 5,113 5,891 5,775
7/03 5,491 6,426 6,285
10/03 5,628 6,881 6,685
1/04 5,927 7,341 7,072
4/04 5,877 7,166 6,865
7/04 5,718 6,973 6,670
10/04 5,971 7,114 6,860
1/05 6,284 7,392 7,199
4/05 6,205 7,195 6,959
7/05 6,829 7,883 7,730
10/05 6,694 7,741 7,689
1/06 7,082 8,191 8,239
4/06 7,260 8,288 8,194
7/06 6,896 7,824 7,587
10/06 7,441 8,581 8,169
1/07 7,913 9,007 7,721
4/07 7,983 9,304 7,912
7/07 7,944 9,348 8,000
10/07 8,539 10,231 9,014
1/08 7,436 9,052 7,913
4/08 7,095 9,281 8,156
7/08 6,662 8,758 7,609
10/08 4,856 6,449 5,490
1/09 4,129 5,753 4,810
4/09 4,645 6,351 5,400
7/09 5,319 7,219 6,127
</Table>
(1) The Russell 1000 Growth Index, an unmanaged index, measures the performance
of those stocks in the Russell 1000 Index with higher price-to-book ratios
and higher forecasted growth values. The index reflects reinvestment of all
distributions and changes in market prices.
(2) The Lipper Large-Cap Growth Funds Index includes the 30 largest large-cap
growth 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.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 11
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended July 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
12 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2009 JULY 31, 2009 THE PERIOD(a) EXPENSE RATIO
- --------------------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,288.10 $ 6.96(c) 1.22%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.85 $ 6.14(c) 1.22%
- --------------------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,283.70 $11.39(c) 2.00%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.96 $10.05(c) 2.00%
- --------------------------------------------------------------------------------------------
Class C
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,283.00 $11.33(c) 1.99%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,015.01 $10.00(c) 1.99%
- --------------------------------------------------------------------------------------------
Class I
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,291.70 $ 3.26(c) .57%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.09 $ 2.87(c) .57%
- --------------------------------------------------------------------------------------------
Class R2
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,287.30 $ 7.64(c) 1.34%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.25 $ 6.74(c) 1.34%
- --------------------------------------------------------------------------------------------
Class R3
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,288.90 $ 6.22(c) 1.09%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.50 $ 5.49(c) 1.09%
- --------------------------------------------------------------------------------------------
Class R4
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,290.00 $ 5.02(c) .88%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.54 $ 4.43(c) .88%
- --------------------------------------------------------------------------------------------
Class R5
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,292.20 $ 3.31(c) .58%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.04 $ 2.92(c) .58%
- --------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2009 JULY 31, 2009 THE PERIOD(a) EXPENSE RATIO
- --------------------------------------------------------------------------------------------
Class W
- --------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,289.10 $ 5.82(c) 1.02%
- --------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.85 $ 5.14(c) 1.02%
- --------------------------------------------------------------------------------------------
</Table>
(a) Expenses are equal to the annualized expense ratio for each class as
indicated above, multiplied by the average account value over the period,
multiplied by 182/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended July 31, 2009: +28.81%
for Class A, +28.37% for Class B, +28.30% for Class C, +29.17% for Class I,
+28.73% for Class R2, +28.89% for Class R3, +29.00% for Class R4, +29.22%
for Class R5 and +28.91% for Class W.
(c) RiverSource Investments, LLC (the Investment Manager) and its affiliates
have contractually agreed to waive certain fees and to absorb certain
expenses until Sept. 30, 2010, unless sooner terminated at the discretion of
the Fund's Board, such that net expenses (excluding fees and expenses of
acquired funds), before giving effect to any performance incentive
adjustment, will not exceed 1.21% for Class A, 1.98% for Class B, 1.97% for
Class C, 0.76% for Class I, 1.56% for Class R2, 1.31% for Class R3, 1.06%
for Class R4, 0.81% for Class R5 and 1.21% for Class W. Any amounts waived
will not be reimbursed by the Fund. This change was effective Aug. 1, 2009.
Had this change been in place for the entire six month period ended July 31,
2009, the actual expenses paid would have been $6.39 for Class A, $10.76 for
Class B and $10.70 for Class C; the hypothetical expenses paid would have
been $5.64 for Class A, $9.50 for Class B and $9.45 for Class C. The actual
and hypothetical expenses for Class I, Class R2, Class R3, Class R4, Class
R5 and Class W would have been the same as those expenses presented in the
table above.
- --------------------------------------------------------------------------------
14 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (99.6%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (2.8%)
Boeing 145,473(d) $6,242,246
Honeywell Intl 258,957 8,985,808
ITT 208,200(d) 10,285,080
Lockheed Martin 129,127(d) 9,653,535
---------------
Total 35,166,669
- -------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.6%)
United Parcel Service Cl B 142,700(d) 7,667,271
- -------------------------------------------------------------------------------------
BEVERAGES (1.1%)
PepsiCo 243,270 13,805,573
- -------------------------------------------------------------------------------------
BIOTECHNOLOGY (5.9%)
Amgen 460,056(b) 28,666,090
Biogen Idec 127,400(b,d) 6,057,870
Celgene 250,140(b,d) 14,247,974
Gilead Sciences 405,546(b,d) 19,843,366
Vertex Pharmaceuticals 191,700(b,d) 6,903,117
---------------
Total 75,718,417
- -------------------------------------------------------------------------------------
CHEMICALS (2.2%)
Monsanto 164,910 13,852,440
Potash Corp of Saskatchewan 147,611(c) 13,729,299
---------------
Total 27,581,739
- -------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (5.6%)
Brocade Communications Systems 1,538,633(b) 12,093,655
Cisco Systems 898,081(b,d) 19,766,763
QUALCOMM 862,692 39,864,998
---------------
Total 71,725,416
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (10.0%)
Apple 316,559(b,d) 51,722,575
Hewlett-Packard 1,549,214(d) 67,080,967
IBM 84,085(d) 9,916,144
---------------
Total 128,719,686
- -------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (0.4%)
Fluor 94,033 4,964,942
- -------------------------------------------------------------------------------------
CONSUMER FINANCE (1.2%)
Capital One Financial 514,390(d) 15,791,773
- -------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (3.9%)
Apollo Group Cl A 237,700(b) 16,410,808
Coinstar 993,114(b,d) 33,001,178
---------------
Total 49,411,986
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (1.3%)
Bank of America 308,981 4,569,829
CME Group 21,047 5,868,535
Interactive Brokers Group Cl A 313,531(b) 5,891,247
---------------
Total 16,329,611
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.9%)
Qwest Communications Intl 2,878,935(d) 11,112,689
- -------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.7%)
ABB ADR 489,700(b,c) 8,951,716
- -------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (2.2%)
Transocean 82,176(b,c) 6,548,605
Weatherford Intl 1,177,869(b,c) 22,096,823
---------------
Total 28,645,428
- -------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (3.4%)
BJ's Wholesale Club 75,542(b) 2,519,326
CVS Caremark 1,227,563 41,098,809
---------------
Total 43,618,135
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (3.4%)
Alcon 222,788(c) 28,427,749
Baxter Intl 111,072(d) 6,261,129
Boston Scientific 841,591(b,d) 9,038,687
---------------
Total 43,727,565
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HEALTH CARE PROVIDERS & SERVICES (2.0%)
Community Health Systems 436,451(b,d) $12,360,292
Express Scripts 88,323(b) 6,186,143
WellPoint 138,592(b,d) 7,295,483
---------------
Total 25,841,918
- -------------------------------------------------------------------------------------
HEALTH CARE TECHNOLOGY (0.5%)
Cerner 106,346(b,d) 6,920,998
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (2.7%)
McDonald's 629,100 34,638,246
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (1.2%)
NVR 26,000(b) 15,629,900
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (0.3%)
3M 55,400 3,906,808
- -------------------------------------------------------------------------------------
INSURANCE (3.8%)
AFLAC 392,568(d) 14,862,624
Principal Financial Group 293,682 6,960,263
Prudential Financial 590,354(d) 26,134,972
---------------
Total 47,957,859
- -------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (2.2%)
Google Cl A 60,509(b,d) 26,808,512
SAVVIS 53,631(b) 778,186
---------------
Total 27,586,698
- -------------------------------------------------------------------------------------
IT SERVICES (3.1%)
MasterCard Cl A 201,131(d) 39,025,448
- -------------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.8%)
Illumina 283,839(b,d) 10,257,941
- -------------------------------------------------------------------------------------
MACHINERY (1.6%)
Deere & Co 333,287(d) 14,577,973
Joy Global 172,100(d) 6,398,678
---------------
Total 20,976,651
- -------------------------------------------------------------------------------------
MEDIA (2.1%)
Time Warner Cable 283,492 9,372,246
Virgin Media 1,676,348(e) 17,517,836
---------------
Total 26,890,082
- -------------------------------------------------------------------------------------
METALS & MINING (2.1%)
Barrick Gold 461,900(c) 16,120,310
United States Steel 257,700(d) 10,243,575
---------------
Total 26,363,885
- -------------------------------------------------------------------------------------
MULTILINE RETAIL (3.2%)
Kohl's 326,049(b,d) 15,829,679
Target 586,472(d) 25,581,909
---------------
Total 41,411,588
- -------------------------------------------------------------------------------------
MULTI-UTILITIES (0.5%)
Public Service Enterprise Group 178,200 5,782,590
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (2.3%)
Apache 69,426 5,828,313
Kinder Morgan Management LLC 1(b) 20
Noble Energy 391,294(d) 23,915,889
---------------
Total 29,744,222
- -------------------------------------------------------------------------------------
PERSONAL PRODUCTS (1.1%)
Avon Products 430,492 13,939,331
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (2.7%)
Johnson & Johnson 406,054(d) 24,724,628
Pfizer 609,453 9,708,586
---------------
Total 34,433,214
- -------------------------------------------------------------------------------------
PROFESSIONAL SERVICES (2.2%)
FTI Consulting 510,310(b,d) 27,776,173
- -------------------------------------------------------------------------------------
ROAD & RAIL (2.2%)
CSX 196,700(d) 7,891,604
Union Pacific 344,018(d) 19,787,915
---------------
Total 27,679,519
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.3%)
Intel 786,875(d) 15,147,344
Marvell Technology Group 1,971,756(b,c,d) 26,303,225
Microsemi 68,839(b,d) 939,652
---------------
Total 42,390,221
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SOFTWARE (11.0%)
Activision Blizzard 1,049,552(b) $12,017,370
Citrix Systems 350,951(b) 12,493,856
McAfee 367,300(b,d) 16,374,234
Microsoft 932,065 21,922,169
Oracle 2,143,420(d) 47,433,885
Rovi 1,205,400(b,d) 31,533,264
---------------
Total 141,774,778
- -------------------------------------------------------------------------------------
TOBACCO (3.1%)
Philip Morris Intl 838,775(d) 39,086,915
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $1,106,286,947) $1,272,953,601
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (2.6%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.41% 32,782,368(f) $32,782,368
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $32,782,368) $32,782,368
- -------------------------------------------------------------------------------------
<Caption>
Investments of Cash Collateral Received for Securities on Loan (21.9%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND (9.4%)
JPMorgan Prime Money Market Fund 120,367,667 $120,367,667
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ASSET-BACKED COMMERCIAL PAPER (3.1%)
Belmont Funding LLC
08-03-09 0.48% $11,999,520 $11,999,520
Ebbets Funding LLC
08-03-09 0.50 9,999,028 9,999,028
Tasman Funding
08-20-09 0.95 7,994,933 7,994,933
Versailles Commercial Paper LLC
08-06-09 0.75 9,992,708 9,992,708
---------------
Total 39,986,189
- -------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (8.1%)
Banco Popular Espanol
09-23-09 0.63 3,995,699 3,995,699
Banco Santander-Madrid
10-13-09 0.45 7,000,000 7,000,000
Bank of Nova Scotia Singapore
10-30-09 0.40 10,000,000 10,000,000
Caisse de Depots et Consignment Paris
10-19-09 0.43 7,991,028 7,991,028
Credit Indusrial et Comm London
10-13-09 0.52 11,984,075 11,984,075
DZ Bank London
08-31-09 0.34 2,999,065 2,999,065
Fortis Bank Brussels
08-06-09 0.33 5,900,000 5,900,000
ING Bank Amsterdam
10-26-09 0.43 2,996,635 2,996,635
MIT
08-18-09 0.42 5,000,000 5,000,000
Mizuho London
10-29-09 0.49 3,000,000 3,000,000
Monte de Pasch London
08-13-09 0.71 10,000,086 10,000,086
Raiffeisen ZentralBank Oest Vienna
08-10-09 0.50 8,000,000 8,000,000
Sumitomo Mutsui Banking Brussels
08-17-09 0.42 7,000,000 7,000,000
Svenska Singapore
10-15-09 0.45 5,000,000 5,000,000
Unicredito Italiano NY
08-13-09 0.42 12,000,000 12,000,000
---------------
Total 102,866,588
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
Investments of Cash Collateral Received for Securities on Loan (continued)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
COMMERCIAL PAPER (1.3%)
Citigroup Global Markets
08-03-09 0.35% $6,999,524 $6,999,524
Royal Bank of Scotland Group
09-10-09 0.47 9,991,513 9,991,513
---------------
Total 16,991,037
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $280,211,481) $280,211,481
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $1,419,280,796)(g) $1,585,947,450
=====================================================================================
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2009, the
value of foreign securities represented 9.6% of net assets.
(d) At July 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 2 to the financial statements). The aggregate value of such securities
at July 31, 2009 was $17,517,836 representing 1.4% of net assets.
Information concerning such security holdings at July 31, 2009 is as
follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
----------------------------------------------------------------------
Virgin Media 03-17-08 thru 08-06-08 $20,900,887
</Table>
(f) Affiliated Money Market Fund -- See Note 9 to the financial statements. The
rate shown is the seven-day current annualized yield at July 31, 2009.
(g) At July 31, 2009, the cost of securities for federal income tax purposes
was $1,452,715,377 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $155,456,498
Unrealized depreciation (22,224,425)
------------------------------------------------------------
Net unrealized appreciation $133,232,073
------------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which 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.
- --------------------------------------------------------------------------------
18 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) requires
disclosure regarding the inputs and valuation techniques used to measure fair
value and any changes in valuation inputs or techniques. In addition,
investments shall be disclosed by major category.
SFAS 157 establishes a fair value hierarchy for inputs used in measuring fair
value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. When a valuation uses multiple inputs from
varying levels of the hierarchy, the hierarchy level is determined based on the
lowest level input or inputs that are significant to the fair value measurement
in its entirety. The input levels are not necessarily an indication of the risk
or liquidity associated with investments at that level. For example, certain
U.S. government securities are generally high quality and liquid, however, they
are reflected as Level 2 because the inputs used to determine fair value may not
always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable inputs and/or significant assumptions by the Fund
Administrator. Inputs used in a valuation model may include, but are not limited
to, financial statement analysis, discount rates and estimated cash flows, and
comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of July 31, 2009:
<Table>
<Caption>
FAIR VALUE AT JULY 31, 2009
------------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- -----------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a) $1,272,953,601 $-- $-- $1,272,953,601
- -----------------------------------------------------------------------------------------------
Total Equity Securities 1,272,953,601 -- -- 1,272,953,601
- -----------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(b) 32,782,368 -- -- 32,782,368
Investments of Cash
Collateral
Received for
Securities on Loan(c) 120,367,667 159,843,814 -- 280,211,481
- -----------------------------------------------------------------------------------------------
Total Other 153,150,035 159,843,814 -- 312,993,849
- -----------------------------------------------------------------------------------------------
Total $1,426,103,636 $159,843,814 $-- $1,585,947,450
- -----------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of
Investments.
(b) Money market fund that is a sweep investment for cash balances in the Fund
at July 31, 2009.
(c) Asset categories for Investments of Cash Collateral are identified in the
Portfolio of Investments.
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
20 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
JULY 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $1,106,286,947) $ 1,272,953,601
Affiliated money market fund (identified cost $32,782,368) 32,782,368
Investments of cash collateral received for securities on loan
(identified cost $280,211,481) 280,211,481
- ----------------------------------------------------------------------------------
Total investments in securities (identified cost $1,419,280,796) 1,585,947,450
Capital shares receivable 23,592,379
Dividends and accrued interest receivable 753,607
Receivable for investment securities sold 15,209,163
Other receivable 734,101
- ----------------------------------------------------------------------------------
Total assets 1,626,236,700
- ----------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 24,254,048
Payable for investment securities purchased 43,742,416
Payable upon return of securities loaned 280,211,481
Accrued investment management services fees 20,845
Accrued distribution fees 9,599
Accrued transfer agency fees 9,642
Accrued administrative services fees 1,959
Accrued plan administration services fees 192
Other accrued expenses 268,484
- ----------------------------------------------------------------------------------
Total liabilities 348,518,666
- ----------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 1,277,718,034
- ----------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 621,770
Additional paid-in capital 2,428,851,267
Undistributed net investment income 10,544,402
Accumulated net realized gain (loss) (1,328,967,913)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 166,668,508
- ----------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 1,277,718,034
- ----------------------------------------------------------------------------------
*Including securities on loan, at value $ 275,073,390
- ----------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 21
STATEMENT OF ASSETS AND LIABILITIES (continued) --------------------------------
JULY 31, 2009
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $943,112,551 45,761,782 $20.61(1)
Class B $ 88,787,716 4,706,432 $18.87
Class C $ 8,051,642 428,993 $18.77
Class I $210,133,410 9,966,520 $21.08
Class R2 $ 3,237 155 $20.88
Class R3 $ 3,237 155 $20.88
Class R4 $ 27,619,715 1,312,605 $21.04
Class R5 $ 3,243 155 $20.92
Class W $ 3,283 157 $20.91
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $21.87. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED JULY 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 25,265,767
Interest 7,135
Income distributions from affiliated money market fund 485,376
Income from securities lending 395,621
Less foreign taxes withheld (374,620)
- ----------------------------------------------------------------------------------
Total income 25,779,279
- ----------------------------------------------------------------------------------
Expenses:
Investment management services fees 6,107,233
Distribution fees
Class A 2,436,012
Class B 1,175,189
Class C 79,809
Class R2 15
Class R3 8
Class W 8
Transfer agency fees
Class A 3,499,402
Class B 452,026
Class C 29,594
Class R2 1
Class R3 1
Class R4 15,076
Class R5 1
Class W 6
Administrative services fees 751,070
Plan administration services fees
Class R2 8
Class R3 8
Class R4 75,380
Compensation of board members 41,745
Custodian fees 102,904
Printing and postage 267,454
Registration fees 40,095
Professional fees 64,729
Other 39,549
- ----------------------------------------------------------------------------------
Total expenses 15,177,323
Expenses waived/reimbursed by the Investment Manager and its
affiliates (6,379)
Earnings and bank fee credits on cash balances (8,220)
- ----------------------------------------------------------------------------------
Total net expenses 15,162,724
- ----------------------------------------------------------------------------------
Investment income (loss) -- net 10,616,555
- ----------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 23
STATEMENT OF OPERATIONS (continued) --------------------------------------------
YEAR ENDED JULY 31, 2009
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(1,039,951,520)
Foreign currency transactions 60,200,826
Options contracts written (8,671,136)
- ----------------------------------------------------------------------------------
Net realized gain (loss) on investments (988,421,830)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 499,366,435
- ----------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (489,055,395)
- ----------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (478,438,840)
- ----------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 10,616,555 $ 22,991,812
Net realized gain (loss) on investments (988,421,830) 18,445,072
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 499,366,435 (492,536,692)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (478,438,840) (451,099,808)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (44,910,369) (18,613,899)
Class B (4,161,210) --
Class C (290,907) (35,082)
Class I (13,320,253) (3,250,974)
Class R2 (146) (34)
Class R3 (156) (46)
Class R4 (1,366,434) (1,320,924)
Class R5 (164) (63)
Class W (149) (42)
- --------------------------------------------------------------------------------------------------
Total distributions (64,049,788) (23,221,064)
- --------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 25
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 54,024,753 $ 112,476,264
Class B shares 7,729,164 21,028,069
Class C shares 1,452,609 2,204,302
Class I shares 30,939,046 38,802,667
Class R4 shares 10,702,702 25,787,191
Fund merger (Note 12)
Class A shares N/A 18,206,825
Class B shares N/A 5,395,871
Class C shares N/A 739,026
Class I shares N/A 161,620,525
Class R4 shares N/A 39,465
Reinvestment of distributions at net asset value
Class A shares 43,556,154 18,132,589
Class B shares 4,110,411 --
Class C shares 285,491 34,035
Class I shares 13,319,983 3,250,578
Class R4 shares 1,366,091 1,320,795
Conversions from Class B to Class A
Class A Shares 23,055,661 46,445,960
Class B shares (23,055,661) (46,445,960)
Payments for redemptions
Class A shares (375,042,272) (642,466,071)
Class B shares (43,082,059) (104,935,483)
Class C shares (3,718,391) (7,113,707)
Class I shares (70,891,789) (132,345,429)
Class R4 shares (29,860,350) (99,292,710)
- --------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (355,108,457) (577,115,198)
- --------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (897,597,085) (1,051,436,070)
Net assets at beginning of year 2,175,315,119 3,226,751,189
- --------------------------------------------------------------------------------------------------
Net assets at end of year $1,277,718,034 $ 2,175,315,119
- --------------------------------------------------------------------------------------------------
Undistributed net investment income $ 10,544,402 $ 1,574,083
- --------------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $27.22 $32.73 $28.61 $28.34 $23.73
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .14(b) .26(b) .23(b) .18 .04
Net gains (losses) (both realized and
unrealized) (5.84) (5.50) 4.11 .10 4.57
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (5.70) (5.24) 4.34 .28 4.61
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.91) (.27) (.22) (.01) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.61 $27.22 $32.73 $28.61 $28.34
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $943 $1,591 $2,393 $2,351 $2,101
- -----------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.16% 1.00% 1.19% 1.14% 1.19%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .74% .84% .71% .72% .16%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98% 134% 136%
- -----------------------------------------------------------------------------------------------------------
Total return(e) (20.17%) (16.14%) 15.20% .98% 19.43%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $24.79 $29.79 $26.06 $26.01 $21.95
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) .02(b) (.02)(b) (.05) (.16)
Net gains (losses) (both realized and
unrealized) (5.28) (5.02) 3.75 .10 4.22
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (5.29) (5.00) 3.73 .05 4.06
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.63) -- -- -- --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.87 $24.79 $29.79 $26.06 $26.01
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $89 $189 $369 $462 $578
- -----------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.93% 1.76% 1.96% 1.91% 1.97%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.03%) .08% (.06%) (.06%) (.62%)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98% 134% 136%
- -----------------------------------------------------------------------------------------------------------
Total return(e) (20.75%) (16.78%) 14.31% .19% 18.50%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
28 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $24.73 $29.77 $26.07 $26.01 $21.95
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)(b) .02(b) (.01)(b) (.04) (.16)
Net gains (losses) (both realized and
unrealized) (5.28) (5.01) 3.74 .10 4.22
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (5.29) (4.99) 3.73 .06 4.06
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.67) (.05) (.03) -- --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.77 $24.73 $29.77 $26.07 $26.01
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $8 $13 $20 $19 $15
- -----------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.92% 1.76% 1.95% 1.91% 1.97%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.04%) .08% (.03%) (.03%) (.62%)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98% 134% 136%
- -----------------------------------------------------------------------------------------------------------
Total return(e) (20.76%) (16.78%) 14.31% .23% 18.50%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $27.90 $33.54 $29.31 $28.93 $24.10
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .27(b) .44(b) .40(b) .32 .12
Net gains (losses) (both realized and
unrealized) (6.02) (5.66) 4.19 .10 4.71
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (5.75) (5.22) 4.59 .42 4.83
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (1.07) (.42) (.36) (.04) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.08 $27.90 $33.54 $29.31 $28.93
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $210 $326 $298 $256 $147
- -----------------------------------------------------------------------------------------------------------
Total expenses(c),(d) .55% .54% .74% .68% .75%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.38% 1.40% 1.21% 1.22% .55%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98% 134% 136%
- -----------------------------------------------------------------------------------------------------------
Total return (19.69%) (15.74%) 15.70% 1.44% 20.04%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
30 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007(f)
Net asset value, beginning of period $27.61 $33.13 $32.23
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .13 .24 .13
Net gains (losses) (both realized and
unrealized) (5.92) (5.54) 1.12
- ------------------------------------------------------------------------------------
Total from investment operations (5.79) (5.30) 1.25
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.94) (.22) (.35)
- ------------------------------------------------------------------------------------
Net asset value, end of period $20.88 $27.61 $33.13
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(d),(g) 1.36% 1.36% 1.50%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(c),(d),(h) 1.21% 1.11% 1.50%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) .69% .76% .63%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98%
- ------------------------------------------------------------------------------------
Total return (20.17%) (16.11%) 3.93%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007(f)
Net asset value, beginning of period $27.65 $33.18 $32.23
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .18 .31 .18
Net gains (losses) (both realized and
unrealized) (5.94) (5.54) 1.13
- ------------------------------------------------------------------------------------
Total from investment operations (5.76) (5.23) 1.31
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (1.01) (.30) (.36)
- ------------------------------------------------------------------------------------
Net asset value, end of period $20.88 $27.65 $33.18
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(d),(g) 1.11% 1.12% 1.27%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(c),(d),(h) .96% .86% 1.27%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) .93% 1.00% .87%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98%
- ------------------------------------------------------------------------------------
Total return (19.98%) (15.91%) 4.09%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $27.78 $33.34 $29.13 $28.81 $24.07
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .22(b) .35(b) .25(b) .24 .09
Net gains (losses) (both realized and
unrealized) (5.98) (5.58) 4.22 .10 4.65
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (5.76) (5.23) 4.47 .34 4.74
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.98) (.33) (.26) (.02) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.04 $27.78 $33.34 $29.13 $28.81
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $28 $56 $146 $265 $304
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(g) .85% .84% 1.03% .95% 1.02%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(c),(d),(h) .83% .66% 1.03% .95% 1.02%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.12% 1.11% .79% .89% .34%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98% 134% 136%
- -----------------------------------------------------------------------------------------------------------
Total return (19.91%) (15.85%) 15.39% 1.17% 19.69%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007(f)
Net asset value, beginning of period $27.68 $33.28 $32.23
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .25 .39 .29
Net gains (losses) (both realized and
unrealized) (5.95) (5.59) 1.12
- ------------------------------------------------------------------------------------
Total from investment operations (5.70) (5.20) 1.41
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (1.06) (.40) (.36)
- ------------------------------------------------------------------------------------
Net asset value, end of period $20.92 $27.68 $33.28
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Total expenses(c),(d) .60% .61% .76%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) 1.29% 1.25% 1.38%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98%
- ------------------------------------------------------------------------------------
Total return (19.70%) (15.80%) 4.41%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007(k)
Net asset value, beginning of period $27.62 $33.21 $31.89
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .17 .27 .24
Net gains (losses) (both realized and
unrealized) (5.93) (5.59) 1.43
- ------------------------------------------------------------------------------------
Total from investment operations (5.76) (5.32) 1.67
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.95) (.27) (.35)
- ------------------------------------------------------------------------------------
Net asset value, end of period $20.91 $27.62 $33.21
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Total expenses(c),(d) 1.02% 1.00% 1.17%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) .87% .86% 1.09%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 169% 112% 98%
- ------------------------------------------------------------------------------------
Total return (20.04%) (16.15%) 5.29%(j)
- ------------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the years ended July 31, 2009 and 2008.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
(f) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(h) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(i) Adjusted to an annual basis.
(j) Not annualized.
(k) For the period from Dec. 1, 2006 (inception date) to July 31, 2007.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
RiverSource Growth Fund (the Fund) is a series of RiverSource Large Cap Series,
Inc. and is registered under the Investment Company Act of 1940, as amended (the
1940 Act) as a diversified, open-end management investment company. RiverSource
Large Cap Series, Inc. has 10 billion authorized shares of capital stock that
can be allocated among the separate series as designated by the Fund's Board of
Directors (the Board). The Fund invests primarily in common stocks of U.S. and
foreign companies that appear to offer growth opportunities.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class
R4, Class R5 and Class W shares.
- - Class A shares are offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are offered without
a front-end sales charge or CDSC to qualifying institutional investors.
- - Class W shares are offered without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At July 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares and the Investment Manager owned 100% of
Class R2, Class R3, Class R5 and Class W shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
- --------------------------------------------------------------------------------
36 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the
Investment Manager, as administrator to the Fund, will fair value foreign
securities pursuant to procedures adopted by the Board, including utilizing a
third party pricing service to determine these fair values. These procedures
take into account multiple factors, including movements in the U.S. securities
markets, to determine a good faith estimate that reasonably reflects the current
market conditions as of the close of the NYSE. Swap transactions are valued
through an authorized pricing service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
ILLIQUID SECURITIES
At July 31, 2009, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at July 31, 2009 was
$17,517,836 representing 1.37% of net assets. Certain illiquid securities may be
valued, in good faith, by management at fair value according to procedures
approved by the Board. According to Board guidelines, certain unregistered
securities are determined to be liquid and are not included within the 15%
limitation specified above. Assets are liquid if they can be sold or disposed of
in the ordinary course of business within seven days at approximately the value
at which the asset is valued by the Fund.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all
- --------------------------------------------------------------------------------
38 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
of its taxable income (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount reflected in the
Statement of Assets and Liabilities.
OPTION TRANSACTIONS
The Fund may buy and write options traded on any U.S. or foreign exchange, or in
the over-the-counter (OTC) market to produce incremental earnings, protect
gains, and facilitate buying and selling of securities for investments. The Fund
may also buy and sell put and call options and write covered call options on
portfolio securities. Options are contracts which entitle the holder to purchase
or sell securities or other financial instruments at a specified price, or in
the case of index options, to receive or pay the difference between the index
value and the strike price of the index option. Completion of transactions for
options traded in the OTC market depends upon the performance of the other
party. Cash collateral may be collected or posted by the Fund to secure certain
OTC options trades. Cash collateral held or posted by the Fund for such option
trades must be returned to the counterparty or the Fund upon closure, exercise
or expiration of the contract.
Option contracts purchased are recorded as investments and options contracts
written are recorded as liabilities of the Fund. Option contracts are valued
daily at the closing prices on their primary exchanges and unrealized
appreciation or depreciation is recorded. Option contracts, including OTC option
contracts, with no readily available market value are valued using quotations
obtained from independent brokers as of the close of the NYSE. The Fund will
realize a gain or loss when the option transaction expires or is exercised. When
options on debt securities or futures are exercised, the Fund will realize a
gain or loss. When other options are exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of premium
received or paid.
The risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of being unable to
enter into a closing transaction if a liquid secondary market does not exist.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The Fund's maximum payout in the case of
written put option contracts represents the maximum potential amount of future
payments (undiscounted) that the Fund could be required to make as a guarantor
for written put options. For OTC options contracts, the transaction is also
subject to
- --------------------------------------------------------------------------------
40 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
counterparty credit risk. The maximum payout amount may be offset by the
subsequent sale, if any, of assets obtained upon the exercise of the put options
by holders of the option contracts or proceeds received upon entering into the
contracts.
TOTAL RETURN SWAP TRANSACTIONS
The Fund may enter into total return swap transactions to gain exposure to the
total return on a specified reference security, a basket of reference securities
or a reference security index during the specified period, in return for
periodic payments based on a fixed or variable interest rate. Total return swap
transactions may be used to obtain exposure to a security or market without
owning or taking physical custody of such reference security or securities in a
market.
The notional amounts of swap contracts are not recorded in the financial
statements. Swap contracts are valued daily, and the change in value is recorded
as unrealized appreciation (depreciation) until the termination of the swap, at
which time the Fund will realize a gain or (loss). Periodic payments received
(or made) by the Fund over the term of the contract are recorded as realized
gains (losses).
Total return swap transactions may be subject to liquidity risk, which exists
when a particular swap is difficult to purchase or sell. It may not be possible
for the Fund to initiate a transaction or liquidate a position at an
advantageous time or price, which may result in significant losses. Total return
swaps are subject to the risk associated with the investment in the reference
securities. The risk in the case of short total return swap transactions is
unlimited based on the potential for unlimited increases in the market value of
the reference securities. This risk may be offset if the Fund holds any of the
reference securities. The risk in the case of long total return swap
transactions is limited to the current notional amount of the total return swap.
Total return swaps are also subject to the risk of the counterparty not
fulfilling its obligations under the contract. The counterparty risk may be
offset by any collateral held by the Fund related to the swap transactions. At
July 31, 2009, and for the year then ended, the Fund had no outstanding total
return swap contracts.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT JULY 31, 2009
At July 31, 2009, the Fund had no outstanding derivatives.
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR
ENDED JULY 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN OR (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ---------------------------------------------------------------------------
FORWARD
FOREIGN
CURRENCY
RISK EXPOSURE CATEGORY CONTRACTS OPTIONS TOTAL
- ---------------------------------------------------------------------------
Equity contracts $ -- $(8,995,974) $(8,995,974)
- ---------------------------------------------------------------------------
Foreign exchange contracts 64,413,707 (993,116) 63,420,591
- ---------------------------------------------------------------------------
TOTAL $64,413,707 $(9,989,090) $54,424,617
- ---------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION) ON DERIVATIVES
RECOGNIZED IN INCOME
- ---------------------------------------------------------------------------
FORWARD
FOREIGN
CURRENCY
RISK EXPOSURE CATEGORY CONTRACTS OPTIONS TOTAL
- ---------------------------------------------------------------------------
Equity contracts $ -- $15,159,613 $15,159,613
- ---------------------------------------------------------------------------
Foreign exchange contracts (1,699,875) 928,175 (771,700)
- ---------------------------------------------------------------------------
TOTAL $(1,699,875) $16,087,788 $14,387,913
- ---------------------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At July 31, 2009, the Fund had no forward foreign currency contracts
outstanding. The monthly average gross notional amount for these contracts was
$90.3 million for the year ended July 31, 2009.
OPTIONS
At July 31, 2009, the Fund had no options contracts outstanding. The monthly
average gross notional contract amount for these contracts was $82.9 million for
the year ended July 31, 2009.
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.60% to 0.375% as the Fund's net assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
- --------------------------------------------------------------------------------
42 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
determined monthly by measuring the percentage difference over a rolling 12-
month period between the annualized performance of one Class A share of the Fund
and the annualized performance of the Lipper Large-Cap Growth Funds Index. In
certain circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than 0.50%,
the adjustment will be zero. The adjustment decreased the management fee by
$1,914,523 for the year ended July 31, 2009. The management fee for the year
ended July 31, 2009 was 0.45% of the Fund's average daily net assets, including
the adjustment under the terms of the performance incentive arrangement.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.06% to 0.03% as the
Fund's net assets increase. The fee for the year ended July 31, 2009 was 0.06%
of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended July 31,
2009, other expenses paid to this company were $138,262.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
attributable to Class R2, Class R3, Class R4 and Class R5 shares and an annual
asset-based fee at a rate of 0.20% of the Fund's average daily net assets
attributable to Class W shares. The Transfer Agent charges an annual fee of $5
per inactive account, charged on a pro rata basis for the 12 month period from
the date the account becomes inactive. These fees are included in the transfer
agency fees in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A, Class R3 and Class W shares, a fee at an annual rate of up to 0.50%
of the Fund's average daily net assets attributable to Class R2 shares and a fee
at an annual rate of up to 1.00% of the Fund's average daily net assets
attributable to Class B and Class C shares. For Class B and Class C shares, of
the 1.00% fee, up to 0.75% is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $4,387,000 and $112,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $993,128 for Class A, $118,996 for Class B and
$1,181 for Class C for the year ended July 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class R2............................................ 1.21%
Class R3............................................ 0.96
Class R4............................................ 0.83
</Table>
- --------------------------------------------------------------------------------
44 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class R4.......................................... $5,193
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2.......................................... $ 5
Class R3.......................................... 5
Class R4.......................................... 1,176
</Table>
Under an agreement which was effective until July 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would not
exceed the following percentage of the class average daily net assets:
<Table>
Class R4............................................ 0.97%
</Table>
Effective Aug. 1, 2009, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Sept. 30, 2010,
unless sooner terminated at the discretion of the Board, such that net expenses
(excluding fees and expenses of acquired funds*), before giving effect to any
performance incentive adjustment, will not exceed the following percentage of
the class' average daily net assets:
<Table>
Class A............................................. 1.21%
Class B............................................. 1.98
Class C............................................. 1.97
Class I............................................. 0.76
Class R2............................................ 1.56
Class R3............................................ 1.31
Class R4............................................ 1.06
Class R5............................................ 0.81
Class W............................................. 1.21
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
BANK FEE CREDITS
During the year ended July 31, 2009, the Fund's transfer agency fees were
reduced by $8,220 as a result of bank fee credits from overnight cash balances.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period from Aug. 1, 2008 to Dec. 15, 2008, the Fund paid custodian
fees amounting to $58,493 to Ameriprise Trust Company, a subsidiary of
Ameriprise Financial.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $2,279,367,412 and $2,516,886,597, respectively, for the
year ended July 31, 2009. Realized gains and losses are determined on an
identified cost basis.
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
- -----------------------------------------------------------------
CLASS A
Sold 2,862,506 3,579,155
Fund merger N/A 647,067
Converted from Class B shares* 1,118,675 1,746,745
Reinvested distributions 2,608,153 561,728
Redeemed (19,263,353) (21,198,973)
- -----------------------------------------------------------------
Net increase (decrease) (12,674,019) (14,664,278)
- -----------------------------------------------------------------
CLASS B
Sold 448,819 733,992
Fund merger N/A 209,948
Reinvested distributions 267,605 --
Converted to Class A shares* (1,222,475) (1,916,878)
Redeemed (2,419,516) (3,796,082)
- -----------------------------------------------------------------
Net increase (decrease) (2,925,567) (4,769,020)
- -----------------------------------------------------------------
CLASS C
Sold 84,812 78,462
Fund merger N/A 28,823
Reinvested distributions 18,684 1,155
Redeemed (204,746) (261,120)
- -----------------------------------------------------------------
Net increase (decrease) (101,250) (152,680)
- -----------------------------------------------------------------
CLASS I
Sold 1,494,146 1,272,282
Fund merger N/A 5,614,412
Reinvested distributions 782,608 98,532
Redeemed (4,007,743) (4,180,720)
- -----------------------------------------------------------------
Net increase (decrease) (1,730,989) 2,804,506
- -----------------------------------------------------------------
</Table>
* Automatic conversion of Class B shares to Class A shares based on the
original purchase.
- --------------------------------------------------------------------------------
46 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
- -----------------------------------------------------------------
CLASS R4
Sold 571,969 815,040
Fund merger N/A 1,376
Reinvested distributions 80,311 40,170
Redeemed (1,352,945) (3,217,095)
- -----------------------------------------------------------------
Net increase (decrease) (700,665) (2,360,509)
- -----------------------------------------------------------------
</Table>
7. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement (the Agreement) with JPMorgan Chase Bank, National Association
(JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments and any uninvested cash
collateral balance are disclosed in the Statement of Assets and Liabilities
along with the related obligation to return the collateral upon the return of
the securities loaned. At July 31, 2009, securities valued at $275,073,390 were
on loan, secured by cash collateral of $280,211,481 invested in short-term
securities or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$364,368 earned from securities lending from Dec. 1, 2008 through July 31, 2009
is
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement pursuant to which the
Fund agreed to reimburse the Investment Manager for expenses incurred by it in
connection with the lending program. Expenses paid to the Investment Manager as
securities lending agent were $1,771 through Nov. 30, 2008 and are included in
other expenses in the Statement of Operations. Cash collateral received on
loaned securities had been invested in an affiliated money market fund. Income
of $31,253 earned from securities lending from Aug. 1, 2008 through Nov. 30,
2008 is included in the Statement of Operations.
8. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written during the year
ended July 31, 2009, are as follows:
<Table>
<Caption>
CALLS PUTS
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- --------------------------------------------------------------------------
Balance July 31, 2008 26,796 $ 2,162,573 5,537 $ 3,967,499
Opened 118,661 9,695,534 34,599 6,791,899
Closed (69,042) (8,731,415) (40,136) (10,759,398)
Expired (76,415) (3,126,692) -- --
- --------------------------------------------------------------------------
Balance July 31, 2009 -- $ -- -- $ --
- --------------------------------------------------------------------------
</Table>
9. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $786,297,609 and $822,343,121,
respectively, for the year ended July 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at July 31, 2009, can be found in the
Portfolio of Investments.
10. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for
- --------------------------------------------------------------------------------
48 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
other temporary or emergency purposes. The credit facility became effective on
Oct. 16, 2008, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $475 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $175 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $650 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the federal funds rate plus 0.75%. Each
borrowing under the credit facility matures no later than 60 days after the date
of borrowing. The Fund also pays a commitment fee equal to its pro rata share of
the amount of the credit facility at a rate of 0.06% per annum, in addition to
an upfront fee equal to its pro rata share of 0.02% of the amount of the credit
facility. The Fund had no borrowings during the year ended July 31, 2009.
Under the prior credit facility which was effective until Oct. 15, 2008, the
Fund had entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow
for the temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The credit facility agreement, which was a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permitted collective borrowings up to $500 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matured no later
than 60 days after the date of borrowing. The Fund also paid a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum.
11. FEDERAL TAX INFORMATION
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of options contracts,
foreign currency transactions, recognition of unrealized appreciation
(depreciation) for certain derivative investments, investments in partnerships,
post-October losses and losses deferred due to wash sales. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by
$62,403,552 and accumulated net realized loss has been increased by $62,305,595
resulting in a net reclassification adjustment to decrease paid-in capital by
$97,957.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31,
2009 2008
-------------------------- --------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME CAPITAL GAIN INCOME CAPITAL GAIN
- --------------------------------------------------------------------------------
Class A $44,910,369 $-- $18,613,899 $--
Class B 4,161,210 -- -- --
Class C 290,907 -- 35,082 --
Class I 13,320,253 -- 3,250,974 --
Class R2 146 -- 34 --
Class R3 156 -- 46 --
Class R4 1,366,434 -- 1,320,924 --
Class R5 164 -- 63 --
Class W 149 -- 42 --
</Table>
At July 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income................ $ 10,565,980
Undistributed accumulated long-term gain..... $ --
Accumulated realized loss.................... $(1,295,533,332)
Unrealized appreciation (depreciation)....... $ 133,212,349
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$280,504,323 at July 31, 2009, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2011 2017
$178,158,939 $102,345,384
</Table>
Because the measurement periods for a regulated investment company's income are
different for excise tax purposes versus income tax purposes, special rules are
in place to protect the amount of earnings and profits needed to support excise
tax distributions. As a result, the Fund is permitted to treat net capital
losses realized between Nov. 1, 2008 and its fiscal year end (post-October loss)
as occurring on the first day of the following tax year. At July 31, 2009, the
Fund had a post-October loss of $1,002,115,191 that is treated for income tax
purposes as occurring on Aug. 1, 2009.
- --------------------------------------------------------------------------------
50 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Fund had recognized built-in losses of $12,913,818 at July 31, 2009, that if
not offset by capital gains will expire in 2017. As a result of the fund merger
(Note 12) the Fund acquired unrealized capital losses, which are limited by
Internal Revenue Code section 382.
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over and recognized built-
in losses have been offset or expire. There is no assurance that the Fund will
be able to utilize all of its capital loss carry-over before it expires.
12. FUND MERGER
At the close of business on March 14, 2008, RiverSource Growth Fund acquired the
assets and assumed the identified liabilities of RiverSource Fundamental Growth
Fund. The reorganization was completed after shareholders approved the plan on
Jan. 29, 2008.
The aggregate net assets of RiverSource Growth Fund immediately before the
acquisition were $2,444,672,413 and the combined net assets immediately after
the acquisition were $2,630,674,125.
The merger was accomplished by a tax-free exchange of 36,872,082 shares of
RiverSource Fundamental Growth Fund valued at $186,001,712.
In exchange for the RiverSource Fundamental Growth Fund shares and net assets,
RiverSource Growth Fund issued the following number of shares:
<Table>
<Caption>
SHARES
- ------------------------------------------------------------
Class A.......................................... 647,067
Class B.......................................... 209,948
Class C.......................................... 28,823
Class I.......................................... 5,614,412
Class R4......................................... 1,376
</Table>
The components of RiverSource Fundamental Growth Fund's net assets after
adjustments for any permanent book-to-tax differences at the merger date were as
follows:
<Table>
<Caption>
EXCESS OF
ACCUMULATED DISTRIBUTIONS OVER
TOTAL CAPITAL UNREALIZED NET NET INVESTMENT
NET ASSETS STOCK DEPRECIATION REALIZED GAIN INCOME
- ----------------------------------------------------------------------------------------------
RiverSource
Fundamental
Growth Fund $186,001,712 $209,335,799 $(24,043,308) $4,925,716 $(4,216,495)
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
13. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Sept. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements, other than as noted below.
At a shareholder meeting on June 2, 2009, shareholders approved the merger of
RiverSource Growth Fund into Seligman Growth Fund, Inc. As of the close of
business on Sept. 11, 2009, the Fund was merged into Seligman Growth Fund, Inc.
14. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with
- --------------------------------------------------------------------------------
52 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
the Securities and Exchange Commission (SEC) and Minnesota Department of
Commerce (MDOC) related to market timing activities. As a result, AEFC was
censured and ordered to cease and desist from committing or causing any
violations of certain provisions of the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four Seligman Funds. This settlement
resolved all outstanding matters between the Seligman Parties and the NYAG. In
addition to the foregoing matter, the New
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
York staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
54 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE GROWTH FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Growth Fund (the Fund) (one of the
portfolios constituting the RiverSource Large Cap Series, Inc.) as of July 31,
2009, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the three years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Fund for the periods presented through
July 31, 2006, were audited by other auditors whose report dated September 20,
2006, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2009, by correspondence with the custodian and
brokers, or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Growth Fund of the RiverSource Large Cap Series, Inc. at
July 31, 2009, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the three years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 21, 2009
- --------------------------------------------------------------------------------
56 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended July 31, 2009
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals........................ 49.84%
Dividends Received Deduction for corporations.................... 45.38%
U.S. Government Obligations...................................... 0.00%
</Table>
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 57
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
58 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 59
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 43 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 43 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Kenwood Capital Management LLC, Ameriprise Certificate
New York, NY 10010 Company, RiverSource Service Corporation and Seligman
Age 58 Data Corp. since 2009; Chief Compliance Officer for
each of the Seligman funds since 2004 and all funds in
the RiverSource Family of Funds since 2009; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 61
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2009, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, most notably, the large
investment made in the acquisition of J. & W. Seligman & Co. Incorporated,
including its portfolio management operations, personnel and infrastructure
(including the addition of two new offices in New York City and Palo Alto).
Further, in connection with the Board's evaluation of the overall package of
services provided by RiverSource Investments, the Board considered the quality
of the administrative and transfer agency services provided by RiverSource
Investments' affiliates to the Fund. The Board also reviewed the financial
condition of RiverSource Investments (and its affiliates) and each entity's
ability to carry out its responsibilities under the IMS Agreement. Further, the
Board considered RiverSource Investments' ability to
- --------------------------------------------------------------------------------
62 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
retain key personnel and its expectations in this regard. The Board also
discussed the acceptability of the terms of the IMS Agreement (including the
relatively broad scope of services required to be performed by RiverSource
Investments). The Board concluded that the services being performed under the
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance was appropriate in light
of the particular management style and the exceptionally challenging market
conditions involved. Further, the Board noted that the portfolio management team
was replaced in November 2008 and that the Fund is proposed to be merged with a
similar fund in 2009.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability. They also reviewed information in the
report comparing the fees charged to the Fund by RiverSource Investments to fees
charged to other client accounts (with similar investment strategies to those of
the Fund).
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 63
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund (excluding the effect of a performance incentive
adjustment, if applicable), with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) was slightly below the peer group's median expense ratio shown in
the reports. The Board also considered the Fund's performance incentive
adjustment and noted its continued appropriateness.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 8, 2009, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
- --------------------------------------------------------------------------------
64 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT 65
RESULTS OF MEETING OF SHAREHOLDERS --------------------------------------------
RiverSource Growth Fund
SPECIAL MEETING OF SHAREHOLDERS HELD ON JUNE 2, 2009
(UNAUDITED)
A brief description of the proposal voted upon at the meeting and the votes cast
for, against or withheld, as well as the number of abstentions and broker non-
votes as to the proposal is set forth below. A vote is based on total dollar
interest in the Fund.
To approve an Agreement and Plan of Reorganization between the Fund and Seligman
Growth Fund, Inc.
<Table>
<Caption>
DOLLARS VOTED DOLLARS VOTED BROKER
"FOR" "AGAINST" ABSTENTIONS NON-VOTES
- ----------------------------------------------------------------
646,163,658.480 49,402,803.070 36,329,651.367 0.000
- ----------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
66 RIVERSOURCE GROWTH FUND -- 2009 ANNUAL REPORT
RIVERSOURCE GROWTH FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Fund Distributors, Inc., Member
FINRA, and managed by RiverSource Investments, LLC.
RiverSource is part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6455 AE (9/09)
</Table>
Annual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
LARGE CAP EQUITY FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2009
RIVERSOURCE LARGE CAP EQUITY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM GROWTH OF CAPITAL.
<Table>
(SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 31
Statement of Operations............ 33
Statements of Changes in Net
Assets........................... 35
Financial Highlights............... 37
Notes to Financial Statements...... 46
Report of Independent Registered
Public Accounting Firm........... 66
Federal Income Tax Information..... 68
Board Members and Officers......... 69
Approval of Investment Management
Services Agreement............... 73
Proxy Voting....................... 76
Results of Meeting of
Shareholders..................... 76
</Table>
At a shareholder meeting on June 2, 2009, shareholders approved the merger of
RiverSource Large Cap Equity Fund into RiverSource Disciplined Equity Fund.
As of the close of business on Sept. 11, 2009, the Fund was merged into
RiverSource Disciplined Equity Fund.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Large Cap Equity Fund (the Fund) Class A shares declined 26.30%
(excluding sales charge) for the 12 months ended July 31, 2009.
> The Fund underperformed its benchmark, the Standard & Poor's 500 Composite
Stock Price Index (S&P 500 Index), which decreased 19.96% during these same 12
months.
> The Fund's peer group, as represented by the Lipper Large-Cap Core Funds
Index, declined 18.83%, for the same period.
> Effective Nov. 1, 2008, the S&P 500 Index replaced the Russell 1000(R) Index
as the Fund's primary benchmark. The Fund's former benchmark, the Russell
1000(R) Index, fell 20.17% during the annual period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS 3/28/02
- ----------------------------------------------------------------------
RiverSource Large Cap Equity
Fund
Class A (excluding sales
charge) -26.30% -10.28% -3.15% -2.53%
- ----------------------------------------------------------------------
S&P 500 Index (unmanaged) -19.96% -6.16% -0.14% -0.09%
- ----------------------------------------------------------------------
Russell 1000 Index (unmanaged) -20.17% -5.99% +0.32% +0.32%
- ----------------------------------------------------------------------
Lipper Large-Cap Core Funds
Index -18.83% -5.36% +0.03% -0.41%
- ----------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. 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 returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
- --------------------------------------------------------------------------------
2 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 3/28/02) -26.30% -10.28% -3.15% -2.53%
- -----------------------------------------------------------------------
Class B (inception 3/28/02) -26.82% -10.98% -3.90% -3.30%
- -----------------------------------------------------------------------
Class C (inception 3/28/02) -26.76% -10.98% -3.91% -3.27%
- -----------------------------------------------------------------------
Class I (inception 3/4/04) -26.06% -9.97% -2.73% -3.57%
- -----------------------------------------------------------------------
Class R2 (inception 12/11/06) -26.42% N/A N/A -15.32%
- -----------------------------------------------------------------------
Class R3 (inception 12/11/06) -26.32% N/A N/A -15.12%
- -----------------------------------------------------------------------
Class R4 (inception 3/28/02) -25.99% -10.16% -2.96% -2.34%
- -----------------------------------------------------------------------
Class R5 (inception 12/11/06) -26.01% N/A N/A -14.95%
- -----------------------------------------------------------------------
With sales charge
Class A (inception 3/28/02) -30.55% -12.03% -4.29% -3.32%
- -----------------------------------------------------------------------
Class B (inception 3/28/02) -30.38% -11.73% -4.23% -3.30%
- -----------------------------------------------------------------------
Class C (inception 3/28/02) -27.47% -10.98% -3.91% -3.27%
- -----------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second year 4%; third and fourth years 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R2, Class R3, Class R4 and Class R5 shares. Class I,
Class R2, Class R3, Class R4 and Class R5 are available to qualifying
institutional investors only.
The Fund's returns reflect the effect of fee waivers/expense reimbursements, if
any. Without such waivers/reimbursements, the Fund's returns would be lower.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
- --------------------------------------------------------------------------------
4 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Dear Shareholder,
RiverSource Large Cap Equity Fund (the Fund) Class A shares declined 26.30%
(excluding sales charge) for the 12 months ended July 31, 2009. The Fund
underperformed its benchmark, the Standard & Poor's 500 Composite Stock Price
Index (S&P 500 Index), which decreased 19.96% during these same 12 months. The
Fund's peer group, as represented by the Lipper Large-Cap Core Funds Index,
declined 18.83%, for the same period.
Effective Nov. 1, 2008, the S&P 500 Index replaced the Russell 1000(R) Index as
the Fund's primary benchmark. The Fund's former benchmark, the Russell 1000(R)
Index, fell 20.17% during the annual period.
SECTOR DIVERSIFICATION(1) (at July 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Consumer Discretionary 13.4%
- ------------------------------------------------
Consumer Staples 10.0%
- ------------------------------------------------
Energy 13.2%
- ------------------------------------------------
Financials 16.6%
- ------------------------------------------------
Health Care 18.8%
- ------------------------------------------------
Industrials 6.8%
- ------------------------------------------------
Information Technology 12.8%
- ------------------------------------------------
Materials 3.6%
- ------------------------------------------------
Telecommunication Services 1.8%
- ------------------------------------------------
Utilities 2.9%
- ------------------------------------------------
Other(2) 0.1%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of July
31, 2009. The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which 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.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
SIGNIFICANT PERFORMANCE FACTORS
Early in the annual period, financial markets worldwide came under great stress
amid a deepening economic downturn. Data showed that the U.S. economy shrank by
6.2% in the fourth quarter of 2008, the largest contraction in 25 years.
Consumer confidence fell, and unemployment hit new highs. Gross Domestic Product
(GDP) continued to decline, shrinking 6.4% during the first quarter of 2009.
Equities, both in the U.S. and around the globe, sold off, posting major
declines not seen since the 1930s. In unprecedented efforts to mitigate the
crisis, governments worldwide passed massive stimulus packages and debated
strategies to calm investor fears. Beginning in March 2009, economic conditions
began to stabilize, with many indicators less negative than they had been in
prior months. For example, GDP declined far less than expected during the second
quarter, with a comparatively modest contraction of 1%. Certain key drivers in
the housing market appeared to turn the corner. Unemployment indicators also
gave reason for cautious optimism. Such "green shoots" provided a boost to the
equity markets, which subsequently rallied strongly through July 2009. Most
major U.S. equity indices were in positive territory year-to-date through July
31, 2009,
TOP TEN HOLDINGS (at July 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Chevron 4.7%
- ------------------------------------------------
Pfizer 4.1%
- ------------------------------------------------
Johnson & Johnson 3.7%
- ------------------------------------------------
McDonald's 2.5%
- ------------------------------------------------
Procter & Gamble 2.4%
- ------------------------------------------------
Home Depot 2.1%
- ------------------------------------------------
Bank of America 2.1%
- ------------------------------------------------
JPMorgan Chase & Co 2.0%
- ------------------------------------------------
IBM 1.9%
- ------------------------------------------------
Microsoft 1.8%
- ------------------------------------------------
</Table>
Excludes cash & cash equivalents.
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
though it was not enough to outweigh the decline of the first five months of the
fiscal year.
We took over the management of this Fund effective Nov. 1, 2008 and thus our
discussion regarding significant performance factors focuses on the period from
that date through the end of the annual period on July 31, 2009 (the Reporting
Period).
The Fund's performance was primarily driven by the three quantitative-based
investment themes we employ in selecting stocks for the Fund's
portfolio -- momentum, value and quality. During the period from Nov. 1, 2008
through July 31, 2009 the value theme outperformed the S&P 500 Index, but not
enough to offset the combined underperformance of the quality and momentum
themes. Our value theme was very weak in the early months of the Reporting
Period but rebounded strongly later in the Reporting Period, lifted primarily by
financials stocks. The quality theme, which had held up well during the equity
market volatility through February, trailed during the subsequent rally. The
momentum theme lagged, challenged by the difficulty in gauging investor
sentiment, which shifted from fear early in the Reporting Period to a more
bullish, less risk-averse view later. While history does not guarantee future
performance, it may serve as a useful guide. Thus, looking at history, the value
theme has rebounded sharply following periods of significant underperformance.
As such, in the last months of the Reporting Period, we began to place greater
emphasis on the value theme in the Fund. It is important to remember that the
themes we use take turns in leading performance over time, demonstrating the
advantages of employing style
During the period from Nov. 1, 2008 through July 31, 2009 the value theme
outperformed the S&P 500 Index, but not enough to offset the combined
underperformance of the quality and momentum themes.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
diversification. Such variance in performance supports our research, indicating
that the style diversification provided by the three very different
quantitative-based themes is a significant investment advantage over the long
term, even though the Fund may experience underperformance in the short term.
Following a specific, disciplined process, we do not make sector or industry
bets based on economic or equity market outlooks. That said, the Fund's
quantitative-based themes led to a bias toward higher quality stocks due to
market volatility. This bias hurt results, as higher quality underperformed
lower quality during the Reporting Period overall. The Fund's themes also
positioned the equity portfolio toward the smaller-cap stocks within the large-
cap universe of the S&P 500 Index. This contributed positively to the Fund's
results.
The Fund's quantitative-based themes further led to various sector weightings
that, together, detracted from results. Having only a modest position in the
information technology sector, which outpaced the S&P 500 Index during the
Reporting Period, hurt most. Sizable weightings in health care and financials
hurt, too, as these were among the weaker performing sectors of the S&P 500
Index during the Reporting Period. Partially offsetting these negatives were the
positive effects of a significant allocation to the relatively stronger
performing consumer discretionary sector and having a smaller exposure to the
weaker telecommunication services sector.
Because we use a bottom-up approach, it is not surprising that most of the
Fund's results were due to stock selection. Specifically, stock selection in the
financials, consumer discretionary and information technology sectors detracted.
This more than offset the combined effect of strong stock selection in energy
and telecommunication services.
Among individual holdings, financial services firm MORGAN STANLEY, selected by
the value theme, contributed most to the Fund's return during the Reporting
Period. Other top contributors included entertainment and communications
provider VIRGIN MEDIA, liked by the momentum theme, insurance company CIGNA, a
quality pick, home improvement retailer HOME DEPOT, selected primarily by the
quality theme, and diversified conglomerate TYCO INTERNATIONAL, a momentum
selection.
- --------------------------------------------------------------------------------
8 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Stocks that detracted most from the Fund's return included two financials
companies, each selected by the value theme -- namely, CITIGROUP and JPMORGAN
CHASE. Other poor performers during the Reporting Period were pharmaceutical
giant PFIZER, selected by the quality and value themes, energy company CHEVRON,
a quality and value pick, and leading fast-food chain MCDONALD'S, a momentum
selection.
At the end of July, the Fund's largest individual stock holdings were Chevron,
Pfizer, JOHNSON & JOHNSON, selected by the quality and momentum themes,
McDonald's, and diversified consumer products giant PROCTER & GAMBLE, chosen by
the momentum theme.
CHANGES TO THE FUND'S PORTFOLIO
When we took over management of the Fund effective Nov. 1, 2008, we began
transitioning the portfolio away from its international equity allocation and
from its exposure to several illiquid or private equity positions. In accordance
with our risk models' criteria, we also began reducing the size of several large
individual positions held in the portfolio. Indeed, our risk models limit the
size of individual holdings, as well as sector and industry allocations,
relative to the Fund's new benchmark, the S&P 500 Index. For instance, the
portfolio's weightings by sector and industry can never be more than 6%
overweighted or underweighted, relative to the S&P 500 Index. We also apply
additional risk measures that impose constraints on market capitalization,
price, quality, turnover, transaction costs and other variables.
As a result of quantitative theme-driven stock selection during the period, the
Fund's sector allocations changed somewhat. For example, the Fund's already
significant exposure to health care and consumer discretionary increased
further, relative to the S&P 500 Index. The Fund's position in industrials also
increased, though it remained a smaller weighting than that of the S&P 500
Index. The Fund's sizable position in financials decreased but remained greater
than that of the benchmark index. The Fund's exposure to information technology,
already less than that of the S&P 500 Index, was reduced further. Each of these
changes in sector allocation was reflective of our enhanced emphasis on the
value theme in the Fund, as mentioned above. Given all of these changes, the
Fund's portfolio turnover rate for the annual period was 117%. The portfolio was
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
repositioned during the Fund's fiscal year with the portfolio management change.
<Table>
(PHOTO - DIMITRIS BERTSIMAS) (PHOTO - GINA MOURTZINOU)
Dimitris Bertsimas, Ph.D. Gina Mourtzinou, Ph.D.
Senior Portfolio Manager Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
10 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Large Cap Equity Fund Class A shares (from 3/28/02 to
7/31/09) as compared to the performance of three widely cited performance
indices, the S&P 500 Index, the Russell 1000 Index and the Lipper Large-Cap Core
Funds Index. In comparing the Fund's Class A shares to these indices, you should
take into account the fact that the Fund's performance reflects the maximum
sales charge of 5.75%, while such charges are not reflected in the performance
of the indices. Returns for the Fund include the reinvestment of any
distributions paid during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2009
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS 3/28/02
RIVERSOURCE LARGE CAP EQUITY FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $6,945 $6,808 $8,031 $7,808
- -------------------------------------------------------------------------------------------
Average annual total return -30.55% -12.03% -4.29% -3.32%
- -------------------------------------------------------------------------------------------
S&P 500 INDEX(1)
Cumulative value of $10,000 $8,004 $8,263 $9,930 $9,929
- -------------------------------------------------------------------------------------------
Average annual total return -19.96% -6.16% -0.14% -0.09%
- -------------------------------------------------------------------------------------------
RUSSELL 1000 INDEX(2)
Cumulative value of $10,000 $7,983 $8,308 $10,161 $10,232
- -------------------------------------------------------------------------------------------
Average annual total return -20.17% -5.99% +0.32% +0.32%
- -------------------------------------------------------------------------------------------
LIPPER LARGE-CAP CORE FUNDS INDEX(3)
Cumulative value of $10,000 $8,117 $8,477 $10,015 $9,705
- -------------------------------------------------------------------------------------------
Average annual total return -18.83% -5.36% +0.03% -0.41%
- -------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
12 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE LARGE CAP EQUITY FUND
LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE LARGE
CAP EQUITY
FUND CLASS LIPPER LARGE-CAP
A (INCLUDES S&P 500 RUSSELL 1000 CORE FUNDS
SALES CHARGE) INDEX(1) INDEX(2) INDEX(3)
----------------- ----------------- ------------------ -----------------
3/28/02 $ 9,425 $10,000 $10,000 $10,000
4/02 8,954 9,394 9,427 9,477
7/02 7,767 7,986 8,014 8,108
10/02 7,616 7,795 7,788 7,954
1/03 7,302 7,565 7,589 7,665
4/03 7,925 8,144 8,158 8,189
7/03 8,548 8,835 8,911 8,807
10/03 8,926 9,415 9,527 9,295
1/04 9,562 10,179 10,295 9,963
4/04 9,389 10,005 10,109 9,769
7/04 9,164 9,997 10,073 9,689
10/04 9,243 10,301 10,415 9,939
1/05 9,870 10,812 10,970 10,398
4/05 9,711 10,638 10,835 10,166
7/05 10,446 11,401 11,703 10,905
10/05 10,208 11,198 11,504 10,799
1/06 10,805 11,934 12,293 11,560
4/06 11,193 12,278 12,645 11,837
7/06 10,812 12,014 12,315 11,449
10/06 11,693 13,028 13,348 12,380
1/07 12,396 13,665 14,073 12,957
4/07 12,665 14,147 14,561 13,396
7/07 12,499 13,950 14,340 13,300
10/07 13,306 14,922 15,354 14,240
1/08 11,766 13,348 13,728 12,799
4/08 11,602 13,485 13,889 12,910
7/08 10,594 12,404 12,818 11,955
10/08 7,946 9,537 9,703 9,128
1/09 6,412 8,193 8,369 7,893
4/09 6,804 8,724 8,986 8,518
7/09 7,808 9,929 10,232 9,705
</Table>
(1) The Standard & Poor's 500 Composite Stock Price 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.*
(2) The Russell 1000 Index, an unmanaged index, measures the performance of the
1,000 largest companies in the Russell 3000(R) Index, which represents
approximately 90% of the total market capitalization of the Russell 3000
Index. The index reflects reinvestment of all distributions and changes in
market prices.*
(3) 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.
* On Nov. 1, 2008, the S&P 500 Index replaced the Russell 1000 Index as the
Fund's primary benchmark. The investment manager made this recommendation to
the Fund's Board because the new index more closely aligns to the Fund's
investment strategy. Information on both indexes will be included for a one-
year transition period. In the future, however, only the S&P 500 Index will
be included.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and non-
affiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended July 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2009 JULY 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,217.60 $4.70(c) .85%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.69 $4.28(c) .85%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,212.40 $8.94(c) 1.62%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.85 $8.15(c) 1.62%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,208.50 $8.92(c) 1.62%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.85 $8.15(c) 1.62%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,216.70 $2.43(c) .44%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.74 $2.22(c) .44%
- ------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,211.30 $6.67(c) 1.21%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.90 $6.09(c) 1.21%
- ------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,211.30 $5.46(c) .99%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.00 $4.99(c) .99%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,218.00 $3.93(c) .71%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.39 $3.58(c) .71%
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2009 JULY 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,241.20 $2.74(c) .49%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.49 $2.47(c) .49%
- ------------------------------------------------------------------------------------------
</Table>
(a) Expenses are equal to the annualized expense ratio for each class as
indicated above, multiplied by the average account value over the period,
multiplied by 182/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended July 31, 2009: +21.76%
for Class A, +21.24% for Class B, +20.85% for Class C, +21.67% for Class I,
+21.13% for Class R2, +21.13% for Class R3, +21.80% for Class R4 and +24.12%
for Class R5.
(c) RiverSource Investments, LLC (the Investment Manager) and its affiliates
have contractually agreed to waive certain fees and to absorb certain
expenses until Sept. 30, 2010, unless sooner terminated at the discretion of
the Fund's Board, such that net expenses (excluding fees and expenses of
acquired funds), before giving effect to any performance incentive
adjustment, will not exceed 1.02% for Class A, 1.80% for Class B, 1.78% for
Class C, 0.57% for Class I, 1.37% for Class R2, 1.12% for Class R3, 0.87%
for Class R4 and 0.62% for Class R5. Any amounts waived will not be
reimbursed by the Fund. This change was effective Aug. 1, 2009. Had this
change been in place for the entire six month period ended July 31, 2009,
the actual expenses paid would have been $4.59 for Class A, $8.88 for Class
B, $8.81 for Class C, $2.16 for Class I, $6.56 for Class R2, $5.18 for Class
R3, $3.76 for Class R4 and $2.46 for Class R5; the hypothetical expenses
paid would have been $4.18 for Class A, $8.10 for Class B, $8.05 for Class
C, $1.97 for Class I, $5.99 for Class R2, $4.73 for Class R3, $3.43 for
Class R4 and $2.22 for Class R5.
- --------------------------------------------------------------------------------
16 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (99.8%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (1.2%)
AeroVironment 8,500(b) $241,740
American Science & Engineering 4,883 340,589
Applied Signal Technology 6,775 169,375
Boeing 77,668(d) 3,332,734
Ceradyne 25,331(b,d) 457,225
Cubic 6,066 237,545
General Dynamics 172,255 9,541,205
Goodrich 39,840 2,046,182
ITT 24,046 1,187,872
Northrop Grumman 113,826 5,074,363
Rockwell Collins 33,368 1,408,130
United Technologies 70,971 3,865,790
---------------
Total 27,902,750
- -------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.6%)
CH Robinson Worldwide 75,566(d) 4,120,614
FedEx 138,129(d) 9,370,672
Pacer Intl 46,242(d) 114,680
---------------
Total 13,605,966
- -------------------------------------------------------------------------------------
AIRLINES (0.2%)
Alaska Air Group 35,201(b) 811,736
Allegiant Travel 8,541(b,d) 369,911
AMR 30,335(b,d) 162,292
Continental Airlines Cl B 14,891(b,d) 166,332
Delta Air Lines 59,755(b) 414,102
Hawaiian Holdings 65,225(b,d) 416,788
SkyWest 71,912 911,845
Southwest Airlines 20,838 163,578
UAL 73,227(b,d) 301,695
US Airways Group 81,594(b,d) 239,070
---------------
Total 3,957,349
- -------------------------------------------------------------------------------------
AUTO COMPONENTS (0.2%)
Autoliv 9,244(c,d) 331,028
Cooper Tire & Rubber 56,651(d) 836,169
Exide Technologies 62,946(b,d) 306,547
Goodyear Tire & Rubber 47,349(b) 805,880
Johnson Controls 65,605(d) 1,697,857
Spartan Motors 35,367 247,569
---------------
Total 4,225,050
- -------------------------------------------------------------------------------------
AUTOMOBILES (0.2%)
Ford Motor 249,800(b) 1,998,400
Harley-Davidson 162,080(d) 3,663,008
---------------
Total 5,661,408
- -------------------------------------------------------------------------------------
BEVERAGES (2.2%)
Brown-Forman Cl B 35,364 1,554,248
Coca-Cola 676,369 33,710,231
Coca-Cola Enterprises 131,192 2,465,098
Pepsi Bottling Group 6,680 226,786
PepsiCo 246,279 13,976,333
---------------
Total 51,932,696
- -------------------------------------------------------------------------------------
BIOTECHNOLOGY (2.4%)
Amgen 722,020(b) 44,989,066
Biogen Idec 90,721(b) 4,313,784
Cephalon 65,271(b,d) 3,828,144
Cubist Pharmaceuticals 15,801(b) 313,966
Isis Pharmaceuticals 42,200(b) 771,416
Myriad Genetics 52,950(b) 1,451,889
NPS Pharmaceuticals 36,398(b) 141,588
PDL BioPharma 32,309 265,903
Vertex Pharmaceuticals 9,983(b) 359,488
---------------
Total 56,435,244
- -------------------------------------------------------------------------------------
BUILDING PRODUCTS (0.1%)
American Woodmark 11,163 261,661
Apogee Enterprises 22,556(d) 328,866
Insteel Inds 27,417(d) 279,379
Masco 162,071(d) 2,257,649
---------------
Total 3,127,555
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
CAPITAL MARKETS (2.7%)
GFI Group 30,674 $197,847
Goldman Sachs Group 133,369 21,779,158
Greenhill & Co 5,649(d) 425,483
Knight Capital Group Cl A 24,027(b) 446,181
Morgan Stanley 1,011,014 28,813,899
MVC Capital 27,641 254,574
State Street 174,106 8,757,532
Stifel Financial 9,344(b,d) 466,546
SWS Group 29,791 409,924
---------------
Total 61,551,144
- -------------------------------------------------------------------------------------
CHEMICALS (1.7%)
Ashland 3,464 114,797
Balchem 10,066 279,332
Calgon Carbon 23,017(b) 291,625
CF Inds Holdings 31,506 2,487,084
Dow Chemical 934,728(d) 19,788,191
Eastman Chemical 25,883 1,285,350
EI du Pont de Nemours & Co 108,801 3,365,215
Innophos Holdings 15,945 299,447
Olin 26,906(d) 371,034
OM Group 25,185(b,d) 847,727
PPG Inds 81,561(d) 4,485,855
Sigma-Aldrich 56,009 2,842,457
Terra Inds 5,426 158,222
Westlake Chemical 14,332(d) 358,157
WR Grace & Co 100,680(b,d) 1,674,308
---------------
Total 38,648,801
- -------------------------------------------------------------------------------------
COMMERCIAL BANKS (1.8%)
BancFirst 6,108(d) 218,850
BB&T 141,632(d) 3,240,540
Comerica 75,591(d) 1,802,089
Fifth Third Bancorp 288,638 2,742,061
First Citizens BancShares Cl A 949 134,786
First Financial 7,250(d) 235,553
First Financial Bankshares 7,383(d) 388,863
First Horizon Natl 265,977(b) 3,409,825
KeyCorp 516,579 2,985,827
MainSource Financial Group 17,647(d) 118,411
Marshall & Ilsley 204,955(d) 1,237,928
PNC Financial Services Group 395,637 14,504,051
SunTrust Banks 146,867 2,863,907
TowneBank 11,883(d) 157,569
Trustmark 13,770(d) 274,023
UMB Financial 10,116(d) 422,040
Wells Fargo & Co 268,910 6,577,539
Zions Bancorporation 9,592(d) 130,259
---------------
Total 41,444,121
- -------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.4%)
Avery Dennison 48,390 1,293,465
GeoEye 8,136(b,d) 201,773
Healthcare Services Group 17,388(d) 324,634
Herman Miller 13,791 229,069
HNI 20,631(d) 459,659
Kimball Intl Cl B 44,536 302,845
Republic Services 58,912 1,567,058
Rollins 21,495 394,003
RR Donnelley & Sons 163,379 2,270,967
Steelcase Cl A 42,877 313,860
Sykes Enterprises 13,650(b,d) 271,635
Tetra Tech 10,673(b,d) 321,471
United Stationers 11,111(b,d) 515,773
Viad 15,712 278,417
---------------
Total 8,744,629
- -------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (1.4%)
3Com 180,387(b) 680,059
Airvana 49,195(b,d) 305,501
ARRIS Group 40,980(b) 499,136
Cisco Systems 584,928(b) 12,874,265
Loral Space & Communications 8,155(b) 170,684
Motorola 133,924(d) 958,896
NETGEAR 21,473(b,d) 365,256
QUALCOMM 328,496 15,179,800
Starent Networks 13,463(b) 322,843
Tellabs 33,981(b) 197,090
---------------
Total 31,553,530
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
COMPUTERS & PERIPHERALS (4.2%)
Adaptec 83,576(b) $222,312
Apple 74,891(b) 12,236,440
Dell 831,979(b) 11,131,879
Electronics for Imaging 26,387(b) 300,812
Hewlett-Packard 338,952 14,676,622
IBM 414,283(f) 48,856,394
Lexmark Intl Cl A 202,640(b,d) 2,934,227
NCR 18,658(b) 241,435
Novatel Wireless 26,135(b,d) 247,760
Seagate Technology 57,900(c) 697,116
Sun Microsystems 38,258(b) 350,826
Western Digital 150,688(b,d) 4,558,312
---------------
Total 96,454,135
- -------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (0.3%)
Dycom Inds 15,166(b,d) 193,063
EMCOR Group 31,746(b) 765,714
Fluor 72,887(d) 3,848,433
Granite Construction 36,466(d) 1,235,468
KBR 9,021 191,155
Michael Baker 6,486(b) 276,628
Tutor Perini 48,557(b,d) 895,877
---------------
Total 7,406,338
- -------------------------------------------------------------------------------------
CONSTRUCTION MATERIALS (0.1%)
Vulcan Materials 72,044 3,420,649
- -------------------------------------------------------------------------------------
CONSUMER FINANCE (0.4%)
American Express 199,278(d) 5,645,546
Discover Financial Services 71,584(d) 850,418
SLM 248,814(b,d) 2,211,956
---------------
Total 8,707,920
- -------------------------------------------------------------------------------------
DISTRIBUTORS (0.1%)
Genuine Parts 43,172 1,529,152
- -------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (0.4%)
Apollo Group Cl A 89,532(b) 6,181,290
Career Education 6,583(b) 150,882
Corinthian Colleges 41,742(b,d) 644,496
H&R Block 125,015 2,086,501
Regis 17,567 239,965
Universal Technical Institute 12,637(b,d) 200,549
---------------
Total 9,503,683
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (5.4%)
Bank of America 3,728,404 55,143,096
CIT Group 338,263(d) 294,289
Citigroup 4,473,883(d) 14,182,209
CME Group 8,563 2,387,621
JPMorgan Chase & Co 1,330,883 51,438,628
KKR Financial Holdings LLC 563,202 1,148,932
Moody's 6,357 150,915
NASDAQ OMX Group 53,417(b) 1,128,701
---------------
Total 125,874,391
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (1.6%)
CenturyTel 156,630 4,916,616
NTELOS Holdings 11,029 170,839
Qwest Communications Intl 383,321(d) 1,479,619
Verizon Communications 924,751 29,656,765
---------------
Total 36,223,839
- -------------------------------------------------------------------------------------
ELECTRIC UTILITIES (1.3%)
Edison Intl 4,849 156,720
FirstEnergy 72,466(d) 2,985,599
ITC Holdings 9,010(d) 429,777
Northeast Utilities 116,179 2,673,279
Pinnacle West Capital 43,106 1,377,668
Progress Energy 164,213 6,476,561
Southern 533,591(d) 16,754,757
---------------
Total 30,854,361
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
ELECTRICAL EQUIPMENT (0.3%)
Emerson Electric 189,915 $6,909,107
General Cable 3,267(b) 126,662
GrafTech Intl 55,444(b,d) 761,246
---------------
Total 7,797,015
- -------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (1.0%)
Anixter Intl 19,722(b,d) 674,887
Arrow Electronics 21,328(b) 549,623
Avnet 24,032(b) 586,381
Benchmark Electronics 82,459(b) 1,302,852
Corning 644,506 10,956,602
Ingram Micro Cl A 30,378(b) 510,958
Insight Enterprises 64,717(b) 666,585
Jabil Circuit 194,712 1,783,562
Methode Electronics 32,965 249,875
Plexus 6,594(b) 169,400
SYNNEX 19,346(b,d) 549,813
Tyco Electronics 266,407(c) 5,719,758
---------------
Total 23,720,296
- -------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (2.1%)
Baker Hughes 144,325 5,845,163
Basic Energy Services 42,516(b) 286,983
BJ Services 139,383(d) 1,976,451
Complete Production Services 30,311(b,d) 250,369
Diamond Offshore Drilling 30,127(d) 2,707,513
ENSCO Intl 152,581(d) 5,781,294
GulfMark Offshore 12,678(b) 405,569
Halliburton 422,282 9,328,210
Helmerich & Payne 10,678(d) 366,896
Key Energy Services 73,267(b) 509,572
Lufkin Inds 8,971 407,283
Nabors Inds 168,845(b,c) 2,873,742
Natl Oilwell Varco 200,633(b) 7,210,751
Noble 59,877 2,027,435
Oil States Intl 7,333(b) 198,871
Parker Drilling 149,991(b,d) 692,958
Patterson-UTI Energy 28,165(d) 388,959
Pioneer Drilling 40,209(b) 176,115
Pride Intl 10,576(b,d) 265,140
Rowan Companies 84,835 1,809,531
Smith Intl 105,370 2,647,948
TETRA Technologies 27,138(b,d) 209,234
Tidewater 6,622 297,990
Unit 6,174(b) 195,654
Weatherford Intl 49,398(b,c) 926,706
Willbros Group 15,871(b) 218,861
---------------
Total 48,005,198
- -------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (2.4%)
Casey's General Stores 32,512(d) 891,804
Ingles Markets Cl A 17,188 287,211
Nash Finch 8,093 248,455
Pantry 12,779(b) 224,271
Safeway 114,272(d) 2,163,169
SUPERVALU 33,537 497,354
Walgreen 176,295 5,473,960
Wal-Mart Stores 906,652 45,223,802
Winn-Dixie Stores 44,499(b,d) 630,551
---------------
Total 55,640,577
- -------------------------------------------------------------------------------------
FOOD PRODUCTS (1.1%)
Archer-Daniels-Midland 275,136 8,287,096
Bunge 7,180(d) 502,385
Cal-Maine Foods 15,374(d) 452,457
Campbell Soup 5,954(d) 184,753
Darling Intl 42,476(b) 299,881
Dean Foods 128,288(b) 2,718,423
Diamond Foods 7,437 209,723
Flowers Foods 19,140(d) 452,278
Fresh Del Monte Produce 16,371(b,c,d) 350,503
General Mills 60,193 3,545,970
Green Mountain Coffee Roasters 10,076(b,d) 709,753
Hershey 4,333(d) 173,103
J&J Snack Foods 7,348(d) 318,462
JM Smucker 23,709 1,186,161
Lance 16,056(d) 406,859
Ralcorp Holdings 12,274(b,d) 779,522
Sanderson Farms 8,829 359,164
Sara Lee 425,244(d) 4,524,596
TreeHouse Foods 11,352(b,d) 368,372
---------------
Total 25,829,461
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
GAS UTILITIES (0.2%)
Laclede Group 9,965 $334,525
New Jersey Resources 25,623 989,048
Nicor 32,666(d) 1,190,349
Piedmont Natural Gas 15,708 386,731
Questar 73,004 2,414,242
---------------
Total 5,314,895
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.7%)
Becton Dickinson & Co 94,068 6,128,530
CR Bard 13,985 1,028,876
Greatbatch 9,720(b,d) 214,229
ICU Medical 8,188(b) 318,759
Medtronic 28,942 1,025,126
NuVasive 16,656(b,d) 689,392
St. Jude Medical 111,411(b) 4,201,309
STERIS 15,583(d) 437,571
Thoratec 32,696(b,d) 821,977
Volcano 21,364(b,d) 324,519
---------------
Total 15,190,288
- -------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (3.3%)
Aetna 208,706 5,628,801
AMERIGROUP 31,195(b,d) 769,893
Bio-Reference Laboratories 5,129(b,d) 164,436
Cardinal Health 93,991 3,129,900
Chemed 4,418(d) 194,834
CIGNA 328,533 9,330,337
Coventry Health Care 31,781(b) 730,963
DaVita 57,423(b) 2,853,923
Emergency Medical Services Cl A 6,485(b) 253,823
Gentiva Health Services 12,919(b,d) 274,916
Health Net 9,990(b) 135,165
HealthSpring 60,412(b,d) 763,004
HMS Holdings 12,314(b,d) 472,858
Humana 21,368(b) 701,939
Kindred Healthcare 52,510(b) 737,240
Laboratory Corp of America Holdings 34,713(b,d) 2,332,366
Landauer 3,898 260,854
LHC Group 6,103(b,d) 179,123
Magellan Health Services 31,902(b) 1,032,349
McKesson 89,146 4,559,818
Molina Healthcare 21,468(b,d) 484,103
Omnicare 7,225(d) 172,461
Quest Diagnostics 162,506(d) 8,876,078
Triple-S Management Cl B 15,743(b,c,d) 269,048
UnitedHealth Group 763,462 21,422,743
Universal American Financial 25,232(b) 229,611
WellPoint 204,330(b) 10,755,931
---------------
Total 76,716,517
- -------------------------------------------------------------------------------------
HEALTH CARE TECHNOLOGY (--%)
Allscripts-Misys Healthcare Solutions 29,488(d) 508,079
Cerner 2,578(b,d) 167,776
Computer Programs & Systems 4,537 176,716
---------------
Total 852,571
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (3.1%)
California Pizza Kitchen 12,680(b,d) 209,220
Intl Game Technology 6,844 135,169
McDonald's 1,179,454 64,940,737
Panera Bread Cl A 2,083(b,d) 114,482
Starbucks 240,766(b,d) 4,261,558
Starwood Hotels & Resorts Worldwide 23,901(d) 564,303
Wyndham Worldwide 86,900 1,212,255
---------------
Total 71,437,724
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.9%)
American Greetings Cl A 24,198(d) 381,602
Black & Decker 39,371(d) 1,480,350
Centex 133,790 1,459,649
DR Horton 201,667 2,337,321
Garmin 13,878(c) 383,865
Harman Intl Inds 72,907(d) 1,799,345
KB Home 54,179(d) 904,248
Leggett & Platt 99,947(d) 1,734,080
Lennar Cl A 134,250 1,589,520
Natl Presto Inds 5,280 424,301
Newell Rubbermaid 40,565(d) 522,072
NVR 401(b) 241,061
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HOUSEHOLD DURABLES (CONT.)
Pulte Homes 287,017(d) $3,263,383
Stanley Works 8,721 350,148
Toll Brothers 6,345(b,d) 124,108
Whirlpool 50,855(d) 2,903,312
---------------
Total 19,898,365
- -------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (3.7%)
Clorox 119,621 7,298,077
Colgate-Palmolive 194,109 14,061,256
Procter & Gamble 1,140,858 63,329,028
---------------
Total 84,688,361
- -------------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
Calpine 8,553(b) 110,163
Constellation Energy Group 104,964 3,012,466
---------------
Total 3,122,629
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (1.7%)
General Electric 2,422,506 32,461,580
McDermott Intl 12,855(b) 251,187
Seaboard 471(d) 515,745
Textron 141,258 1,898,508
Tredegar 16,209(d) 237,300
Tyco Intl 113,702(c) 3,436,074
---------------
Total 38,800,394
- -------------------------------------------------------------------------------------
INSURANCE (6.0%)
AFLAC 147,289 5,576,362
Allied World Assurance Holdings 6,869(c) 298,527
Allstate 1,197,191 32,216,410
American Financial Group 11,304 275,705
Amerisafe 21,519(b) 357,861
Aon 137,109 5,408,950
Arch Capital Group 6,237(b,c) 387,879
Aspen Insurance Holdings 21,780(c) 541,669
Assurant 103,087 2,630,780
Axis Capital Holdings 16,884(c) 480,519
Chubb 140,797 6,502,005
Cincinnati Financial 84,582 2,042,655
Employers Holdings 36,927 514,024
Everest Re Group 5,516(c) 442,494
Hartford Financial Services Group 287,244(d) 4,736,654
HCC Insurance Holdings 15,794 396,429
Horace Mann Educators 38,344 435,204
IPC Holdings 32,454(c) 939,219
Lincoln Natl 276,766 5,864,672
Marsh & McLennan Companies 18,265 372,971
Max Capital Group 39,473(c) 788,276
MetLife 521,754 17,713,548
Montpelier Re Holdings 50,061(c) 784,956
Odyssey Re Holdings 12,427(d) 574,127
PartnerRe 5,647(c,d) 387,328
Platinum Underwriters Holdings 54,426(c) 1,836,878
Principal Financial Group 246,500 5,842,050
ProAssurance 5,639(b) 286,348
Progressive 567,505(b) 8,841,728
Prudential Financial 192,833 8,536,717
RenaissanceRe Holdings 8,305(c) 417,326
RLI 14,751(d) 731,797
Safety Insurance Group 12,332 397,830
Torchmark 26,496(d) 1,034,934
Tower Group 10,392 259,488
Travelers Companies 434,027 18,693,543
WR Berkley 17,489 406,269
Zenith Natl Insurance 29,120(d) 695,094
---------------
Total 138,649,226
- -------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL (0.4%)
Amazon.com 103,652(b) 8,889,195
NetFlix 6,974(b,d) 306,438
NutriSystem 41,148(d) 585,536
PetMed Express 10,222(b,d) 189,720
---------------
Total 9,970,889
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
22 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
INTERNET SOFTWARE & SERVICES (0.1%)
EarthLink 118,051(b) $997,530
ModusLink Global Solutions 71,828(b) 512,134
RealNetworks 67,312(b,d) 195,205
VistaPrint 7,372(b,c,d) 304,095
---------------
Total 2,008,964
- -------------------------------------------------------------------------------------
IT SERVICES (1.1%)
Affiliated Computer Services Cl A 37,071(b) 1,757,536
Automatic Data Processing 243,236(d) 9,060,541
Ciber 52,635(b) 174,222
Computer Sciences 87,188(b,d) 4,199,846
Convergys 13,435(b) 143,889
CSG Systems Intl 22,398(b) 373,599
Fiserv 50,050(b) 2,372,871
ManTech Intl Cl A 8,341(b) 444,575
MasterCard Cl A 13,068 2,535,584
MAXIMUS 5,630 239,951
NCI Cl A 8,433(b,d) 267,242
Paychex 134,912(d) 3,575,168
SAIC 18,983(b) 343,402
Total System Services 21,811 320,185
---------------
Total 25,808,611
- -------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (0.2%)
Brunswick 51,291(d) 368,269
Eastman Kodak 257,081(d) 763,531
JAKKS Pacific 40,483(b,d) 466,769
Mattel 143,230 2,517,984
Polaris Inds 5,327(d) 201,733
---------------
Total 4,318,286
- -------------------------------------------------------------------------------------
MACHINERY (1.6%)
AGCO 5,632(b,d) 177,183
Caterpillar 109,254(d) 4,813,731
Chart Inds 11,721(b) 225,746
Cummins 106,487(d) 4,580,006
Eaton 74,070 3,845,714
Force Protection 84,911(b) 438,990
FreightCar America 7,315(d) 146,154
Illinois Tool Works 185,938 7,539,786
Ingersoll-Rand 334,780(c) 9,668,447
Joy Global 3,356(d) 124,776
Manitowoc 146,341(d) 904,387
Mueller Inds 51,804 1,230,863
NACCO Inds Cl A 8,300 349,347
Parker Hannifin 74,896 3,316,395
Terex 12,700(b,d) 192,786
Timken 8,432 171,844
Wabtec 15,282(d) 514,239
---------------
Total 38,240,394
- -------------------------------------------------------------------------------------
MARINE (--%)
Genco Shipping & Trading 6,203(d) 148,314
- -------------------------------------------------------------------------------------
MEDIA (0.8%)
CBS Cl B 590,869(d) 4,839,217
Gannett 301,222(d) 2,108,554
Meredith 46,849(d) 1,240,093
New York Times Cl A 58,290(d) 458,742
News Corp Cl A 719,830 7,435,845
Viacom Cl B 149,990(b) 3,473,768
WorldSpace Cl A 263,942(b,d) 1,016
---------------
Total 19,557,235
- -------------------------------------------------------------------------------------
METALS & MINING (1.8%)
AK Steel Holding 93,510 1,839,342
Alcoa 422,699(d) 4,970,940
Allegheny Technologies 99,029 2,681,705
AM Castle & Co 26,449(d) 279,037
Brush Engineered Materials 10,112(b,d) 215,689
Cliffs Natural Resources 8,998 246,455
Commercial Metals 15,756 260,604
Freeport-McMoRan Copper & Gold 168,263 10,146,258
Haynes Intl 7,153(b) 164,734
Horsehead Holding 46,388(b,d) 495,888
Kaiser Aluminum 8,262 273,142
Newmont Mining 153,872 6,362,607
Nucor 135,835 6,040,582
Olympic Steel 15,484 394,997
Reliance Steel & Aluminum 10,684 360,158
Royal Gold 10,047 412,731
RTI Intl Metals 16,677(b,d) 296,184
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
METALS & MINING (CONT.)
Timminco 510,164(b,c,d) $497,365
United States Steel 120,605(d) 4,794,049
Worthington Inds 32,120 424,626
---------------
Total 41,157,093
- -------------------------------------------------------------------------------------
MULTILINE RETAIL (1.1%)
Big Lots 70,655(b) 1,627,891
Dillard's Cl A 75,054(d) 796,323
Dollar Tree 4,963(b) 228,894
Family Dollar Stores 207,839 6,530,301
JC Penney 98,555(d) 2,971,433
Kohl's 164,150(b) 7,969,483
Macy's 169,774 2,361,556
Nordstrom 82,493(d) 2,181,115
Sears Holdings 5,951(b,d) 394,789
---------------
Total 25,061,785
- -------------------------------------------------------------------------------------
MULTI-UTILITIES (1.2%)
CH Energy Group 7,695(d) 380,826
Consolidated Edison 199,101(d) 7,836,615
PG&E 340,872(d) 13,761,002
SCANA 46,751 1,652,648
Xcel Energy 175,873(d) 3,506,908
---------------
Total 27,137,999
- -------------------------------------------------------------------------------------
OFFICE ELECTRONICS (0.1%)
Xerox 158,635 1,299,221
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (11.2%)
Apache 162,893 13,674,867
Chevron 1,754,837 121,908,527
Cimarex Energy 5,499(d) 196,754
ConocoPhillips 710,508 31,056,305
Frontier Oil 14,907 207,207
Frontline 4,642(c,d) 106,163
Hess 127,604 7,043,741
Marathon Oil 412,818 13,313,381
Massey Energy 51,633(d) 1,373,438
McMoRan Exploration 30,874(b) 196,359
Murphy Oil 117,952 6,864,806
Noble Energy 80,295 4,907,630
Nordic American Tanker Shipping 9,127(c,d) 279,925
Occidental Petroleum 488,757(d) 34,867,925
Peabody Energy 100,447 3,325,800
Pioneer Natural Resources 36,626(d) 1,045,672
Plains Exploration & Production 5,949(b) 170,439
Rosetta Resources 28,754(b) 298,179
St. Mary Land & Exploration 7,659 182,820
Sunoco 152,800(d) 3,772,632
Swift Energy 39,731(b,d) 782,701
Tesoro 154,079(d) 2,016,894
USEC 94,136(b,d) 364,306
Valero Energy 369,952(d) 6,659,136
Western Refining 23,140(b,d) 150,641
Williams Companies 202,174 3,374,284
World Fuel Services 13,605(d) 596,715
---------------
Total 258,737,247
- -------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (--%)
Intl Paper 16,822 316,422
Wausau Paper 27,620(d) 259,628
---------------
Total 576,050
- -------------------------------------------------------------------------------------
PERSONAL PRODUCTS (--%)
Chattem 3,303(b,d) 206,999
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (12.4%)
Abbott Laboratories 102,899 4,629,426
Allergan 109,423 5,846,471
Auxilium Pharmaceuticals 16,342(b,d) 505,458
Bristol-Myers Squibb 544,140 11,829,604
Forest Laboratories 214,741(b) 5,546,760
Johnson & Johnson 1,601,577 97,520,023
King Pharmaceuticals 196,315(b,d) 1,780,577
Merck & Co 695,446 20,870,334
Mylan 57,756(b,d) 761,802
Par Pharmaceutical Companies 19,731(b,d) 319,840
Pfizer 6,754,920(d) 107,605,875
Schering-Plough 532,992 14,129,618
Valeant Pharmaceuticals Intl 36,414(b,d) 939,481
ViroPharma 75,128(b) 553,693
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
24 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
PHARMACEUTICALS (CONT.)
Watson Pharmaceuticals 46,739(b) $1,623,245
Wyeth 266,933 12,425,731
---------------
Total 286,887,938
- -------------------------------------------------------------------------------------
PROFESSIONAL SERVICES (0.1%)
Administaff 15,452(d) 387,227
Heidrick & Struggles Intl 15,205(d) 311,550
Huron Consulting Group 6,585(b,d) 292,045
ICF Intl 8,881(b,d) 230,018
Kelly Services Cl A 32,477 381,930
Korn/Ferry Intl 30,868(b,d) 429,374
Manpower 6,495 311,435
TrueBlue 49,670(b) 630,809
---------------
Total 2,974,388
- -------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (--%)
Capstead Mtge 36,929 493,371
Equity Residential 8,439(d) 202,536
Liberty Property Trust 4,148 115,190
---------------
Total 811,097
- -------------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT (--%)
Avatar Holdings 8,745(b) 187,580
- -------------------------------------------------------------------------------------
ROAD & RAIL (0.1%)
Arkansas Best 33,461(d) 952,969
Con-way 2,669(d) 121,573
Ryder System 43,280(d) 1,520,427
Saia 18,839(b,d) 340,232
---------------
Total 2,935,201
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.7%)
Amkor Technology 141,788(b,d) 887,593
Atmel 32,711(b,d) 136,405
Infineon Technologies 806,777(b,c,d) 3,322,738
Infineon Technologies ADR 886,981(b,c,d) 3,601,143
Intel 1,283,714 24,711,494
Lam Research 15,569(b,d) 468,004
Linear Technology 7,477(d) 200,907
MEMC Electronic Materials 156,783(b) 2,762,516
MKS Instruments 22,873(b) 443,050
Natl Semiconductor 114,937(d) 1,730,951
NVIDIA 21,718(b) 280,814
OmniVision Technologies 40,728(b) 538,831
Sigma Designs 26,295(b,d) 425,190
Silicon Image 79,753(b) 195,395
Teradyne 33,804(b,d) 266,376
Xilinx 7,898 171,308
Zoran 33,505(b) 385,978
---------------
Total 40,528,693
- -------------------------------------------------------------------------------------
SOFTWARE (3.2%)
Concur Technologies 8,222(b,d) 283,577
EPIQ Systems 8,672(b,d) 139,186
Intuit 218,430(b) 6,487,371
Microsoft 1,978,466 46,533,520
Oracle 659,566 14,596,196
Pegasystems 7,084(d) 200,477
Rovi 13,309(b) 348,163
Symantec 306,417(b) 4,574,806
Take-Two Interactive Software 46,887(d) 446,364
TeleCommunication Systems Cl A 31,053(b) 257,119
---------------
Total 73,866,779
- -------------------------------------------------------------------------------------
SPECIALTY RETAIL (5.3%)
Abercrombie & Fitch Cl A 121,228(d) 3,465,909
American Eagle Outfitters 12,985 186,854
Asbury Automotive Group 38,005 531,690
AutoNation 123,439(b,d) 2,552,719
AutoZone 18,255(b,d) 2,803,420
Barnes & Noble 9,537(d) 219,637
Bed Bath & Beyond 96,094(b,d) 3,339,267
Best Buy 125,015(d) 4,671,811
Brown Shoe 35,184(d) 272,676
Cato Cl A 27,254(d) 541,810
Charlotte Russe Holding 15,977(b) 239,815
Children's Place Retail Stores 13,580(b,d) 445,017
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 25
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SPECIALTY RETAIL (CONT.)
Collective Brands 37,080(b) $590,314
Dress Barn 46,627(b,d) 726,915
Foot Locker 34,753(d) 385,063
Gap 312,757(d) 5,104,194
Genesco 12,496(b) 271,413
Group 1 Automotive 22,691 668,477
Home Depot 2,137,091 55,436,140
Hot Topic 59,577(b,d) 460,530
Jo-Ann Stores 18,977(b,d) 442,164
Jos A Bank Clothiers 17,289(b,d) 632,605
Limited Brands 117,345(d) 1,518,444
Lowe's Companies 697,082 15,656,461
Men's Wearhouse 50,831 1,098,458
Monro Muffler Brake 6,976 185,492
Office Depot 154,479(b,d) 702,879
OfficeMax 67,581(d) 629,179
O'Reilly Automotive 137,783(b,d) 5,602,256
PetSmart 15,007(d) 335,707
RadioShack 161,303 2,501,810
Rent-A-Center 43,584(b) 904,804
Sherwin-Williams 124,300(d) 7,178,324
Stage Stores 24,180(d) 301,766
Staples 100,397(d) 2,110,345
Tiffany & Co 11,563(d) 344,924
Wet Seal Cl A 86,206(b) 284,480
---------------
Total 123,343,769
- -------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (0.7%)
Carter's 26,542(b) 752,200
Coach 101,339 2,998,621
Jones Apparel Group 170,107(d) 2,340,672
Liz Claiborne 253,530(d) 801,155
Nike Cl B 107,243 6,074,245
Skechers USA Cl A 24,247(b) 335,336
Steven Madden 11,908(b) 381,770
VF 32,063 2,074,155
---------------
Total 15,758,154
- -------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.3%)
First Niagara Financial Group 35,355 464,918
Freddie Mac 112,515(b,d) 69,759
Hudson City Bancorp 13,309 187,125
Ocwen Financial 24,735(b,d) 352,474
People's United Financial 313,606 5,096,097
---------------
Total 6,170,373
- -------------------------------------------------------------------------------------
TOBACCO (0.5%)
Alliance One Intl 32,910(b) 136,247
Altria Group 344,858 6,045,361
Lorillard 83,747 6,173,829
---------------
Total 12,355,437
- -------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (0.1%)
Beacon Roofing Supply 20,182(b) 338,452
Fastenal 44,898(d) 1,597,021
H&E Equipment Services 27,493(b) 292,526
Rush Enterprises Cl A 19,939(b,d) 261,201
WESCO Intl 10,007(b) 247,073
---------------
Total 2,736,273
- -------------------------------------------------------------------------------------
WATER UTILITIES (--%)
Aqua America 8,571(d) 154,792
California Water Service Group 6,437(d) 243,769
---------------
Total 398,561
- -------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.3%)
Shenandoah Telecommunications 12,924(d) 263,133
Sprint Nextel 1,283,585(b) 5,134,340
Syniverse Holdings 23,531(b) 412,498
USA Mobility 37,213 502,376
---------------
Total 6,312,347
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $2,273,422,145) $2,313,923,905
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
26 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
MONEY MARKET FUND (0.1%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.41% 2,422,905(e) $2,422,905
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $2,422,905) $2,422,905
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (13.0%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND (3.1%)
JPMorgan Prime Money Market Fund 71,115,850 $71,115,850
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
ASSET-BACKED COMMERCIAL PAPER (1.8%)
Belmont Funding LLC
08-03-09 0.48% $11,999,520 $11,999,520
Ebbets Funding LLC
08-03-09 0.50 14,998,542 14,998,542
Tasman Funding
08-20-09 0.95 9,993,667 9,993,667
Versailles Commercial Paper LLC
08-06-09 0.75 4,996,354 4,996,354
---------------
Total 41,988,083
- -------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT (7.2%)
Banco Espanol de Credito Madrid
08-05-09 0.34 2,000,000 2,000,000
Banco Espirito Santo e Comm London
08-24-09 0.62 8,495,172 8,495,172
Banco Popular Espanol
09-04-09 0.76 4,993,272 4,993,272
09-23-09 0.63 3,995,699 3,995,699
Banco Santander-Madrid
10-13-09 0.45 9,000,000 9,000,000
Bank of Nova Scotia Singapore
10-30-09 0.40 10,000,000 10,000,000
Caisse de Depots et Consignment Paris
10-19-09 0.43 9,988,785 9,988,785
Caixa Geral Dep London
10-26-09 0.57 5,000,000 5,000,000
Credit Indusrial et Comm London
10-13-09 0.52 11,984,075 11,984,075
DZ Bank London
08-31-09 0.34 4,498,598 4,498,598
Fortis Bank Brussels
08-06-09 0.33 6,900,000 6,900,000
ING Bank London
10-13-09 0.50 10,000,000 10,000,000
MIT
08-18-09 0.42 10,000,000 10,000,000
Mizuho London
10-29-09 0.49 4,000,000 4,000,000
Monte de Pasch London
08-13-09 0.71 10,000,086 10,000,086
Nederlandse Waterschapsbank
10-20-09 0.40 9,989,788 9,989,788
Raiffeisen ZentralBank Oest Vienna
08-10-09 0.50 12,000,000 11,999,999
San Paolo Imi Ireland
10-07-09 0.40 5,994,006 5,994,006
Sumitomo Mutsui Banking Brussels
08-17-09 0.42 10,000,000 10,000,000
Svenska Singapore
10-15-09 0.45 6,000,000 6,000,000
Unicredito Italiano NY
08-13-09 0.42 12,000,000 11,999,999
---------------
Total 166,839,479
- -------------------------------------------------------------------------------------
COMMERCIAL PAPER (0.9%)
Citigroup Global Markets
08-13-09 0.35 9,999,319 9,999,319
Royal Bank of Scotland Group
09-10-09 0.47 11,989,817 11,989,817
---------------
Total 21,989,136
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $301,932,548) $301,932,548
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $2,577,777,598)(g) $2,618,279,358
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 27
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2009
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------
S&P 500 Index 25 $6,152,500 Sept. 2009 $665,617
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2009, the
value of foreign securities represented 1.7% of net assets.
(d) At July 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Affiliated Money Market Fund -- See Note 9 to the financial statements. The
rate shown is the seven-day current annualized yield at July 31, 2009.
(f) At July 31, 2009, investments in securities included securities valued at
$4,705,407 that were partially pledged as collateral to cover initial
margin deposits on open stock index futures contracts.
(g) At July 31, 2009, the cost of securities for federal income tax purposes
was $2,678,380,723 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $146,491,589
Unrealized depreciation (206,592,954)
-----------------------------------------------------------
Net unrealized depreciation $(60,101,365)
-----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which 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.
- --------------------------------------------------------------------------------
28 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) requires
disclosure regarding the inputs and valuation techniques used to measure fair
value and any changes in valuation inputs or techniques. In addition,
investments shall be disclosed by major category.
SFAS 157 establishes a fair value hierarchy for inputs used in measuring fair
value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. When a valuation uses multiple inputs from
varying levels of the hierarchy, the hierarchy level is determined based on the
lowest level input or inputs that are significant to the fair value measurement
in its entirety. The input levels are not necessarily an indication of the risk
or liquidity associated with investments at that level. For example, certain
U.S. government securities are generally high quality and liquid, however, they
are reflected as Level 2 because the inputs used to determine fair value may not
always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 29
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable inputs and/or significant assumptions by the Fund
Administrator. Inputs used in a valuation model may include, but are not limited
to, financial statement analysis, discount rates and estimated cash flows, and
comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of July 31, 2009:
<Table>
<Caption>
FAIR VALUE AT JULY 31, 2009
------------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ----------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a) $2,313,923,905 $-- $-- $2,313,923,905
- ----------------------------------------------------------------------------------------------
Total Equity Securities 2,313,923,905 -- -- 2,313,923,905
- ----------------------------------------------------------------------------------------------
Other
Affiliated Money
Market Fund(b) 2,422,905 -- -- 2,422,905
Investments of Cash
Collateral Received
for Securities on
Loan 71,115,850 230,816,698 -- 301,932,548
- ----------------------------------------------------------------------------------------------
Total Other 73,538,755 230,816,698 -- 304,355,453
- ----------------------------------------------------------------------------------------------
Investments in
Securities 2,387,462,660 230,816,698 -- 2,618,279,358
Other Financial
Instruments(c) 665,617 -- -- 665,617
- ----------------------------------------------------------------------------------------------
Total $2,388,128,277 $230,816,698 $-- $2,618,944,975
- ----------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of
Investments.
(b) Money market fund that is a sweep investment for cash balances in the Fund
at July 31, 2009.
(c) Other Financial Instruments are derivative instruments, which are valued at
the unrealized appreciation (depreciation) on the instrument. Derivative
descriptions are located in the Investments in Derivatives section of the
Portfolio of Investments.
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
30 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
JULY 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $2,273,422,145) $ 2,313,923,905
Affiliated money market fund (identified cost $2,422,905) 2,422,905
Investments of cash collateral received for securities on loan
(identified cost $301,932,548) 301,932,548
- ----------------------------------------------------------------------------------
Total investments in securities (identified cost $2,577,777,598) 2,618,279,358
Capital shares receivable 56,188,453
Dividends and accrued interest receivable 4,056,203
Receivable for investment securities sold 29,350,588
Variation margin receivable on futures contracts 28,050
Other receivable 432,997
- ----------------------------------------------------------------------------------
Total assets 2,708,335,649
- ----------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 57,648,096
Payable for investment securities purchased 28,678,198
Payable upon return of securities loaned 301,932,548
Accrued investment management services fees 36,915
Accrued distribution fees 20,428
Accrued transfer agency fees 21,225
Accrued administrative services fees 3,375
Accrued plan administration services fees 461
Other accrued expenses 418,907
- ----------------------------------------------------------------------------------
Total liabilities 388,760,153
- ----------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 2,319,575,496
- ----------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 7,279,769
Additional paid-in capital 4,196,734,727
Undistributed net investment income 50,406,073
Accumulated net realized gain (loss) (1,976,009,918)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 41,164,845
- ----------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 2,319,575,496
- ----------------------------------------------------------------------------------
*Including securities on loan, at value $ 291,555,333
- ----------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 31
STATEMENT OF ASSETS AND LIABILITIES (continued) --------------------------------
JULY 31, 2009
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $1,984,217,715 622,263,354 $3.19(1)
Class B $ 196,741,923 62,665,534 $3.14
Class C $ 12,767,237 4,078,727 $3.13
Class I $ 35,414,783 11,056,120 $3.20
Class R2 $ 2,641 822 $3.21
Class R3 $ 2,641 822 $3.21
Class R4 $ 67,662,124 20,899,631 $3.24
Class R5 $ 22,766,432 7,011,868 $3.25
- -------------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $3.38. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
32 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED JULY 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 66,237,392
Interest 1,097
Income distributions from affiliated money market fund 769,893
Income from securities lending 5,128,368
Less foreign taxes withheld (156)
- ----------------------------------------------------------------------------------
Total income 72,136,594
- ----------------------------------------------------------------------------------
Expenses:
Investment management services fees 10,057,519
Distribution fees
Class A 5,300,686
Class B 2,745,390
Class C 134,053
Class R2 13
Class R3 7
Transfer agency fees
Class A 7,489,963
Class B 1,045,694
Class C 49,435
Class R2 1
Class R3 1
Class R4 47,830
Class R5 5,627
Administrative services fees 1,332,322
Plan administration services fees
Class R2 7
Class R3 7
Class R4 239,150
Compensation of board members 78,950
Custodian fees 189,090
Printing and postage 437,944
Registration fees 47,015
Professional fees 80,700
Other 74,421
- ----------------------------------------------------------------------------------
Total expenses 29,355,825
Expenses waived/reimbursed by the Investment Manager and its
affiliates (5,578,496)
Earnings and bank fee credits on cash balances (27,696)
- ----------------------------------------------------------------------------------
Total net expenses 23,749,633
- ----------------------------------------------------------------------------------
Investment income (loss) -- net 48,386,961
- ----------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 33
STATEMENT OF OPERATIONS (continued) --------------------------------------------
YEAR ENDED JULY 31, 2009
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(1,514,180,554)
Foreign currency transactions 38,079,058
Futures contracts (35,299,631)
Options contracts written (4,792,289)
- ----------------------------------------------------------------------------------
Net realized gain (loss) on investments (1,516,193,416)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 382,206,451
- ----------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (1,133,986,965)
- ----------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(1,085,600,004)
- ----------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
34 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 48,386,961 $ 65,487,946
Net realized gain (loss) on investments (1,516,193,416) (20,362,259)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 382,206,451 (865,038,637)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (1,085,600,004) (819,912,950)
- ---------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (73,410,478) (36,389,921)
Class B (5,489,205) --
Class C (317,848) --
Class I (1,247,238) (866,696)
Class R2 (88) (32)
Class R3 (97) (44)
Class R4 (4,396,983) (2,588,075)
Class R5 (105) --
Net realized gain
Class A (11,674,647) (503,800,045)
Class B (1,552,503) (85,854,373)
Class C (75,828) (3,230,993)
Class I (166,927) (7,554,314)
Class R2 (14) (539)
Class R3 (14) (539)
Class R4 (654,100) (31,125,821)
Class R5 (14) (539)
- ---------------------------------------------------------------------------------------------------
Total distributions (98,986,089) (671,411,931)
- ---------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 35
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 63,377,441 $ 101,098,724
Class B shares 15,965,516 33,647,160
Class C shares 1,703,347 2,226,679
Class I shares 9,032,397 10,561,864
Class R4 shares 16,847,369 34,516,064
Class R5 shares 23,232,789 --
Reinvestment of distributions at net asset value
Class A shares 82,326,172 523,659,899
Class B shares 6,986,555 85,230,086
Class C shares 385,379 3,174,765
Class I shares 1,413,924 8,419,823
Class R4 shares 5,050,991 33,713,417
Conversions from Class B to Class A
Class A shares 55,879,729 110,385,457
Class B shares (55,879,729) (110,385,457)
Payments for redemptions
Class A shares (618,515,143) (1,079,980,371)
Class B shares (79,087,950) (315,875,480)
Class C shares (4,135,219) (8,714,618)
Class I shares (2,585,718) (30,081,251)
Class R4 shares (75,775,201) (150,506,498)
Class R5 shares (2,543,974) (26,533,250)
- ---------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (556,321,325) (775,442,987)
- ---------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (1,740,907,418) (2,266,767,868)
Net assets at beginning of year 4,060,482,914 6,327,250,782
- ---------------------------------------------------------------------------------------------------
Net assets at end of year $ 2,319,575,496 $ 4,060,482,914
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income $ 50,406,073 $ 47,429,271
- ---------------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
36 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.52 $6.05 $5.40 $5.26 $4.64
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06(b) .07(b) .06(b) .06 .04
Net gains (losses) (both realized and
unrealized) (1.26) (.90) .79 .12 .61
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (1.20) (.83) .85 .18 .65
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.11) (.05) (.06) (.04) (.02)
Distributions from realized gains (.02) (.65) (.14) -- (.01)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.13) (.70) (.20) (.04) (.03)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.19 $4.52 $6.05 $5.40 $5.26
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1,984 $3,389 $5,039 $5,461 $1,030
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.09% 1.03% 1.09% 1.06% 1.16%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .86% .97% 1.09% 1.06% 1.11%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.97% 1.31% .99% 1.08% .79%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 117% 68% 66% 116% 128%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (26.30%) (15.40%) 15.79% 3.51% 13.99%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 37
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.41 $5.91 $5.29 $5.15 $4.56
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04(b) .03(b) .01(b) .02 --
Net gains (losses) (both realized and
unrealized) (1.23) (.88) .76 .12 .60
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (1.19) (.85) .77 .14 .60
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) -- (.01) -- --
Distributions from realized gains (.02) (.65) (.14) -- (.01)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.08) (.65) (.15) -- (.01)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.14 $4.41 $5.91 $5.29 $5.15
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $197 $433 $833 $1,169 $472
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.86% 1.79% 1.86% 1.84% 1.93%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.63% 1.73% 1.86% 1.84% 1.88%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.20% .56% .23% .28% .02%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 117% 68% 66% 116% 128%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (26.82%) (15.97%) 14.71% 2.72% 13.09%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
38 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.41 $5.92 $5.30 $5.16 $4.57
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04(b) .03(b) .01(b) .02 --
Net gains (losses) (both realized and
unrealized) (1.23) (.89) .77 .12 .60
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (1.19) (.86) .78 .14 .60
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) -- (.02) -- --
Distributions from realized gains (.02) (.65) (.14) -- (.01)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.09) (.65) (.16) -- (.01)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.13 $4.41 $5.92 $5.30 $5.16
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $13 $21 $32 $35 $9
- ----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.85% 1.79% 1.86% 1.84% 1.93%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.62% 1.73% 1.86% 1.84% 1.88%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.21% .55% .23% .28% .02%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 117% 68% 66% 116% 128%
- ----------------------------------------------------------------------------------------------------------
Total return(g) (26.76%) (16.11%) 14.80% 2.71% 13.06%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 39
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.55 $6.09 $5.44 $5.31 $4.67
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .09(b) .09(b) .10 .05
Net gains (losses) (both realized and
unrealized) (1.27) (.90) .78 .12 .63
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (1.20) (.81) .87 .22 .68
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.13) (.08) (.08) (.09) (.03)
Distributions from realized gains (.02) (.65) (.14) -- (.01)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.15) (.73) (.22) (.09) (.04)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.20 $4.55 $6.09 $5.44 $5.31
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $35 $39 $68 $105 $43
- ----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .48% .57% .63% .59% .70%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .44% .57% .63% .59% .65%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.41% 1.74% 1.44% 1.53% 1.24%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 117% 68% 66% 116% 128%
- ----------------------------------------------------------------------------------------------------------
Total return (26.06%) (15.02%) 16.13% 4.06% 14.64%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
40 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(h)
Net asset value, beginning of period $4.55 $6.08 $6.08
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .06 .06 .03
Net gains (losses) (both realized and
unrealized) (1.28) (.90) .19
- ------------------------------------------------------------------------------------
Total from investment operations (1.22) (.84) .22
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.04) (.08)
Distributions from realized gains (.02) (.65) (.14)
- ------------------------------------------------------------------------------------
Total distributions (.12) (.69) (.22)
- ------------------------------------------------------------------------------------
Net asset value, end of period $3.21 $4.55 $6.08
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(c),(d) 1.23% 1.39% 1.44%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(j) 1.07% 1.14% 1.44%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) 1.77% 1.15% .67%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 117% 68% 66%
- ------------------------------------------------------------------------------------
Total return (26.42%) (15.45%) 3.71%(k)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 41
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(h)
Net asset value, beginning of period $4.56 $6.09 $6.08
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .06 .08 .04
Net gains (losses) (both realized and
unrealized) (1.27) (.90) .19
- ------------------------------------------------------------------------------------
Total from investment operations (1.21) (.82) .23
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.12) (.06) (.08)
Distributions from realized gains (.02) (.65) (.14)
- ------------------------------------------------------------------------------------
Total distributions (.14) (.71) (.22)
- ------------------------------------------------------------------------------------
Net asset value, end of period $3.21 $4.56 $6.09
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(c),(d) 1.00% 1.14% 1.19%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(j) .83% .89% 1.19%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) 2.01% 1.40% .92%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 117% 68% 66%
- ------------------------------------------------------------------------------------
Total return (26.32%) (15.19%) 3.88%(k)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
42 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.58 $6.13 $5.47 $5.28 $4.66
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .08(b) .07(b) .09 .04
Net gains (losses) (both realized and
unrealized) (1.27) (.92) .79 .12 .61
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (1.20) (.84) .86 .21 .65
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.12) (.06) (.06) (.02) (.02)
Distributions from realized gains (.02) (.65) (.14) -- (.01)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.14) (.71) (.20) (.02) (.03)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.24 $4.58 $6.13 $5.47 $5.28
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $68 $179 $330 $1,069 $--
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .79% .87% .90% .81% .95%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(f) .72% .82% .89% .81% .90%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.09% 1.46% 1.14% 1.41% 1.08%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 117% 68% 66% 116% 128%
- -----------------------------------------------------------------------------------------------------------
Total return (25.99%) (15.40%) 15.80% 4.03% 14.06%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 43
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(h)
Net asset value, beginning of period $4.61 $6.11 $6.08
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .07 .08 .06
Net gains (losses) (both realized and
unrealized) (1.28) (.93) .19
- ------------------------------------------------------------------------------------
Total from investment operations (1.21) (.85) .25
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.13) -- (.08)
Distributions from realized gains (.02) (.65) (.14)
- ------------------------------------------------------------------------------------
Total distributions (.15) (.65) (.22)
- ------------------------------------------------------------------------------------
Net asset value, end of period $3.25 $4.61 $6.11
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $23 $-- $25
- ------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/
reimbursement(c),(d) .51% .67% .70%(i)
- ------------------------------------------------------------------------------------
Net expenses after expense waiver/
reimbursement(d),(e),(f) .48% .67% .70%(i)
- ------------------------------------------------------------------------------------
Net investment income (loss) 2.37% 1.21% 1.44%(i)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 117% 68% 66%
- ------------------------------------------------------------------------------------
Total return (26.01%) (15.38%) 4.24%(k)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
44 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2009
were less than 0.01% of average net assets. The ratio of net expenses after
expense waiver/reimbursement and after reduction for earnings and bank fee
credits was 0.96% for Class A, 1.72% for Class B 1.72% for Class C, 0.56%
for Class I, 0.81% for Class R4 and 0.66% for Class R5 for the year ended
July 31, 2008.
(g) Total return does not reflect payment of a sales charge.
(h) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(i) Adjusted to an annual basis.
(j) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the years ended July 31, 2009 and 2008.
(k) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
RiverSource Large Cap Equity Fund (the Fund) is a series of RiverSource Large
Cap Series, Inc. and is registered under the Investment Company Act of 1940, as
amended (the 1940 Act) as a diversified, open-end management investment company.
RiverSource Large Cap Series, Inc. has 10 billion authorized shares of capital
stock that can be allocated among the separate series as designated by the Funds
Board of Directors (the Board). The Fund invests primarily in equity securities
of companies with a market capitalization greater than $5 billion at the time of
purchase.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4
and Class R5 shares.
- - Class A shares are offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are offered without
a front-end sales charge or CDSC to qualifying institutional investors.
At July 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares, and the Investment Manager owned 100% of
Class R2 and Class R3 shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
- --------------------------------------------------------------------------------
46 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the
Investment Manager, as administrator to the Fund, will fair value foreign
securities pursuant to procedures adopted by the Board, including utilizing a
third party pricing service to determine these fair values. These procedures
take into account multiple factors, including movements in the U.S. securities
markets, to determine a good faith estimate that reasonably reflects the current
market conditions as of the close of the NYSE. Swap transactions are valued
through an authorized pricing service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund
- --------------------------------------------------------------------------------
48 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
SECURITY LITIGATION SETTLEMENTS
Litigation proceeds from Enron Corp. related to portfolio securities no longer
included in the portfolio are recorded as realized gains. Proceeds received
during the year ended July 31, 2009 were $589,084.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount reflected in the
Statement of
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Assets and Liabilities. At July 31, 2009, the Fund had no outstanding forward
foreign currency contracts.
FUTURES TRANSACTIONS
The Fund may buy and sell financial futures contracts traded on any U.S. or
foreign exchange to produce incremental earnings, hedge existing positions or
protect against market changes in the value of equities, interest rates or
foreign currencies. The Fund may also buy and write put and call options on
these futures contracts. A futures contract represents a commitment for the
future purchase or sale of an asset at a specified price on a specified date.
Futures and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Upon entering into futures contracts, the Fund bears the risk of interest rates,
exchange rates or securities prices moving unexpectedly, in which case, the Fund
may not achieve the anticipated benefits of the futures contracts and may
realize a loss. Additional risks include counterparty credit risk, the
possibility of an illiquid market, and that a change in the value of the
contract or option may not correlate with changes in the value of the underlying
securities.
OPTION TRANSACTIONS
The Fund may buy and write options traded on any U.S. or foreign exchange, or in
the over-the-counter (OTC) market to produce incremental earnings, protect
gains, and facilitate buying and selling of securities for investments. The Fund
may also buy and sell put and call options and write covered call options on
portfolio securities. Options are contracts which entitle the holder to purchase
or sell securities or other financial instruments at a specified price, or in
the case of index options, to receive or pay the difference between the index
value and the strike price of the index option. Completion of transactions for
options traded in the OTC market depends upon the performance of the other
party. Cash collateral may be collected or posted by the Fund to secure certain
OTC options trades. Cash collateral held or posted by the Fund for such option
trades must be returned to the counterparty or the Fund upon closure, exercise
or expiration of the contract.
Option contracts purchased are recorded as investments and options contracts
written are recorded as liabilities of the Fund. Option contracts are valued
daily
- --------------------------------------------------------------------------------
50 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
at the closing prices on their primary exchanges and unrealized appreciation or
depreciation is recorded. Option contracts, including OTC option contracts, with
no readily available market value are valued using quotations obtained from
independent brokers as of the close of the NYSE. The Fund will realize a gain or
loss when the option transaction expires or is exercised. When options on debt
securities or futures are exercised, the Fund will realize a gain or loss. When
other options are exercised, the proceeds on sales for a written call option,
the purchase cost for a written put option or the cost of a security for a
purchased put or call option is adjusted by the amount of premium received or
paid.
The risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of being unable to
enter into a closing transaction if a liquid secondary market does not exist.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The Fund's maximum payout in the case of
written put option contracts represents the maximum potential amount of future
payments (undiscounted) that the Fund could be required to make as a guarantor
for written put options. For OTC options contracts, the transaction is also
subject to counterparty credit risk. The maximum payout amount may be offset by
the subsequent sale, if any, of assets obtained upon the exercise of the put
options by holders of the option contracts or proceeds received upon entering
into the contracts. At July 31, 2009 the Fund had no outstanding purchased or
written options contracts.
TOTAL RETURN SWAP TRANSACTIONS
The Fund may enter into total return swap transactions to gain exposure to the
total return on a specified reference security, a basket of reference securities
or a reference security index during the specified period, in return for
periodic payments based on a fixed or variable interest rate. Total return swap
transactions may be used to obtain exposure to a security or market without
owning or taking physical custody of such reference security or securities in a
market.
The notional amounts of swap contracts are not recorded in the financial
statements. Swap contracts are valued daily, and the change in value is recorded
as unrealized appreciation (depreciation) until the termination of the swap, at
which time the Fund will realize a gain or (loss). Periodic payments received
(or made) by the Fund over the term of the contract are recorded as realized
gains (losses).
Total return swap transactions may be subject to liquidity risk, which exists
when a particular swap is difficult to purchase or sell. It may not be possible
for the Fund to initiate a transaction or liquidate a position at an
advantageous time or
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
price, which may result in significant losses. Total return swaps are subject to
the risk associated with the investment in the reference securities. The risk in
the case of short total return swap transactions is unlimited based on the
potential for unlimited increases in the market value of the reference
securities. This risk may be offset if the Fund holds any of the reference
securities. The risk in the case of long total return swap transactions is
limited to the current notional amount of the total return swap. Total return
swaps are also subject to the risk of the counterparty not fulfilling its
obligations under the contract. The counterparty risk may be offset by any
collateral held by the Fund related to the swap transactions. At July 31, 2009,
and for the year then ended, the Fund had no outstanding total return swap
contracts.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT JULY 31, 2009
<Table>
<Caption>
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------- -------------------------------------
STATEMENT OF ASSETS STATEMENT OF ASSETS
RISK EXPOSURE AND LIABILITIES AND LIABILITIES
CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE
- -------------------------------------------------------------------------------------------
Equity contracts Net
assets -- unrealiz-
ed appreciation $665,617* N/A N/A
- -------------------------------------------------------------------------------------------
Total $665,617 N/A
- -------------------------------------------------------------------------------------------
</Table>
* Includes cumulative appreciation (depreciation) of futures contracts as
reported in the Futures Contracts Outstanding table following the Portfolio
of Investments. Only the current day's variation margin is reported in
receivables or payables in the Statement of Assets and Liabilities.
- --------------------------------------------------------------------------------
52 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN OR (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ------------------------------------------------------------------------------------
FORWARD FOREIGN
RISK EXPOSURE CURRENCY
CATEGORY CONTRACTS FUTURES OPTIONS TOTAL
- ------------------------------------------------------------------------------------
Equity contracts $ -- $(35,299,631) $(6,083,114) $(41,382,745)
- ------------------------------------------------------------------------------------
Foreign exchange
contracts 41,374,261 -- (582,142) 40,792,119
- ------------------------------------------------------------------------------------
Total $41,374,261 $(35,299,631) $(6,665,256) $ (590,626)
- ------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN
INCOME
- ----------------------------------------------------------------------------------
FORWARD FOREIGN
RISK EXPOSURE CURRENCY
CATEGORY CONTRACTS FUTURES OPTIONS TOTAL
- ----------------------------------------------------------------------------------
Equity contracts $ -- $299,736 $9,127,010 $9,426,746
- ----------------------------------------------------------------------------------
Foreign exchange
contracts (1,071,998) -- 544,075 (527,923)
- ----------------------------------------------------------------------------------
Total $(1,071,998) $299,736 $9,671,085 $8,898,823
- ----------------------------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At July 31, 2009, the Fund had no forward foreign currency contracts
outstanding. The monthly average gross notional amount for these contracts was
$56.8 million for the year ended July 31, 2009.
FUTURES
The gross notional amount of long contracts was $6.2 million at July 31, 2009.
The monthly average gross notional contract amount for these contracts was $31.2
million for the year ended July 31, 2009. The fair value of such contracts on
July 31, 2009 is set forth in the table above.
OPTIONS
At July 31, 2009, the Fund had no option contracts outstanding. The monthly
average gross notional contract amount for these contracts was $50.7 million for
the year ended July 31, 2009.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.60% to 0.375% as the Fund's net assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
determined monthly by measuring the percentage difference over a rolling 12-
month period between the annualized performance of one Class A share of the Fund
and the annualized performance of the Lipper Large-Cap Core Funds Index. In
certain circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than 0.50%,
the adjustment will be zero. The adjustment decreased the management fee by
$4,655,984 for the year ended July 31, 2009. The management fee for the year
ended July 31, 2009 was 0.39% of the Fund's average daily net assets, including
the adjustment under the terms of the performance incentive arrangement.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.06% to 0.03% as the
Fund's net assets increase. The fee for the year ended July 31, 2009 was 0.05%
of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended July 31,
2009, other expenses paid to this company were $22,765.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides
- --------------------------------------------------------------------------------
54 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Fund shareholder services. The Fund pays the Transfer Agent an annual account-
based fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00
for Class C for this service. The Transfer Agent also charges an annual fee of
$3 per account serviced directly by the Fund or its designated agent for Class
A, Class B and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R2, Class R3, Class R4 and Class R5 shares. The Transfer
Agent charges an annual fee of $5 per inactive account, charged on a pro rata
basis for the 12 month period from the date the account becomes inactive. These
fees are included in the transfer agency fees in the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement RiverSource Fund Distributors, Inc. (the Distributor)
for distribution and shareholder services. Under a Plan and Agreement of
Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up
to 0.25% of the Fund's average daily net assets attributable to Class A and
Class R3 shares, a fee at an annual rate of up to 0.50% of the Fund's average
daily net assets attributable to Class R2 shares and a fee at an annual rate of
up to 1.00% of the Fund's average daily net assets attributable to Class B and
Class C shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is
reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $11,130,000 and $173,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $1,810,048 for Class A, $313,571 for Class B and
$1,468 for Class C for the year ended July 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 55
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class A............................................. 0.86%
Class B............................................. 1.63
Class C............................................. 1.62
Class I............................................. 0.44
Class R2............................................ 1.07
Class R3............................................ 0.83
Class R4............................................ 0.72
Class R5............................................ 0.48
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A......................................... $3,872,955
Class B......................................... 519,518
Class C......................................... 25,088
Class R4........................................ 18,676
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2........................................... $ 4
Class R3........................................... 4
Class R4........................................... 917
</Table>
The management fees waived/reimbursed at the Fund level were $1,141,334.
Under an agreement which was effective until July 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would not
exceed the following percentage of the class' average daily net assets:
<Table>
Class A............................................. 1.04%
Class B............................................. 1.81
Class C............................................. 1.80
Class I............................................. 0.62
Class R2............................................ 1.42
Class R3............................................ 1.17
Class R4............................................ 0.90
Class R5............................................ 0.67
</Table>
Effective Aug. 1, 2009, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Sept. 30, 2010,
unless sooner terminated at the discretion of the Board, such that net expenses
(excluding fees and expenses of acquired funds*), before giving effect to any
- --------------------------------------------------------------------------------
56 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
performance incentive adjustment, will not exceed the following percentage of
the class' average daily net assets:
<Table>
Class A............................................. 1.02%
Class B............................................. 1.80
Class C............................................. 1.78
Class I............................................. 0.57
Class R2............................................ 1.37
Class R3............................................ 1.12
Class R4............................................ 0.87
Class R5............................................ 0.62
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
BANK FEE CREDITS
During the year ended July 31, 2009, the Fund's transfer agency fees were
reduced by $27,696 as a result of bank fee credits from overnight cash balances.
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period from Aug. 1, 2008 to Dec. 15, 2008, the Fund paid custodian
fees amounting to $160,746 to Ameriprise Trust Company, a subsidiary of
Ameriprise Financial.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $2,999,647,954 and $3,486,387,344, respectively, for the
year ended July 31, 2009. Realized gains and losses are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 57
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
- ------------------------------------------------------------------
CLASS A
Sold 20,635,223 18,941,496
Converted from Class B shares* 17,517,161 25,030,716
Reinvested distributions 28,486,553 98,990,509
Redeemed (194,905,059) (225,955,886)
- ------------------------------------------------------------------
Net increase (decrease) (128,266,122) (82,993,165)
- ------------------------------------------------------------------
CLASS B
Sold 5,336,513 6,351,542
Reinvested distributions 2,442,851 16,421,985
Converted to Class A shares* (17,796,097) (25,671,036)
Redeemed (25,437,018) (39,872,307)
- ------------------------------------------------------------------
Net increase (decrease) (35,453,751) (42,769,816)
- ------------------------------------------------------------------
CLASS C
Sold 558,322 430,927
Reinvested distributions 135,221 611,708
Redeemed (1,316,324) (1,682,294)
- ------------------------------------------------------------------
Net increase (decrease) (622,781) (639,659)
- ------------------------------------------------------------------
CLASS I
Sold 2,900,138 2,016,152
Reinvested distributions 489,247 1,585,654
Redeemed (896,196) (6,198,548)
- ------------------------------------------------------------------
Net increase (decrease) 2,493,189 (2,596,742)
- ------------------------------------------------------------------
CLASS R4
Sold 5,294,926 6,389,837
Reinvested distributions 1,723,888 6,289,817
Redeemed (25,223,615) (27,462,232)
- ------------------------------------------------------------------
Net increase (decrease) (18,204,801) (14,782,578)
- ------------------------------------------------------------------
CLASS R5
Sold 7,931,251 --
Redeemed (920,205) (4,152,231)
- ------------------------------------------------------------------
Net increase (decrease) 7,011,046 (4,152,231)
- ------------------------------------------------------------------
</Table>
* Automatic conversion of Class B shares to Class A shares based on the
original purchase.
7. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement (the Agreement) with JPMorgan Chase Bank, National Association
(JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend
- --------------------------------------------------------------------------------
58 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments and any uninvested cash
collateral balance are disclosed in the Statement of Assets and Liabilities
along with the related obligation to return the collateral upon the return of
the securities loaned. At July 31, 2009, securities valued at $291,555,333 were
on loan, secured by cash collateral of $301,932,548 invested in short-term
securities or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$5,047,078 earned from securities lending from Dec. 1, 2008 through July 31,
2009 is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement pursuant to which the
Fund agreed to reimburse the Investment Manager for expenses incurred by it in
connection with the lending program. Expenses paid to the Investment Manager as
securities lending agent were $8,577 through Nov. 30, 2008 and are included in
other expenses in the Statement of Operations. Cash collateral received on
loaned securities had been invested in an affiliated money market fund. Income
of $81,290 earned from securities lending from Aug. 1, 2008 through Nov. 30,
2008 is included in the Statement of Operations.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 59
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
8. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written during the year
ended July 31, 2009, are as follows:
<Table>
<Caption>
PUTS CALLS
--------------------------- ---------------------------
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- --------------------------------------------------------------------------------------
Balance July 31, 2008 3,427 $ 2,454,994 16,411 $ 1,328,757
Opened 21,362 4,207,566 75,902 6,191,236
Closed (24,789) (6,662,560) (44,412) (5,545,057)
Expired -- -- (47,901) (1,974,936)
- --------------------------------------------------------------------------------------
Balance July 31, 2009 -- $ -- -- $ --
- --------------------------------------------------------------------------------------
</Table>
9. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $1,067,045,569 and
$1,188,960,157, respectively, for the year ended July 31, 2009. The income
distributions received with respect to the Fund's investment in RiverSource
Short-Term Cash Fund can be found in the Statement of Operations and the Fund's
invested balance in RiverSource Short-Term Cash Fund at July 31, 2009, can be
found in the Portfolio of Investments.
10. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
16, 2008, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $475 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $175 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $650 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the federal funds rate plus 0.75%. Each
borrowing under the credit facility matures no later than 60 days after the date
of borrowing. The Fund also pays a commitment fee equal to its pro rata share of
- --------------------------------------------------------------------------------
60 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
the amount of the credit facility at a rate of 0.06% per annum, in addition to
an upfront fee equal to its pro rata share of 0.02% of the amount of the credit
facility. The Fund had no borrowings during the year ended July 31, 2009.
Under the prior credit facility which was effective until Oct. 15, 2008, the
Fund had entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow
for the temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The credit facility agreement, which was a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permitted collective borrowings up to $500 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matured no later
than 60 days after the date of borrowing. The Fund also paid a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum.
11. FEDERAL TAX INFORMATION
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of futures and options
contracts, recognition of unrealized appreciation (depreciation) for certain
derivative investments, re-characterization of REIT distributions, investments
in partnerships, post-October losses and losses deferred due to wash sales. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by
$39,451,883 and accumulated net realized loss has been increased by $39,448,845
resulting in a net reclassification adjustment to decrease paid-in capital by
$3,038.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 61
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31,
2009 2008
------------------------- --------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME CAPITAL GAIN INCOME CAPITAL GAIN
- ----------------------------------------------------------------------------
Class A $85,085,125 $-- $211,882,459 $328,307,507
Class B 7,041,708 -- 29,908,842 55,945,531
Class C 393,676 -- 1,125,566 2,105,427
Class I 1,414,165 -- 3,498,173 4,922,837
Class R2 102 -- 220 351
Class R3 111 -- 232 351
Class R4 5,051,083 -- 13,430,477 20,283,419
Class R5 119 -- 188 351
</Table>
At July 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income................ $ 50,830,427
Undistributed accumulated long-term gain..... $ --
Accumulated realized loss.................... $(1,874,434,186)
Unrealized appreciation (depreciation)....... $ (60,835,241)
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$450,500,318 at July 31, 2009, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2010 2011 2017
$20,982,455 $9,473,267 $420,044,596
</Table>
Because the measurement periods for a regulated investment company's income are
different for excise tax purposes versus income tax purposes, special rules are
in place to protect the amount of earnings and profits needed to support excise
tax distributions. As a result, the Fund is permitted to treat net capital
losses realized between Nov. 1, 2008 and its fiscal year end (post-October loss)
as occurring on the first day of the following tax year. At July 31, 2009, the
Fund had a post-October loss of $1,423,933,868 that is treated for income tax
purposes as occurring on Aug. 1, 2009.
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
- --------------------------------------------------------------------------------
62 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
12. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Sept. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements, other than as noted below.
At a shareholder meeting on June 2, 2009, shareholders approved the merger of
RiverSource Large Cap Equity Fund into RiverSource Disciplined Equity Fund. As
of the close of business on Sept. 11, 2009, the Fund was merged into RiverSource
Disciplined Equity Fund.
13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 63
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Commerce (MDOC) related to market timing activities. As a result, AEFC was
censured and ordered to cease and desist from committing or causing any
violations of certain provisions of the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four Seligman Funds. This settlement
resolved all outstanding matters between the Seligman Parties and the NYAG. In
addition to the foregoing matter, the New York staff of the SEC indicated in
September 2005 that it was considering recommending to the Commissioners of the
SEC the instituting of a formal
- --------------------------------------------------------------------------------
64 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
action against Seligman and Seligman Advisors, Inc. relating to frequent trading
in the Seligman Funds. Seligman responded to the staff in October 2005 that it
believed that any action would be both inappropriate and unnecessary, especially
in light of the fact that Seligman had previously resolved the underlying issue
with the Independent Directors of the Seligman Funds and made recompense to the
affected Seligman Funds. There have been no further developments with the SEC on
this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 65
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE LARGE CAP EQUITY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Large Cap Equity Fund (the Fund)
(one of the portfolios constituting the RiverSource Large Cap Series, Inc.) as
of July 31, 2009, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the three years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights of the Fund for the periods presented through
July 31, 2006, were audited by other auditors whose report dated September 20,
2006, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2009, by correspondence with the custodian and
brokers, or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
- --------------------------------------------------------------------------------
66 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Large Cap Equity Fund of the RiverSource Large Cap
Series, Inc. at July 31, 2009, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 21, 2009
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 67
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended July 31, 2009
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 91.72%
Dividends Received Deduction for corporations................ 90.89%
U.S. Government Obligations.................................. 0.00%
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
68 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 69
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
70 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 43 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 71
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 43 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Kenwood Capital Management LLC, Ameriprise Certificate
New York, NY 10010 Company, RiverSource Service Corporation and Seligman
Age 58 Data Corp. since 2009; Chief Compliance Officer for
each of the Seligman funds since 2004 and all funds in
the RiverSource Family of Funds since 2009; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
72 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2009, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, most notably, the large
investment made in the acquisition of J. & W. Seligman & Co. Incorporated,
including its portfolio management operations, personnel and infrastructure
(including the addition of two new offices in New York City and Palo Alto).
Further, in connection with the Board's evaluation of the overall package of
services provided by RiverSource Investments, the Board considered the quality
of the administrative and transfer agency services provided by RiverSource
Investments' affiliates to the Fund. The Board also reviewed the financial
condition of RiverSource Investments (and its affiliates) and each entity's
ability to carry out its responsibilities under the IMS Agreement. Further, the
Board considered RiverSource Investments' ability to
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 73
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
retain key personnel and its expectations in this regard. The Board also
discussed the acceptability of the terms of the IMS Agreement (including the
relatively broad scope of services required to be performed by RiverSource
Investments). The Board concluded that the services being performed under the
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance reflected the
interrelationship of exceptionally challenging market conditions with the
investment strategies employed by the portfolio management team. Further, the
Board noted that appropriate measures have been taken to change the portfolio
management team and reposition the Fund using a quantitative investment process.
Additionally, the Board noted that the Fund is proposed to merge into
RiverSource Disciplined Equity Fund, subject to shareholder approval.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability.
- --------------------------------------------------------------------------------
74 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund (excluding the effect of a performance incentive
adjustment, if applicable), with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) approximated the peer group's median expense ratio. The Board also
considered the Fund's performance incentive adjustment and noted its continued
appropriateness.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 8, 2009, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT 75
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
RESULTS OF MEETING OF SHAREHOLDERS --------------------------------------------
RiverSource Large Cap Equity Fund
SPECIAL MEETING OF SHAREHOLDERS HELD ON JUNE 2, 2009
(UNAUDITED)
A brief description of the proposal voted upon at the meeting and the votes cast
for, against or withheld, as well as the number of abstentions and broker non-
votes as to the proposal is set forth below. A vote is based on total dollar
interest in the Fund.
To approve an Agreement and Plan of Reorganization between the Fund and
RiverSource Disciplined Equity Fund, a series of RiverSource Large Cap Series,
Inc.
<Table>
<Caption>
DOLLARS VOTED DOLLARS VOTED BROKER
"FOR" "AGAINST" ABSTENTIONS NON-VOTES
- ------------------------------------------------------------------
1,096,406,541.394 67,412,793.885 69,192,497.675 0.000
- ------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
76 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 ANNUAL REPORT
RIVERSOURCE LARGE CAP EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Fund Distributors, Inc., Member
FINRA, and managed by RiverSource Investments, LLC.
RiverSource is part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6244 K (9/09)
</Table>
Annual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
LARGE CAP VALUE FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2009
RIVERSOURCE LARGE CAP VALUE FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM GROWTH OF CAPITAL.
<Table>
(SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 10
Fund Expenses Example.............. 12
Portfolio of Investments........... 15
Statement of Assets and
Liabilities...................... 22
Statement of Operations............ 23
Statements of Changes in Net
Assets........................... 25
Financial Highlights............... 27
Notes to Financial Statements...... 35
Report of Independent Registered
Public Accounting Firm........... 50
Federal Income Tax Information..... 52
Board Members and Officers......... 53
Approval of Investment Management
Services Agreement............... 57
Proxy Voting....................... 60
Results of Meeting of
Shareholders..................... 60
</Table>
At a shareholder meeting on June 2, 2009, shareholders approved the merger of
RiverSource Large Cap Value Fund into RiverSource Equity Value Fund. As of the
close of business on Sept. 11, 2009, the Fund was merged into RiverSource
Equity Value Fund.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Large Cap Value Fund (the Fund) Class A shares declined 21.76%
(excluding sales charge) for the 12 months ended July 31, 2009.
> The Fund outperformed the Russell 1000(R) Value Index, which decreased 22.94%
during the same timeframe.
> The Fund underperformed its peer group, as represented by the Lipper Large-Cap
Value Funds Index, which fell 19.21% during the same period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS 6/27/02
- ----------------------------------------------------------------------
RiverSource Large Cap Value Fund
Class A (excluding sales
charge) -21.76% -10.02% -2.17% +0.43%
- ----------------------------------------------------------------------
Russell 1000 Value Index
(unmanaged) -22.94% -9.47% -0.29% +2.29%
- ----------------------------------------------------------------------
Lipper Large-Cap Value Funds
Index -19.21% -7.33% -0.11% +1.92%
- ----------------------------------------------------------------------
</Table>
(See "The Fund's Long-term Performance" for Index descriptions)
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by contacting your financial intermediary,
visiting riversource.com/funds or calling 1(800) 221-2450.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. 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 returns reflect the effect of fee waivers/expense
reimbursements, if any. Without such waivers/reimbursements, the Fund's returns
would be lower. See the Average Annual Total Returns table for performance of
other share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2009
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 6/27/02) -21.76% -10.02% -2.17% +0.43%
- -----------------------------------------------------------------------
Class B (inception 6/27/02) -22.32% -10.68% -2.91% -0.32%
- -----------------------------------------------------------------------
Class C (inception 6/27/02) -22.05% -10.60% -2.86% -0.28%
- -----------------------------------------------------------------------
Class I (inception 3/4/04) -21.19% -9.45% -1.64% -2.22%
- -----------------------------------------------------------------------
Class R2 (inception 12/11/06) -21.77% N/A N/A -14.77%
- -----------------------------------------------------------------------
Class R3 (inception 12/11/06) -21.28% N/A N/A -14.49%
- -----------------------------------------------------------------------
Class R4 (inception 6/27/02) -21.04% -9.45% -1.74% +0.81%
- -----------------------------------------------------------------------
Class R5 (inception 12/11/06) -21.17% N/A N/A -14.34%
- -----------------------------------------------------------------------
With sales charge
Class A (inception 6/27/02) -26.26% -11.78% -3.32% -0.41%
- -----------------------------------------------------------------------
Class B (inception 6/27/02) -26.16% -11.37% -3.18% -0.32%
- -----------------------------------------------------------------------
Class C (inception 6/27/02) -22.82% -10.60% -2.86% -0.28%
- -----------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second year 4%; third and fourth years 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R2, Class R3, Class R4 and Class R5 shares. Class I,
Class R2, Class R3, Class R4 and Class R5 are available to qualifying
institutional investors only.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
- --------------------------------------------------------------------------------
4 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
At July 31, 2009, approximately 36% of RiverSource Large Cap Value Fund's (the
Fund) total outstanding shares were owned in aggregate by affiliated funds-of-
funds managed by RiverSource Investments, LLC (RiverSource). As a result of
asset allocation decisions by RiverSource, it is possible the Fund may
experience relatively large purchases or redemptions from affiliated funds-of-
funds (see page 43, Class I capital share transactions for related activity
during the most recent fiscal period). RiverSource 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 affiliated funds-of-funds. For more information on the Fund's
expenses, see the discussions beginning on pages 12 and 39.
Effective Nov. 1, 2008, Warren Spitz, Steve Schroll, Laton Spahr and Paul
Stocking took over the management of the Fund from Bob Ewing.
Dear Shareholder,
RiverSource Large Cap Value Fund (the Fund) Class A shares declined 21.76%
(excluding sales charge) for the 12 months ended July 31, 2009. The Fund
outperformed the Russell 1000(R) Value Index (Russell Index), which decreased
22.94% during the same timeframe. The Fund underperformed its peer group, as
represented by the Lipper Large-Cap Value Funds Index, which fell 19.21% during
the same period.
SIGNIFICANT PERFORMANCE FACTORS
The performance of the U.S. equity markets can be divided into two distinct
portions during the 12 months ended July 31, 2009 -- one of the largest equity
market corrections ever and then one of the biggest equity market recoveries
ever. It was the end of one era and the start of a new one. Indeed, it would be
an understatement to call this fiscal year a tumultuous time, and it was
certainly one during which all equity investors were forced to re-think what was
"normal" market behavior.
Through early March 2009, the U.S. equity markets were characterized by
negativity and soaring volatility, as the equity markets reacted to a litany of
bad economic news. Investor concerns were fostered by rising unemployment and a
still-fragile housing market as well as by continued financial disruptions.
Underlying this uncertainty were signs that U.S. economic growth was moving into
a recession, as evidenced by a waning
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
SECTOR DIVERSIFICATION(1) (at July 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Consumer Discretionary 6.0%
- ------------------------------------------------
Consumer Staples 6.8%
- ------------------------------------------------
Energy 17.3%
- ------------------------------------------------
Financials 17.4%
- ------------------------------------------------
Health Care 9.7%
- ------------------------------------------------
Industrials 13.8%
- ------------------------------------------------
Information Technology 15.1%
- ------------------------------------------------
Materials 8.9%
- ------------------------------------------------
Telecommunication Services 3.6%
- ------------------------------------------------
Utilities 0.7%
- ------------------------------------------------
Other(2) 0.7%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan) as of July
31, 2009. The Fund's composition is subject to change.
(2) Cash & Cash Equivalents.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which 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.
TOP TEN HOLDINGS (at July 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Hewlett-Packard 3.1%
- ------------------------------------------------
Intel 2.9%
- ------------------------------------------------
Bank of America 2.6%
- ------------------------------------------------
Chevron 2.5%
- ------------------------------------------------
Lorillard 2.2%
- ------------------------------------------------
Goldman Sachs Group
- --% 2009 2.1%
- ------------------------------------------------
Wal-Mart Stores 2.0%
- ------------------------------------------------
Transocean 1.9%
- ------------------------------------------------
XL Capital Cl A 1.9%
- ------------------------------------------------
EI du Pont de Nemours & Co 1.7%
- ------------------------------------------------
</Table>
Excludes cash & cash equivalents.
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
consumer and a dimming export sector, which, until recently, had been a rare
bright spot in the U.S. economic picture. Global financial institutions cut back
lending as other major financial institutions either went bankrupt, were forced
to merge or were taken over by the government. Together, these factors fostered
heightened investor risk aversion and fear. The result was that investors sold
off all types of equity assets in a flight to the relative safety of U.S.
Treasuries.
Then, economic news became less negative and "green shoots" even began to appear
in early March. Investor sentiment improved. The Treasury Department finally
revealed details on key parts of its financial rescue plans, and investors
recognized that the government was not interested in nationalizing companies
that could be viable as privately-owned enterprises. Gross Domestic Product
(GDP) declined less than expected in the second quarter of 2009, and U.S.
equities rallied strongly. Although the equity markets stalled somewhat in June,
the rally resumed with vigor again in July such that most of the major equity
indices enjoyed gains for five months in a row. Despite growing concerns about
building inflationary pressures, including oil prices jumping nearly 56% from
the start of 2009, the equity markets' big push since early March primarily
reflected a belief among investors that an economic recovery was forming.
Still, the mid-period rally in the equity markets was not enough to recoup prior
months' losses, and so virtually all equity asset classes generated steep
double-digit declines for the 12-month period overall. Cyclical sectors within
the Russell
At the end of July, we were biased toward sectors and companies that we
believe will be the beneficiaries of global economic growth not just U.S.
economic growth.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
Index performed worst, including financials, industrials, basic materials and
energy. More defensive sectors, such as consumer staples and health care, held
up best. Perhaps most surprisingly, the technology sector also generated strong
returns relative to the Russell Index for the fiscal year.
The Fund's absolute returns were certainly disappointing. While its
outperformance relative to the Russell Index may be of limited solace, it does
serve as testament to our emphasis on both risk management and investment
opportunity. The Fund's relative results benefited most from effective sector
allocation during the annual period. Having a significant exposure to technology
helped most. Prudent timing of weighting shifts in utilities and basic materials
also contributed positively to the Fund's performance. Stock selection in the
consumer staples and industrials sectors further boosted the Fund's relative
return, although stock selection overall detracted from the Fund's annual
results, especially in the financials and consumer discretionary sectors.
From an individual security perspective, sizable positions in financials firm XL
CAPITAL, technology bellwether INTEL and consumer staples' tobacco giant
LORILLARD were the most meaningful contributors to the Fund's annual results.
Also important were our team's decisions to maintain only a modest exposure to
energy major EXXONMOBIL and to completely avoid conglomerate GENERAL ELECTRIC.
The prudence of such decisions was evidenced by the news headlines about these
two companies' substantial share price declines. Conversely, significant
positions in health care's ABBOT LABORATORIES, consumer discretionary retail
giant WAL-MART STORES and financials firm CIT GROUP detracted, as each
underperformed the Russell Index during the annual period. Either not owning or
having only a modest position in a basket of other financials companies that
rallied strongly during the last five months of the period also hurt.
CHANGES TO THE FUND'S PORTFOLIO
Since our team took over management of this Fund effective Nov. 1, 2008, we made
several changes to the Fund's portfolio. Most significant among those changes
were increasing the Fund's exposure to the basic materials and technology
sectors and decreasing its allocation to the financials sector and the
integrated oils segment of the energy sector. We also dramatically reduced the
number of names held in the Fund's
- --------------------------------------------------------------------------------
8 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
portfolio, employing our contrarian investment approach to try to identify what
we considered to be the best long-term investment ideas among large-cap U.S.
companies that were disliked, forgotten or misunderstood.
<Table>
(PHOTO - WARREN SPITZ) (PHOTO - STEVE SCHROLL)
Warren Spitz Steve Schroll
Senior Portfolio Manager Portfolio Manager
(PHOTO - LATON SPAHR) (PHOTO - PAUL STOCKING)
Laton Spahr, CFA(R) Paul Stocking
Portfolio Manager Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 9
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Large Cap Value Fund Class A shares (from 6/27/02 to
7/31/09) as compared to the performance of two widely cited performance indices,
the Russell 1000 Value Index and the Lipper Large-Cap Value Funds Index. In
comparing the Fund's Class A shares to these indices, you should take into
account the fact that the Fund's performance reflects the maximum sales charge
of 5.75%, while such charges are not reflected in the performance of the
indices. Returns for the Fund include the reinvestment of any distributions paid
during each period.
The performance information shown represents past performance and is not a
guarantee of future results. The table below and the chart on the facing page do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The investment return and
principal value of your investment will fluctuate so that your shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance information shown. You
may obtain performance information current to the most recent month-end by
contacting your financial intermediary or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2009
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS 6/27/02
RIVERSOURCE LARGE CAP VALUE FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $7,374 $6,866 $8,447 $9,717
- -------------------------------------------------------------------------------------------
Average annual total return -26.26% -11.78% -3.32% -0.41%
- -------------------------------------------------------------------------------------------
RUSSELL 1000 VALUE INDEX(1)
Cumulative value of $10,000 $7,706 $7,420 $9,856 $11,739
- -------------------------------------------------------------------------------------------
Average annual total return -22.94% -9.47% -0.29% +2.29%
- -------------------------------------------------------------------------------------------
LIPPER LARGE-CAP VALUE FUNDS INDEX(2)
Cumulative value of $10,000 $8,079 $7,958 $9,945 $11,441
- -------------------------------------------------------------------------------------------
Average annual total return -19.21% -7.33% -0.11% +1.92%
- -------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 3.
- --------------------------------------------------------------------------------
10 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE LARGE CAP VALUE FUND
LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE LARGE
CAP VALUE
FUND CLASS LIPPER LARGE-CAP
A (INCLUDES RUSSELL 1000 VALUE FUNDS
SALES CHARGE) VALUE INDEX(1) INDEX(2)
----------------- -------------- ----------------
6/27/02 $ 9,425 $10,000 $10,000
7/02 8,695 9,142 9,201
10/02 8,465 8,794 8,793
1/03 8,241 8,725 8,687
4/03 8,762 9,255 9,179
7/03 9,611 10,124 9,993
10/03 10,151 10,804 10,603
1/04 11,008 11,830 11,565
4/04 10,825 11,684 11,453
7/04 10,846 11,912 11,507
10/04 11,191 12,473 11,852
1/05 11,845 13,302 12,512
4/05 11,717 13,311 12,403
7/05 12,420 14,179 13,240
10/05 12,164 13,952 13,032
1/06 12,952 15,060 13,953
4/06 13,541 15,747 14,507
7/06 13,337 15,823 14,379
10/06 14,380 16,945 15,432
1/07 15,213 17,948 16,244
4/07 15,615 18,605 16,850
7/07 15,267 17,956 16,513
10/07 15,908 18,784 17,373
1/08 14,172 16,984 15,599
4/08 14,083 16,936 15,601
7/08 12,420 15,236 14,163
10/08 9,419 11,870 10,917
1/09 7,828 9,887 9,431
4/09 8,590 10,295 9,995
7/09 9,717 11,739 11,441
</Table>
(1) The Russell 1000 Value Index, an unmanaged index, measures the performance
of those stocks in the Russell 1000 Index with lower price-to-book ratios
and lower forecasted growth values. The index reflects reinvestment of all
distributions and changes in market prices.
(2) The Lipper Large-Cap Value Funds Index includes the 30 largest large-cap
value 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.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 11
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the ongoing expenses of any funds in which the Fund
invests (also referred to as "acquired funds"), including affiliated and
nonaffiliated pooled investment vehicles (including mutual funds and exchange
traded funds). The Fund's indirect expense from investing in the acquired funds
is based on the Fund's pro rata portion of the ongoing expenses charged by
acquired funds using the expense ratio of each of the acquired funds as of the
acquired fund's most recent shareholder report.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended July 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
12 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2009 JULY 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,241.20 $ 8.27 1.48%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.55 $ 7.44 1.48%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,236.40 $12.55 2.25%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.71 $11.30 2.25%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,243.10 $12.53 2.24%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,013.76 $11.25 2.24%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,245.10 $ 4.59 .82%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.84 $ 4.13 .82%
- ------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,242.20 $ 8.78 1.57%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.10 $ 7.90 1.57%
- ------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,246.10 $ 7.56 1.35%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.20 $ 6.79 1.35%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,249.00 $ 5.66(c) 1.01%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.90 $ 5.09(c) 1.01%
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2009 JULY 31, 2009 THE PERIOD(a) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,245.20 $ 4.76 .85%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.69 $ 4.28 .85%
- ------------------------------------------------------------------------------------------
</Table>
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 182/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended July 31, 2009: +24.12%
for Class A, +23.64% for Class B, +24.31% for Class C, +24.51% for Class I,
+24.22% for Class R2, +24.61% for Class R3, +24.90% for Class R4 and +24.52%
for Class R5.
(c) RiverSource Investments, LLC (the Investment Manager) and its affiliates had
contractually agreed to waive certain fees and to absorb certain expenses
until July 31, 2009, such that net expenses (excluding fees and expenses of
acquired funds), before giving effect to any performance incentive
adjustment, would not exceed 1.13% for Class R4. Had this agreement not been
in effect for the entire six month period ended July 31, 2009, the actual
expenses paid would have been $6.28 and the hypothetical expenses paid would
have been $5.64 for Class R4.
- --------------------------------------------------------------------------------
14 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (96.0%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (3.1%)
Boeing 6,274(d) $269,217
Honeywell Intl 11,593 402,277
United Technologies 10,537 573,951
---------------
Total 1,245,445
- -------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (1.2%)
United Parcel Service Cl B 9,390 504,525
- -------------------------------------------------------------------------------------
AIRLINES (1.0%)
AMR 14,656(b,d) 78,410
Continental Airlines Cl B 6,695(b,d) 74,783
Delta Air Lines 20,414(b) 141,469
UAL 8,443(b,d) 34,785
US Airways Group 22,717(b,d) 66,561
---------------
Total 396,008
- -------------------------------------------------------------------------------------
AUTOMOBILES (0.2%)
Ford Motor 12,649(b) 101,192
- -------------------------------------------------------------------------------------
CAPITAL MARKETS (2.5%)
Bank of New York Mellon 9,085 248,384
Goldman Sachs Group 3,687 602,086
Morgan Stanley 6,225 177,413
---------------
Total 1,027,883
- -------------------------------------------------------------------------------------
CHEMICALS (5.4%)
Air Products & Chemicals 8,626 643,500
Dow Chemical 23,849 504,883
EI du Pont de Nemours & Co 27,339 845,595
Praxair 2,562(d) 200,297
---------------
Total 2,194,275
- -------------------------------------------------------------------------------------
COMMERCIAL BANKS (0.2%)
US Bancorp 4,136 84,416
- -------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.8%)
Waste Management 11,392(d) 320,229
- -------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (1.3%)
Cisco Systems 23,695(b) 521,527
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (5.1%)
Hewlett-Packard 35,370 1,531,521
IBM 4,573(d) 539,294
---------------
Total 2,070,815
- -------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (0.2%)
Insituform Technologies Cl A 3,927(b,d) 72,257
- -------------------------------------------------------------------------------------
CONSUMER FINANCE (0.2%)
SLM 6,917(b) 61,492
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (4.8%)
Bank of America 86,319 1,276,658
CIT Group 28,834(d) 25,086
JPMorgan Chase & Co 17,005 657,243
---------------
Total 1,958,987
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (3.6%)
AT&T 27,204(d) 713,560
Deutsche Telekom 9,147(c) 117,188
FairPoint Communications 362(d) 214
Verizon Communications 19,797 634,890
---------------
Total 1,465,852
- -------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (1.0%)
ABB ADR 21,475(b,c) 392,563
- -------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (0.2%)
Tyco Electronics 4,307(c) 92,471
- -------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (5.1%)
Baker Hughes 7,547 305,654
Halliburton 14,185 313,346
Schlumberger 5,367 287,135
Transocean 11,624(b,c) 926,316
Weatherford Intl 13,684(b,c) 256,712
---------------
Total 2,089,163
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
FOOD & STAPLES RETAILING (3.3%)
CVS Caremark 9,693 $324,522
Wal-Mart Stores 20,288(d) 1,011,965
---------------
Total 1,336,487
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.5%)
Baxter Intl 1,895 106,821
Covidien 5,328(c) 201,452
Medtronic 8,580 303,903
---------------
Total 612,176
- -------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (0.8%)
Cardinal Health 3,302(d) 109,957
UnitedHealth Group 7,421 208,233
---------------
Total 318,190
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.0%)
Carnival Unit 14,812 414,588
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.7%)
Centex 9,585 104,572
DR Horton 3,247(d) 37,633
KB Home 6,428(d) 107,283
Pulte Homes 3,956(d) 44,980
---------------
Total 294,468
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (0.9%)
Tyco Intl 11,588(c) 350,189
- -------------------------------------------------------------------------------------
INSURANCE (6.9%)
ACE 10,780(c) 528,867
Allstate 2,952(d) 79,438
Chubb 3,309 152,810
Everest Re Group 7,213(c) 578,627
Lincoln Natl 2,674(d) 56,662
Marsh & McLennan Companies 9,197 187,803
Travelers Companies 7,986(d) 343,957
XL Capital Cl A 65,563(c,d) 923,126
---------------
Total 2,851,290
- -------------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.8%)
Thermo Fisher Scientific 7,489(b,d) 339,102
- -------------------------------------------------------------------------------------
MACHINERY (5.4%)
Caterpillar 14,308(d) 630,410
Deere & Co 2,112 92,379
Eaton 7,750 402,380
Illinois Tool Works 16,546(d) 670,941
Ingersoll-Rand 6,451(c) 186,305
Parker Hannifin 4,991(d) 221,001
---------------
Total 2,203,416
- -------------------------------------------------------------------------------------
MEDIA (0.1%)
Sirius XM Radio 101,498(b) 45,674
- -------------------------------------------------------------------------------------
METALS & MINING (2.5%)
Alcoa 21,537(d) 253,275
Freeport-McMoRan Copper & Gold 4,364(d) 263,149
Nucor 8,201 364,699
Rio Tinto ADR 268(c) 44,911
Vale ADR 2,078(c,d) 40,999
Xstrata 3,629(c) 48,994
---------------
Total 1,016,027
- -------------------------------------------------------------------------------------
MULTILINE RETAIL (1.6%)
Kohl's 3,296(b,d) 160,021
Macy's 9,532(d) 132,590
Target 8,059(d) 351,534
---------------
Total 644,145
- -------------------------------------------------------------------------------------
MULTI-UTILITIES (0.7%)
Dominion Resources 8,596 290,545
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (12.0%)
Anadarko Petroleum 9,711 468,070
Apache 4,515 379,034
BP ADR 14,864(c,d) 743,795
Chevron 17,548(d) 1,219,060
ConocoPhillips 19,225 840,325
Devon Energy 3,520 204,477
EnCana 3,227(c) 173,129
Exxon Mobil 6,013 423,255
Petroleo Brasileiro ADR 7,555(c) 311,568
Ultra Petroleum 2,529(b) 111,579
Valero Energy 2,950 53,100
---------------
Total 4,927,392
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
PAPER & FOREST PRODUCTS (1.0%)
Weyerhaeuser 11,675(d) $409,092
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (6.4%)
Bristol-Myers Squibb 28,335(d) 616,003
Johnson & Johnson 7,491(d) 456,127
Merck & Co 16,548 496,605
Pfizer 24,038(d) 382,925
Schering-Plough 14,207 376,628
Wyeth 6,918 322,033
---------------
Total 2,650,321
- -------------------------------------------------------------------------------------
ROAD & RAIL (0.3%)
CSX 2,596 104,152
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (4.9%)
Intel 75,766(d) 1,458,495
Microchip Technology 2,744 73,896
Taiwan Semiconductor Mfg ADR 34,678(c,d) 363,079
Xilinx 4,031(d) 87,432
---------------
Total 1,982,902
- -------------------------------------------------------------------------------------
SOFTWARE (3.5%)
Microsoft 21,732 511,137
Oracle 26,809 593,283
Symantec 22,732(b,d) 339,389
---------------
Total 1,443,809
- -------------------------------------------------------------------------------------
SPECIALTY RETAIL (2.3%)
Best Buy 4,933(d) 184,346
Home Depot 14,055(d) 364,587
Lowe's Companies 8,068(d) 181,207
Staples 9,784(d) 205,660
---------------
Total 935,800
- -------------------------------------------------------------------------------------
TOBACCO (3.5%)
Lorillard 14,822 1,092,678
Philip Morris Intl 6,974 324,988
---------------
Total 1,417,666
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $36,336,979) $39,186,531
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
EQUITY-LINKED NOTES (2.6%)(G)
COUPON PRINCIPAL
ISSUER RATE AMOUNT VALUE(a)
Goldman Sachs Group
Absolute Trigger Mandatory Exchangeable Nts
12-28-09 --% $1,000,000(e) $1,063,999
- -------------------------------------------------------------------------------------
TOTAL BONDS
(Cost: $1,000,000) $1,063,999
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
OTHER (--%)
ISSUER SHARES VALUE(a)
HOTELS, RESTAURANTS & LEISURE
Krispy Kreme Doughnuts
Warrants 100(b,e) $6
- -------------------------------------------------------------------------------------
TOTAL OTHER
(Cost: $--) $6
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (0.7%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.41% 273,212(f) $273,212
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $273,212) $273,212
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL
RECEIVED FOR SECURITIES ON
LOAN (22.3%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime Money Market Fund 9,120,462 $9,120,462
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $9,120,462) $9,120,462
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $46,730,653)(h) $49,644,210
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2009, the
value of foreign securities represented 15.4% of net assets.
(d) At July 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 2 to the financial statements). The aggregate value of such securities
at July 31, 2009 was $1,064,005 representing 2.6% of net assets.
Information concerning such security holdings at July 31, 2009 is as
follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
----------------------------------------------------------------
Goldman Sachs Group
-- % Absolute Trigger Mandatory
Exchangeable Nts 2009 05-18-09 $1,000,000
Krispy Kreme Doughnuts 07-01-09 --
</Table>
(f) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at July 31, 2009.
(g) Equity-Linked Notes (ELNs) are notes created by a counterparty, typically
an investment bank that may bear interest at a fixed or floating rate. At
maturity, the notes must be exchanged for an amount based on the value of
one or more equity securities of third party issuers or the value of an
index. The exchanged value may be limited to an amount less than the actual
value of the underlying stocks or value of an index at the maturity date.
Any difference between the exchange amount and the original cost of the
notes will be a gain or loss.
(h) At July 31, 2009, the cost of securities for federal income tax purposes
was $49,190,532 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $5,164,984
Unrealized depreciation (4,711,306)
----------------------------------------------------------
Net unrealized appreciation $453,678
----------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which 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.
- --------------------------------------------------------------------------------
18 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) requires
disclosure regarding the inputs and valuation techniques used to measure fair
value and any changes in valuation inputs or techniques. In addition,
investments shall be disclosed by major category.
SFAS 157 establishes a fair value hierarchy for inputs used in measuring fair
value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. When a valuation uses multiple inputs from
varying levels of the hierarchy, the hierarchy level is determined based on the
lowest level input or inputs that are significant to the fair value measurement
in its entirety. The input levels are not necessarily an indication of the risk
or liquidity associated with investments at that level. For example, certain
U.S. government securities are generally high quality and liquid, however, they
are reflected as Level 2 because the inputs used to determine fair value may not
always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as Level 3 investments due to lack
of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any
remaining investments classified as Level 3. These models rely on one or more
significant unobservable inputs and/or significant assumptions by the Fund
Administrator. Inputs used in a valuation model may include, but are not limited
to, financial statement analysis, discount rates and estimated cash flows, and
comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of July 31, 2009:
<Table>
<Caption>
FAIR VALUE AT JULY 31, 2009
--------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- --------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a) $39,186,531 $-- $-- $39,186,531
Other(a) 6 -- -- 6
- --------------------------------------------------------------------------------------------
Total Equity Securities 39,186,537 -- 39,186,537
- --------------------------------------------------------------------------------------------
Bonds
Corporate Debt
Securities -- 1,063,999 -- 1,063,999
- --------------------------------------------------------------------------------------------
Total Bonds -- 1,063,999 -- 1,063,999
- --------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(b) 273,212 -- -- 273,212
Investments of Cash
Collateral Received
for Securities on Loan 9,120,462 -- -- 9,120,462
- --------------------------------------------------------------------------------------------
Total Other 9,393,674 -- -- 9,393,674
- --------------------------------------------------------------------------------------------
Total $48,580,211 $1,063,999 $-- $49,644,210
- --------------------------------------------------------------------------------------------
</Table>
(a) All industry classifications are identified in the Portfolio of Investments.
(b) Money market fund that is a sweep investment for cash balances in the Fund
at July 31, 2009.
- --------------------------------------------------------------------------------
20 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling the RiverSource
Family of Funds at 1(800) 221-2450.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 21
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
JULY 31, 2009
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $37,336,979) $ 40,250,536
Affiliated money market fund (identified cost $273,212) 273,212
Investments of cash collateral received for securities on loan
(identified cost $9,120,462) 9,120,462
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $46,730,653) 49,644,210
Capital shares receivable 747,760
Dividends and accrued interest receivable 100,164
Receivable for investment securities sold 415,890
- -------------------------------------------------------------------------------
Total assets 50,908,024
- -------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 755,509
Payable for investment securities purchased 123,916
Payable upon return of securities loaned 9,120,462
Accrued investment management services fees 667
Accrued distribution fees 284
Accrued transfer agency fees 248
Accrued administrative services fees 67
Other accrued expenses 84,879
- -------------------------------------------------------------------------------
Total liabilities 10,086,032
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 40,821,992
- -------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 127,658
Additional paid-in capital 58,144,482
Undistributed net investment income 581,972
Accumulated net realized gain (loss) (20,945,677)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 2,913,557
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $ 40,821,992
- -------------------------------------------------------------------------------
*Including securities on loan, at value $ 8,970,388
- -------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $21,330,156 6,677,459 $3.19(1)
Class B $ 3,931,473 1,230,647 $3.19
Class C $ 649,091 205,082 $3.17
Class I $14,885,997 4,644,752 $3.20
Class R2 $ 3,585 1,127 $3.18
Class R3 $ 2,432 763 $3.19
Class R4 $ 16,775 5,233 $3.21
Class R5 $ 2,483 763 $3.25
- ----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $3.38. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED JULY 31, 2009
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 1,218,133
Interest 135
Income distributions from affiliated money market fund 7,311
Income from securities lending 9,003
Less foreign taxes withheld (7,445)
- -------------------------------------------------------------------------------
Total income 1,227,137
- -------------------------------------------------------------------------------
Expenses:
Investment management services fees 179,788
Distribution fees
Class A 55,095
Class B 48,967
Class C 5,271
Class R2 14
Class R3 6
Transfer agency fees
Class A 79,925
Class B 18,929
Class C 2,002
Class R2 1
Class R3 1
Class R4 8
Class R5 1
Administrative services fees 23,466
Plan administration services fees
Class R2 7
Class R3 6
Class R4 40
Compensation of board members 1,233
Custodian fees 12,645
Printing and postage 37,175
Registration fees 41,975
Professional fees 38,738
Other 2,961
- -------------------------------------------------------------------------------
Total expenses 548,254
Expenses waived/reimbursed by the Investment Manager and its
affiliates (54)
Earnings and bank fee credits on cash balances (29)
- -------------------------------------------------------------------------------
Total net expenses 548,171
- -------------------------------------------------------------------------------
Investment income (loss) -- net 678,966
- -------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 23
STATEMENT OF OPERATIONS (continued) --------------------------------------------
YEAR ENDED JULY 31, 2009
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $(19,522,946)
Foreign currency transactions (498)
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments (19,523,444)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 7,619,296
- -------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (11,904,148)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(11,225,182)
- -------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 678,966 $ 1,045,750
Net realized gain (loss) on investments (19,523,444) 927,507
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies 7,619,296 (16,296,453)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (11,225,182) (14,323,196)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (355,895) (682,628)
Class B (13,356) (32,633)
Class C (3,634) (4,493)
Class I (226,632) (311,395)
Class R2 (51) (49)
Class R3 (51) (60)
Class R4 (438) (623)
Class R5 (56) --
Net realized gain
Class A (159,185) (4,625,594)
Class B (35,901) (1,148,253)
Class C (3,687) (84,730)
Class I (66,705) (1,493,181)
Class R2 (19) (369)
Class R3 (17) (369)
Class R4 (113) (3,183)
Class R5 (17) (369)
- ---------------------------------------------------------------------------------------------
Total distributions (865,757) (8,387,929)
- ---------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 25
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 4,643,375 $ 3,876,774
Class B shares 731,629 701,838
Class C shares 228,867 135,278
Class I shares 8,484,728 2,612,695
Class R2 shares 1,019 --
Class R4 shares -- 1,000
Reinvestment of distributions at net asset value
Class A shares 501,092 5,196,120
Class B shares 48,538 1,166,160
Class C shares 7,274 87,581
Class I shares 293,251 1,804,061
Class R2 shares 9 --
Class R4 shares 335 2,650
Conversions from Class B to Class A
Class A shares 721,675 752,915
Class B shares (721,675) (752,915)
Payments for redemptions
Class A shares (11,489,141) (22,746,329)
Class B shares (1,732,859) (5,378,031)
Class C shares (115,750) (340,594)
Class I shares (3,023,601) (5,559,082)
Class R4 shares -- (10,330)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (1,421,234) (18,450,209)
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (13,512,173) (41,161,334)
Net assets at beginning of year 54,334,165 95,495,499
- ---------------------------------------------------------------------------------------------
Net assets at end of year $ 40,821,992 $ 54,334,165
- ---------------------------------------------------------------------------------------------
Undistributed net investment income $ 581,972 $ 491,247
- ---------------------------------------------------------------------------------------------
</Table>
Certain line items from the prior year have been renamed to conform to the
current year presentation.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.18 $5.71 $5.88 $5.83 $5.34
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05(b) .07(b) .06(b) .09 .06
Net gains (losses) (both realized and
unrealized) (.97) (1.05) .77 .32 .70
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (.92) (.98) .83 .41 .76
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.07) (.07) (.07) (.04)
Distributions from realized gains (.02) (.48) (.93) (.29) (.23)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.07) (.55) (1.00) (.36) (.27)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.19 $4.18 $5.71 $5.88 $5.83
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $21 $35 $62 $63 $74
- ----------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.48% 1.31% 1.28% 1.21% 1.29%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.65% 1.41% .99% 1.35% 1.07%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 24% 35% 46% 57%
- ----------------------------------------------------------------------------------------------------------
Total return(e) (21.76%) (18.65%) 14.47% 7.39% 14.52%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.15 $5.66 $5.82 $5.77 $5.29
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03(b) .03(b) .01(b) .04 .01
Net gains (losses) (both realized and
unrealized) (.96) (1.04) .78 .32 .70
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (.93) (1.01) .79 .36 .71
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01) (.02) (.02) (.02) --
Distributions from realized gains (.02) (.48) (.93) (.29) (.23)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.03) (.50) (.95) (.31) (.23)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.19 $4.15 $5.66 $5.82 $5.77
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $4 $7 $15 $19 $28
- ----------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.25% 2.07% 2.05% 1.97% 2.05%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) .89% .65% .23% .59% .30%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 24% 35% 46% 57%
- ----------------------------------------------------------------------------------------------------------
Total return(e) (22.32%) (19.35%) 13.75% 6.51% 13.66%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
28 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.13 $5.64 $5.82 $5.77 $5.29
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03(b) .03(b) .01(b) .04 .01
Net gains (losses) (both realized and
unrealized) (.95) (1.03) .76 .32 .70
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (.92) (1.00) .77 .36 .71
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.03) (.02) (.02) --
Distributions from realized gains (.02) (.48) (.93) (.29) (.23)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.04) (.51) (.95) (.31) (.23)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.17 $4.13 $5.64 $5.82 $5.77
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1 $1 $1 $1 $1
- ----------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 2.24% 2.08% 2.04% 1.98% 2.06%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) .87% .65% .23% .58% .30%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 24% 35% 46% 57%
- ----------------------------------------------------------------------------------------------------------
Total return(e) (22.05%) (19.25%) 13.50% 6.56% 13.62%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.20 $5.75 $5.91 $5.86 $5.36
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .10(b) .08(b) .12 .07
Net gains (losses) (both realized and
unrealized) (.97) (1.07) .79 .32 .72
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (.90) (.97) .87 .44 .79
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.10) (.10) (.10) (.06)
Distributions from realized gains (.02) (.48) (.93) (.29) (.23)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.10) (.58) (1.03) (.39) (.29)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.20 $4.20 $5.75 $5.91 $5.86
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $15 $11 $17 $13 $38
- ----------------------------------------------------------------------------------------------------------
Total expenses(c),(d) .86% .86% .85% .75% .86%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.28% 1.87% 1.41% 1.85% 1.50%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 24% 35% 46% 57%
- ----------------------------------------------------------------------------------------------------------
Total return (21.19%) (18.41%) 15.10% 7.86% 14.97%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
30 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(f)
Net asset value, beginning of period $4.18 $5.69 $6.55
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .05 .07 .02
Net gains (losses) (both realized and
unrealized) (.97) (1.03) .15
- ------------------------------------------------------------------------------------
Total from investment operations (.92) (.96) .17
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.07) (.10)
Distributions from realized gains (.02) (.48) (.93)
- ------------------------------------------------------------------------------------
Total distributions (.08) (.55) (1.03)
- ------------------------------------------------------------------------------------
Net asset value, end of period $3.18 $4.18 $5.69
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.61% 1.65% 1.63%(g)
- ------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(h),(i) 1.48% 1.41% 1.63%(g)
- ------------------------------------------------------------------------------------
Net investment income (loss) 1.63% 1.32% .55%(g)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 85% 24% 35%
- ------------------------------------------------------------------------------------
Total return (21.77%) (18.44%) 2.84%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(f)
Net asset value, beginning of period $4.18 $5.70 $6.55
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .06 .08 .03
Net gains (losses) (both realized and
unrealized) (.96) (1.04) .15
- ------------------------------------------------------------------------------------
Total from investment operations (.90) (.96) .18
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.08) (.10)
Distributions from realized gains (.02) (.48) (.93)
- ------------------------------------------------------------------------------------
Total distributions (.09) (.56) (1.03)
- ------------------------------------------------------------------------------------
Net asset value, end of period $3.19 $4.18 $5.70
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.39% 1.39% 1.38%(g)
- ------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(h),(i) 1.25% 1.15% 1.38%(g)
- ------------------------------------------------------------------------------------
Net investment income (loss) 1.87% 1.58% .80%(g)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 85% 24% 35%
- ------------------------------------------------------------------------------------
Total return (21.28%) (18.38%) 3.03%(j)
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
32 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
FISCAL PERIOD ENDED JULY 31,
2009 2008 2007 2006 2005
Net asset value, beginning of period $4.22 $5.74 $5.90 $5.85 $5.36
- ----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .10(b) .07(b) .10 .07
Net gains (losses) (both realized and
unrealized) (.97) (1.04) .78 .32 .70
- ----------------------------------------------------------------------------------------------------------
Total from investment operations (.90) (.94) .85 .42 .77
- ----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.09) (.10) (.08) (.08) (.05)
Distributions from realized gains (.02) (.48) (.93) (.29) (.23)
- ----------------------------------------------------------------------------------------------------------
Total distributions (.11) (.58) (1.01) (.37) (.28)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $3.21 $4.22 $5.74 $5.90 $5.85
- ----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- ----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.18% 1.15% 1.13% 1.00% 1.11%
- ----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(h),(i) .86% .81% 1.12% 1.00% 1.11%
- ----------------------------------------------------------------------------------------------------------
Net investment income (loss) 2.26% 1.90% 1.14% 1.69% 1.25%
- ----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 85% 24% 35% 46% 57%
- ----------------------------------------------------------------------------------------------------------
Total return (21.04%) (17.99%) 14.67% 7.55% 14.67%
- ----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a)
<Table>
<Caption>
Fiscal period ended July 31,
2009 2008 2007(f)
Net asset value, beginning of period $4.26 $5.72 $6.55
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(b) .07 .09 .05
Net gains (losses) (both realized and
unrealized) (.98) (1.07) .15
- ------------------------------------------------------------------------------------
Total from investment operations (.91) (.98) .20
- ------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) -- (.10)
Distributions from realized gains (.02) (.48) (.93)
- ------------------------------------------------------------------------------------
Total distributions (.10) (.48) (1.03)
- ------------------------------------------------------------------------------------
Net asset value, end of period $3.25 $4.26 $5.72
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $--
- ------------------------------------------------------------------------------------
Total expenses(c),(d) .89% .92% .83%(g)
- ------------------------------------------------------------------------------------
Net investment income (loss) 2.23% 1.81% 1.45%(g)
- ------------------------------------------------------------------------------------
Portfolio turnover rate 85% 24% 35%
- ------------------------------------------------------------------------------------
Total return (21.17%) (18.41%) 3.40%(j)
- ------------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
(f) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(g) Adjusted to an annual basis.
(h) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees of acquired funds), before giving
effect to any performance incentive adjustment.
(i) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the years ended July 31, 2009 and 2008.
(j) Not annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
34 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
RiverSource Large Cap Value Fund (the Fund) is a series of RiverSource Large Cap
Series, Inc. and is registered under the Investment Company Act of 1940, as
amended (the 1940 Act) as a diversified, open-end management investment company.
RiverSource Large Cap Series, Inc. has 10 billion authorized shares of capital
stock that can be allocated among the separate series as designated by the
Fund's Board of Directors (the Board). The Fund invests primarily in equity
securities of companies with a market capitalization greater than $5 billion.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4
and Class R5 shares.
- - Class A shares are offered with a front-end sales charge, which may be waived
under certain circumstances.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares one month after the completion of
the eighth year of ownership if originally purchased in a RiverSource fund on
or after May 21, 2005 or originally purchased in a Seligman fund on or after
June 13, 2009. Class B shares originally purchased in a RiverSource fund
prior to May 21, 2005 will convert to Class A shares in the ninth calendar
year of ownership. Class B shares originally purchased in a Seligman fund
prior to June 13, 2009 will convert to Class A shares in the month prior to
the ninth year of ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are offered without
a front-end sales charge or CDSC to qualifying institutional investors.
At July 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and affiliated funds-of-funds in the RiverSource Family of
Funds owned 100% of Class I shares, and the Investment Manager owned 100% of
Class R3 and Class R5 shares. At July 31, 2009, the Investment Manager and
affiliated funds-of-funds in the RiverSource Family of Funds owned approximately
36% of the total outstanding Fund shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the New York Stock
Exchange (NYSE). Securities traded on national securities exchanges or included
in national market systems are valued at the last quoted sales price. Debt
securities are generally traded in the over-the-counter market and are valued by
an independent pricing service using an evaluated bid. When market quotes are
not readily available, the pricing service, in determining fair values of debt
securities, takes into consideration such factors as current quotations by
broker/dealers, coupon, maturity, quality, type of issue, trading
characteristics, and other yield and risk factors it deems relevant in
determining valuations. Foreign securities are valued based on quotations from
the principal market in which such securities are normally traded. The
procedures adopted by the Board generally contemplate the use of fair valuation
in the event that price quotations or valuations are not readily available,
price quotations or valuations from other sources are not reflective of market
value and thus deemed unreliable, or a significant event has occurred in
relation to a security or class of securities (such as foreign securities) that
is not reflected in price quotations or valuations from other sources. A fair
value price is a good faith estimate of the value of a security at a given point
in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the
Investment Manager, as administrator to the Fund, will fair value foreign
securities pursuant to procedures adopted by the Board, including utilizing a
third party pricing service to determine these fair values. These procedures
take into account multiple factors, including movements in the U.S. securities
markets, to determine a good faith estimate that reasonably reflects the current
market conditions as of the close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Typically, those maturing in 60 days or less that originally had
maturities
- --------------------------------------------------------------------------------
36 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
of more than 60 days at acquisition date are valued at amortized cost using the
market value on the 61st day before maturity. Short-term securities maturing in
60 days or less at acquisition date are valued at amortized cost. Amortized cost
is an approximation of market value. Investments in money market funds are
valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes.
ILLIQUID SECURITIES
At July 31, 2009, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at July 31, 2009 was
$1,064,005 representing 2.61% of net assets. Certain illiquid securities may be
valued, in good faith, by management at fair value according to procedures
approved by the Board. According to Board guidelines, certain unregistered
securities are determined to be liquid and are not included within the 15%
limitation specified above. Assets are liquid if they can be sold or disposed of
in the ordinary course of business within seven days at approximately the value
at which the asset is valued by the Fund.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
of its taxable income (which includes net short-term capital gains) to
shareholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements. Generally,
the tax authorities can examine all the tax returns filed for the last three
years.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
- --------------------------------------------------------------------------------
38 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount reflected in the
Statement of Assets and Liabilities. At July 31, 2009, the Fund had no
outstanding forward foreign currency contracts.
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT JULY 31, 2009
At July 31, 2009, the Fund had no outstanding derivatives.
EFFECT OF DERIVATIVE INSTRUMENTS ON THE STATEMENT OF OPERATIONS FOR THE YEAR
ENDED JULY 31, 2009
<Table>
<Caption>
AMOUNT OF REALIZED GAIN OR (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- --------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
Foreign exchange contracts $(6,018)
- --------------------------------------------------------------------------------
TOTAL $(6,018)
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION) ON DERIVATIVES
RECOGNIZED IN INCOME
- --------------------------------------------------------------------------
RISK EXPOSURE CATEGORY FORWARD FOREIGN CURRENCY CONTRACTS
Foreign exchange contracts $45
- --------------------------------------------------------------------------------
TOTAL $45
- --------------------------------------------------------------------------------
</Table>
4. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is an annual fee that is equal to a percentage of the Fund's average daily net
assets that declines from 0.60% to 0.375% as the Fund's net assets increase. The
fee may be adjusted upward or downward by a performance incentive adjustment
determined monthly by measuring the percentage difference over a rolling 12-
month period between the annualized performance of one Class A share of the Fund
and the annualized performance of the Lipper Large-Cap Value Funds Index. In
certain circumstances, the Board may approve a change in the index.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The maximum adjustment is 0.12% per year. If the performance difference is less
than 0.50%, the adjustment will be zero. The adjustment decreased the management
fee by $54,869 for the year ended July 31, 2009. The management fee for the year
ended July 31, 2009 was 0.46% of the Fund's average daily net assets, including
the adjustment under the terms of the performance incentive arrangement.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial
an annual fee for administration and accounting services equal to a percentage
of the Fund's average daily net assets that declines from 0.06% to 0.03% as the
Fund's net assets increase. The fee for the year ended July 31, 2009 was 0.06%
of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended July 31,
2009, other expenses paid to this company were $275.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the funds until distributed in accordance with the Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains Fund shareholder accounts and records and provides Fund
shareholder services. The Fund pays the Transfer Agent an annual account-based
fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for
Class C for this service. The Transfer Agent also charges an annual fee of $3
per account serviced directly by the Fund or its designated agent for Class A,
Class B, and Class C shares. The Fund also pays the Transfer Agent an annual
asset-based fee at a rate of 0.05% of the Fund's average daily net assets
attributable to Class R2, Class R3, Class R4 and Class R5 shares. The Transfer
Agent charges an annual fee of $5 per inactive account, charged on a pro rata
basis for the 12 month period from the date the account becomes inactive. These
fees are included in the transfer agency fees in the Statement of Operations.
- --------------------------------------------------------------------------------
40 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Fund Distributors, Inc. (the
Distributor) for distribution and shareholder services. Under a Plan and
Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an
annual rate of up to 0.25% of the Fund's average daily net assets attributable
to Class A and Class R3 shares, a fee at an annual rate of up to 0.50% of the
Fund's average daily net assets attributable to Class R2 shares and a fee at an
annual rate of up to 1.00% of the Fund's average daily net assets attributable
to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee,
up to 0.75% is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed (unreimbursed expense) was approximately $194,000 and $7,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of April 30, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGES
Sales charges, including front-end and CDSCs, received by the Distributor for
distributing Fund shares were $27,183 for Class A, $3,417 for Class B and $14
for Class C for the year ended July 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2009, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*), including the adjustment under the terms
of a performance incentive arrangement, were as follows:
<Table>
Class R2............................................ 1.48%
Class R3............................................ 1.25%
Class R4............................................ 0.84%
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class R4............................................. $8
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2............................................ $ 3
Class R3............................................ 3
Class R4............................................ 40
</Table>
Under an agreement which was effective until July 31, 2009, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would not
exceed the following percentage of the class average daily net assets:
<Table>
Class R4............................................ 1.13%
</Table>
* In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the funds in
which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
BANK FEE CREDITS
During the year ended July 31, 2009, the Fund's transfer agency fees were
reduced by $29 as a result of earnings and bank fee credits from overnight cash
balances.
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. For the period from Aug. 1, 2008 to Dec. 15, 2008, the Fund paid custodian
fees amounting to $11,773 to Ameriprise Trust Company, a subsidiary of
Ameriprise Financial.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $33,681,275 and $34,980,554, respectively, for the year
ended July 31, 2009. Realized gains and losses are determined on an identified
cost basis.
- --------------------------------------------------------------------------------
42 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2009 2008
- -----------------------------------------------------------------
CLASS A
Sold 1,600,537 786,876
Converted from Class B shares* 226,231 185,905
Reinvested distributions 177,065 1,043,398
Redeemed (3,723,795) (4,547,178)
- -----------------------------------------------------------------
Net increase (decrease) (1,719,962) (2,530,999)
- -----------------------------------------------------------------
CLASS B
Sold 249,263 144,597
Reinvested distributions 17,091 234,640
Converted to Class A shares* (226,231) (186,828)
Redeemed (575,322) (1,098,819)
- -----------------------------------------------------------------
Net increase (decrease) (535,199) (906,410)
- -----------------------------------------------------------------
CLASS C
Sold 82,472 26,989
Reinvested distributions 2,589 17,693
Redeemed (39,541) (69,667)
- -----------------------------------------------------------------
Net increase (decrease) 45,520 (24,985)
- -----------------------------------------------------------------
CLASS I
Sold 2,964,785 513,889
Reinvested distributions 103,990 361,535
Redeemed (1,095,863) (1,138,246)
- -----------------------------------------------------------------
Net increase (decrease) 1,972,912 (262,822)
- -----------------------------------------------------------------
CLASS R2
Sold 361 --
Reinvested distributions 3 --
- -----------------------------------------------------------------
Net increase (decrease) 364 --
- -----------------------------------------------------------------
CLASS R4
Sold -- 213
Reinvested distributions 118 530
Redeemed -- (2,217)
- -----------------------------------------------------------------
Net increase (decrease) 118 (1,474)
- -----------------------------------------------------------------
</Table>
* Automatic conversion of Class B shares to Class A shares based on the
original purchase.
7. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement (the Agreement) with JPMorgan Chase Bank, National Association
(JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments and any uninvested cash
collateral balance are disclosed in the Statement of Assets and Liabilities
along with the related obligation to return the collateral upon the return of
the securities loaned. At July 31, 2009, securities valued at $8,970,388 were on
loan, secured by cash collateral of $9,120,462 invested in short-term securities
or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Fund or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$9,003 earned from securities lending from Dec. 1, 2008 through July 31, 2009 is
included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Prior to Dec. 1, 2008, the Investment Manager served as securities lending agent
for the Fund under the Securities Lending Agency Agreement. For the period from
Aug. 1, 2008 through Nov. 30, 2008, the Fund had no securities on loan.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
of RiverSource Short-Term Cash Fund aggregated $17,430,730 and $17,837,003,
respectively, for the year ended July 31, 2009. The income distributions
received
- --------------------------------------------------------------------------------
44 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
with respect to the Fund's investment in RiverSource Short-Term Cash Fund can be
found in the Statement of Operations and the Fund's invested balance in
RiverSource Short-Term Cash Fund at July 31, 2009 can be found in the Portfolio
of Investments.
9. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
16, 2008, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds in the
RiverSource Family of Funds, severally and not jointly, permits collective
borrowings up to $475 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $175 million
in the aggregate amount of the credit facility from new or existing lenders,
provided that the aggregate amount of the credit facility shall at no time
exceed $650 million. Participation in such increase by any existing lender shall
be at such lender's sole discretion. Interest is charged to each Fund based on
its borrowings at a rate equal to the federal funds rate plus 0.75%. Each
borrowing under the credit facility matures no later than 60 days after the date
of borrowing. The Fund also pays a commitment fee equal to its pro rata share of
the amount of the credit facility at a rate of 0.06% per annum, in addition to
an upfront fee equal to its pro rata share of 0.02% of the amount of the credit
facility. The Fund had no borrowings during the year ended July 31, 2009.
Under the prior credit facility which was effective until Oct. 15, 2008, the
Fund had entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow
for the temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The credit facility agreement, which was a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permitted collective borrowings up to $500 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matured no later
than 60 days after the date of borrowing. The Fund also paid a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum.
10. FEDERAL TAX INFORMATION
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of foreign currency
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
transactions, re-characterization of REIT distributions, investments in
partnerships, post-October losses and losses deferred due to wash sales. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $11,872
and accumulated net realized loss has been increased by $11,872.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31,
2009 2008
------------------------- ---------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM
INCOME CAPITAL GAIN INCOME CAPITAL GAIN
- -----------------------------------------------------------------------------
Class A $356,188 $158,892 $1,307,656 $4,000,566
Class B 13,422 35,835 187,794 993,092
Class C 3,640 3,681 15,942 73,281
Class I 226,755 66,582 513,160 1,291,416
Class R2 51 19 99 319
Class R3 51 17 110 319
Class R4 438 113 1,053 2,753
Class R5 56 17 50 319
</Table>
At July 31, 2009, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ 582,483
Undistributed accumulated long-term gain....... $ --
Accumulated realized loss...................... $(18,485,631)
Unrealized appreciation (depreciation)......... $ 453,000
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$4,453,917 at July 31, 2009, that if not offset by capital gains will expire in
2017.
Because of the measurement periods for a regulated investment company's income
are different for excise tax purposes versus income tax purposes, special rules
are in place to protect the amount of earnings and profits needed to support
excise tax distributions. As a result, the Fund is permitted to treat net
capital losses realized between Nov. 1, 2008 and its fiscal year end (post-
October loss) as occurring on the first day of the following tax year. At July
31, 2009, the Fund had a post-October loss of $14,031,714 that is treated for
income tax purposes as occurring on Aug. 1, 2009.
- --------------------------------------------------------------------------------
46 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
11. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Sept. 21, 2009, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements, other than as noted below.
At a shareholder meeting on June 2, 2009, shareholders approved the merger of
RiverSource Large Cap Value Fund into RiverSource Equity Value Fund. As of the
close of business on Sept. 11, 2009, the Fund was merged into RiverSource Equity
Value Fund.
12. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Harris Associates, which involves issues of law similar to those presented in
the Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the
- --------------------------------------------------------------------------------
48 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman paid $11.3 million to four Seligman
Funds. This settlement resolved all outstanding matters between the Seligman
Parties and the NYAG. In addition to the foregoing matter, the New York staff of
the SEC indicated in September 2005 that it was considering recommending to the
Commissioners of the SEC the instituting of a formal action against Seligman and
Seligman Advisors, Inc. relating to frequent trading in the Seligman Funds.
Seligman responded to the staff in October 2005 that it believed that any action
would be both inappropriate and unnecessary, especially in light of the fact
that Seligman had previously resolved the underlying issue with the Independent
Directors of the Seligman Funds and made recompense to the affected Seligman
Funds. There have been no further developments with the SEC on this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE LARGE CAP VALUE FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Large Cap Value Fund (the Fund)
(one of the portfolios constituting the RiverSource Large Cap Series, Inc.) as
of July 31, 2009, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for the each of the three years
in the period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The financial highlights of the Fund for the periods presented
through July 31, 2006, were audited by other auditors whose report dated
September 20, 2006, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2009, by correspondence with the custodian and
brokers, or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
- --------------------------------------------------------------------------------
50 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Large Cap Value Fund of the RiverSource Large Cap
Series, Inc. at July 31, 2009, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 21, 2009
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 51
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Shareholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended July 31, 2009.
<Table>
<Caption>
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 100%
Dividends Received Deduction for corporations................ 100%
U.S. Government Obligations.................................. 1.52%
CAPITAL GAIN DISTRIBUTION - the Fund designates $265,156 to be taxed as
long-term capital gain.
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
52 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Board members
serve until the next regular shareholders' meeting or until he or she reaches
the mandatory retirement age established by the Board.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 1999 Governor of Minnesota
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2007, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 70 2002
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 53
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2008 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2008 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceuticals,
Minneapolis, MN 55402 Biotech Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
54 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2002 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling the RiverSource Family of
Funds at 1(800) 221-2450; contacting your financial intermediary; or visiting
riversource.com/funds.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 43 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 55
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2006 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 43 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2009 Kenwood Capital Management LLC, Ameriprise Certificate
New York, NY 10010 Company, RiverSource Service Corporation and Seligman
Age 58 Data Corp. since 2009; Chief Compliance Officer for
each of the Seligman funds since 2004 and all funds in
the RiverSource Family of Funds since 2009; Anti-Money
Laundering Prevention Officer and Identity Theft
Prevention Officer for each of the Seligman funds since
2008; Managing Director, J. & W. Seligman & Co.
Incorporated and Vice-President for each of the
Seligman funds, 2004-2008
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2004 Ameriprise Financial, Inc. since 2004; Compliance
Minneapolis, MN 55474 Director, Ameriprise Financial, Inc., 2004-2008
Age 45
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
56 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement"), RiverSource Investments
provides investment advice and other services to the Fund and all funds in the
RiverSource Family of Funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2009, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 7-8, 2009 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, most notably, the large
investment made in the acquisition of J. & W. Seligman & Co. Incorporated,
including its portfolio management operations, personnel and infrastructure
(including the addition of two new offices in New York City and Palo Alto).
Further, in connection with the Board's evaluation of the overall package of
services provided by RiverSource Investments, the Board considered the quality
of the administrative and transfer agency services provided by RiverSource
Investments' affiliates to the Fund. The Board also reviewed the financial
condition of RiverSource Investments (and its affiliates) and each entity's
ability to carry out its responsibilities under the IMS Agreement. Further, the
Board considered RiverSource Investments' ability to
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 57
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
retain key personnel and its expectations in this regard. The Board also
discussed the acceptability of the terms of the IMS Agreement (including the
relatively broad scope of services required to be performed by RiverSource
Investments). The Board concluded that the services being performed under the
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods, recent Fund inflows (and outflows) and
a comparison of the Fund's net assets from December 2007 to December 2008. The
Board observed that the Fund's investment performance reflected the
interrelationship of exceptionally challenging market conditions with the
investment strategies employed by the portfolio management team. Further, the
Board noted that appropriate measures have been taken to change the portfolio
management team. Additionally, the Board noted that the Fund is proposed to
merge into RiverSource Equity Value Fund, subject to shareholder approval.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability. They also reviewed information in the
report comparing the fees charged to the Fund by RiverSource Investments to fees
charged to other client accounts (with similar investment strategies to those of
the Fund).
- --------------------------------------------------------------------------------
58 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund (excluding the effect of a performance incentive
adjustment, if applicable), with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) was below the peer group's median expense ratio shown in the
reports. The Board also considered the Fund's performance incentive adjustment
and noted its continued appropriateness.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 8, 2009, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT 59
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling the RiverSource Family of Funds at 1(800) 221-2450; contacting your
financial intermediary; visiting riversource.com/funds; or searching the website
of the Securities and Exchange Commission (SEC) at http://www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31 for the most recent 12-month
period ending June 30 of that year, and is available without charge by visiting
riversource.com/funds; or searching the website of the SEC at www.sec.gov.
RESULTS OF MEETING OF SHAREHOLDERS --------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS HELD ON JUNE 2, 2009
(UNAUDITED)
A brief description of the proposal voted upon at the meeting and the votes cast
for, against or withheld, as well as the number of abstentions and broker non-
votes as to the proposal is set forth below. A vote is based on total dollar
interest in the Fund.
To approve an Agreement and Plan of Reorganization between the Fund and
RiverSource Equity Value Fund, a series of RiverSource Strategy Series, Inc.
<Table>
<Caption>
DOLLARS VOTED DOLLARS VOTED BROKER
"FOR" "AGAINST" ABSTENTIONS NON-VOTES
- -------------------------------------------------------------
22,943,677.294 1,147,409.148 1,721,546.241 0.000
- -------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 ANNUAL REPORT
RIVERSOURCE LARGE CAP VALUE FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Fund Distributors, Inc., Member
FINRA, and managed by RiverSource Investments, LLC.
RiverSource is part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C)2009 RiverSource Investments, LLC. S-6246 K (9/09)
</Table>
Item 2. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial officer. A
copy of the code of ethics is filed as an exhibit to this form N-CSR.
(b) During the period covered by this report, there were not any amendments
to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any implicit
or explicit waivers to the provisions of the code of ethics adopted in
2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Pamela G. Carlton, Jeffrey Laikind, John F. Maher and Anne P.
Jones, each qualify as audit committee financial experts.
Item 4. Principal Accountant Fees and Services
Fund - Related Fees
(a) Audit Fees. The fees for the year ended July 31, to Ernst & Young LLP for
professional services rendered for the audits of the annual financial
statements for RiverSource Large Cap Series, Inc. were as follows:
2009 - $80,284 2008 - $79,060
(b) Audit-Related Fees. The fees for the year ended July 31, to Ernst & Young
LLP for additional audit-related services rendered for RiverSource Large
Cap Series, Inc. were as follows:
2009 - $1,500 2008 - $3,500
(c) Tax Fees. The fees for the year ended July 31, to Ernst & Young LLP for tax
compliance related services rendered for RiverSource Large Cap Series, Inc.
were as follows:
2009 - $28,872 2008 - $51,540
(d) All Other Fees. The fees for the year ended July 31, to Ernst & Young LLP
for additional professional services rendered for RiverSource Large Cap
Series, Inc. were as follows:
2009 - $0 2008 - $0
(e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley
pre-approval requirements, all services to be performed by Ernst & Young
LLP for the registrant and to the registrant's investment adviser and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant must be
pre-approved by the audit committee.
(e) (2) 100% of the services performed for items (b) through (d) above during
2009 and 2008 were pre-approved by the audit committee.
(f) Not applicable.
(g) Non-Audit Fees. The fees for the year ended July 31, to Ernst & Young LLP
by the registrant for non-audit fees and by the registrant's investment
adviser, and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant were as
follows:
2009 - $852,858 2008 - $668,240
(h) 100% of the services performed in item (g) above during 2009 and 2008 were
pre-approved by the Ameriprise Financial Audit Committee and/or the
RiverSource Mutual Funds Audit Committee.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this Form
N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not
applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form
N-CSR, the registrant's Principal Financial Officer and Principal Executive
Officer have concluded that those disclosure controls and procedures
provide reasonable assurance that the material information required to be
disclosed by the registrant on this report is recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a)(1) Code of ethics as applies to the Registrant's principal executive
officer and principal financial officer, as required to be disclosed under
Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(a)(2) Separate certification for the Registrant's principal executive
officer and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company
Act of 1940, are attached as EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 and Rule 30a-2(b) under the Investment Company Act of 1940, is
attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) RiverSource Large Cap Series, Inc.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President and Principal Executive
Officer
Date October 2, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President and Principal Executive
Officer
Date October 2, 2009
By /s/ Jeffrey P. Fox
----------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial
Officer
Date October 2, 2009