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 811-1629
RIVERSOURCE DIMENSIONS 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: July 31
Date of reporting period: July 31, 2010
ITEM 1. REPORTS TO STOCKHOLDERS.
Annual Report
and Prospectus
(COLUMBIA MANAGEMENT LOGO)
RIVERSOURCE
DISCIPLINED SMALL AND
MID CAP EQUITY FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT FOR THE PERIOD ENDED
JULY 31, 2010
(Prospectus also enclosed)
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND SEEKS
TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
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.
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 6
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Statement of Assets and
Liabilities...................... 31
Statement of Operations............ 32
Statements of Changes in Net
Assets........................... 33
Financial Highlights............... 34
Notes to Financial Statements...... 39
Report of Independent Registered
Public Accounting Firm........... 54
Federal Income Tax Information..... 56
Board Members and Officers......... 57
Approval of Investment Management
Services Agreement............... 63
Proxy Voting....................... 66
</Table>
SEE THE FUND'S PROSPECTUS FOR RISKS ASSOCIATED WITH INVESTING IN THE FUND.
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2 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
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> RiverSource Disciplined Small and Mid Cap Equity Fund (the Fund) Class A
shares gained 19.04% (excluding sales charge) for the 12-month period ended
July 31, 2010.
> The Fund underperformed its benchmark, the Russell 2500(TM) Index, which rose
21.77% for the same period.
> The Fund also underperformed the Lipper Mid-Cap Core Funds Index, representing
the Fund's peer group, which advanced 20.69%, for the same period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2010)
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<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 3 YEARS 5/18/06
- -------------------------------------------------------------------
RiverSource Disciplined Small and Mid
Cap Equity Fund
Class A (excluding sales charge) +19.04% -7.96% -5.50%
- -------------------------------------------------------------------
Russell 2500 Index (unmanaged) +21.77% -4.00% -0.11%
- -------------------------------------------------------------------
Lipper Mid-Cap Core Funds Index
(unmanaged) +20.69% -4.07% +0.57%
- -------------------------------------------------------------------
</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,
columbiamanagement.com or calling 800.345.6611.
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
fees and 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.
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RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
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<Table>
<Caption>
AT JULY 31, 2010
SINCE
Without sales charge 1 YEAR 3 YEARS INCEPTION
Class A (inception 5/18/06) +19.04% -7.96% -5.50%
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Class B (inception 5/18/06) +18.00% -8.69% -6.22%
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Class C (inception 5/18/06) +18.00% -8.69% -6.24%
- --------------------------------------------------------------------
Class I (inception 5/18/06) +19.45% -7.55% -5.12%
- --------------------------------------------------------------------
Class R4 (inception 5/18/06) +19.23% -7.66% -5.24%
- --------------------------------------------------------------------
Class W (inception 12/1/06) +19.00% -7.98% -7.11%
- --------------------------------------------------------------------
With sales charge
Class A (inception 5/18/06) +12.19% -9.76% -6.82%
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Class B (inception 5/18/06) +13.00% -9.61% -6.67%
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Class C (inception 5/18/06) +17.00% -8.69% -6.24%
- --------------------------------------------------------------------
</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 R4 and Class W shares. Class I and Class
R4 are available to qualifying institutional investors only. Class W shares are
offered through qualifying discretionary accounts.
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4 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
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MORNINGSTAR STYLE BOX(TM)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Equity Style
Value Blend Growth
Large
X Medium Size
Small
</Table>
The Morningstar Style Box(TM) is based on the fund's portfolio holdings as of
period end. For equity funds, the vertical axis shows the market capitalization
of the stocks owned, and the horizontal axis shows investment style (value,
blend, or growth). Information shown is based on the most recent data provided
by Morningstar.
(C)2010 Morningstar, Inc. All rights reserved. The information contained herein
is proprietary to Morningstar and/or its content providers, may not be copied or
distributed and is not warranted to be accurate, complete, or timely. Neither
Morningstar nor its content providers are responsible for any damages or losses
arising from any use of this information. Past performance is no guarantee of
future results.
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RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 5
MANAGER COMMENTARY -------------------------------------------------------------
Effective May 1, 2010, Brian Condon and Alfred Alley III joined Gina Mourtzinou
as co-portfolio managers of RiverSource Disciplined Small and Mid Cap Equity
Fund. Effective July 3, 2010, Mr. Condon and Mr. Alley III became sole portfolio
managers of RiverSource Disciplined Small and Mid Cap Equity Fund.
Dear Shareholder,
RiverSource Disciplined Small and Mid Cap Equity Fund (the Fund) Class A shares
gained 19.04% (excluding sales charge) for the 12-month period ended July 31,
2010. The Fund underperformed its benchmark, the Russell 2500(R) Index (Russell
Index), which rose 21.77%, as well as the Lipper Mid-Cap Core Funds Index,
representing the Fund's peer group, which advanced 20.69%, for the same period.
SIGNIFICANT PERFORMANCE FACTORS
Against a strengthening economic backdrop supported by generally positive data,
the equity market rally that had begun in mid-March 2009
SECTOR BREAKDOWN(1) (at July 31, 2010)
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<Table>
<Caption>
Consumer Discretionary 14.5%
- ------------------------------------------------
Consumer Staples 3.0%
- ------------------------------------------------
Energy 5.9%
- ------------------------------------------------
Financials 20.4%
- ------------------------------------------------
Health Care 11.1%
- ------------------------------------------------
Industrials 13.8%
- ------------------------------------------------
Information Technology 15.5%
- ------------------------------------------------
Materials 7.1%
- ------------------------------------------------
Telecommunication Services 1.6%
- ------------------------------------------------
Utilities 5.5%
- ------------------------------------------------
Other(2) 1.6%
- ------------------------------------------------
</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 exceeded 25% of portfolio assets.
Percentages indicated are based upon total investments (excluding Investments
of Cash Collateral Received for Securities on Loan). 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.
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6 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
continued with little interruption until May 2010. As investor risk aversion had
abated significantly, lower quality stocks led the way during these months. The
rally then stalled in May and June of 2010 as worries heightened about the
sovereign debt crisis in Europe and about the trajectory of the nascent global
economic recovery. Investors questioned whether the recovery could be sustained
without the tremendous fiscal and monetary stimulus injected into the economy
since the 2008 credit crisis, as several government and Federal Reserve programs
expired in March and April 2010. Further, unemployment and housing data
indicated persistent weakness. Investors also were uncertain about how much of
the first quarter 2010 rebound in corporate earnings was attributable merely to
rebuilding of inventories. The potential of a "double-dip" recession or even
deflation became of heightened concern. Equity market volatility rose. That
said, by the end of the annual period, a strong start to the second quarter 2010
earnings reporting season buoyed the equity market as did an overall improvement
in risk sentiment. The release of the results of the European bank stress tests
on July 23 also had a positive impact on equity markets broadly.
TOP TEN HOLDINGS(1) (at July 31, 2010)
- ---------------------------------------------------------------------
<Table>
<Caption>
DST Systems, Inc. 1.2%
- ------------------------------------------------
Ryder System, Inc. 1.1%
- ------------------------------------------------
Raymond James Financial, Inc. 1.1%
- ------------------------------------------------
Cree, Inc. 1.1%
- ------------------------------------------------
The Finish Line, Inc., Class A 1.0%
- ------------------------------------------------
F5 Networks, Inc. 1.0%
- ------------------------------------------------
Mirant Corp. 1.0%
- ------------------------------------------------
Murphy Oil Corp. 0.9%
- ------------------------------------------------
International Bancshares Corp. 0.9%
- ------------------------------------------------
Domino's Pizza, Inc. 0.9%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan and 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
The Fund's performance was primarily driven by the two quantitative-based
investment themes we employed in selecting stocks for the Fund's
portfolio -- valuation and momentum. During the 12-month period, the momentum
theme outperformed the Russell Index, but not enough to offset the
underperformance of the valuation theme. The momentum theme, designed in part to
capture investor sentiment over the near to mid term, benefited from exposure to
materials and information technology stocks. The valuation theme, which favors
cheaper price-to-earnings ratio (P/E) stocks, started the annual period with
solid performance but weakened later in the period as market volatility
heightened. The valuation theme was hurt most by consumer-oriented stocks. It is
important to remember that the themes we used 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 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. At the same time, 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.
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 further led to various sector weightings that,
together, contributed modestly to results. A sizable weighting in consumer
discretionary, one of the better performing sectors in the Russell Index during
the period, and having only modest position in utilities, one of the weaker
performing sectors in the Russell Index during the period, helped most. The
primary detractors from a sector allocation perspective were the Fund's
significant exposure to the lagging consumer staples sector and having a less-
than-Russell Index position in the stronger financials 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
utilities, industrials and financials sectors detracted. This more than offset
the combined effect of strong stock selection in health care, materials and
information technology.
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8 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
Among individual holdings, the stocks that contributed most favorably to the
Fund's return during the annual period included digital electronics manufacturer
3COM (selected by the momentum theme and acquired on April 12, 2010 by Hewlett-
Packard), chemical manufacturer W R GRACE & CO. (also a choice of the momentum
theme), household appliances manufacturer WHIRLPOOL (selected by the valuation
theme), multi-line insurance company GENWORTH FINANCIAL (chosen by the valuation
and momentum themes), and printer manufacturer LEXMARK INTERNATIONAL (a momentum
pick).
Stocks that detracted most from the Fund's annual results were each selected by
the valuation model. These were commercial bank INTERNATIONAL BANCSHARES, food
and beverage company DEAN FOODS, independent power producer MIRANT, financial
services company SWS GROUP and therapeutics developer ISIS PHARMACEUTICALS.
At the end of July, the Fund's largest individual stock holdings included
computer services firm DST SYSTEMS (a momentum theme choice), transportation
services company RYDER SYSTEM (selected by the momentum theme), financial
services company RAYMOND JAMES FINANCIAL (a valuation theme pick), semiconductor
manufacturer CREE (selected by the momentum theme), and athletic and leisure
apparel and shoe retailer THE FINISH LINE (a choice of the valuation theme).
CHANGES TO THE FUND'S PORTFOLIO
As a result of quantitative-based theme-driven stock selection during the
period, the portfolio's sector allocations changed somewhat. For example, the
Fund's exposure to information
At the same time, 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
technology increased but remained a less-than-Russell Index position in the
sector. The Fund's allocation to financials decreased but remained greater than
the Russell Index. Toward the end of the annual period, we began bringing the
Fund's sector allocation more in line with that of the benchmark index, a shift
primarily driven by our new management team's sector-neutral investment process.
In managing risk associated with small- and mid-cap investing, we use a
proprietary risk management system that allows us to manage the Fund's exposure
to several key factors, including industry, sector, market capitalization and
portfolio turnover. During the period, we used these and other techniques in an
effort to reduce the expected risk of the portfolio and to avoid large
deviations in exposure from the Russell Index.
Perhaps the biggest change made was that a new portfolio management team was put
in place toward the end of the annual period. The Fund's principal investment
strategies remained based on quantitative analysis, using similar investment
themes. However, while we continue to use computer-based models to analyze
stocks within sectors, the new team's models are somewhat different from those
previously used. We seek to maintain sector weighting neutrality overall
relative to the benchmark index, and the models drive stock selection by
focusing on factors within three themes -- quality, valuation and catalyst.
Quality-theme factors include profitability as well as strength and
sustainability measures, such as return on assets, return on equity,
receivables, reserve management and cash flow accruals. Valuation-theme factors
measure profitability-at-a-reasonable-price and growth-at-a-reasonable-price and
include cash flow, operating income, sales, earnings, book value and risk-
adjusted return. Catalyst-theme factors include long-term and short-term
momentum measures and estimate revisions.
Given all of these changes, the Fund's portfolio turnover rate for the annual
period was 107%.
OUR FUTURE STRATEGY
We hold a cautious view regarding prospects for the financial markets over the
remainder of 2010. After a solid run over the 12 months ended July 31, 2010, we
believe stocks appeared to be closer to fair value than
- --------------------------------------------------------------------------------
10 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
they had been one year prior. At the same time, however, we expect volatility to
remain somewhat heightened. We believe the U.S. economy will continue to
recover, albeit at a relatively slow pace, and that inflation should remain
under control.
Given this view, we intend to use our quantitative-based themes, as described
above, in our stock selection process, seeking to position the Fund's portfolio
to take advantage of what we consider a beneficial shift in underlying market
dynamics. At the same time, we believe our use of multiple investment
disciplines can potentially serve the Fund well in all investment environments
over the long term, and the diversified portfolio is well positioned for most
potential market conditions. Whether there is a surge in small- and mid-cap
stocks or a downturn, the combination of themes should, in our view, help us
deliver value relative to the Russell Index over extended periods of time. We
are convinced of the merit of our multifaceted, disciplined approach to managing
risk in the portfolio. We believe this combination of style diversification and
rigorous risk management will allow us to maintain the high quality of the
Fund's portfolio in whatever market conditions lie ahead.
<Table>
Brian Condon, CFA(R) Alfred Alley III, CFA(R)
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 Columbia Management Investment Advisers, LLC*
(the Investment Manager) or any subadviser to the Fund or any other person in
the Investment Manager or subadviser organizations. Any such views are subject
to change at any time based upon market or other conditions and the Investment
Manager disclaims any responsibility to update such views. These views may not
be relied on as investment advice and, because investment decisions for the Fund
are based on numerous factors, may not be relied on as an indication of trading
intent on behalf of the Fund.
* Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia
Management Investment Advisers, LLC.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 11
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 Small and Mid Cap Equity Fund Class A
shares (from 5/18/06 to 7/31/10) as compared to the performance of the Russell
2500 Index and the Lipper Mid-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 initial 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 columbiamanagement.com or
calling 800.345.6611. Also see "Past Performance" in the Fund's current
prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2010
SINCE
INCEPTION
1 YEAR 3 YEARS 5/18/06
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $11,219 $7,348 $7,432
- ---------------------------------------------------------------------------------
Average annual total return +12.19% -9.76% -6.82%
- ---------------------------------------------------------------------------------
RUSSELL 2500 INDEX(1)
Cumulative value of $10,000 $12,177 $8,847 $9,954
- ---------------------------------------------------------------------------------
Average annual total return +21.77% -4.00% -0.11%
- ---------------------------------------------------------------------------------
LIPPER MID-CAP CORE FUNDS INDEX(2)
Cumulative value of $10,000 $12,069 $8,828 $10,239
- ---------------------------------------------------------------------------------
Average annual total return +20.69% -4.07% +0.57%
- ---------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 4.
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12 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE DISCIPLINED SMALL AND
MID CAP EQUITY FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE DISCIPLINED
SMALL AND
MID CAP
EQUITY FUND
CLASS A LIPPER MID-CAP
(INCLUDES SALES RUSSELL 2500 CORE FUNDS
CHARGE) ($7,432) INDEX(1) ($9,954) INDEX(2) ($10,239)
----------------------- ----------------- ------------------
5/18/06 $ 9,425 $10,000 $10,000
7/06 8,898 9,735 9,807
10/06 9,455 10,589 10,519
1/07 10,191 11,278 11,190
4/07 10,401 11,665 11,746
7/07 9,533 11,249 11,599
10/07 9,732 11,935 12,223
1/08 8,505 10,454 10,847
4/08 8,535 10,635 11,129
7/08 8,395 10,302 10,575
10/08 5,803 7,487 7,639
1/09 5,143 6,404 6,674
4/09 5,493 7,194 7,461
7/09 6,243 8,174 8,484
10/09 6,473 8,481 8,951
1/10 6,880 9,143 9,615
4/10 8,083 10,821 11,127
7/10 7,432 9,954 10,239
</Table>
(1) The Russell 2500 Index, an unmanaged index, measures the performance of the
2,500 smallest companies in the Russell 3000 Index, which represents
approximately 16% of the total market capitalization of the Russell 3000
Index. The index reflects reinvestment of all distributions and changes in
market prices.
(2) The Lipper Mid-Cap Core Funds Index includes the 30 largest mid-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 SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (i) transaction
costs, including sales charges (loads) on purchase payments; and (ii) ongoing
costs, which may include management fees; distribution and service (Rule 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, 2010.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses for each class. 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 "Direct expenses paid during
the period" to estimate the expenses you paid on your account during this
period. You can also estimate the direct and indirect expenses you paid over the
period by using the number in the first line under the heading "Direct and
indirect expenses paid during the period."
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the actual expense ratio for each
class and an assumed rate of return of 5% per year before expenses, which is not
the actual return for the class. 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.
- --------------------------------------------------------------------------------
14 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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.
<Table>
<Caption>
DIRECT AND
DIRECT INDIRECT
BEGINNING ENDING EXPENSES EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING
FEB. 1, 2010 JULY 31, 2010 THE PERIOD(a) THE PERIOD(b)
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,080.20 $ 6.95(d) $ 7.21(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.25 $ 6.74(d) $ 6.99(d)
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,076.10 $10.92(d) $11.18(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.41 $10.60(d) $10.85(d)
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,076.10 $10.87(d) $11.13(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.46 $10.55(d) $10.80(d)
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,083.00 $ 4.41 $ 4.67
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.69 $ 4.28 $ 4.53
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,081.60 $ 5.97 $ 6.23
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.20 $ 5.79 $ 6.04
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,080.50 $ 6.74 $ 7.00
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.45 $ 6.54 $ 6.79
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
ANNUALIZED EXPENSE RATIOS
<Table>
<Caption>
FUND'S ACQUIRED FUND
ANNUALIZED FEES AND NET FUND
EXPENSE RATIO EXPENSES EXPENSES
- ----------------------------------------------------------------------
Class A 1.34% .05% 1.39%
- ----------------------------------------------------------------------
Class B 2.11% .05% 2.16%
- ----------------------------------------------------------------------
Class C 2.10% .05% 2.15%
- ----------------------------------------------------------------------
Class I .85% .05% .90%
- ----------------------------------------------------------------------
Class R4 1.15% .05% 1.20%
- ----------------------------------------------------------------------
Class W 1.30% .05% 1.35%
- ----------------------------------------------------------------------
</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) Expenses are equal to the annualized expense ratio for each class as
indicated above, plus the acquired fund fees and expenses, multiplied by the
average account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
(c) Based on the actual return for the six months ended July 31, 2010: +8.02%
for Class A, +7.61% for Class B, +7.61% for Class C, +8.30% for Class I,
+8.16% for Class R4 and +8.05% for Class W.
(d) Columbia Management Investment Advisers, LLC (formerly known as RiverSource
Investments, LLC) (the Investment Manager) and its affiliates have
contractually agreed to waive certain fees and to absorb certain expenses
until Sept. 30, 2011, unless sooner terminated at the sole 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 1.39% for Class A, 2.14% for Class B and 2.14%
for Class C. Any amounts waived will not be reimbursed by the Fund. This
change is effective Oct. 1, 2010. Had this change been in place for the
entire six month period ended July 31, 2010, the actual direct expenses paid
would have been $6.90 for Class A, $10.77 for Class B and $10.77 for Class
C; the hypothetical direct expenses paid would have been $6.69 for Class A,
$10.45 for Class B and $10.45 for Class C. Additionally, had this change
been in place for the entire six month period ended July 31, 2010, the
actual direct and indirect expenses paid would have been $7.16 for Class A,
$11.02 for Class B and $11.02 for Class C; the hypothetical direct and
indirect expenses paid would have been $6.94 for Class A, $10.70 for Class B
and $10.70 for Class C.
- --------------------------------------------------------------------------------
16 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2010
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (97.9%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (0.9%)
Astronics Corp. 4,400(b,d) $70,400
BE Aerospace, Inc. 5,145(b) 151,263
Ceradyne, Inc. 12,801(b) 297,623
Esterline Technologies Corp. 2,894(b) 148,549
LMI Aerospace, Inc. 12,900(b) 222,138
Triumph Group, Inc. 4,422(d) 335,630
---------------
Total 1,225,603
- -------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.4%)
Atlas Air Worldwide Holdings, Inc. 10,010(b,d) 585,385
- -------------------------------------------------------------------------------------
AIRLINES (1.3%)
Alaska Air Group, Inc. 12,304(b) 634,763
Allegiant Travel Co. 4,661(d) 206,902
Continental Airlines, Inc., Class B 23,581(b) 589,997
Hawaiian Holdings, Inc. 36,341(b,d) 218,046
Skywest, Inc. 14,978(d) 186,476
---------------
Total 1,836,184
- -------------------------------------------------------------------------------------
AUTO COMPONENTS (1.3%)
Autoliv, Inc. 13,331(b,c,d) 765,733
Cooper Tire & Rubber Co. 16,254(d) 351,249
Tenneco, Inc. 13,857(b,d) 382,453
TRW Automotive Holdings Corp. 10,859(b) 381,042
---------------
Total 1,880,477
- -------------------------------------------------------------------------------------
BEVERAGES (0.2%)
Boston Beer Co., Inc., Class A 3,600(b) 249,696
- -------------------------------------------------------------------------------------
BIOTECHNOLOGY (0.6%)
Cephalon, Inc. 3,516(b,d) 199,533
Cubist Pharmaceuticals, Inc. 10,413(b,d) 224,712
Incyte Corp., Ltd. 11,841(b,d) 154,170
Nabi Biopharmaceuticals 22,000(b) 125,840
PDL BioPharma, Inc. 30,900(d) 192,198
---------------
Total 896,453
- -------------------------------------------------------------------------------------
BUILDING PRODUCTS (0.5%)
AAON, Inc. 8,900(d) 221,254
Apogee Enterprises, Inc. 19,482(d) 219,367
Quanex Building Products Corp. 11,796 207,492
---------------
Total 648,113
- -------------------------------------------------------------------------------------
CAPITAL MARKETS (3.6%)
Apollo Investment Corp. 59,380 599,738
Ares Capital Corp. 36,786 515,372
BGC Partners, Inc., Class A 42,381(d) 229,705
GFI Group, Inc. 22,904(d) 134,905
Investment Technology Group, Inc. 5,931(b) 93,176
Jefferies Group, Inc. 3,103(d) 76,613
Knight Capital Group, Inc., Class A 23,808(b,d) 342,359
MF Global Holdings Ltd. 23,932(b,d) 153,883
MVC Capital, Inc. 7,749(d) 99,342
optionsXpress Holdings, Inc. 7,299(b,d) 113,864
Raymond James Financial, Inc. 57,154(d) 1,524,868
SWS Group, Inc. 48,965(d) 426,975
TICC Capital Corp. 91,500(d) 802,455
---------------
Total 5,113,255
- -------------------------------------------------------------------------------------
CHEMICALS (4.4%)
Ashland, Inc. 11,548 587,216
Cabot Corp. 5,038 148,621
CF Industries Holdings, Inc. 9,263 752,063
Cytec Industries, Inc. 8,176 408,146
Eastman Chemical Co. 3,128 195,938
Hawkins, Inc. 6,800(d) 220,728
Huntsman Corp. 39,932 418,088
Innophos Holdings, Inc. 11,922(d) 349,434
Lubrizol Corp. 3,245 303,375
NewMarket Corp. 3,761 403,142
Olin Corp. 30,073(d) 610,482
OM Group, Inc. 10,630(b,d) 287,010
PolyOne Corp. 24,288(b,d) 250,409
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
CHEMICALS (CONT.)
Stepan Co. 5,549(d) $366,289
WR Grace & Co. 37,938(b,d) 973,868
---------------
Total 6,274,809
- -------------------------------------------------------------------------------------
COMMERCIAL BANKS (2.7%)
Bancfirst Corp. 4,720(d) 194,370
CVB Financial Corp. 11,711(d) 119,218
East West Bancorp, Inc. 33,145(d) 516,731
First Financial Bancorp 58,284(d) 926,716
International Bancshares Corp. 75,598(d) 1,310,868
Republic Bancorp, Inc., Class A 2,700 66,906
TowneBank 14,586(d) 224,624
Trico Bancshares 10,072(d) 190,059
Wintrust Financial Corp. 4,934(d) 153,546
Zions Bancorporation 9,533 211,537
---------------
Total 3,914,575
- -------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (1.9%)
Consolidated Graphics, Inc. 12,620(b) 542,282
Deluxe Corp. 3,500 72,030
Herman Miller, Inc. 10,765(d) 185,158
Kimball International, Inc., Class B 24,290(d) 151,570
RR Donnelley & Sons Co. 27,390 462,069
Standard Parking Corp. 5,200(b,d) 88,712
Steelcase, Inc., Class A 29,467(d) 203,617
The Brink's Co. 22,478 492,268
US Ecology, Inc. 13,200(d) 195,228
United Stationers, Inc. 5,008(b,d) 271,183
---------------
Total 2,664,117
- -------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (1.9%)
Blue Coat Systems, Inc. 8,233(b,d) 180,303
F5 Networks, Inc. 16,095(b) 1,413,624
JDS Uniphase Corp. 13,742(b) 149,101
Netgear, Inc. 9,591(b,d) 230,184
Plantronics, Inc. 13,793(d) 413,376
Tellabs, Inc. 47,291 330,091
---------------
Total 2,716,679
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (0.5%)
Lexmark International, Inc., Class A 8,484(b) 311,787
NCR Corp. 26,010(b) 356,337
---------------
Total 668,124
- -------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (1.6%)
Comfort Systems USA, Inc. 24,370(d) 278,062
EMCOR Group, Inc. 33,476(b,d) 870,711
KBR, Inc. 30,645 685,835
Layne Christensen Co. 8,275(b,d) 208,613
The Shaw Group, Inc. 8,035(b) 257,441
---------------
Total 2,300,662
- -------------------------------------------------------------------------------------
CONSUMER FINANCE (1.1%)
Cash America International, Inc. 8,828(d) 295,738
Discover Financial Services 31,881 486,823
Ezcorp, Inc., Class A 13,220(b,d) 263,078
Nelnet, Inc., Class A 23,000(d) 463,680
---------------
Total 1,509,319
- -------------------------------------------------------------------------------------
CONTAINERS & PACKAGING (0.3%)
Rock-Tenn Co., Class A 7,350(d) 391,167
- -------------------------------------------------------------------------------------
DISTRIBUTORS (0.1%)
Core-Mark Holding Co., Inc. 5,920(b,d) 180,678
- -------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (0.9%)
Corinthian Colleges, Inc. 14,138(b,d) 128,656
Lincoln Educational Services Corp. 10,100(b) 213,009
Pre-Paid Legal Services, Inc. 8,019(b,d) 393,412
Regis Corp. 17,357(d) 264,347
Sotheby's 9,217 250,057
---------------
Total 1,249,481
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (0.1%)
Life Partners Holdings, Inc. 7,000(d) 121,450
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
DIVERSIFIED TELECOMMUNICATION SERVICES (1.2%)
Alaska Communications Systems Group, Inc. 41,200(d) $381,512
CenturyLink, Inc. 17,323 617,045
Qwest Communications International, Inc. 128,046 724,741
---------------
Total 1,723,298
- -------------------------------------------------------------------------------------
ELECTRIC UTILITIES (2.4%)
DPL, Inc. 50,600 1,280,686
Edison International 33,227 1,101,475
El Paso Electric Co. 46,700(b) 1,004,050
---------------
Total 3,386,211
- -------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.8%)
EnerSys 12,131(b) 293,813
General Cable Corp. 8,078(b,d) 214,390
GrafTech International Ltd. 32,855(b,d) 515,166
Powell Industries, Inc. 5,200(b,d) 170,872
---------------
Total 1,194,241
- -------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (2.3%)
Anixter International, Inc. 13,027(b,d) 629,465
Arrow Electronics, Inc. 11,100(b) 275,169
Avnet, Inc. 9,011(b) 226,627
Benchmark Electronics, Inc. 14,414(b) 240,714
Electro Rent Corp. 20,600 284,280
Ingram Micro, Inc., Class A 6,266(b) 103,577
Insight Enterprises, Inc. 18,381(b,d) 267,811
Jabil Circuit, Inc. 19,847 287,980
Littelfuse, Inc. 8,894(b,d) 316,715
Methode Electronics, Inc. 19,678(d) 210,161
Plexus Corp. 7,141(b,d) 208,517
SYNNEX Corp. 9,983(b,d) 263,451
---------------
Total 3,314,467
- -------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (2.2%)
Atwood Oceanics, Inc. 11,487(b) 312,446
Gulfmark Offshore, Inc., Class A 7,271(b,d) 214,058
Helmerich & Payne, Inc. 12,433(d) 503,909
Lufkin Industries, Inc. 13,734 564,605
Oil States International, Inc. 7,538(b) 346,296
Rowan Companies, Inc. 20,868(b) 527,126
SEACOR Holdings, Inc. 2,858(b) 236,700
Superior Energy Services, Inc. 12,247(b) 279,109
Unit Corp. 4,876(b) 199,428
---------------
Total 3,183,677
- -------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (1.4%)
BJ's Wholesale Club, Inc. 15,623(b) 711,628
Nash Finch Co. 5,099(d) 200,493
Ruddick Corp. 12,569(d) 445,571
Spartan Stores, Inc. 12,197(d) 175,149
The Pantry, Inc. 9,367(b,d) 168,606
Winn-Dixie Stores, Inc. 28,298(b,d) 277,603
---------------
Total 1,979,050
- -------------------------------------------------------------------------------------
FOOD PRODUCTS (0.7%)
Cal-Maine Foods, Inc. 8,223(d) 259,765
Chiquita Brands International, Inc. 15,968(b,d) 234,410
Dean Foods Co. 6,325(b) 72,485
Fresh Del Monte Produce, Inc. 19,703(b,c,d) 410,610
---------------
Total 977,270
- -------------------------------------------------------------------------------------
GAS UTILITIES (0.6%)
Chesapeake Utilities Corp. 6,700 222,708
Energen Corp. 3,212 142,741
Oneok, Inc. 2,747 127,818
Questar Corp. 6,310 103,800
The Laclede Group, Inc. 5,366 187,488
UGI Corp. 4,400 118,624
---------------
Total 903,179
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.5%)
Hill-Rom Holdings, Inc. 10,953(d) 361,887
Intuitive Surgical, Inc. 2,951(b) 969,020
Medical Action Industries, Inc. 7,400(b) 101,380
ResMed, Inc. 2,616(b,d) 171,845
Sirona Dental Systems, Inc. 6,081(b) 187,173
STERIS Corp. 6,849(d) 217,730
Thoratec Corp. 3,938(b) 144,840
---------------
Total 2,153,875
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HEALTH CARE PROVIDERS & SERVICES (5.5%)
America Service Group, Inc. 6,700 $118,188
AMERIGROUP Corp. 18,284(b,d) 653,836
Assisted Living Concepts, Inc., Class A 8,600(b) 270,556
Bio-Reference Labs, Inc. 20,000(b,d) 419,400
Centene Corp. 21,848(b,d) 465,581
CIGNA Corp. 20,163 620,214
Health Net, Inc. 15,514(b) 365,355
Healthspring, Inc. 31,969(b,d) 601,017
Humana, Inc. 26,566(b) 1,249,133
Kindred Healthcare, Inc. 27,824(b,d) 370,059
Landauer, Inc. 2,900(d) 182,033
Lincare Holdings, Inc. 13,450(d) 319,572
Magellan Health Services, Inc. 22,468(b,d) 945,678
Molina Healthcare, Inc. 11,081(b,d) 330,325
The Providence Service Corp. 8,700(b) 125,280
Triple-S Management Corp., Series B 14,760(b,c,d) 293,429
Universal American Corp. 33,692(b,d) 564,004
---------------
Total 7,893,660
- -------------------------------------------------------------------------------------
HEALTH CARE TECHNOLOGY (0.4%)
Computer Programs & Systems, Inc. 7,400(d) 332,778
Medidata Solutions, Inc. 11,400(b,d) 171,912
---------------
Total 504,690
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.3%)
Brinker International, Inc. 5,124 80,549
Domino's Pizza, Inc. 101,300(b,d) 1,295,627
Wyndham Worldwide Corp. 15,669 400,030
---------------
Total 1,776,206
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (1.0%)
American Greetings Corp., Class A 13,283(d) 272,169
Garmin Ltd. 16,586(c,d) 472,867
National Presto Industries, Inc. 1,045(d) 106,580
Tupperware Brands Corp. 15,345 604,439
---------------
Total 1,456,055
- -------------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (1.8%)
Constellation Energy Group, Inc. 25,016 790,506
Mirant Corp. 121,906(b) 1,337,308
NRG Energy, Inc. 22,078(b) 500,729
---------------
Total 2,628,543
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (0.5%)
Raven Industries, Inc. 9,000(d) 315,270
Seaboard Corp. 222(d) 336,996
---------------
Total 652,266
- -------------------------------------------------------------------------------------
INSURANCE (5.9%)
Allied World Assurance Co. Holdings Ltd. 7,393(c) 368,319
American Equity Investment Life Holding Co. 43,800(d) 473,040
American Financial Group, Inc. 15,861 467,424
Arch Capital Group Ltd. 4,193(b,c) 328,144
Argo Group International Holdings Ltd. 10,766(c) 335,253
Aspen Insurance Holdings Ltd. 8,687(c) 237,589
Axis Capital Holdings Ltd. 6,056 188,766
CNA Surety Corp. 8,227(b,d) 141,916
Endurance Specialty Holdings Ltd. 7,608(c) 293,593
FBL Financial Group, Inc., Class A 16,300(d) 369,847
First American Financial Corp. 7,465 110,109
First Mercury Financial Corp. 7,800 89,388
HCC Insurance Holdings, Inc. 11,492 300,171
Horace Mann Educators Corp. 27,760 466,923
Montpelier Re Holdings Ltd. 15,112(c,d) 245,721
National Financial Partners Corp. 22,382(b) 240,159
PartnerRe Ltd. 9,044(c) 654,514
Platinum Underwriters Holdings Ltd. 21,057(c,d) 822,907
ProAssurance Corp. 13,219(b) 786,662
Protective Life Corp. 14,447 324,913
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
INSURANCE (CONT.)
RenaissanceRe Holdings Ltd. 6,430(c,d) $367,925
Safety Insurance Group, Inc. 7,026(d) 275,419
StanCorp Financial Group, Inc. 6,908 260,363
Validus Holdings Ltd. 7,180(c) 178,351
---------------
Total 8,327,416
- -------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL (0.2%)
Blue Nile, Inc. 3,200(b,d) 162,880
Overstock.com, Inc. 6,900(b,d) 136,413
---------------
Total 299,293
- -------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (0.8%)
Earthlink, Inc. 65,986(d) 582,657
GSI Commerce, Inc. 5,237(b,d) 117,937
IAC/InterActiveCorp. 8,387(b) 209,675
NIC, Inc. 19,200(d) 142,464
Travelzoo, Inc. 5,900(b) 91,804
---------------
Total 1,144,537
- -------------------------------------------------------------------------------------
IT SERVICES (4.5%)
Acxiom Corp. 62,753(b,d) 962,631
Cognizant Technology Solutions Corp., Class A 7,055(b) 384,921
Convergys Corp. 27,350(b,d) 305,500
CoreLogic, Inc. 7,465 149,524
CSG Systems International, Inc. 48,059(b,d) 906,393
DST Systems, Inc. 39,200 1,610,335
Heartland Payment Systems, Inc. 12,806(d) 202,079
SAIC, Inc. 50,307(b,d) 836,605
TeleTech Holdings, Inc. 15,100(b) 209,890
Total System Services, Inc. 60,100 896,091
---------------
Total 6,463,969
- -------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (0.5%)
Brunswick Corp. 9,676(d) 163,718
Jakks Pacific, Inc. 19,935(b,d) 314,574
Polaris Industries, Inc. 4,548(d) 271,516
---------------
Total 749,808
- -------------------------------------------------------------------------------------
MACHINERY (3.5%)
AGCO Corp. 11,567(b,d) 402,069
Alamo Group, Inc. 11,900(d) 278,817
Blount International, Inc. 18,800(b) 200,220
Bucyrus International, Inc. 8,488 528,123
Chart Industries, Inc. 17,509(b) 311,835
EnPro Industries, Inc. 3,093(b,d) 92,635
FreightCar America, Inc. 6,680(d) 165,864
LB Foster Co., Class A 5,957(b,d) 182,165
Mueller Industries, Inc. 11,774 291,053
Navistar International Corp. 4,870(b,d) 251,828
Nordson Corp. 11,671(d) 735,857
Oshkosh Corp. 14,100(b) 484,758
Terex Corp. 13,561(b,d) 267,694
The Manitowoc Co., Inc. 16,561(d) 171,572
Timken Co. 11,030(d) 370,829
WABCO Holdings, Inc. 6,938(b) 268,362
---------------
Total 5,003,681
- -------------------------------------------------------------------------------------
MEDIA (1.5%)
DISH Network Corp., Class A 31,258 627,660
Gannett Co., Inc. 19,777 260,661
Lamar Advertising Co., Class A 4,322(b,d) 118,207
Liberty Media Corp. -- Capital, Series A 5,612(b,e) 261,744
The Interpublic Group of Companies, Inc. 48,485(b) 443,153
Valassis Communications, Inc. 12,400(b) 428,668
---------------
Total 2,140,093
- -------------------------------------------------------------------------------------
METALS & MINING (0.7%)
Carpenter Technology Corp. 6,638(d) 231,998
Kaiser Aluminum Corp. 4,120 168,920
Walter Energy, Inc. 5,448 388,442
Worthington Industries, Inc. 12,909(d) 184,986
---------------
Total 974,346
- -------------------------------------------------------------------------------------
MULTILINE RETAIL (0.3%)
Big Lots, Inc. 4,249(b,d) 145,783
Dillard's, Inc., Class A 12,797(d) 296,123
---------------
Total 441,906
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
MULTI-UTILITIES (0.6%)
Integrys Energy Group, Inc. 17,914(d) $848,228
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (3.6%)
Cimarex Energy Co. 6,484 446,553
Forest Oil Corp. 8,272(b) 236,496
Frontline Ltd. 7,726(c,d) 236,416
Green Plains Renewable Energy, Inc. 30,200(b) 279,652
James River Coal Co. 11,800(b,d) 206,618
Massey Energy Co. 8,931 273,110
Murphy Oil Corp. 24,009(g) 1,314,493
Patriot Coal Corp. 9,274(b,d) 111,844
QEP Resources, Inc. 6,310(b) 217,190
Rosetta Resources, Inc. 11,224(b,d) 247,714
SM Energy Co. 9,404 389,514
Swift Energy Co. 8,629(b) 223,750
Whiting Petroleum Corp. 5,986(b,d) 526,828
World Fuel Services Corp. 16,263(d) 423,651
---------------
Total 5,133,829
- -------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (1.7%)
Clearwater Paper Corp. 6,603(b,d) 406,943
Domtar Corp. 10,974(c) 641,979
International Paper Co. 20,758 502,344
KapStone Paper and Packaging Corp. 10,878(b,d) 124,444
Neenah Paper, Inc. 21,000(d) 376,740
Schweitzer-Mauduit International, Inc. 6,946 367,652
---------------
Total 2,420,102
- -------------------------------------------------------------------------------------
PERSONAL PRODUCTS (0.5%)
Inter Parfums, Inc. 4,900 85,505
Nu Skin Enterprises, Inc., Class A 12,353(d) 351,813
Nutraceutical International Corp. 4,800(b,d) 75,600
Revlon, Inc., Class A 9,600(b,d) 120,384
---------------
Total 633,302
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (3.1%)
Endo Pharmaceuticals Holdings, Inc. 37,289(b) 895,309
Forest Laboratories, Inc. 30,980(b) 859,695
Impax Laboratories, Inc. 14,068(b,d) 230,575
Medicis Pharmaceutical Corp., Class A 9,418 238,746
Par Pharmaceutical Companies, Inc. 13,881(b,d) 366,458
Perrigo Co. 13,604 761,960
Questcor Pharmaceuticals, Inc. 26,215(b,d) 294,919
Valeant Pharmaceuticals International 8,912(b,d) 501,924
Viropharma, Inc. 15,989(b) 210,575
---------------
Total 4,360,161
- -------------------------------------------------------------------------------------
PROFESSIONAL SERVICES (0.2%)
Administaff, Inc. 12,253 319,313
- -------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (6.2%)
American Capital Agency Corp. 45,599(d) 1,254,883
Annaly Capital Management, Inc. 67,971 1,182,694
Anworth Mortgage Asset Corp. 31,416(d) 218,970
Apartment Investment & Management Co., Class
A 24,001 515,301
Capstead Mortgage Corp. 41,049(d) 480,273
CBL & Associates Properties, Inc. 67,552(d) 950,457
Cogdell Spencer, Inc. 37,800(d) 280,854
Developers Diversified Realty Corp. 7,086 80,426
Extra Space Storage, Inc. 9,960 154,480
Glimcher Realty Trust 66,900 444,885
Hatteras Financial Corp. 3,968(d) 117,612
Hospitality Properties Trust 12,368 252,926
Lexington Realty Trust 18,028 115,920
Medical Properties Trust, Inc. 26,053(d) 258,967
MFA Financial, Inc. 42,426(d) 311,407
Saul Centers, Inc. 12,900(d) 545,670
SL Green Realty Corp. 3,708 223,370
Sovran Self Storage, Inc. 3,107(d) 114,338
Sun Communities, Inc. 24,900(d) 724,590
Sunstone Hotel Investors, Inc. 19,689(b,d) 203,190
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
22 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
REAL ESTATE INVESTMENT TRUSTS (REITS) (CONT.)
The Macerich Co. 6,488(d) $268,928
UDR, Inc. 6,615(d) 139,643
---------------
Total 8,839,784
- -------------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT (0.5%)
CB Richard Ellis Group, Inc., Class A 16,611(b) 282,387
Jones Lang LaSalle, Inc. 6,294 487,533
---------------
Total 769,920
- -------------------------------------------------------------------------------------
ROAD & RAIL (1.5%)
Kansas City Southern 14,030(b) 514,901
Ryder System, Inc. 36,500 1,593,955
---------------
Total 2,108,856
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.2%)
Atheros Communications, Inc. 22,901(b) 605,502
Cavium Networks, Inc. 2,331(b,d) 62,541
Cree, Inc. 21,141(b,d) 1,497,629
Micrel, Inc. 99,200(d) 964,224
Monolithic Power Systems, Inc. 12,491(b,d) 220,091
Omnivision Technologies, Inc. 21,473(b,d) 479,063
Sigma Designs, Inc. 13,255(b) 135,731
Skyworks Solutions, Inc. 24,891(b,d) 436,339
Volterra Semiconductor Corp. 8,669(b,d) 195,226
---------------
Total 4,596,346
- -------------------------------------------------------------------------------------
SOFTWARE (2.2%)
ArcSight, Inc. 7,072(b,d) 176,871
Blackbaud, Inc. 9,819(d) 232,612
Deltek, Inc. 16,800(b) 126,000
JDA Software Group, Inc. 8,188(b) 192,418
Manhattan Associates, Inc. 31,500(b) 846,090
MicroStrategy, Inc., Class A 2,867(b) 237,932
Renaissance Learning, Inc. 12,200 169,580
Sourcefire, Inc. 8,381(b,d) 178,851
Taleo Corp., Class A 8,657(b,d) 212,962
TIBCO Software, Inc. 35,261(b) 478,139
Ultimate Software Group, Inc. 7,100(b,d) 229,046
---------------
Total 3,080,501
- -------------------------------------------------------------------------------------
SPECIALTY RETAIL (5.5%)
Abercrombie & Fitch Co., Class A 6,301 232,759
American Eagle Outfitters, Inc. 10,503(d) 129,292
AnnTaylor Stores Corp. 13,601(b) 238,562
Cabela's, Inc. 6,196(b,d) 96,596
Collective Brands, Inc. 10,930(b,d) 175,099
DSW, Inc., Class A 29,470(b,d) 784,196
Foot Locker, Inc. 8,223 111,751
Genesco, Inc. 11,899(b,d) 324,724
HOT Topic, Inc. 29,515(d) 156,134
Jo-Ann Stores, Inc. 16,158(b,d) 676,859
OfficeMax, Inc. 22,563(b,d) 322,425
PetSmart, Inc. 10,279 319,163
RadioShack Corp. 4,729 101,863
Rent-A-Center, Inc. 23,999(b) 527,738
Signet Jewelers Ltd. 8,977(b,c,d) 267,245
Stage Stores, Inc. 11,163(d) 122,793
The Cato Corp., Class A 10,990(d) 255,847
The Childrens Place Retail Stores, Inc. 8,374(b,d) 350,452
The Dress Barn, Inc. 28,108(b) 694,267
The Finish Line, Inc., Class A 99,489 1,423,687
The Men's Wearhouse, Inc. 19,398(d) 377,485
Williams-Sonoma, Inc. 3,391(d) 90,574
---------------
Total 7,779,511
- -------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (1.8%)
Cherokee, Inc. 7,900(d) 155,077
Deckers Outdoor Corp. 14,994(b,d) 763,045
Fossil, Inc. 9,786(b,d) 387,526
Jones Apparel Group, Inc. 15,451(d) 269,465
Quiksilver, Inc. 29,498(b,d) 131,856
Skechers U.S.A., Inc., Class A 7,880(b,d) 292,269
Steven Madden Ltd. 4,072(b) 157,301
The Warnaco Group, Inc. 8,083(b) 337,627
True Religion Apparel, Inc. 5,302(b,d) 130,323
---------------
Total 2,624,489
- -------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.2%)
Astoria Financial Corp. 19,311(d) 255,678
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
TOBACCO (0.3%)
Universal Corp. 8,686(d) $385,224
- -------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (0.7%)
Applied Industrial Technologies, Inc. 2,700 75,600
H&E Equipment Services, Inc. 20,609(b,d) 179,298
RSC Holdings, Inc. 41,300(b) 322,966
TAL International Group, Inc. 14,800 398,712
---------------
Total 976,576
- -------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.3%)
Telephone & Data Systems, Inc. 5,481 187,067
USA Mobility, Inc. 20,952 310,718
---------------
Total 497,785
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $123,981,165) $139,327,569
- -------------------------------------------------------------------------------------
<Caption>
MUTUAL FUND (0.1%)
SHARES VALUE(a)
CAPITAL MARKETS
Kayne Anderson Energy Development Co. 4,800(d) $72,432
- -------------------------------------------------------------------------------------
TOTAL MUTUAL FUND
(Cost: $70,123) $72,432
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (1.7%)
SHARES VALUE(a)
Columbia Short-Term Cash Fund, 0.279% 2,356,008(f) $2,356,008
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $2,356,008) $2,356,008
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (23.9%)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
CERTIFICATES OF DEPOSIT (2.8%)
Commerzbank AG
08-09-10 0.450% $1,000,000 $1,000,000
Dexia Credit Local
08-16-10 0.630 1,000,009 1,000,009
DZ Bank AG
08-09-10 0.470 1,000,000 1,000,000
Landesbank Hessen Thuringen
08-06-10 0.440 999,634 999,634
---------------
Total 3,999,643
- -------------------------------------------------------------------------------------
<Caption>
EFFECTIVE PRINCIPAL
ISSUER YIELD AMOUNT VALUE(a)
REPURCHASE AGREEMENTS (21.1%)(h)
Cantor Fitzgerald & Co.
dated 07-30-10, matures 08-02-10,
repurchase price
$15,000,287 0.230% $15,000,000 $15,000,000
Pershing LLC
dated 07-30-10, matures 08-02-10,
repurchase price
$8,000,207 0.310 8,000,000 8,000,000
UBS Securities LLC
dated 07-30-10, matures 08-02-10,
repurchase price
$7,008,680 0.210 7,008,557 7,008,557
---------------
Total 30,008,557
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL
RECEIVED FOR SECURITIES ON LOAN
(Cost: $34,008,200) $34,008,200
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $160,415,496)(i) $175,764,209
=====================================================================================
</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.
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
24 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2010
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------
E-Mini S&P MidCap 400
Index 15 $1,138,200 Sept. 2010 $15,783
Russell 2000 Mini Index 17 1,104,320 Sept. 2010 23,720
- ------------------------------------------------------------------------------------
Total $39,503
- ------------------------------------------------------------------------------------
</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, 2010, the
value of foreign securities, excluding short-term securities, represented
4.86% of net assets.
(d) At July 31, 2010, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Shareholders of tracking stocks have a financial interest only in a unit or
division of the company. Unlike the common stock of the company itself, a
tracking stock usually has limited or no voting rights. In the event of a
company's liquidation, tracking stock shareholders typically do not have a
legal claim on the company's assets.
(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, 2010.
(g) At July 31, 2010, investments in securities included securities valued at
$520,125 that were partially pledged as collateral to cover initial margin
deposits on open stock index futures contracts.
(h) The table below represents securities received as collateral for repurchase
agreements. This collateral, which is generally high quality short-term
obligations, is deposited with the Fund's custodian and, pursuant to the
terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. The market value of securities held as collateral for repurchase
agreements is monitored on a daily basis to ensure the existence of the
proper level of collateral.
<Table>
<Caption>
CANTOR FITZGERALD & CO. (0.230%)
SECURITY DESCRIPTION VALUE(a)
- -----------------------------------------------------------
Fannie Mae Discount Notes $340
Fannie Mae Grantor Trust 3,085
Fannie Mae Interest Strip 169,649
Fannie Mae Pool 1,583,703
Fannie Mae Principal Strip 14,436
Fannie Mae REMICS 1,258,270
Fannie Mae Whole Loan 202
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 25
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF
INVESTMENTS (CONTINUED)
<Table>
<Caption>
CANTOR FITZGERALD & CO. (0.230%) (CONTINUED)
SECURITY DESCRIPTION VALUE(a)
- -----------------------------------------------------------
Federal Farm Credit Bank $323,874
Federal Home Loan Bank Discount Notes 333,033
Federal Home Loan Banks 2,409,570
Federal Home Loan Mortgage Corp 206,770
Federal National Mortgage Association 548,890
FHLMC Structured Pass Through Securities 468,445
Freddie Mac Coupon Strips 1,092
Freddie Mac Discount Notes 79,968
Freddie Mac Non Gold Pool 696,029
Freddie Mac Reference REMIC 12,061
Freddie Mac REMICS 755,647
Freddie Mac Strips 101,276
Ginnie Mae I Pool 1,004,460
Ginnie Mae II Pool 888,431
Government National Mortgage Association 298,759
United States Treasury Bill 3,222,435
United States Treasury Inflation Indexed
Bonds 128,486
United States Treasury Strip Coupon 749,448
United States Treasury Strip Principal 41,641
- -----------------------------------------------------------
Total market value of collateral securities $15,300,000
- -----------------------------------------------------------
<Caption>
PERSHING LLC (0.310%)
SECURITY DESCRIPTION VALUE(a)
- -----------------------------------------------------------
Fannie Mae Benchmark REMIC $20,768
Fannie Mae Pool 3,295,358
Fannie Mae REMICS 311,237
Federal Farm Credit Bank 28,053
Federal Home Loan Banks 85,065
Federal Home Loan Mortgage Corp 5,528
Federal National Mortgage Association 541
Freddie Mac Gold Pool 886,247
Freddie Mac Non Gold Pool 99,018
Freddie Mac REMICS 287,305
Ginnie Mae I Pool 179,516
Ginnie Mae II Pool 361,003
Government National Mortgage Association 93,521
United States Treasury Inflation Indexed
Bonds 164,428
United States Treasury Note/Bond 1,702,280
United States Treasury Strip Coupon 233,388
United States Treasury Strip Principal 406,744
- -----------------------------------------------------------
Total market value of collateral securities $8,160,000
- -----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
26 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF
INVESTMENTS (CONTINUED)
<Table>
<Caption>
UBS SECURITIES LLC (0.210%)
SECURITY DESCRIPTION VALUE(a)
- -----------------------------------------------------------
Fannie Mae Interest Strip $1,592,777
Fannie Mae Principal Strip 304,243
Federal Farm Credit Bank 843,972
Federal Home Loan Mortgage Corp 2,990,474
Freddie Mac Strips 1,417,281
- -----------------------------------------------------------
Total market value of collateral securities $7,148,747
- -----------------------------------------------------------
</Table>
(i) At July 31, 2010, the cost of securities for federal income tax purposes
was $161,000,845 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $19,219,523
Unrealized depreciation (4,456,159)
-----------------------------------------------------------
Net unrealized appreciation $14,763,364
-----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 27
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require 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.
The Fund categorizes its fair value measurements according to a three-level
hierarchy 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. 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.
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
- --------------------------------------------------------------------------------
28 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
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 valuations may include,
but are not limited to, financial statement analysis, capital account balances,
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, 2010:
<Table>
<Caption>
FAIR VALUE AT JULY 31, 2010
------------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION(A) IDENTICAL ASSETS(B) INPUTS INPUTS TOTAL
- ---------------------------------------------------------------------------------------------
Equity Securities
Common Stocks $139,327,569 $-- $-- $139,327,569
- ---------------------------------------------------------------------------------------------
Total Equity Securities 139,327,569 -- -- 139,327,569
- ---------------------------------------------------------------------------------------------
Other
Mutual Fund 72,432 -- -- 72,432
Affiliated Money
Market Fund(c) 2,356,008 -- -- 2,356,008
Investments of Cash
Collateral Received
for Securities on
Loan -- 34,008,200 -- 34,008,200
- ---------------------------------------------------------------------------------------------
Total Other 2,428,440 34,008,200 -- 36,436,640
- ---------------------------------------------------------------------------------------------
Investments in
Securities 141,756,009 34,008,200 -- 175,764,209
Other Financial
Instruments(d) 39,503 -- -- 39,503
- ---------------------------------------------------------------------------------------------
Total $141,795,512 $34,008,200 $-- $175,803,712
- ---------------------------------------------------------------------------------------------
</Table>
(a) See the Portfolio of Investments for all investment classifications not
indicated in the table.
(b) There were no significant transfers between levels 1 and 2 during the
period.
(c) Money market fund that is a sweep investment for cash balances in the Fund
at July 31, 2010.
(d) 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 29
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
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 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 800.345.6611.
- --------------------------------------------------------------------------------
30 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
JULY 31, 2010
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $124,051,288) $139,400,001
Affiliated money market fund (identified cost $2,356,008) 2,356,008
Investments of cash collateral received for securities on loan
Short-term securities (identified cost $3,999,643) 3,999,643
Repurchase agreements (identified cost $30,008,557) 30,008,557
- -------------------------------------------------------------------------------
Total investments in securities (identified cost $160,415,496) 175,764,209
Capital shares receivable 340,773
Dividends and accrued interest receivable 43,602
Receivable for investment securities sold 827,608
Variation margin receivable on futures contracts 10,090
- -------------------------------------------------------------------------------
Total assets 176,986,282
- -------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash 319
Capital shares payable 546,688
Payable upon return of securities loaned 34,008,200
Accrued investment management services fees 2,733
Accrued distribution fees 811
Accrued transfer agency fees 761
Accrued administrative services fees 234
Other accrued expenses 61,996
- -------------------------------------------------------------------------------
Total liabilities 34,621,742
- -------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $142,364,540
- -------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 192,516
Additional paid-in capital 134,945,251
Undistributed net investment income 105,501
Accumulated net realized gain (loss) (8,266,944)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies 15,388,216
- -------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $142,364,540
- -------------------------------------------------------------------------------
*Value of securities on loan $ 33,100,425
- -------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $ 9,570,996 1,291,322 $7.41(1)
Class B $ 586,284 81,313 $7.21
Class C $ 205,141 28,435 $7.21
Class I $ 27,121,153 3,643,387 $7.44
Class R4 $ 8,952 1,206 $7.42
Class W $104,872,014 14,205,922 $7.38
- ------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $7.86. 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 SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 31
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED JULY 31, 2010
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 1,938,106
Income distributions from affiliated money market fund 4,690
Income from securities lending -- net 105,671
- ------------------------------------------------------------------------------
Total income 2,048,467
- ------------------------------------------------------------------------------
Expenses:
Investment management services fees 851,036
Distribution fees
Class A 25,573
Class B 9,144
Class C 2,729
Class W 265,113
Transfer agency fees
Class A 27,442
Class B 2,600
Class C 751
Class R4 4
Class W 216,254
Administrative services fees 83,767
Plan administration services fees -- Class R4 22
Compensation of board members 4,122
Custodian fees 12,007
Printing and postage 68,155
Registration fees 42,767
Professional fees 23,549
Other 11,570
- ------------------------------------------------------------------------------
Total expenses 1,646,605
- ------------------------------------------------------------------------------
Investment income (loss) -- net 401,862
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions 29,735,673
Futures contracts 1,205,849
- ------------------------------------------------------------------------------
Net realized gain (loss) on investments 30,941,522
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (7,553,953)
- ------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 23,387,569
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $23,789,431
- ------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
32 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2010 2009
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 401,862 $ 434,794
Net realized gain (loss) on investments 30,941,522 (21,892,627)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (7,553,953) 26,269,090
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 23,789,431 4,811,257
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (25,228) --
Class I (135,774) (76,661)
Class R4 (37) (28)
Class W (129,029) (331,470)
Tax return of capital
Class I -- (14,347)
Class R4 -- (4)
Class W -- (77,411)
- ---------------------------------------------------------------------------------------------
Total distributions (290,068) (499,921)
- ---------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 1,785,414 6,309,131
Class B shares 92,807 674,807
Class C shares 42,960 208,691
Class I shares 13,189,458 30,487,874
Class W shares 50,394,571 167,849,227
Reinvestment of distributions at net asset value
Class A shares 24,217 --
Class I shares 135,727 90,986
Class R4 shares 6 6
Class W shares 129,025 408,872
Conversions from Class B to Class A
Class A shares 198,363 246,654
Class B shares (198,363) (246,654)
Payments for redemptions
Class A shares (4,359,977) (8,114,777)
Class B shares (402,814) (285,979)
Class C shares (171,195) (63,129)
Class I shares (10,291,319) (21,030,480)
Class W shares (91,749,873) (60,828,360)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (41,180,993) 115,706,869
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (17,681,630) 120,018,205
Net assets at beginning of year 160,046,170 40,027,965
- ---------------------------------------------------------------------------------------------
Net assets at end of year $142,364,540 $160,046,170
- ---------------------------------------------------------------------------------------------
Undistributed (excess of distributions over) net investment
income $ 105,501 $ (8,527)
- ---------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 33
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for the periods shown. For periods ended 2007 and after, per
share net investment income (loss) amounts are calculated based on average
shares outstanding during the period. Total returns assume reinvestment of all
dividends and distributions. Total returns do not reflect payment of sales
charges, if any, and are not annualized for periods of less than one year.
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS A --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.24 $8.39 $9.55 $8.95 $9.48
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01 .01 .00(b) .05 --
Net gains (losses) (both realized and
unrealized) 1.18 (2.16) (1.14) .59 (.53)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.19 (2.15) (1.14) .64 (.53)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) -- (.02) (.04) --
Tax return of capital -- -- (.00)(b) -- --
- -----------------------------------------------------------------------------------------------------------
Total distributions (.02) -- (.02) (.04) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.41 $6.24 $8.39 $9.55 $8.95
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 19.04% (25.63%) (11.94%) 7.12% (5.59%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 1.30% 1.40% 1.32% 1.67% 5.83%(d)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.30% 1.29% 1.20% 1.29% 1.26%(d)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .17% .18% .05% .52% .01%(d)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $10 $10 $17 $18 $9
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 104% 56% 84% 14%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
34 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS B --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.11 $8.27 $9.47 $8.93 $9.48
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.04) (.03) (.06) (.04) (.01)
Net gains (losses) (both realized and
unrealized) 1.14 (2.13) (1.14) .62 (.54)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.10 (2.16) (1.20) .58 (.55)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- (.04) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.21 $6.11 $8.27 $9.47 $8.93
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 18.00% (26.12%) (12.67%) 6.43% (5.80%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 2.06% 2.17% 2.09% 2.12% 6.64%(d)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 2.06% 2.08% 1.97% 2.06% 2.07%(d)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.60%) (.60%) (.71%) (.41%) (.37%)(d)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1 $1 $1 $1 $--
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 104% 56% 84% 14%
- -----------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS C --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.11 $8.27 $9.47 $8.93 $9.48
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.04) (.03) (.06) (.04) (.01)
Net gains (losses) (both realized and
unrealized) 1.14 (2.13) (1.14) .61 (.54)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.10 (2.16) (1.20) .57 (.55)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- (.03) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.21 $6.11 $8.27 $9.47 $8.93
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 18.00% (26.12%) (12.67%) 6.37% (5.80%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 2.05% 2.16% 2.08% 2.16% 6.61%(d)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 2.05% 2.07% 1.96% 2.06% 2.04%(d)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.59%) (.56%) (.72%) (.40%) (.78%)(d)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 104% 56% 84% 14%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 35
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS I --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.27 $8.41 $9.57 $8.95 $9.48
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05 .04 .05 .08 --
Net gains (losses) (both realized and
unrealized) 1.17 (2.16) (1.16) .59 (.53)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.22 (2.12) (1.11) .67 (.53)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.02) (.04) (.05) --
Tax return of capital -- (.00)(b) (.01) -- --
- -----------------------------------------------------------------------------------------------------------
Total distributions (.05) (.02) (.05) (.05) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.44 $6.27 $8.41 $9.57 $8.95
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 19.45% (25.15%) (11.63%) 7.48% (5.59%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement .79% .85% .91% .95% 5.58%(d)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) .79% .85% .84% .95% 1.01%(d)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .68% .68% .50% .80% .19%(d)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $27 $21 $15 $39 $--
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 104% 56% 84% 14%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
36 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS R4 --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.25 $8.42 $9.56 $8.95 $9.48
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03 .03 .04 .07 --
Net gains (losses) (both realized and
unrealized) 1.17 (2.17) (1.14) .58 (.53)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.20 (2.14) (1.10) .65 (.53)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.03) (.03) (.03) (.04) --
Tax return of capital -- (.00)(b) (.01) -- --
- -----------------------------------------------------------------------------------------------------------
Total distributions (.03) (.03) (.04) (.04) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.42 $6.25 $8.42 $9.56 $8.95
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 19.23% (25.41%) (11.48%) 7.30% (5.59%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 1.08% 1.17% 1.23% 1.68% 5.69%(d)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.08% 1.01% .84% 1.15% 1.12%(d)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .39% .47% .42% .71% .21%(d)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 104% 56% 84% 14%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 37
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS W ---------------------------------------------
PER SHARE DATA 2010 2009 2008 2007(f)
Net asset value, beginning of period $6.21 $8.36 $9.54 $9.79
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 .01 .01 --
Net gains (losses) (both realized and
unrealized) 1.16 (2.14) (1.17) (.20)
- ------------------------------------------------------------------------------------------------
Total from investment operations 1.18 (2.13) (1.16) (.20)
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01) (.02) (.01) (.05)
Tax return of capital -- (.00)(b) (.01) --
- ------------------------------------------------------------------------------------------------
Total distributions (.01) (.02) (.02) (.05)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $7.38 $6.21 $8.36 $9.54
- ------------------------------------------------------------------------------------------------
TOTAL RETURN 19.00% (25.47%) (12.13%) (2.06%)
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Gross expenses prior to expense
waiver/reimbursement 1.24% 1.29% 1.34% 1.60%(d)
- ------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e) 1.24% 1.29% 1.31% 1.32%(d)
- ------------------------------------------------------------------------------------------------
Net investment income (loss) .23% .28% .08% .03%(d)
- ------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $105 $128 $7 $57
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 107% 104% 56% 84%
- ------------------------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) For the period from May 18, 2006 (when shares became publicly available) to
July 31, 2006.
(b) Rounds to less than $0.01 per share.
(c) Expense ratios include the impact of a performance incentive adjustment, if
any. 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
underlying funds in which it invests. Such indirect expenses are not
included in the reported expense ratios.
(d) Annualized.
(e) The Investment Manager and its affiliates agreed to waive/reimburse certain
fees and expenses (excluding fees and expenses of acquired funds), before
giving effect to any performance incentive adjustment.
(f) For the period from Dec. 1, 2006 (when shares became publicly available) to
July 31, 2007.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
38 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
RiverSource Disciplined Small and Mid Cap Equity Fund (the Fund) is a series of
RiverSource Dimensions Series, Inc. (the Corporation) and is registered under
the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified,
open-end management investment company. The Corporation has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the Corporation's Board of Directors (the Board). The
Fund invests primarily in equity securities of companies with market
capitalizations of up to $5 billion or that fall within the range of companies
that comprise the Russell 2500(TM) Index at the time of investment.
The Fund offers Class A, Class B, Class C, Class I, Class R4 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. Effective Sept. 7, 2010, the Fund no longer
accepts investments from new or existing investors in the Fund's Class B
shares, except that (i) dividend and/or capital gain distributions may
continue to be reinvested in Class B shares of the Fund and (ii) shareholders
invested in Class B shares of the Fund may exchange those shares for Class B
shares of other Columbia, Columbia Acorn, RiverSource, Seligman and
Threadneedle funds offering such shares.
- - Class C shares may be subject to a CDSC.
- - Class I and Class R4 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, 2010, Columbia Management Investment Advisers, LLC (formerly known
as RiverSource Investments, LLC) (the Investment Manager) and affiliated funds-
of-funds owned 100% of Class I shares.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
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 from the
primary exchange. 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
- --------------------------------------------------------------------------------
40 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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. The fair value of a security is likely
to be different from the quoted or published price, if available.
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 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.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. Generally, securities received as
collateral subject to repurchase agreements are deposited with the Fund's
custodian and, pursuant to the terms of the repurchase agreement, must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. The market value of securities held as collateral
for repurchase agreements is monitored on a daily basis to ensure the existence
of the proper level of collateral.
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
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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 tax returns filed for the last three years.
FOREIGN CAPITAL GAINS TAXES
Realized gains in certain countries may be subject to foreign taxes at the fund
level, at rates ranging from approximately 10% to 15%. The Fund pays such
foreign taxes on net realized gains at the appropriate rate for each
jurisdiction.
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. Investments in
derivative instruments may expose the Fund to certain additional risks,
including those detailed below.
- --------------------------------------------------------------------------------
42 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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.
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 DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT JULY 31, 2010
<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
- -------------------------------------------------------------------------------------------
Net
assets -- unrealiz-
ed appreciation on
Equity contracts investments $39,503* N/A 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, 2010
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
- ------------------------------------------------------------------
RISK EXPOSURE CATEGORY FUTURES
- ------------------------------------------------------------------
Equity contracts $1,205,849
- ------------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES
RECOGNIZED IN INCOME
- -----------------------------------------------------------------
RISK EXPOSURE CATEGORY FUTURES
- -----------------------------------------------------------------
Equity contracts $28,412
- -----------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FUTURES
The gross notional amount of long contracts outstanding was approximately $2.2
million at July 31, 2010. The monthly average gross notional amount for long
contracts was $2.2 million for the year ended July 31, 2010. The fair value of
such contracts at July 31, 2010 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 0.70% to 0.475% 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 Mid-Cap Core Funds Index. In
certain circumstances, the Board may approve a change in the index.
- --------------------------------------------------------------------------------
44 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 $126,252 for the year ended July 31, 2010. The management fee for the
year ended July 31, 2010 was 0.61% 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, 2010 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,
2010, other expenses paid to this company were $443.
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 certain other funds managed by the
Investment Manager. 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, Columbia Management Investment Services Corp.
(formerly known as RiverSource Service Corporation) (the Transfer Agent)
maintains Fund shareholder accounts and records and provides Fund shareholder
services. The Fund paid 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 charged 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 paid 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
R4 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 charged an
annual fee of $5 per inactive account, charged on a
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
pro rata basis for the 12 month period from the date the account becomes
inactive. The Transfer Agent also received reimbursement for certain out-of-
pocket expenses. 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
paid an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R4 shares for the provision of various administrative,
recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with Columbia Management Investment Distributors, Inc.
(formerly known as 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 paid 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 W 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 $53,000 for Class B shares.
This amount is based on the most recent information available as of April 30,
2010, 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 $24,414 for Class A and $1,307 for Class B for the
year ended July 31, 2010.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
Under an agreement which is effective until Sept. 30, 2010, the Investment
Manager and its affiliates have contractually agreed to waive certain fees and
reimburse certain expenses such that net expenses (excluding fees and expenses
of acquired funds*), before giving effect to any performance incentive
- --------------------------------------------------------------------------------
46 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
adjustment, will not exceed the following percentage of the class' average daily
net assets:
<Table>
Class A.............................................. 1.40%
Class B.............................................. 2.17
Class C.............................................. 2.16
Class I.............................................. 0.95
Class R4............................................. 1.25
Class W.............................................. 1.40
</Table>
For the year ended July 31, 2010, the waiver was not invoked since the Fund's
expenses were below the cap amount.
Effective Oct. 1, 2010, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and reimburse certain expenses until
Sept. 30, 2011, unless sooner terminated at the sole 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.............................................. 1.39%
Class B.............................................. 2.14
Class C.............................................. 2.14
Class I.............................................. 0.94
Class R4............................................. 1.24
Class W.............................................. 1.39
</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.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $147,970,383 and $190,225,431, respectively, for the
year ended July 31, 2010. Realized gains and losses are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated were as
follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2010 2009
- -------------------------------------------------------------------
CLASS A
Sold 247,014 1,123,483
Converted from Class B* 26,770 39,528
Reinvested distributions 3,392 --
Redeemed (605,057) (1,539,579)
- -------------------------------------------------------------------
Net increase (decrease) (327,881) (376,568)
- -------------------------------------------------------------------
CLASS B
Sold 13,336 121,575
Converted to Class A* (27,512) (40,369)
Redeemed (56,800) (50,038)
- -------------------------------------------------------------------
Net increase (decrease) (70,976) 31,168
- -------------------------------------------------------------------
CLASS C
Sold 5,839 38,661
Redeemed (24,245) (11,505)
- -------------------------------------------------------------------
Net increase (decrease) (18,406) 27,156
- -------------------------------------------------------------------
CLASS I
Sold 1,784,276 5,323,223
Reinvested distributions 18,983 16,573
Redeemed (1,475,547) (3,840,456)
- -------------------------------------------------------------------
Net increase (decrease) 327,712 1,499,340
- -------------------------------------------------------------------
CLASS R4
Reinvested distributions 1 1
- -------------------------------------------------------------------
Net increase (decrease) 1 1
- -------------------------------------------------------------------
CLASS W
Sold 6,840,609 31,029,459
Reinvested distributions 18,147 74,885
Redeemed (13,252,234) (11,322,377)
- -------------------------------------------------------------------
Net increase (decrease) (6,393,478) 19,781,967
- -------------------------------------------------------------------
</Table>
* Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
7. LENDING OF PORTFOLIO SECURITIES
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.
- --------------------------------------------------------------------------------
48 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 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, 2010,
securities valued at $33,100,425 were on loan, secured by cash collateral of
$34,008,200 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. Net income of
$105,671 earned from securities lending for the year ended July 31, 2010 is
included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund
(formerly known as RiverSource Short-Term Cash Fund), a money market fund
established for the exclusive use of certain funds managed by the Investment
Manager and other institutional clients of the Investment Manager. The cost of
the Fund's purchases and proceeds from sales of shares of Columbia Short-Term
Cash Fund aggregated $58,782,082 and $56,426,074, respectively, for the year
ended July 31, 2010. The income distributions received with respect to the
Fund's investment in Columbia Short-Term Cash Fund can be found in the Statement
of Operations and the Fund's invested balance in Columbia Short-Term Cash Fund
at July 31, 2010, can be found in the Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds managed
by the Investment Manager, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 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 $500 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 sum of the federal funds rate plus (i)
1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. 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
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other funds managed by the Investment Manager, severally and not
jointly, permitted collective borrowings up to $475 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.75%. 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, 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,
2010.
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 real estate investment trust (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 were recorded by the Fund.
- --------------------------------------------------------------------------------
50 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $2,234
and accumulated net realized loss has been decreased by $3,222 resulting in a
net reclassification adjustment to decrease paid-in capital by $5,456.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2010 2009
- ----------------------------------------------------------------
Ordinary income............................. $290,068 $408,159
Long-term capital gain...................... -- --
Tax return of capital....................... -- 91,762
</Table>
At July 31, 2010, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................... $ 108,375
Undistributed accumulated long-term gain......... $ --
Accumulated realized loss........................ $(7,615,730)
Unrealized appreciation (depreciation)........... $14,734,128
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$7,615,730 at July 31, 2010, that if not offset by capital gains will expire in
2017.
For the year ended July 31, 2010, $13,819,504 of capital loss carry-over was
utilized and/or expired unused. 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 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.
The Board of Directors of the Fund has approved in principle the proposed merger
of the Fund into Columbia Mid Cap Value Fund. It is currently anticipated that a
Special Meeting of Shareholders will be held during the first half of 2011 to
vote on the proposal.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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 legacy
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 (the
Supreme Court), asking the Supreme Court to stay the District Court proceedings
while the 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. On March 30, 2010, the Supreme Court issued its ruling in Jones v.
Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth
Circuit's decision in the Gallus case and remanded the case to the Eighth
Circuit for further consideration in light of the Supreme Court's decision in
Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the
Gallus case to the District Court for further consideration in light of the
Supreme Court's decision in Jones v. Harris Associates.
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
- --------------------------------------------------------------------------------
52 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 Funds' Boards of Directors/Trustees.
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 DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 53
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Disciplined Small and Mid Cap
Equity Fund (the Fund), (one of the portfolios constituting the RiverSource
Dimensions Series, Inc.) as of July 31, 2010, 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 four 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 period ended 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, 2010, 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.
- --------------------------------------------------------------------------------
54 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 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 Disciplined Small and Mid Cap Equity Fund of the
RiverSource Dimensions Series, Inc. at July 31, 2010, 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 four years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 20, 2010
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 55
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, 2010
<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%
</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.
- --------------------------------------------------------------------------------
56 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 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.
Each Board member oversees 150 Columbia, RiverSource, Seligman and Threadneedle
funds. Under current Board policy, members generally serve until the next
regular shareholders' meeting, until he or she reaches the mandatory retirement
age established by the Board, or the fifteenth anniversary of the first Board
meeting they attended as members of the Board.
INDEPENDENT BOARD MEMBERS*
<Table>
<Caption>
OTHER PRESENT OR
NAME, POSITION HELD PAST DIRECTORSHIPS
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS)
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 1/11/06 Attorney
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource and Threadneedle Funds, 1999-2006; None
901 S. Marquette Ave. 1/5/99 former Governor of Minnesota
Minneapolis, MN 55402
Age 76
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 7/11/07 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 3/1/85
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 11/1/05 Insurance; Hapoalim
Minneapolis, MN 55402 Securities USA, Inc.
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures
Minneapolis, MN 55402 Board member irrigation systems)
Age 71 since 1/1/02
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 57
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
OTHER PRESENT OR
NAME, POSITION HELD PAST DIRECTORSHIPS
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS)
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member Retired President and Chief Executive Officer and None
901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 67
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 11/1/04 real estate and asset management company)
Minneapolis, MN 55402
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 69 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. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals,
Minneapolis, MN 55402 Biopharmaceuticals Inc.
Age 66 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Mr. Laikind may be deemed, as a technical matter, an interested person of
RiverSource International Managers Series, Inc. and RiverSource Variable
Series Trust because he serves as an independent director of a broker-dealer
that has executed transactions for subadvisers to certain of the funds.
- --------------------------------------------------------------------------------
58 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
<Table>
<Caption>
OTHER PRESENT OR
NAME, POSITION HELD PAST DIRECTORSHIPS
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS)
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member Chairman of the Board, Columbia Management Investment None
53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC)
Financial Center Vice President since since May 2010 (previously President, Chairman of the
Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010);
Age 50 Senior Vice President, Atlantic Funds, Columbia Funds
and Nations Funds since May 2010; Chief Executive
Officer, U.S. Asset Management &
President -- Annuities, Ameriprise Financial, Inc.
since May 2010 (previously President -- U.S. Asset
Management and Chief Investment Officer, 2005-April
2010 and Senior Vice President -- Chief Investment
Officer, 2001-2005); Director, President and Chief
Executive Officer, Ameriprise Certificate Company since
2006; Director, Columbia Management Investment
Distributors, Inc. (formerly RiverSource Fund
Distributors, Inc.) since May 2010 (previously Chairman
of the Board and Chief Executive Officer, 2008-April
2010); Chairman of the Board and Chief Executive
Officer, RiverSource Distributors, Inc. since 2006
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person (as defined under the 1940 Act) by reason of being an
officer, director, security holder and/or employee of the investment manager
or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling 800.345.6611; contacting your
financial intermediary; or visiting columbiamanagement.com.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 59
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
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 FUNDS AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual
One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers,
Boston, MA 02111 LLC since May 2010; President, Columbia Funds since
Age 46 2009 (previously Senior Vice President and Chief
Financial Officer, June 2008 -- January 2009);
President, Atlantic Funds and Nations Funds since 2009;
Managing Director of Columbia Management Advisors, LLC,
December 2004 -- April 2010; Treasurer, Columbia Funds,
October 2003 -- May 2008; Treasurer, the Liberty Funds,
Stein Roe Funds and Liberty All-Star Funds, December
2000 -- December 2006; Senior Vice
President -- Columbia Management Advisors, LLC, April
2003 -- December 2004; President, Columbia Funds,
Liberty Funds and Stein Roe Funds, February
2004 -- October 2004
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer,
5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly
Center Minneapolis, MN RiverSource Investments, LLC) since May 2010
55474 (previously Chief Administrative Officer, 2009 -- April
Age 45 2010 and Vice President -- Asset Management and Trust
Company Services, 2006-2009 and Vice
President -- Operations and Compliance, 2004-2006);
Senior Vice President, Atlantic Funds, Columbia Funds
and Nations Funds since May 2010; Director of Product
Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment
105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund
Financial Center Distributors, Inc.) and of Seligman Data Corp. since
Minneapolis, MN 55474 2008; Vice President -- Investment Accounting,
Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial
Officer, RiverSource Distributors, Inc. since 2006
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia
5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly
Center Secretary since RiverSource Investments, LLC) since June 2005; Vice
Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management,
Age 51 Ameriprise Financial, Inc. since May 2010 (previously
Vice President and Chief Counsel -- Asset Management,
2005-April 2010 and Vice President -- Asset Management
Compliance, 2004-2005); Senior Vice President,
Secretary and Chief Legal Officer, Atlantic Funds,
Columbia Funds and Nations Funds since May 2010; Vice
President, Chief Counsel and Assistant Secretary,
Columbia Management Investment Distributors, Inc.
(formerly RiverSource Fund Distributors, Inc.) since
2008; Vice President, General Counsel and Secretary,
Ameriprise Certificate Company since 2005; Chief
Counsel, RiverSource Distributors, Inc. since 2006;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michael A. Jones Vice President since Director and President, Columbia Management Investment
100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director,
Boston, MA 02110 Columbia Management Investment Distributors, Inc. since
Age 51 May 2010; Senior Vice President, Atlantic Funds,
Columbia Funds and Nations Funds since May 2010;
Manager, Chairman, Chief Executive Officer and
President, Columbia Management Advisors, LLC,
2007 -- April 2010; Chief Executive Officer, President
and Director, Columbia Management Distributors, Inc.,
2006 -- April 2010; former Co-President and Senior
Managing Director, Robeco Investment Management
- --------------------------------------------------------------------------------------------------------
Colin Moore Vice President since Chief Investment Officer, Columbia Management
One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice
Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations
Age 52 Funds since May 2010; Manager, Managing Director and
Chief Investment Officer, Columbia Management Advisors,
LLC, 2007- April 2010; Head of Equities, Columbia
Management Advisors, LLC, 2002-Sept. 2007
- --------------------------------------------------------------------------------------------------------
Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia
One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010;
Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007;
Age 46 Senior Vice President and Chief Compliance Officer,
Atlantic Funds and Nations Funds since 2007; Director
(Columbia Management Group, LLC and Investment Product
Group Compliance), Bank of America, June 2005 -- April
2010; Director of Corporate Compliance and Conflicts
Officer, MFS Investment Management (investment
management), August 2004 -- May 2005
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 61
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and
Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management
Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource
Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money
since 2008 Laundering Officer, Ameriprise Financial, Inc. since
2005; Compliance Director, Ameriprise Financial, Inc.,
2004-2008
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
62 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
Columbia Management Investment Advisers, LLC ("Columbia Management" or the
"investment manager"), formerly known as RiverSource Investments, LLC, 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"), Columbia Management provides investment advice
and other services to the Fund and all funds branded Columbia, RiverSource,
Seligman and Threadneedle.
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. Columbia Management prepared detailed reports for the Board
and its Contracts Committee in March and April 2010, including reports based on
data provided by independent organizations and a comprehensive response to each
item of information requested by independent legal counsel to the Independent
Directors ("Independent Legal Counsel") in a letter to the investment manager,
to assist the Board in making this determination. All of the materials presented
in March and April 2010 were first supplied in draft form to designated
representatives of the Independent Directors, i.e., Independent Legal Counsel,
the Chair of the Board and the Chair of the Contracts Committee (including
materials relating to the Fund's proposed revised expense cap), and the final
materials were revised to reflect comments provided by these Board
representatives. In addition, throughout the year, the Board (or its committees)
reviews information prepared by Columbia Management addressing the services
Columbia Management provides and Fund performance. The Board accords particular
weight to the work, deliberations and conclusions of the Contracts Committee,
the Investment Review Committee and the Compliance Committee in determining
whether to continue the IMS Agreement. At the April 6-8, 2010 in-person Board
meeting, Independent Legal Counsel reviewed with the Independent Directors,
including in an executive session without management, 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 Columbia Management: The
Board analyzed various reports and presentations it had received detailing the
services performed by Columbia Management, as well as its expertise, resources
and capabilities. The Board specifically considered many developments during the
past year concerning the services provided by Columbia Management, including, in
particular, the continued investment in, and resources dedicated to, the Fund's
operations, most notably, management's announcement of the massive
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 63
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
investment made in the acquisition of the long-term asset management business of
Columbia Management Group, LLC (the "Columbia Transaction") and the completed
integration of J. & W. Seligman & Co. Incorporated, acquisitions which should
continue to enhance investment capabilities and provide access to a greater
depth of experienced portfolio managers in key categories. The Board noted, in
particular, that upon the close of the Columbia Transaction, the investment
manager will have grown to 10 investment offices (compared to 6 in 2009). In
addition, the Board reviewed information concerning the investment manager's new
Chief Investment Officer upon the close of the Columbia Transaction, including
the application of his particular investment philosophy, which is intended to
enhance the risk and portfolio management oversight of the entire fund family.
Moreover, in connection with the Board's evaluation of the overall package of
services provided by Columbia Management, the Board considered the quality of
the administrative and transfer agency services provided by Columbia
Management's affiliates to the Fund. The Board also reviewed the financial
condition of Columbia Management and its affiliates, and each entity's ability
to carry out its responsibilities under the IMS Agreement. Further, the Board
considered Columbia Management's ability to retain key personnel in certain
targeted areas 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 Columbia Management). The Board
concluded that the services being performed under the IMS Agreement were of a
reasonably high quality.
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 Columbia Management 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 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. The Board observed that the
Fund's investment performance reflected the interrelationship of market
conditions with the particular investment strategies employed by the portfolio
- --------------------------------------------------------------------------------
64 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
management team. Further, the Board noted measures taken to address the Fund's
performance, including the anticipated change in portfolio managers for the
Fund. In this regard, the Board reviewed a detailed report illustrating the
performance and track record of the new portfolio managers expected to assume
responsibilities for the Fund upon the close of the Columbia Transaction.
Comparative Fees, Costs of Services Provided and the Profits Realized By
Columbia Management 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 Columbia Management's
profitability. They also reviewed information in the report showing the fees
charged by Columbia Management 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 legacy RiverSource Funds' family, while assuring that the overall
fees for each fund (with few defined exceptions) 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), 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 revised expense caps/waivers) approximated 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. Based
on its review, the Board concluded that the Fund's management fee was fair and
reasonable in light of the extent and quality of services that the Fund
receives.
The Board also considered various preliminary integration plans in connection
with the Columbia Transaction which, if implemented, would impact the fee
structures of various legacy RiverSource Funds. The Board was satisfied with the
principles underlying these plans, which, at their preliminary stage, are
designed to achieve a rational, consistent pricing model across the combined
fund families, as well as preserve the "pricing philosophy" of the legacy
RiverSource Funds.
The Board also considered the expected profitability of Columbia Management and
its affiliates in connection with Columbia Management providing investment
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT 65
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
management services to the Fund. In this regard, the Board referred to a
detailed profitability report, discussing the profitability to Columbia
Management and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. In
this regard, the Board observed slightly reduced profitability in 2009 vs. 2008.
The Board also considered the services acquired by the investment manager
through the use of commission dollars paid by the legacy RiverSource 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 Columbia Management 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, 2010, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
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 800.345.6611; contacting your financial intermediary; visiting
columbiamanagement.com; 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 columbiamanagement.com; or searching the website of
the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
66 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 ANNUAL REPORT
RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND
P.O. Box 8081
Boston, MA 02266-8081
COLUMBIAMANAGEMENT.COM
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. The Fund is distributed by Columbia
Management Investment Distributors, Inc. member FINRA, and
managed by Columbia Management Investment Advisers, LLC.
(C)2010 Columbia Management Investment Advisers, LLC. All
(COLUMBIA MANAGEMENT LOGO) rights reserved. S-6505 G (9/10)
</Table>
Annual Report
and Prospectus
(COLUMBIA MANAGEMENT LOGO)
RIVERSOURCE
DISCIPLINED SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT FOR THE PERIOD ENDED
JULY 31, 2010
(Prospectus also enclosed)
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND SEEKS TO PROVIDE SHAREHOLDERS WITH
LONG-TERM CAPITAL GROWTH.
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.
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 3
Manager Commentary................. 6
The Fund's Long-term Performance... 14
Fund Expenses Example.............. 16
Portfolio of Investments........... 20
Statement of Assets and
Liabilities...................... 33
Statement of Operations............ 35
Statements of Changes in Net
Assets........................... 37
Financial Highlights............... 38
Notes to Financial Statements...... 46
Report of Independent Registered
Public Accounting Firm........... 61
Federal Income Tax Information..... 63
Board Members and Officers......... 64
Approval of Investment Management
Services Agreement............... 70
Proxy Voting....................... 73
</Table>
SEE THE FUND'S PROSPECTUS FOR RISKS ASSOCIATED WITH INVESTING IN THE FUND.
- --------------------------------------------------------------------------------
2 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Disciplined Small Cap Value Fund (the Fund) Class A shares gained
18.33% (excluding sales charge) for the 12-month period ended July 31, 2010.
> The Fund underperformed its benchmark, the unmanaged Russell 2000(R) Value
Index, which rose 20.11% for the same period.
> The Fund also underperformed the Lipper Small-Cap Value Funds Index,
representing the Fund's peer group, which advanced 21.11%, for the same
period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2010)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
INCEPTION
1 YEAR 3 YEARS 2/16/2006
- ------------------------------------------------------------------
RiverSource Disciplined Small Cap
Value Fund
Class A (excluding sales charge) +18.33% -6.39% -4.40%
- ------------------------------------------------------------------
Russell 2000 Value Index (unmanaged) +20.11% -4.97% -1.67%
- ------------------------------------------------------------------
Lipper Small-Cap Value Funds Index
(unmanaged) +21.11% -3.96% -0.40%
- ------------------------------------------------------------------
</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 columbiamanagement.com or calling 800.345.6611.
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
fees and 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2010
SINCE
Without sales charge 1 YEAR 3 YEARS INCEPTION
Class A (inception 2/16/06) +18.33% -6.39% -4.40%
- --------------------------------------------------------------------
Class B (inception 2/16/06) +17.42% -7.08% -5.14%
- --------------------------------------------------------------------
Class C (inception 2/16/06) +17.49% -7.09% -5.13%
- --------------------------------------------------------------------
Class I (inception 2/16/06) +18.78% -6.02% -4.06%
- --------------------------------------------------------------------
Class R2(a) (inception 12/11/06) +17.78% -6.63% -7.46%
- --------------------------------------------------------------------
Class R3 (inception 12/11/06) +18.22% -6.35% -7.20%
- --------------------------------------------------------------------
Class R4(b) (inception 2/16/06) +18.38% -6.14% -4.20%
- --------------------------------------------------------------------
Class R5(b) (inception 12/11/06) +18.79% -6.06% -6.89%
- --------------------------------------------------------------------
With sales charge
Class A (inception 2/16/06) +11.53% -8.22% -5.66%
- --------------------------------------------------------------------
Class B (inception 2/16/06) +12.42% -8.00% -5.56%
- --------------------------------------------------------------------
Class C (inception 2/16/06) +16.49% -7.09% -5.13%
- --------------------------------------------------------------------
</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 and Class R5
shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available to
qualifying institutional investors only.
(a) Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares.
(b) Effective July 23, 2010, the Fund no longer offers Class R4 or Class R5
shares.
- --------------------------------------------------------------------------------
4 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
MORNINGSTAR STYLE BOX(TM)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Equity Style
Value Blend Growth
Large
Medium Size
X Small
</Table>
The Morningstar Style Box(TM) is based on the fund's portfolio holdings as of
period end. For equity funds, the vertical axis shows the market capitalization
of the stocks owned, and the horizontal axis shows investment style (value,
blend, or growth). Information shown is based on the most recent data provided
by Morningstar.
(C)2010 Morningstar, Inc. All rights reserved. The information contained herein
is proprietary to Morningstar and/or its content providers, may not be copied or
distributed and is not warranted to be accurate, complete, or timely. Neither
Morningstar nor its content providers are responsible for any damages or losses
arising from any use of this information. Past performance is no guarantee of
future results.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 5
MANAGER COMMENTARY ------------------------------------------------------------
At July 31, 2010, approximately 93% of the Fund's shares were owned in the
aggregate by affiliated funds-of-funds managed by Columbia Management Investment
Advisers, LLC (Columbia Management). As a result of asset allocation decisions
by Columbia Management, it is possible that RiverSource Disciplined Small Cap
Value Fund may experience relatively large purchases or redemptions from
affiliated funds-of-funds (see page 55, Class I capital share transactions for
related activity during the most recent fiscal period). Columbia Management
seeks to minimize the impact of these transactions by structuring them over a
reasonable period of time. RiverSource Disciplined Small Cap Value Fund may
experience increased expenses as it buys and sells securities as a result of
purchases or redemptions by affiliated funds-of-funds. For more information on
the Fund's expenses, see the discussions beginning on pages 16 and 51.
Effective May 1, 2010 Brian Condon and Alfred Alley III joined Gina Mourtzinou
as co-portfolio managers. Effective July 3, 2010, Mr. Condon and Mr. Alley III
became sole portfolio managers of RiverSource Disciplined Small Cap Value Fund.
Dear Shareholder,
RiverSource Disciplined Small Cap Value Fund (the Fund) Class A shares gained
18.33% (excluding sales charge) for the 12-month period ended July 31, 2010. The
Fund underperformed its benchmark, the unmanaged Russell 2000(R) Value Index
(Russell Index), which rose 20.11%, as well as the Lipper Small-Cap Value Funds
Index, representing the Fund's peer group, which advanced 21.11%, for the same
period.
- --------------------------------------------------------------------------------
6 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
SIGNIFICANT PERFORMANCE FACTORS
Against a strengthening economic backdrop supported by generally positive data,
the equity market rally that had begun in mid-March 2009 continued with little
interruption until May 2010. As investor risk aversion had abated significantly,
lower quality stocks led the way during these months. The rally then stalled in
May and June of 2010 as worries heightened about the sovereign debt crisis in
Europe and about the trajectory of the nascent global economic recovery.
Investors questioned whether the recovery could be sustained without the
tremendous fiscal and monetary stimulus injected into the economy since the 2008
credit crisis, as several government and Federal Reserve programs expired in
March and April 2010. Further, unemployment and housing data indicated
persistent weakness. Investors also were uncertain about how much of the first
quarter 2010 rebound in corporate earnings was attributable merely to rebuilding
of inventories. The potential of a "double-dip" recession or even deflation
became of heightened concern. Equity market volatility rose. By the end of the
annual period, a strong start to the second quarter
SECTOR BREAKDOWN(1) (at July 31, 2010)
- ---------------------------------------------------------------------
<Table>
<Caption>
Consumer Discretionary 9.8%
- ------------------------------------------------
Consumer Staples 3.3%
- ------------------------------------------------
Energy 6.4%
- ------------------------------------------------
Financials 37.6%
- ------------------------------------------------
Health Care 5.6%
- ------------------------------------------------
Industrials 13.4%
- ------------------------------------------------
Information Technology 9.2%
- ------------------------------------------------
Materials 5.2%
- ------------------------------------------------
Telecommunication Services 0.8%
- ------------------------------------------------
Utilities 6.2%
- ------------------------------------------------
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 exceeded 25% of portfolio assets.
Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan). 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 DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
2010 earnings reporting season buoyed the equity market as did an overall
improvement in risk sentiment. The release of the results of the European bank
stress tests on July 23 also had a positive impact on equity markets broadly.
The Fund's performance was primarily driven by the quantitative-based investment
themes we employed in selecting stocks for the Fund's portfolio. During the 12-
month period, the momentum theme outperformed the Russell Index, but not enough
to offset the underperformance of the valuation theme. The momentum theme,
designed in part to capture investor sentiment over the near to mid term,
benefited from exposure to information technology stocks. The valuation theme,
which favors cheaper price-to-earnings ratio (P/E) stocks, started the annual
period with solid performance but weakened later in the period as market
volatility heightened. The valuation theme was hurt most by financials stocks.
It is important to remember that the themes we used 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 very different quantitative-based
themes is a significant
TOP TEN HOLDINGS(1) (at July 31, 2010)
- ---------------------------------------------------------------------
<Table>
<Caption>
Platinum Underwriters Holdings Ltd. 1.3%
- ------------------------------------------------
ProAssurance Corp. 1.3%
- ------------------------------------------------
Ares Capital Corp. 1.3%
- ------------------------------------------------
Apollo Investment Corp. 1.2%
- ------------------------------------------------
SVB Financial Group 1.2%
- ------------------------------------------------
EMCOR Group, Inc. 1.2%
- ------------------------------------------------
Rent-A-Center, Inc. 1.2%
- ------------------------------------------------
CNO Financial Group, Inc. 1.1%
- ------------------------------------------------
Magellan Health Services, Inc. 1.1%
- ------------------------------------------------
Capstead Mortgage Corp. 1.0%
- ------------------------------------------------
</Table>
(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan and 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.
- --------------------------------------------------------------------------------
8 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
investment advantage over the long term, even though the Fund may experience
underperformance in the short term. At the same time, 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.
Following a specific, disciplined process, we do not make sector or industry
bets based on economic or equity market outlooks. The Fund's quantitative-based
themes further led to various sector weightings that, together, contributed to
results. Having only modest exposure to utilities and financials, each of which
lagged the Russell Index during the annual period, benefitted results most. The
primary detractors from a sector allocation perspective were the Fund's
significant exposures to the lagging consumer staples and energy sectors.
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, utilities and industrials sectors detracted. This more than offset
the combined effect of strong stock selection in health care, information
technology and telecommunication services.
Individual stocks that contributed most favorably to the Fund's return during
the annual period included chemical manufacturer W R GRACE & CO. (also a choice
of the momentum theme), auto and air freight transportation company ATLAS AIR
WORLDWIDE (another momentum selection), and managed health care services
provider MAGELLAN HEALTH SERVICES (selected by the valuation theme).
Our research continues to indicate that the style diversification provided by
the 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
Among individual holdings, the stocks that detracted most from the Fund's annual
results were silver and gold miner COEUR D'ALENE MINES (a valuation theme
selection), food retailer WINN-DIXIE STORES (chosen by the valuation theme),
appliance retailer CONN'S (another valuation theme pick), and financial services
company KNIGHT CAPITAL GROUP (selected by the valuation theme).
At the end of July, the Fund's largest individual stock holdings were each
financials-related companies and each chosen by the valuation theme. These top
holdings at the end of the annual period were property and casualty insurance
company PROASSURANCE, reinsurance company PLATINUM UNDERWRITERS, commercial bank
SVB FINANCIAL, and investment companies ARES CAPITAL and APOLLO INVESTMENT.
CHANGES TO THE FUND'S PORTFOLIO
As a result of quantitative-based theme-driven stock selection during the
period, the portfolio's sector allocations changed somewhat. Most notably, the
Fund's exposure to information technology increased but remained a less-than-
Russell Index position in the sector. The Fund's allocation to financials
decreased but remained greater than the Russell Index. Toward the end of the
annual period, we began bringing the Fund's sector allocation more in line with
that of the benchmark index, a shift primarily driven by our new management
team's sector-neutral investment process.
In managing risk associated with small-cap investing, we use a proprietary risk
management system that allows us to manage the Fund's exposure to several key
factors, including industry, sector, market capitalization and portfolio
turnover. During the period, we used these and other techniques in an effort to
reduce the expected risk of the portfolio and to avoid large deviations in
exposure from the Russell Index.
Perhaps the biggest change made was that a new portfolio management team was put
in place toward the end of the annual period. The Fund's principal investment
strategies remained based on quantitative analysis, using similar investment
themes. However, while we continue to use computer-based models to analyze
stocks within sectors, the new team's models are somewhat different from those
previously used. We seek to maintain sector weighting neutrality overall
relative to the benchmark
- --------------------------------------------------------------------------------
10 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
index, and the models drive stock selection by focusing on factors within three
themes -- quality, valuation and catalyst. Quality-theme factors include
profitability as well as strength and sustainability measures, such as return on
assets, return on equity, receivables, reserve management and cash flow
accruals. Valuation-theme factors measure profitability-at-a-reasonable-price
and growth-at-a-reasonable-price and include cash flow, operating income, sales,
earnings, book value and risk-adjusted return. Catalyst-theme factors include
long-term and short-term momentum measures and estimate revisions.
Given all of these changes, the Fund's portfolio turnover rate for the annual
period was 114%.
OUR FUTURE STRATEGY
We hold a cautious view regarding prospects for the financial markets over the
remainder of 2010. After a solid run over the 12 months ended July 31, 2010, we
believe stocks appeared to be closer to fair value than they had been one year
prior. At the same time, however, we expect volatility to remain somewhat
heightened. We believe the U.S. economy will continue to recover, albeit at a
relatively slow pace, and that inflation should remain under control.
Given this view, we intend to use our quantitative-based themes, as described
above, in our stock selection process, seeking to position the Fund's portfolio
to take advantage of what we consider a beneficial shift in underlying market
dynamics. At the same time, we believe our use of multiple investment
disciplines serves the Fund well in all investment environments over the long
term, and the portfolio is well positioned for most potential market conditions.
Whether there is a surge in small-cap stocks or a downturn, the combination of
themes should, in our view, help us deliver value relative to the Russell Index
over extended periods of time.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 11
MANAGER COMMENTARY (continued) -------------------------------------------------
We are convinced that our multifaceted, disciplined approach may assist in
managing risk in the portfolio. We believe this combination of style
diversification and rigorous risk management will allow us to maintain the high
quality of the Fund's portfolio in whatever market conditions lie ahead.
<Table>
Brian Condon, CFA(R) Alfred Alley III, CFA(R)
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 Columbia Management Investment Advisers, LLC*
(the Investment Manager) or any subadviser to the Fund or any other person in
the Investment Manager or subadviser organizations. Any such views are subject
to change at any time based upon market or other conditions and the Investment
Manager disclaims any responsibility to update such views. These views may not
be relied on as investment advice and, because investment decisions for the Fund
are based on numerous factors, may not be relied on as an indication of trading
intent on behalf of the Fund.
* Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia
Management Investment Advisers, LLC.
- --------------------------------------------------------------------------------
12 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 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 Small Cap Value Fund Class A shares (from
2/16/06 to 7/31/10) as compared to the performance of the Russell 2000 Value
Index and the Lipper Small-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 initial 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 columbiamanagement.com. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2010
SINCE
INCEPTION
1 YEAR 3 YEARS 2/16/06
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $11,153 $7,731 $7,713
- ---------------------------------------------------------------------------------
Average annual total return +11.53% -8.22% -5.66%
- ---------------------------------------------------------------------------------
RUSSELL 2000 VALUE INDEX(1)
Cumulative value of $10,000 $12,011 $8,582 $9,279
- ---------------------------------------------------------------------------------
Average annual total return +20.11% -4.97% -1.67%
- ---------------------------------------------------------------------------------
LIPPER SMALL-CAP VALUE FUNDS INDEX(2)
Cumulative value of $10,000 $12,111 $8,858 $9,825
- ---------------------------------------------------------------------------------
Average annual total return +21.11% -3.96% -0.40%
- ---------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 4.
- --------------------------------------------------------------------------------
14 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE DISCIPLINED SMALL CAP
VALUE FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE DISCIPLINED
SMALL CAP
VALUE FUND
CLASS A RUSSELL 2000 LIPPER SMALL-CAP
(INCLUDES SALES VALUE INDEX(1) VALUE FUNDS
CHARGE) ($7,713) ($9,279) INDEX(2) ($9,825)
----------------------- -------------- -----------------
2/16/06 $ 9,425 $10,000 $10,000
4/06 9,969 10,495 10,495
7/06 9,010 10,043 9,771
10/06 9,692 10,976 10,530
1/07 10,326 11,558 11,148
4/07 10,213 11,674 11,535
7/07 9,405 10,814 11,092
10/07 9,443 11,201 11,285
1/08 8,389 9,852 9,966
4/08 8,506 9,907 10,083
7/08 8,486 9,738 9,722
10/08 6,422 7,781 7,445
1/09 5,265 6,260 6,243
4/09 5,683 6,800 7,061
7/09 6,518 7,726 8,113
10/09 6,664 7,933 8,486
1/10 7,068 8,547 9,070
4/10 8,319 10,365 10,821
7/10 7,713 9,279 9,825
</Table>
(1) The Russell 2000 Value Index, an unmanaged index, measures the performance
of those Russell 2000 companies 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 Small-Cap Value Funds Index includes the 30 largest small-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 DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (i) transaction
costs, including sales charges (loads) on purchase payments; and (ii) ongoing
costs, which may include management fees; distribution and service (Rule 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, 2010.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses for each class. 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 "Direct expenses paid during
the period" to estimate the expenses you paid on your account during this
period. You can also estimate the direct and indirect expenses you paid over the
period by using the number in the first line under the heading "Direct and
indirect expenses paid during the period."
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the actual expense ratio for each
class and an assumed rate of return of 5% per year before expenses, which is not
the actual return for the class. 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.
- --------------------------------------------------------------------------------
16 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 17
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
DIRECT AND
DIRECT INDIRECT
BEGINNING ENDING EXPENSES EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING
FEB. 1, 2010 JULY 31, 2010 THE PERIOD(a) THE PERIOD(b)
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,091.30 $ 6.99(d) $ 8.39(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.25 $ 6.74(d) $ 8.10(d)
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,087.00 $11.19(d) $12.59(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.21 $10.80(d) $12.15(d)
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,087.00 $11.13(d) $12.54(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,014.26 $10.75(d) $12.10(d)
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,095.40 $ 4.91(d) $ 6.32(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.24 $ 4.73(d) $ 6.09(d)
- ------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,089.90 $ 9.01(d) $10.42(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.31 $ 8.70(d) $10.05(d)
- ------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,092.80 $ 7.72(d) $ 9.13(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.55 $ 7.44(d) $ 8.80(d)
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,092.70 $ 6.42(d) $ 7.83(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.80 $ 6.19(d) $ 7.55(d)
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(c) $1,000 $1,094.10 $ 5.12(d) $ 6.53(d)
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.04 $ 4.94(d) $ 6.30(d)
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
18 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
ANNUALIZED EXPENSE RATIOS
<Table>
<Caption>
FUND'S ACQUIRED FUND
ANNUALIZED FEES AND NET FUND
EXPENSE RATIO EXPENSES EXPENSES
- ----------------------------------------------------------------------
Class A 1.34% .27% 1.61%
- ----------------------------------------------------------------------
Class B 2.15% .27% 2.42%
- ----------------------------------------------------------------------
Class C 2.14% .27% 2.41%
- ----------------------------------------------------------------------
Class I .94% .27% 1.21%
- ----------------------------------------------------------------------
Class R2 1.73% .27% 2.00%
- ----------------------------------------------------------------------
Class R3 1.48% .27% 1.75%
- ----------------------------------------------------------------------
Class R4 1.23% .27% 1.50%
- ----------------------------------------------------------------------
Class R5 .98% .27% 1.25%
- ----------------------------------------------------------------------
</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) Expenses are equal to the annualized expense ratio for each class as
indicated above, plus the acquired fund fees and expenses, multiplied by the
average account value over the period, multiplied by 182/365 (to reflect the
one-half year period).
(c) Based on the actual return for the six months ended July 31, 2010: +9.13%
for Class A, +8.70% for Class B, +8.70 for Class C, +9.54% for Class I,
+8.99% for Class R2, +9.28% for Class R3, +9.27% for Class R4 and +9.41% for
Class R5.
(d) Columbia Management Investment Advisers, LLC (formerly known as RiverSource
Investments, LLC) (the Investment Manager) and its affiliates have
contractually agreed to waive certain fees and to absorb certain expenses
until Sept. 30, 2011, unless sooner terminated at the sole 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 1.43% for Class A, 2.18% for Class B, 2.18% for
Class C, 1.01% for Class I, 1.68% for Class R2, 1.56% for Class R3, 1.31%
for Class R4 and 1.06% for Class R5. Any amounts waived will not be
reimbursed by the Fund. This change is effective Oct. 1, 2010. Had this
change been in place for the entire six month period ended July 31, 2010,
the actual direct expenses paid would have been $6.88 for Class A, $10.77
for Class B, $10.77 for Class C, $4.70 for Class I, $8.18 for Class R2,
$7.57 for Class R3, $6.26 for Class R4 and $4.96 for Class R5; the
hypothetical direct expenses paid would have been $6.64 for Class A, $10.40
for Class B, $10.40 for Class C, $4.53 for Class I, $7.90 for Class R2,
$7.29 for Class R3, $6.04 for Class R4 and $4.78 for Class R5. Additionally,
had this change been in place for the entire six month period ended July 31,
2010, the actual direct and indirect expenses paid would have been $8.29 for
Class A, $12.18 for Class B, $12.18 for Class C, $6.11 for Class I, $9.59
for Class R2, $8.97 for Class R3, $7.67 for Class R4 and $6.37 for Class R5;
the hypothetical direct and indirect expenses paid would have been $8.00 for
Class A, $11.75 for Class B, $11.75 for Class C, $5.89 for Class I, $9.25
for Class R2, $8.65 for Class R3, $7.40 for Class R4 and $6.14 for Class R5.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 19
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2010
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (98.1%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (1.5%)
Ceradyne, Inc. 8,211(b) $190,906
Esterline Technologies Corp. 2,773(b) 142,338
Ladish Co., Inc. 4,650(b) 136,757
Triumph Group, Inc. 3,923(d) 297,755
---------------
Total 767,756
- -------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (1.1%)
Atlas Air Worldwide Holdings, Inc. 7,958(b,d) 465,383
Pacer International, Inc. 9,986(b,d) 82,285
---------------
Total 547,668
- -------------------------------------------------------------------------------------
AIRLINES (1.8%)
Alaska Air Group, Inc. 9,470(b) 488,558
Skywest, Inc. 31,983 398,188
US Airways Group, Inc. 4,700(b) 50,995
---------------
Total 937,741
- -------------------------------------------------------------------------------------
AUTO COMPONENTS (0.4%)
Exide Technologies 14,347(b,d) 86,369
Tenneco, Inc. 4,562(b,d) 125,911
---------------
Total 212,280
- -------------------------------------------------------------------------------------
BUILDING PRODUCTS (0.9%)
AO Smith Corp. 1,265 69,170
Apogee Enterprises, Inc. 15,650 176,219
Griffon Corp. 4,872(b,d) 66,064
Insteel Industries, Inc. 7,523(d) 69,889
Quanex Building Products Corp. 4,351 76,534
---------------
Total 457,876
- -------------------------------------------------------------------------------------
CAPITAL MARKETS (6.7%)
Apollo Investment Corp. 62,023(d) 626,432
Ares Capital Corp. 46,337 649,181
BGC Partners, Inc., Class A 39,213(d) 212,534
Capital Southwest Corp. 600(d) 53,292
Cohen & Steers, Inc. 5,245(d) 116,964
Hercules Technology Growth Capital, Inc. 9,943(d) 104,004
Knight Capital Group, Inc., Class A 17,467(b,d) 251,175
MCG Capital 22,500(d) 130,275
MVC Capital, Inc. 7,424 95,176
Oppenheimer Holdings, Inc., Class A 7,155(d) 204,848
PennantPark Investment Corp. 19,874(d) 208,876
Prospect Capital Corp. 6,138 59,600
Sanders Morris Harris Group, Inc. 9,300(d) 51,150
SWS Group, Inc. 20,581(d) 179,466
TICC Capital Corp. 46,700(d) 409,559
Westwood Holdings Group, Inc. 2,887(d) 104,596
---------------
Total 3,457,128
- -------------------------------------------------------------------------------------
CHEMICALS (3.0%)
Ferro Corp. 8,406(b,d) 89,692
HB Fuller Co. 2,704(d) 55,270
Innophos Holdings, Inc. 12,445 364,763
Innospec, Inc. 9,414(b,c) 103,554
Minerals Technologies, Inc. 1,136 59,265
Olin Corp. 12,566 255,090
OM Group, Inc. 5,212(b) 140,724
PolyOne Corp. 15,297(b) 157,712
WR Grace & Co. 12,645(b) 324,597
---------------
Total 1,550,667
- -------------------------------------------------------------------------------------
COMMERCIAL BANKS (9.7%)
1st Source Corp. 2,900(d) 53,331
Ameris Bancorp 9,846(b) 96,885
Arrow Financial Corp. 3,240(d) 81,713
Bancfirst Corp. 3,023 124,487
Boston Private Financial Holdings, Inc. 9,200(d) 60,812
Camden National Corp. 3,298(d) 103,063
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
COMMERCIAL BANKS (CONT.)
Century Bancorp, Inc., Class A 2,702(d) $58,039
Enterprise Financial Services Corp. 5,600 57,344
First Bancorp 19,211(d) 320,632
First Commonwealth Financial Corp. 13,800(d) 73,140
First Community Bancshares, Inc. 4,200 61,782
First Financial Bancorp 9,548(d) 151,813
First Financial Corp. 2,400(d) 68,088
First Merchants Corp. 10,200 88,536
German American Bancorp, Inc. 3,296(d) 55,208
Great Southern Bancorp, Inc. 13,659(d) 299,542
Heartland Financial USA 3,500 61,810
Heritage Financial Corp. 3,888(b,d) 57,737
International Bancshares Corp. 12,471(d) 216,247
Lakeland Bancorp, Inc. 6,300(d) 56,511
MainSource Financial Group, Inc. 29,328(d) 221,133
Nara Bancorp, Inc. 9,154(b) 65,634
National Bankshares, Inc. 4,466(d) 115,580
NBT Bancorp, Inc. 5,565(d) 122,875
Northrim BanCorp, Inc. 10,136 178,394
OmniAmerican Bancorp, Inc. 4,500(b,d) 51,570
Oriental Financial Group, Inc. 3,900(c,d) 55,224
PacWest Bancorp 2,696 56,427
Peoples Bancorp, Inc. 6,000(d) 103,500
Republic Bancorp, Inc., Class A 10,319(d) 255,705
SVB Financial Group 14,240(b,d) 615,025
The First of Long Island Corp. 2,118(d) 54,602
Trico Bancshares 6,425(d) 121,240
Trustmark Corp. 8,569(d) 188,518
UMB Financial Corp. 4,313(d) 162,255
Virginia Commerce Bancorp, Inc. 9,900(b,d) 63,459
West Bancorporation, Inc. 10,387(b,d) 69,489
Wilshire Bancorp, Inc. 16,066(d) 120,977
Wintrust Financial Corp. 6,793 211,398
---------------
Total 4,979,725
- -------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (1.1%)
Consolidated Graphics, Inc. 2,314(b) 99,433
Deluxe Corp. 2,500 51,450
Kimball International, Inc., Class B 18,984 118,459
Steelcase, Inc., Class A 9,402(d) 64,968
United Stationers, Inc. 2,177(b) 117,885
Viad Corp. 4,828 96,077
---------------
Total 548,272
- -------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (0.6%)
Oplink Communications, Inc. 4,601(b,d) 74,122
Plantronics, Inc. 8,349 250,220
---------------
Total 324,342
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (0.3%)
Intevac, Inc. 6,032(b,d) 66,352
Super Micro Computer, Inc. 5,143(b,d) 74,265
---------------
Total 140,617
- -------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (2.7%)
Comfort Systems USA, Inc. 22,454 256,200
EMCOR Group, Inc. 22,889(b) 595,343
Granite Construction, Inc. 8,201(d) 190,673
Layne Christensen Co. 6,374(b) 160,689
Sterling Construction Co., Inc. 6,836(b) 84,698
Tutor Perini Corp. 4,662(b,d) 89,883
---------------
Total 1,377,486
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 21
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
CONSUMER FINANCE (1.1%)
Cash America International, Inc. 7,870(d) $263,645
Credit Acceptance Corp. 2,956(b) 165,477
Nelnet, Inc., Class A 3,700 74,592
World Acceptance Corp. 1,809(b,d) 74,947
---------------
Total 578,661
- -------------------------------------------------------------------------------------
DISTRIBUTORS (0.2%)
Core-Mark Holding Co., Inc. 3,936(b) 120,127
- -------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (0.3%)
Regis Corp. 8,713(d) 132,699
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (0.4%)
Compass Diversified Holdings 3,558(d) 53,619
PHH Corp. 8,389(b,d) 167,025
---------------
Total 220,644
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.7%)
Consolidated Communications Holdings, Inc. 3,946(d) 68,897
IDT Corp., Class B 16,800(b,d) 311,136
---------------
Total 380,033
- -------------------------------------------------------------------------------------
ELECTRIC UTILITIES (3.1%)
Central Vermont Public Service Corp. 7,100(d) 150,804
Cleco Corp. 11,924(d) 340,430
IDACORP, Inc. 12,800 450,816
UIL Holdings Corp. 13,100 356,975
Unisource Energy Corp. 9,900(d) 319,572
---------------
Total 1,618,597
- -------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.7%)
EnerSys 6,684(b) 161,886
Woodward Governor Co. 7,069 213,767
---------------
Total 375,653
- -------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (3.9%)
Agilysys, Inc. 7,000 55,510
Anixter International, Inc. 5,850(b,d) 282,671
Benchmark Electronics, Inc. 3,075(b) 51,353
Coherent, Inc. 4,875(b,d) 180,473
CTS Corp. 10,294(d) 96,249
Electro Rent Corp. 7,400 102,120
Gerber Scientific, Inc. 9,900(b,d) 56,826
Insight Enterprises, Inc. 6,548(b) 95,404
Littelfuse, Inc. 7,171(b,d) 255,359
Measurement Specialties, Inc. 10,000(b,d) 167,000
Methode Electronics, Inc. 7,792(d) 83,219
Plexus Corp. 6,232(b,d) 181,974
Rogers Corp. 3,391(b,d) 104,951
SYNNEX Corp. 8,771(b,d) 231,467
TTM Technologies, Inc. 7,143(b,d) 73,216
---------------
Total 2,017,792
- -------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (3.3%)
Bristow Group, Inc. 4,106(b) 137,264
Cal Dive International, Inc. 62,393(b) 369,366
Dawson Geophysical Co. 7,179(b,d) 167,342
Gulfmark Offshore, Inc., Class A 4,283(b,d) 126,092
Lufkin Industries, Inc. 9,796 402,713
Matrix Service Co. 8,518(b) 82,539
Natural Gas Services Group, Inc. 4,605(b,d) 76,213
PHI, Inc. 6,100(b) 96,929
T-3 Energy Services, Inc. 2,935(b,d) 74,432
Tetra Technologies, Inc. 6,314(b) 65,792
Union Drilling, Inc. 12,700(b,d) 75,311
---------------
Total 1,673,993
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
22 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
FOOD & STAPLES RETAILING (2.1%)
Nash Finch Co. 3,471(d) $136,480
Ruddick Corp. 11,031 391,048
Spartan Stores, Inc. 10,377 149,014
The Andersons, Inc. 1,514 52,036
The Pantry, Inc. 5,451(b,d) 98,118
Weis Markets, Inc. 3,249(d) 116,477
Winn-Dixie Stores, Inc. 15,665(b,d) 153,674
---------------
Total 1,096,847
- -------------------------------------------------------------------------------------
FOOD PRODUCTS (0.1%)
Alico, Inc. 2,500 60,900
- -------------------------------------------------------------------------------------
GAS UTILITIES (2.0%)
Chesapeake Utilities Corp. 4,400 146,256
Nicor, Inc. 4,040 176,912
Southwest Gas Corp. 13,400 431,078
The Laclede Group, Inc. 2,397 83,751
WGL Holdings, Inc. 5,600 202,048
---------------
Total 1,040,045
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.5%)
Cantel Medical Corp. 9,400(d) 149,272
Medical Action Industries, Inc. 8,800(b) 120,560
---------------
Total 269,832
- -------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (4.5%)
Assisted Living Concepts, Inc., Class A 6,700(b) 210,782
Cross Country Healthcare, Inc. 10,200(b,d) 90,576
Healthspring, Inc. 27,881(b) 524,163
Kindred Healthcare, Inc. 21,849(b) 290,592
Magellan Health Services, Inc. 13,489(b) 567,752
Molina Healthcare, Inc. 5,353(b,d) 159,573
Triple-S Management Corp., Series B 9,722(b,c,d) 193,273
Universal American Corp. 15,258(b) 255,419
---------------
Total 2,292,130
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.1%)
Biglari Holdings, Inc. 241(b,d) 70,011
Domino's Pizza, Inc. 7,400(b,d) 94,646
Red Robin Gourmet Burgers, Inc. 3,848(b,d) 82,116
Ruby Tuesday, Inc. 30,100(b,d) 307,622
---------------
Total 554,395
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.5%)
American Greetings Corp., Class A 5,190(d) 106,343
CSS Industries, Inc. 4,029(d) 72,603
La-Z-Boy, Inc. 10,600(b) 90,736
---------------
Total 269,682
- -------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (0.1%)
Oil-Dri Corp. of America 3,000 65,640
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (0.8%)
Seaboard Corp. 195(d) 296,010
Standex International Corp. 3,661 109,903
---------------
Total 405,913
- -------------------------------------------------------------------------------------
INSURANCE (7.6%)
American Equity Investment Life Holding Co. 4,700 50,760
AMERISAFE, Inc. 9,961(b,d) 178,900
CNA Surety Corp. 6,751(b,d) 116,455
CNO Financial Group, Inc. 106,692(b,d) 572,936
Employers Holdings, Inc. 25,808(d) 401,056
FBL Financial Group, Inc., Class A 3,300 74,877
First Mercury Financial Corp. 4,500 51,570
Greenlight Capital Re Ltd., Series A 5,459(b,c,d) 140,788
Horace Mann Educators Corp. 21,998 370,006
Meadowbrook Insurance Group, Inc. 18,841(d) 172,584
Montpelier Re Holdings Ltd. 16,466(c,d) 267,737
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 23
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
INSURANCE (CONT.)
National Financial Partners Corp. 18,883(b) $202,615
Platinum Underwriters Holdings Ltd. 16,744(c,d) 654,355
ProAssurance Corp. 10,973(b) 653,003
---------------
Total 3,907,642
- -------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (1.0%)
Earthlink, Inc. 59,969(d) 529,526
- -------------------------------------------------------------------------------------
IT SERVICES (1.0%)
Acxiom Corp. 3,912(b,d) 60,010
CSG Systems International, Inc. 4,004(b) 75,515
TeleTech Holdings, Inc. 10,400(b) 144,560
Unisys Corp. 8,203(b) 221,564
---------------
Total 501,649
- -------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (0.3%)
Jakks Pacific, Inc. 5,647(b,d) 89,109
Sport Supply Group, Inc. 4,416 59,793
---------------
Total 148,902
- -------------------------------------------------------------------------------------
MACHINERY (1.2%)
Altra Holdings, Inc. 7,397(b,d) 107,257
American Railcar Industries, Inc. 5,010(b,d) 68,387
FreightCar America, Inc. 5,336(d) 132,492
LB Foster Co., Class A 3,937(b,d) 120,393
Mueller Industries, Inc. 3,687 91,143
Robbins & Myers, Inc. 3,168 75,145
---------------
Total 594,817
- -------------------------------------------------------------------------------------
MARINE (0.4%)
American Commercial Lines, Inc. 2,048(b,d) 49,459
Genco Shipping & Trading Ltd. 3,697(b) 61,740
International Shipholding Corp. 3,567(d) 88,961
---------------
Total 200,160
- -------------------------------------------------------------------------------------
MEDIA (0.5%)
EW Scripps Co., Class A 9,440(b,d) 74,198
Valassis Communications, Inc. 4,900(b) 169,393
---------------
Total 243,591
- -------------------------------------------------------------------------------------
METALS & MINING (1.1%)
AM Castle & Co. 3,729(b,d) 55,077
AMCOL International Corp. 2,625(d) 78,645
Brush Engineered Materials, Inc. 2,775(b) 66,184
Coeur d'Alene Mines Corp. 3,873(b,d) 58,986
Haynes International, Inc. 1,908 64,223
Kaiser Aluminum Corp. 1,697 69,577
Olympic Steel, Inc. 4,373(d) 111,206
RTI International Metals, Inc. 2,496(b,d) 70,836
---------------
Total 574,734
- -------------------------------------------------------------------------------------
MULTILINE RETAIL (0.6%)
Dillard's, Inc., Class A 10,567(d) 244,521
Retail Ventures, Inc. 8,086(b,d) 78,353
---------------
Total 322,874
- -------------------------------------------------------------------------------------
MULTI-UTILITIES (0.8%)
Avista Corp. 18,900 395,388
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (3.2%)
ATP Oil & Gas Corp. 6,015(b,d) 63,518
Clayton Williams Energy, Inc. 1,215(b) 54,080
Cloud Peak Energy, Inc. 4,094(b,d) 62,843
CVR Energy, Inc. 9,600(b,d) 77,760
Golar LNG Ltd. 7,445(c) 80,257
Green Plains Renewable Energy, Inc. 7,000(b) 64,820
Knightsbridge Tankers Ltd. 6,225(c) 116,159
Miller Petroleum, Inc. 18,400(b,d) 91,816
Patriot Coal Corp. 11,004(b,d) 132,708
Penn Virginia Corp. 8,758(d) 166,402
Petroleum Development Corp. 9,896(b,d) 288,369
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
24 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
OIL, GAS & CONSUMABLE FUELS (CONT.)
Rex American Resources Corp. 3,100(b,d) $49,755
Rosetta Resources, Inc. 11,926(b) 263,207
Swift Energy Co. 1,983(b) 51,419
Western Refining, Inc. 11,469(b,d) 60,786
---------------
Total 1,623,899
- -------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (1.1%)
Clearwater Paper Corp. 5,437(b) 335,082
KapStone Paper and Packaging Corp. 13,844(b) 158,375
PH Glatfelter Co. 5,946 67,963
---------------
Total 561,420
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (0.6%)
Medicis Pharmaceutical Corp., Class A 2,991 75,822
Par Pharmaceutical Companies, Inc. 9,380(b) 247,632
---------------
Total 323,454
- -------------------------------------------------------------------------------------
PROFESSIONAL SERVICES (0.2%)
Diamond Management & Technology Consultants,
Inc. 8,805 95,534
- -------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (11.3%)
American Capital Agency Corp. 18,518 509,615
Anworth Mortgage Asset Corp. 39,526(d) 275,496
Associated Estates Realty Corp. 5,084(d) 70,363
Capstead Mortgage Corp. 45,270(d) 529,660
CBL & Associates Properties, Inc. 33,100(d) 465,717
Chesapeake Lodging Trust 3,700(b) 64,713
Cogdell Spencer, Inc. 8,442 62,724
Colonial Properties Trust 21,300 343,356
Cypress Sharpridge Investments, Inc. 34,230(d) 451,836
Extra Space Storage, Inc. 4,997 77,503
First Potomac Realty Trust 4,285(d) 66,418
Glimcher Realty Trust 38,500 256,025
Hatteras Financial Corp. 11,402(d) 337,955
Invesco Mortgage Capital, Inc. 2,610(d) 53,114
LaSalle Hotel Properties 13,200(d) 313,104
Lexington Realty Trust 55,400 356,222
MFA Financial, Inc. 42,891(d) 314,820
Mid-America Apartment Communities, Inc. 2,936 165,825
Omega Healthcare Investors, Inc. 8,798(d) 193,380
One Liberty Properties, Inc. 8,800(d) 136,928
Resource Capital Corp. 50,500(d) 308,050
Sovran Self Storage, Inc. 1,588(d) 58,438
Sun Communities, Inc. 3,817(d) 111,075
Terreno Realty Corp. 6,400(b) 115,200
U-Store-It Trust 8,700 70,209
Walter Investment Management Corp. 3,139(d) 54,211
---------------
Total 5,761,957
- -------------------------------------------------------------------------------------
ROAD & RAIL (0.2%)
Celadon Group, Inc. 4,246(b) 66,407
Werner Enterprises, Inc. 2,500 57,575
---------------
Total 123,982
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.8%)
Cabot Microelectronics Corp. 2,000(b,d) 65,380
Micrel, Inc. 27,400 266,328
Omnivision Technologies, Inc. 4,249(b,d) 94,795
---------------
Total 426,503
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 25
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SOFTWARE (1.6%)
Fair Isaac Corp. 16,300(d) $388,754
JDA Software Group, Inc. 7,559(b) 177,637
TIBCO Software, Inc. 18,276(b) 247,823
---------------
Total 814,214
- -------------------------------------------------------------------------------------
SPECIALTY RETAIL (5.0%)
America's Car-Mart, Inc. 2,353(b) 54,778
Brown Shoe Co., Inc. 3,626(d) 53,012
Build-A-Bear Workshop, Inc. 9,576(b,d) 57,935
Cabela's, Inc. 4,702(b,d) 73,304
Collective Brands, Inc. 7,258(b,d) 116,273
Conn's, Inc. 10,787(b,d) 56,740
DSW, Inc., Class A 5,921(b,d) 157,558
Genesco, Inc. 8,959(b,d) 244,491
Group 1 Automotive, Inc. 3,467(b,d) 96,105
HOT Topic, Inc. 12,825 67,844
Jo-Ann Stores, Inc. 10,212(b,d) 427,781
Rent-A-Center, Inc. 26,473(b) 582,140
Shoe Carnival, Inc. 3,413(b,d) 71,844
Stage Stores, Inc. 9,037 99,407
The Dress Barn, Inc. 5,957(b) 147,138
The Finish Line, Inc., Class A 8,334 119,260
The Men's Wearhouse, Inc. 8,049(d) 156,634
---------------
Total 2,582,244
- -------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (1.0%)
Jones Apparel Group, Inc. 7,671 133,782
Perry Ellis International, Inc. 2,400(b,d) 53,736
Quiksilver, Inc. 30,017(b,d) 134,177
Skechers U.S.A., Inc., Class A 3,104(b) 115,127
Unifirst Corp. 1,672 73,501
---------------
Total 510,323
- -------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (1.1%)
BankFinancial Corp. 5,800(d) 51,504
Federal Agricultural Mortgage Corp., Class C 9,300 138,942
Flushing Financial Corp. 5,500 68,585
Northwest Bancshares, Inc. 4,381(d) 53,142
Ocwen Financial Corp. 13,769(b) 145,400
Radian Group, Inc. 13,100 112,660
---------------
Total 570,233
- -------------------------------------------------------------------------------------
TOBACCO (0.9%)
Universal Corp. 10,884(d) 482,705
- -------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (1.0%)
Aircastle Ltd. 15,600 142,583
H&E Equipment Services, Inc. 9,814(b,d) 85,382
TAL International Group, Inc. 2,000 53,880
Textainer Group Holdings Ltd. 3,696(c,d) 100,901
United Rentals, Inc. 8,825(b,d) 116,314
---------------
Total 499,060
- -------------------------------------------------------------------------------------
WATER UTILITIES (0.3%)
Consolidated Water 5,800(c) 69,832
SJW Corp. 3,800(d) 94,582
---------------
Total 164,414
- -------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.1%)
USA Mobility, Inc. 3,700 54,871
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $47,105,204) $50,489,237
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (2.5%)
SHARES VALUE(a)
Columbia Short-Term Cash Fund, 0.279% 1,269,720(f) $1,269,720
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $1,269,720) $1,269,720
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
26 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (24.8%)
EFFECTIVE PRINCIPAL
ISSUER YIELD AMOUNT VALUE(a)
REPURCHASE AGREEMENTS(E)
Barclays Capital, Inc.
dated 07-30-10, matures 08-02-10,
repurchase price
$5,000,129 0.310% $5,000,000 $5,000,000
Cantor Fitzgerald & Co.
dated 07-30-10, matures 08-02-10,
repurchase price
$5,000,096 0.230 5,000,000 5,000,000
UBS Securities LLC
dated 07-30-10, matures 08-02-10,
repurchase price
$2,755,292 0.210 2,755,244 2,755,244
---------------
Total 12,755,244
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $12,755,244) $12,755,244
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $61,130,168)(g) $64,514,201
=====================================================================================
</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.
INVESTMENTS IN DERIVATIVES
At July 31, 2010, $60,000 was held in a margin deposit account as collateral to
cover initial margin requirements on open stock index futures contracts.
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2010
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
- ------------------------------------------------------------------------------------
Russell 2000 Mini Index 8 $519,680 Sept. 2010 $28,462
- ------------------------------------------------------------------------------------
</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, 2010, the
value of foreign securities, excluding short-term securities, represented
3.46% of net assets.
(d) At July 31, 2010, security was partially or fully on loan. See Note 7 to
the financial statements.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 27
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(e) The table below represents securities received as collateral for repurchase
agreements. This collateral, which is generally high quality short-term
obligations, is deposited with the Fund's custodian and, pursuant to the
terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. The market value of securities held as collateral for repurchase
agreements is monitored on a daily basis to ensure the existence of the
proper level of collateral.
<Table>
<Caption>
BARCLAYS CAPITAL, INC. (0.310%)
SECURITY DESCRIPTION VALUE(a)
- -----------------------------------------------------------
Rabobank Nederland $5,250,000
- -----------------------------------------------------------
Total market value of collateral securities $5,250,000
- -----------------------------------------------------------
<Caption>
CANTOR FITZGERALD & CO. (0.230%)
SECURITY DESCRIPTION VALUE(a)
- -----------------------------------------------------------
Fannie Mae Discount Notes $113
Fannie Mae Grantor Trust 1,028
Fannie Mae Interest Strip 56,550
Fannie Mae Pool 527,901
Fannie Mae Principal Strip 4,812
Fannie Mae REMICS 419,423
Fannie Mae Whole Loan 67
Federal Farm Credit Bank 107,958
Federal Home Loan Bank Discount Notes 111,011
Federal Home Loan Banks 803,190
Federal Home Loan Mortgage Corp 68,923
Federal National Mortgage Association 182,963
FHLMC Structured Pass Through Securities 156,148
Freddie Mac Coupon Strips 364
Freddie Mac Discount Notes 26,656
Freddie Mac Non Gold Pool 232,010
Freddie Mac Reference REMIC 4,020
Freddie Mac REMICS 251,883
Freddie Mac Strips 33,759
Ginnie Mae I Pool 334,820
Ginnie Mae II Pool 296,144
Government National Mortgage Association 99,586
United States Treasury Bill 1,074,145
United States Treasury Inflation Indexed Bonds 42,829
United States Treasury Strip Coupon 249,816
United States Treasury Strip Principal 13,881
- -----------------------------------------------------------
Total market value of collateral securities $5,100,000
- -----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
28 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF
INVESTMENTS (CONTINUED)
<Table>
<Caption>
UBS SECURITIES LLC (0.210%)
SECURITY DESCRIPTION VALUE(a)
- -----------------------------------------------------------
Fannie Mae Interest Strip $626,161
Fannie Mae Principal Strip 119,606
Federal Farm Credit Bank 331,787
Federal Home Loan Mortgage Corp 1,175,632
Freddie Mac Strips 557,170
- -----------------------------------------------------------
Total market value of collateral securities $2,810,356
- -----------------------------------------------------------
</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, 2010.
(g) At July 31, 2010, the cost of securities for federal income tax purposes
was $61,471,025 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $4,986,095
Unrealized depreciation (1,942,919)
----------------------------------------------------------
Net unrealized appreciation $3,043,176
----------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 29
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require 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.
The Fund categorizes its fair value measurements according to a three-level
hierarchy 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. 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.
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
- --------------------------------------------------------------------------------
30 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
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 valuations may include,
but are not limited to, financial statement analysis, capital account balances,
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, 2010:
<Table>
<Caption>
FAIR VALUE AT JULY 31, 2010
-----------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION(A) IDENTICAL ASSETS(B) INPUTS INPUTS TOTAL
- ---------------------------------------------------------------------------------------------
Equity Securities
Common Stocks $50,489,237 $-- $-- $50,489,237
- ---------------------------------------------------------------------------------------------
Total Equity Securities 50,489,237 -- -- 50,489,237
- ---------------------------------------------------------------------------------------------
Other
Affiliated Money
Market Fund(c) 1,269,720 -- -- 1,269,720
Investments of Cash
Collateral Received
for Securities on
Loan -- 12,755,244 -- 12,755,244
- ---------------------------------------------------------------------------------------------
Total Other 1,269,720 12,755,244 -- 14,024,964
- ---------------------------------------------------------------------------------------------
Investments in
Securities 51,758,957 12,755,244 -- 64,514,201
Other Financial
Instruments(d) 28,462 -- -- 28,462
- ---------------------------------------------------------------------------------------------
Total $51,787,419 $12,755,244 $-- $64,542,663
- ---------------------------------------------------------------------------------------------
</Table>
(a) See the Portfolio of Investments for all investment classifications not
indicated in the table.
(b) There were no significant transfers between Levels 1 and 2 during the
period.
(c) Money market fund that is a sweep investment for cash balances in the Fund
at July 31, 2010.
(d) 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 31
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
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 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 800.345.6611.
- --------------------------------------------------------------------------------
32 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
JULY 31, 2010
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $47,105,204) $50,489,237
Affiliated money market fund (identified cost $1,269,720) 1,269,720
Investments of cash collateral received for securities on loan
Repurchase agreements (identified cost $12,755,244) 12,755,244
- ------------------------------------------------------------------------------
Total investments in securities (identified cost $61,130,168) 64,514,201
Capital shares receivable 29,947
Dividends and accrued interest receivable 27,763
Receivable for investment securities sold 1,785,805
Variation margin receivable on futures contracts 2,160
Margin deposits on futures contracts 60,000
- ------------------------------------------------------------------------------
Total assets 66,419,876
- ------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 43,937
Payable for investment securities purchased 2,118,309
Payable upon return of securities loaned 12,755,244
Accrued investment management services fees 1,203
Accrued distribution fees 32
Accrued transfer agency fees 27
Accrued administrative services fees 113
Other accrued expenses 55,552
- ------------------------------------------------------------------------------
Total liabilities 14,974,417
- ------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $51,445,459
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 33
STATEMENT OF ASSETS AND LIABILITIES (continued) --------------------------------
JULY 31, 2010
<Table>
<Caption>
REPRESENTED BY
Capital stock -- $.01 par value $ 65,009
Additional paid-in capital 54,093,866
Undistributed net investment income 461,738
Accumulated net realized gain (loss) (6,587,649)
Unrealized appreciation (depreciation) on investments 3,412,495
- ------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $51,445,459
- ------------------------------------------------------------------------------
*Value of securities on loan $12,373,802
- ------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $ 3,483,311 441,264 $7.89(1)
Class B $ 141,730 18,276 $7.75
Class C $ 120,243 15,510 $7.75
Class I $47,679,790 6,023,250 $7.92
Class R2 $ 3,587 455 $7.88
Class R3 $ 5,300 672 $7.89
Class R4 $ 7,899 1,000 $7.90
Class R5 $ 3,599 455 $7.91
- -----------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $8.37. 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.
- --------------------------------------------------------------------------------
34 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED JULY 31, 2010
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 897,622
Income distributions from affiliated money market fund 2,567
Income from securities lending -- net 71,788
Foreign taxes withheld (16)
- -----------------------------------------------------------------------------
Total income 971,961
- -----------------------------------------------------------------------------
Expenses:
Investment management services fees 375,114
Distribution fees
Class A 19,337
Class B 2,362
Class C 1,006
Class R2 17
Class R3 12
Transfer agency fees
Class A 9,420
Class B 396
Class C 172
Class R2 1
Class R3 3
Class R4 4
Class R5 1
Administrative services fees 40,614
Plan administration services fees
Class R2 8
Class R3 12
Class R4 19
Compensation of board members 1,492
Custodian fees 9,315
Printing and postage 27,925
Registration fees 48,303
Professional fees 20,537
Other 6,562
- -----------------------------------------------------------------------------
Total expenses 562,632
Expenses waived/reimbursed by the Investment Manager and its
affiliates (58,290)
- -----------------------------------------------------------------------------
Total net expenses 504,342
- -----------------------------------------------------------------------------
Investment income (loss) -- net 467,619
- -----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 35
STATEMENT OF OPERATIONS (continued) --------------------------------------------
YEAR ENDED JULY 31, 2010
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $8,005,642
Futures contracts 377,599
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments 8,383,241
Net change in unrealized appreciation (depreciation) on
investments (169,568)
- -----------------------------------------------------------------------------
Net gain (loss) on investments 8,213,673
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $8,681,292
- -----------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
36 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31, 2010 2009
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 467,619 $ 377,135
Net realized gain (loss) on investments 8,383,241 (11,082,938)
Net change in unrealized appreciation (depreciation) on
investments (169,568) 7,316,289
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 8,681,292 (3,389,514)
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (74,218) (28,406)
Class C (52) --
Class I (324,851) (220,730)
Class R2 (10) (1)
Class R3 (25) (10)
Class R4 (52) (42)
Class R5 (31) (17)
- ---------------------------------------------------------------------------------------------
Total distributions (399,239) (249,206)
- ---------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares 422,161 2,450,687
Class B shares 2,214 205,267
Class C shares 34,489 56,304
Class I shares 22,147,944 35,465,513
Class R3 shares 674 724
Reinvestment of distributions at net asset value
Class A shares 26,528 11,018
Class C shares 47 --
Class I shares 324,780 220,690
Class R3 shares 7
Conversions from Class B to Class A
Class A shares 28,004 79,994
Class B shares (28,004) (79,994)
Payments for redemptions
Class A shares (9,055,896) (1,511,682)
Class B shares (135,187) (115,767)
Class C shares (4,551) (18,418)
Class I shares (23,989,375) (15,688,017)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (10,226,165) 21,076,319
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (1,944,112) 17,437,599
Net assets at beginning of year 53,389,571 35,951,972
- ---------------------------------------------------------------------------------------------
Net assets at end of year $ 51,445,459 $ 53,389,571
- ---------------------------------------------------------------------------------------------
Undistributed net investment income $ 461,738 $ 365,594
- ---------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 37
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The following tables are intended to help you understand the Fund's financial
performance. Certain information reflects financial results for a single share
of a class held for the periods shown. For periods ended 2007 and after, per
share net investment income (loss) amounts are calculated based on average
shares outstanding during the period. Total returns assume reinvestment of all
dividends and distributions. Total returns do not reflect payment of sales
charges, if any, and are not annualized for periods of less than one year.
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS A --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.71 $8.76 $10.00 $9.77 $10.22
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .04 .04 .14 .02
Net gains (losses) (both realized and
unrealized) 1.19 (2.07) (1.01) .29 (.47)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.23 (2.03) (.97) .43 (.45)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.02) (.05) (.01) --
Distributions from realized gains -- -- (.22) (.19) --
- -----------------------------------------------------------------------------------------------------------
Total distributions (.05) (.02) (.27) (.20) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.89 $6.71 $8.76 $10.00 $9.77
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 18.33% (23.18%) (9.67%) 4.29% (4.40%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.39% 1.60% 1.54% 1.73% 3.27%(c)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 1.29% 1.42% 1.24% 1.35% 1.40%(c)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .60% .61% .44% 1.30% .55%(c)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $11 $13 $14 $11
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 98% 87% 127% 40%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
38 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS B --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.60 $8.65 $9.90 $9.73 $10.22
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01) (.01) (.02) .05 --
Net gains (losses) (both realized and
unrealized) 1.16 (2.04) (1.01) .31 (.49)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.15 (2.05) (1.03) .36 (.49)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Distributions from realized gains -- -- (.22) (.19) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.75 $6.60 $8.65 $9.90 $9.73
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 17.42% (23.70%) (10.47%) 3.51% (4.79%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 2.20% 2.37% 2.29% 2.38% 4.05%(c)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 2.09% 2.18% 2.00% 2.11% 2.18%(c)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.18%) (.14%) (.27%) .49% (.17%)(c)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $1 $--
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 98% 87% 127% 40%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 39
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS C --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.60 $8.65 $9.90 $9.73 $10.22
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01) (.01) (.03) .05 --
Net gains (losses) (both realized and
unrealized) 1.16 (2.04) (1.00) .31 (.49)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.15 (2.05) (1.03) .36 (.49)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.00)(e) -- (.00)(e) -- --
Distributions from realized gains -- -- (.22) (.19) --
- -----------------------------------------------------------------------------------------------------------
Total distributions (.00)(e) -- (.22) (.19) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.75 $6.60 $8.65 $9.90 $9.73
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 17.49% (23.70%) (10.43%) 3.51% (4.79%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 2.23% 2.36% 2.29% 2.47% 4.05%(c)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 2.10% 2.17% 2.00% 2.11% 2.18%(c)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) (.16%) (.13%) (.29%) .43% (.22%)(c)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 98% 87% 127% 40%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
40 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS I --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.73 $8.78 $10.03 $9.78 $10.22
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07 .06 .07 .15 .03
Net gains (losses) (both realized and
unrealized) 1.19 (2.07) (1.02) .32 (.47)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.26 (2.01) (.95) .47 (.44)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.04) (.08) (.03) --
Distributions from realized gains -- -- (.22) (.19) --
- -----------------------------------------------------------------------------------------------------------
Total distributions (.07) (.04) (.30) (.22) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.92 $6.73 $8.78 $10.03 $9.78
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 18.78% (22.83%) (9.46%) 4.69% (4.31%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.05% 1.22% 1.22% 1.19% 3.00%(c)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) .93% 1.04% .92% 1.05% 1.13%(c)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .99% .98% .79% 1.43% .91%(c)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $48 $42 $23 $25 $3
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 98% 87% 127% 40%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 41
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS R2 --------------------------------------------
PER SHARE DATA 2010 2009 2008 2007(f)
Net asset value, beginning of period $6.71 $8.75 $9.97 $10.99
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 .02 .02 .06
Net gains (losses) (both realized and
unrealized) 1.17 (2.06) (1.00) (.86)
- -----------------------------------------------------------------------------------------------
Total from investment operations 1.19 (2.04) (.98) (.80)
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.00)(e) (.02) (.03)
Distributions from realized gains -- -- (.22) (.19)
- -----------------------------------------------------------------------------------------------
Total distributions (.02) (.00)(e) (.24) (.22)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $7.88 $6.71 $8.75 $9.97
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 17.78% (23.28%) (9.82%) (7.40%)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.80% 2.04% 2.03% 1.85%(c)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 1.71% 1.71% 1.46% 1.80%(c)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) .22% .31% .23% .77%(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 98% 87% 127%
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
42 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS R3 --------------------------------------------
PER SHARE DATA 2010 2009 2008 2007(f)
Net asset value, beginning of period $6.71 $8.76 $9.99 $10.99
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03 .04 .04 .07
Net gains (losses) (both realized and
unrealized) 1.19 (2.07) (1.00) (.85)
- -----------------------------------------------------------------------------------------------
Total from investment operations 1.22 (2.03) (.96) (.78)
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.02) (.05) (.03)
Distributions from realized gains -- -- (.22) (.19)
- -----------------------------------------------------------------------------------------------
Total distributions (.04) (.02) (.27) (.22)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $7.89 $6.71 $8.76 $9.99
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 18.22% (23.11%) (9.65%) (7.21%)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.62% 1.80% 1.79% 1.58%(c)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 1.48% 1.46% 1.21% 1.55%(c)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) .45% .58% .48% 1.02%(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 98% 87% 127%
- -----------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 43
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS R4 --------------------------------------------------------
PER SHARE DATA 2010 2009 2008 2007 2006(a)
Net asset value, beginning of period $6.72 $8.78 $10.00 $9.77 $10.22
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05 .05 .07 .17 .02
Net gains (losses) (both realized and
unrealized) 1.18 (2.07) (1.00) .28 (.47)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 1.23 (2.02) (.93) .45 (.45)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.04) (.07) (.03) --
Distributions from realized gains -- -- (.22) (.19) --
- -----------------------------------------------------------------------------------------------------------
Total distributions (.05) (.04) (.29) (.22) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $7.90 $6.72 $8.78 $10.00 $9.77
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN 18.38% (22.92%) (9.27%) 4.42% (4.40%)
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.35% 1.56% 1.52% 1.83% 3.12%(c)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) 1.23% 1.22% .97% 1.26% 1.25%(c)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .69% .80% .73% 1.60% .69%(c)
- -----------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 98% 87% 127% 40%
- -----------------------------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Highlights.
- --------------------------------------------------------------------------------
44 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
YEAR ENDED JULY 31,
CLASS R5 --------------------------------------------
PER SHARE DATA 2010 2009 2008 2007(f)
Net asset value, beginning of period $6.72 $8.77 $10.02 $10.99
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07 .06 .07 .11
Net gains (losses) (both realized and
unrealized) 1.19 (2.07) (1.02) (.86)
- -----------------------------------------------------------------------------------------------
Total from investment operations 1.26 (2.01) (.95) (.75)
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.04) (.08) (.03)
Distributions from realized gains -- -- (.22) (.19)
- -----------------------------------------------------------------------------------------------
Total distributions (.07) (.04) (.30) (.22)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $7.91 $6.72 $8.77 $10.02
- -----------------------------------------------------------------------------------------------
TOTAL RETURN 18.79% (22.90%) (9.50%) (6.93%)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(b)
Gross expenses prior to expense
waiver/reimbursement 1.07% 1.27% 1.28% 1.09%(c)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d) .96% 1.10% .97% 1.05%(c)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) .96% .92% .72% 1.53%(c)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 114% 98% 87% 127%
- -----------------------------------------------------------------------------------------------
</Table>
NOTES TO FINANCIAL HIGHLIGHTS
(a) For the period from Feb. 16, 2006 (when shares became publicly available) to
July 31, 2006.
(b) Expense ratios include the impact of a performance incentive adjustment, if
any. 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.
(c) Annualized.
(d) The Investment Manager and its affiliates agreed to waive/reimburse certain
fees and expenses (excluding fees and expenses of acquired funds), before
giving effect to any performance incentive adjustment.
(e) Rounds to less than $0.01 per share.
(f) For the period from Dec. 11, 2006 (when shares became publicly available) to
July 31, 2007.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
RiverSource Disciplined Small Cap Value Fund (the Fund) is a series of
RiverSource Dimensions Series, Inc. (the Corporation) and is registered under
the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified,
open-end management investment company. The Corporation has 10 billion
authorized shares of capital stock that can be allocated among the separate
series as designated by the Corporation's Board of Directors (the Board). The
Fund invests primarily in small capitalization equity securities of companies
with market capitalizations that fall within the range of companies that
comprise the Russell 2000 Value Index at the time of investment.
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. Effective September 7, 2010, the Fund no longer
accepts investments from new or existing investors in the Fund's Class B
shares, except that (i) dividend and/or capital gain distributions may
continue to be reinvested in Class B shares of the Fund and (ii) shareholders
invested in Class B shares of the Fund may exchange those shares for Class B
shares of other Columbia, Columbia Acorn, RiverSource, Seligman and
Threadneedle funds offering such shares.
- - 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.
Effective July 23, 2010, the Fund no longer offers Class R4 and Class R5
shares. Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares.
At July 31, 2010, Columbia Management Investment Advisers, LLC (formerly known
as RiverSource Investments, LLC) (the Investment Manager) and affiliated funds-
of-funds owned 100% of Class I shares, and the Investment Manager owned 100% of
Class R2, Class R4 and Class R5 shares. At July 31,
- --------------------------------------------------------------------------------
46 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
2010, the Investment Manager and affiliated funds-of-funds owned approximately
93% 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.
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 from the
primary exchange. 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
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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. The fair value of a security is likely
to be different from the quoted or published price, if available.
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 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.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. Generally, securities received as
collateral subject to repurchase agreements are deposited with the Fund's
custodian and, pursuant to the terms of the repurchase agreement, must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. The market value of securities held as collateral
for repurchase agreements is monitored on a daily basis to ensure the existence
of the proper level of collateral.
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
- --------------------------------------------------------------------------------
48 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 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
normally 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. Investments in
derivative instruments may expose the Fund to certain additional risks,
including those detailed below.
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
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 49
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
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, 2010
<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
- -------------------------------------------------------------------------------------------
Net
assets -- unrealiz-
ed appreciation on
Equity contracts investments $28,462* N/A 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.
- --------------------------------------------------------------------------------
50 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR
ENDED JULY 31, 2010
<Table>
<Caption>
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN
INCOME
- -----------------------------------------------------------------
RISK EXPOSURE CATEGORY FUTURES
- -----------------------------------------------------------------
Equity contracts $377,599
- -----------------------------------------------------------------
</Table>
<Table>
<Caption>
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES
RECOGNIZED IN INCOME
- -----------------------------------------------------------------
RISK EXPOSURE CATEGORY FUTURES
- -----------------------------------------------------------------
Equity contracts $24,545
- -----------------------------------------------------------------
</Table>
VOLUME OF DERIVATIVE ACTIVITY
FUTURES
The gross notional amount of long contracts outstanding was approximately
$500,000 at July 31, 2010. The monthly average gross notional amount for these
contracts was $1.3 million for the year ended July 31, 2010. The fair value of
such contracts at July 31, 2010 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 0.85% to 0.725% 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 Small-Cap Value 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
$56,412 for the year ended July 31, 2010. The management fee for the year ended
July 31, 2010 was 0.74% 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 0.08% to 0.05% as the
Fund's net assets increase. The fee for the year ended July 31, 2010 was 0.08%
of the Fund's average daily net assets.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 51
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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,
2010, other expenses paid to this company were $144.
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 certain other funds managed by the
Investment Manager. 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, Columbia Management Investment Services Corp.
(formerly known as RiverSource Service Corporation) (the Transfer Agent)
maintains Fund shareholder accounts and records and provides Fund shareholder
services. The Fund paid 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 charged 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 paid 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 charged 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. The Transfer Agent also
received reimbursement for certain out-of-pocket expenses. 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
paid 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 Columbia Management Investment Distributors, Inc.
(formerly known as RiverSource Fund Distributors, Inc.) (the Distributor) for
distribution and shareholder services. Under a Plan and Agreement of
- --------------------------------------------------------------------------------
52 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
Distribution pursuant to Rule 12b-1, the Fund paid 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 $17,000 and $2,000 for Class
B and Class C shares, respectively. These amounts are based on the most recent
information available as of April 30, 2010, 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 $5,474 for Class A and $33 for Class B for the
year ended July 31, 2010.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2010, 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.............................................. 1.29%
Class B.............................................. 2.09
Class C.............................................. 2.10
Class I.............................................. 0.93
Class R2............................................. 1.71
Class R3............................................. 1.48
Class R4............................................. 1.23
Class R5............................................. 0.96
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class R3.............................................. $1
</Table>
The management fees waived/reimbursed at the Fund level were $58,289.
Under an agreement which is effective until Sept. 30, 2010, the Investment
Manager and its affiliates have contractually agreed to waive certain fees and
reimburse certain expenses such that net expenses (excluding fees and expenses
of acquired funds*), before giving effect to any performance incentive
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 53
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
adjustment, will not exceed the following percentage of the class' average daily
net assets:
<Table>
Class A.............................................. 1.49%
Class B.............................................. 2.26
Class C.............................................. 2.25
Class I.............................................. 1.04
Class R2............................................. 1.84
Class R3............................................. 1.59
Class R4............................................. 1.34
Class R5............................................. 1.09
</Table>
Effective Oct. 1, 2010, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until Sept. 30, 2011,
unless sooner terminated at the sole 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.............................................. 1.43%
Class B.............................................. 2.18
Class C.............................................. 2.18
Class I.............................................. 1.01
Class R2............................................. 1.68
Class R3............................................. 1.56
</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.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $55,750,456 and $66,132,085, respectively, for the year
ended July 31, 2010. Realized gains and losses are determined on an identified
cost basis.
- --------------------------------------------------------------------------------
54 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated were as
follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2010 2009
- ------------------------------------------------------------------
CLASS A
Sold 55,100 390,536
Converted from Class B* 3,549 11,922
Reinvested distributions 3,537 1,852
Redeemed (1,223,853) (252,101)
- ------------------------------------------------------------------
Net increase (decrease) (1,161,667) 152,209
- ------------------------------------------------------------------
CLASS B
Sold 298 30,986
Converted to Class A* (3,613) (12,120)
Redeemed (17,917) (19,523)
- ------------------------------------------------------------------
Net increase (decrease) (21,232) (657)
- ------------------------------------------------------------------
CLASS C
Sold 4,466 7,429
Reinvested distributions 6 --
Redeemed (632) (2,110)
- ------------------------------------------------------------------
Net increase (decrease) 3,840 5,319
- ------------------------------------------------------------------
CLASS I
Sold 2,898,254 6,190,809
Reinvested distributions 43,304 37,091
Redeemed (3,203,531) (2,542,749)
- ------------------------------------------------------------------
Net increase (decrease) (261,973) 3,685,151
- ------------------------------------------------------------------
CLASS R3
Sold 89 127
Reinvested distributions 1 --
- ------------------------------------------------------------------
Net increase (decrease) 90 127
- ------------------------------------------------------------------
</Table>
* Automatic conversion of Class B shares to Class A shares based on the
original purchase date.
7. LENDING OF PORTFOLIO SECURITIES
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
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 55
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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 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, 2010,
securities valued at $12,373,802 were on loan, secured by cash collateral of
$12,755,244 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. Net income of
$71,788 earned from securities lending for the year ended July 31, 2010 is
included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund
(formerly known as RiverSource Short-Term Cash Fund), a money market fund
established for the exclusive use of certain funds managed by the Investment
Manager and other institutional clients of the Investment Manager. The cost of
the Fund's purchases and proceeds from sales of shares of Columbia Short-Term
Cash Fund aggregated $35,608,211 and $34,600,580, respectively, for the year
ended July 31, 2010. The income distributions received with respect to the
Fund's investment in Columbia Short-Term Cash Fund can be found in the Statement
of Operations and the Fund's invested balance in Columbia Short-Term Cash Fund
at July 31, 2010, 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
- --------------------------------------------------------------------------------
56 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
other temporary or emergency purposes. The credit facility became effective on
Oct. 15, 2009, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other funds managed
by the Investment Manager, severally and not jointly, permits collective
borrowings up to $300 million. The borrowers shall have the right, upon written
notice to the Administrative Agent to request an increase of up to $200 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 $500 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 sum of the federal funds rate plus (i)
1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the
amount of such excess. 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
0.10% per annum, in addition to an upfront fee equal to its pro rata share of
0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit
facility agreement, which was a collective agreement between the Fund and
certain other funds managed by the Investment Manager, severally and not
jointly, permitted collective borrowings up to $475 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.75%. 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, 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,
2010.
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,
passive foreign investment company (PFIC) holdings, re-characterization of real
estate investment trust (REIT) distributions 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 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 $27,764
and accumulated net realized loss has been increased by $27,764.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 57
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
The tax character of distributions paid for the years indicated was as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2010 2009
- ----------------------------------------------------------------
Ordinary income............................. $399,239 $249,206
Long-term capital gain...................... -- --
</Table>
At July 31, 2010 the components of distributable earnings on a tax basis were as
follows:
<Table>
Undistributed ordinary income.................... $ 478,802
Undistributed accumulated long-term gain......... $ --
Accumulated realized loss........................ $(6,228,634)
Unrealized appreciation (depreciation)........... $ 3,036,416
</Table>
For federal income tax purposes, the Fund had a capital loss carry-over of
$6,228,634 at July 31, 2010, that if not offset by capital gains will expire in
2017.
For the year ended July 31, 2010, $559,116 of capital loss carry-over was
utilized and/or expired unused. 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 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.
The Board of Directors of the Fund has approved in principle the proposed merger
of the Fund into Columbia Small Cap Value Fund I. It is currently anticipated
that a Special Meeting of Shareholders will be held during the first half of
2011 to vote on the proposal.
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 legacy
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
- --------------------------------------------------------------------------------
58 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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, (the
Supreme Court), asking the Supreme Court to stay the District Court proceedings
while the 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. On March 30, 2010, the Supreme Court issued its ruling in Jones v.
Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth
Circuit's decision in the Gallus case and remanded the case to the Eighth
Circuit for further consideration in light of the Supreme Court's decision in
Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the
Gallus case to the District Court for further consideration in light of the
Supreme Court's decision in Jones v. Harris Associates.
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 funds' Boards of Directors/Trustees.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 59
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
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.
- --------------------------------------------------------------------------------
60 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Disciplined Small Cap Value Fund
(the Fund) (one of the portfolios constituting the RiverSource Dimensions
Series, Inc.), as of July 31, 2010, 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
four 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 period ended
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, 2010, 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 SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 61
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 Small Cap Value Fund of the RiverSource
Dimensions Series, Inc. at July 31, 2010, 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 four years in
the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 20, 2010
- --------------------------------------------------------------------------------
62 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 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, 2010
<Table>
<Caption>
INCOME DISTRIBUTIONS -- the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 100.00%
Dividends Received Deduction for corporations................ 100.00%
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 DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 63
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.
Each Board member oversees 150 Columbia, RiverSource, Seligman and Threadneedle
funds. Under current Board policy, members generally serve until the next
regular shareholders' meeting, until he or she reaches the mandatory retirement
age established by the Board, or the fifteenth anniversary of the first Board
meeting they attended as members of the Board.
INDEPENDENT BOARD MEMBERS*
<Table>
<Caption>
OTHER PRESENT OR
NAME, POSITION HELD PAST DIRECTORSHIPS
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS)
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 1/11/06 Attorney
Minneapolis, MN 55402
Age 56
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource and Threadneedle Funds, 1999-2006; None
901 S. Marquette Ave. 1/5/99 former Governor of Minnesota
Minneapolis, MN 55402
Age 76
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 7/11/07 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 3/1/85
Minneapolis, MN 55402
Age 75
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 11/1/05 Insurance; Hapoalim
Minneapolis, MN 55402 Securities USA, Inc.
Age 74
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures
Minneapolis, MN 55402 Board member irrigation systems)
Age 71 since 1/1/02
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
64 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
OTHER PRESENT OR
NAME, POSITION HELD PAST DIRECTORSHIPS
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS)
- ------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member Retired President and Chief Executive Officer and None
901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 67
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 11/1/04 real estate and asset management company)
Minneapolis, MN 55402
Age 58
- ------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 69 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. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals,
Minneapolis, MN 55402 Biopharmaceuticals Inc.
Age 66 (biotechnology);
Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Mr. Laikind may be deemed, as a technical matter, an interested person of
RiverSource International Managers Series, Inc. and RiverSource Variable
Series Trust because he serves as an independent director of a broker-dealer
that has executed transactions for subadvisers to certain of the funds.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 65
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
<Table>
<Caption>
OTHER PRESENT OR
NAME, POSITION HELD PAST DIRECTORSHIPS
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS)
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member Chairman of the Board, Columbia Management Investment None
53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC)
Financial Center Vice President since since May 2010 (previously President, Chairman of the
Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010);
Age 50 Senior Vice President, Atlantic Funds, Columbia Funds
and Nations Funds since May 2010; Chief Executive
Officer, U.S. Asset Management &
President -- Annuities, Ameriprise Financial, Inc.
since May 2010 (previously President -- U.S. Asset
Management and Chief Investment Officer, 2005-April
2010 and Senior Vice President -- Chief Investment
Officer, 2001-2005); Director, President and Chief
Executive Officer, Ameriprise Certificate Company since
2006; Director, Columbia Management Investment
Distributors, Inc. (formerly RiverSource Fund
Distributors, Inc.) since May 2010 (previously Chairman
of the Board and Chief Executive Officer, 2008-April
2010); Chairman of the Board and Chief Executive
Officer, RiverSource Distributors, Inc. since 2006
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person (as defined under the 1940 Act) by reason of being an
officer, director, security holder and/or employee of the investment manager
or Ameriprise Financial.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling 800.345.6611; contacting your
financial intermediary; or visiting columbiamanagement.com.
- --------------------------------------------------------------------------------
66 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 FUNDS AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual
One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers,
Boston, MA 02111 LLC since May 2010; President, Columbia Funds since
Age 46 2009 (previously Senior Vice President and Chief
Financial Officer, June 2008 -- January 2009);
President, Atlantic Funds and Nations Funds since 2009;
Managing Director of Columbia Management Advisors, LLC,
December 2004 -- April 2010; Treasurer, Columbia Funds,
October 2003 -- May 2008; Treasurer, the Liberty Funds,
Stein Roe Funds and Liberty All-Star Funds, December
2000 -- December 2006; Senior Vice
President -- Columbia Management Advisors, LLC, April
2003 -- December 2004; President, Columbia Funds,
Liberty Funds and Stein Roe Funds, February
2004 -- October 2004
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer,
5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly
Center Minneapolis, MN RiverSource Investments, LLC) since May 2010
55474 (previously Chief Administrative Officer, 2009 -- April
Age 45 2010 and Vice President -- Asset Management and Trust
Company Services, 2006-2009 and Vice
President -- Operations and Compliance, 2004-2006);
Senior Vice President, Atlantic Funds, Columbia Funds
and Nations Funds since May 2010; Director of Product
Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment
105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund
Financial Center Distributors, Inc.) and of Seligman Data Corp. since
Minneapolis, MN 55474 2008; Vice President -- Investment Accounting,
Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial
Officer, RiverSource Distributors, Inc. since 2006
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 67
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia
5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly
Center Secretary since RiverSource Investments, LLC) since June 2005; Vice
Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management,
Age 51 Ameriprise Financial, Inc. since May 2010 (previously
Vice President and Chief Counsel -- Asset Management,
2005-April 2010 and Vice President -- Asset Management
Compliance, 2004-2005); Senior Vice President,
Secretary and Chief Legal Officer, Atlantic Funds,
Columbia Funds and Nations Funds since May 2010; Vice
President, Chief Counsel and Assistant Secretary,
Columbia Management Investment Distributors, Inc.
(formerly RiverSource Fund Distributors, Inc.) since
2008; Vice President, General Counsel and Secretary,
Ameriprise Certificate Company since 2005; Chief
Counsel, RiverSource Distributors, Inc. since 2006;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michael A. Jones Vice President since Director and President, Columbia Management Investment
100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director,
Boston, MA 02110 Columbia Management Investment Distributors, Inc. since
Age 51 May 2010; Senior Vice President, Atlantic Funds,
Columbia Funds and Nations Funds since May 2010;
Manager, Chairman, Chief Executive Officer and
President, Columbia Management Advisors, LLC,
2007 -- April 2010; Chief Executive Officer, President
and Director, Columbia Management Distributors, Inc.,
2006 -- April 2010; former Co-President and Senior
Managing Director, Robeco Investment Management
- --------------------------------------------------------------------------------------------------------
Colin Moore Vice President since Chief Investment Officer, Columbia Management
One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice
Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations
Age 52 Funds since May 2010; Manager, Managing Director and
Chief Investment Officer, Columbia Management Advisors,
LLC, 2007- April 2010; Head of Equities, Columbia
Management Advisors, LLC, 2002-Sept. 2007
- --------------------------------------------------------------------------------------------------------
Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia
One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010;
Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007;
Age 46 Senior Vice President and Chief Compliance Officer,
Atlantic Funds and Nations Funds since 2007; Director
(Columbia Management Group, LLC and Investment Product
Group Compliance), Bank of America, June 2005 -- April
2010; Director of Corporate Compliance and Conflicts
Officer, MFS Investment Management (investment
management), August 2004 -- May 2005
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
68 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and
Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management
Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource
Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money
since 2008 Laundering Officer, Ameriprise Financial, Inc. since
2005; Compliance Director, Ameriprise Financial, Inc.,
2004-2008
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 69
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
Columbia Management Investment Advisers, LLC ("Columbia Management" or the
"investment manager"), formerly known as RiverSource Investments, LLC, 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"), Columbia Management provides investment advice
and other services to the Fund and all funds branded Columbia, RiverSource,
Seligman and Threadneedle.
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. Columbia Management prepared detailed reports for the Board
and its Contracts Committee in March and April 2010, including reports based on
data provided by independent organizations and a comprehensive response to each
item of information requested by independent legal counsel to the Independent
Directors ("Independent Legal Counsel") in a letter to the investment manager,
to assist the Board in making this determination. All of the materials presented
in March and April 2010 were first supplied in draft form to designated
representatives of the Independent Directors, i.e., Independent Legal Counsel,
the Chair of the Board and the Chair of the Contracts Committee (including
materials relating to the Fund's proposed revised expense cap), and the final
materials were revised to reflect comments provided by these Board
representatives. In addition, throughout the year, the Board (or its committees)
reviews information prepared by Columbia Management addressing the services
Columbia Management provides and Fund performance. The Board accords particular
weight to the work, deliberations and conclusions of the Contracts Committee,
the Investment Review Committee and the Compliance Committee in determining
whether to continue the IMS Agreement. At the April 6-8, 2010 in-person Board
meeting, Independent Legal Counsel reviewed with the Independent Directors,
including in an executive session without management, 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 Columbia Management: The
Board analyzed various reports and presentations it had received detailing the
services performed by Columbia Management, as well as its expertise, resources
and capabilities. The Board specifically considered many developments during the
past year concerning the services provided by Columbia Management, including, in
particular, the continued investment in, and resources dedicated to, the Fund's
operations, most notably, management's announcement of the massive
- --------------------------------------------------------------------------------
70 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
investment made in the acquisition of the long-term asset management business of
Columbia Management Group, LLC (the "Columbia Transaction") and the completed
integration of J. & W. Seligman & Co. Incorporated, acquisitions which should
continue to enhance investment capabilities and provide access to a greater
depth of experienced portfolio managers in key categories. The Board noted, in
particular, that upon the close of the Columbia Transaction, the investment
manager will have grown to 10 investment offices (compared to 6 in 2009). In
addition, the Board reviewed information concerning the investment manager's new
Chief Investment Officer upon the close of the Columbia Transaction, including
the application of his particular investment philosophy, which is intended to
enhance the risk and portfolio management oversight of the entire fund family.
Moreover, in connection with the Board's evaluation of the overall package of
services provided by Columbia Management, the Board considered the quality of
the administrative and transfer agency services provided by Columbia
Management's affiliates to the Fund. The Board also reviewed the financial
condition of Columbia Management and its affiliates, and each entity's ability
to carry out its responsibilities under the IMS Agreement. Further, the Board
considered Columbia Management's ability to retain key personnel in certain
targeted areas 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 Columbia Management). The Board
concluded that the services being performed under the IMS Agreement were of a
reasonably high quality.
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 Columbia Management 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 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. The Board observed that the
Fund's investment performance reflected the interrelationship of market
conditions with the particular investment strategies employed by the portfolio
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 71
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
management team. Further, the Board noted measures taken to address the Fund's
performance, including the anticipated change in portfolio managers for the
Fund. In this regard, the Board reviewed a detailed report illustrating the
performance and track record of the new portfolio managers expected to assume
responsibilities for the Fund upon the close of the Columbia Transaction.
Comparative Fees, Costs of Services Provided and the Profits Realized By
Columbia Management 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 Columbia Management's
profitability. They also reviewed information in the report showing the fees
charged by Columbia Management 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 legacy RiverSource Funds' family, while assuring that the overall
fees for each fund (with few defined exceptions) 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), 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 revised 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. Based on its review, the
Board concluded that the Fund's management fee was fair and reasonable in light
of the extent and quality of services that the Fund receives.
The Board also considered various preliminary integration plans in connection
with the Columbia Transaction which, if implemented, would impact the fee
structures of various legacy RiverSource Funds. The Board was satisfied with the
principles underlying these plans, which, at their preliminary stage, are
designed to achieve a rational, consistent pricing model across the combined
fund families, as well as preserve the "pricing philosophy" of the legacy
RiverSource Funds.
The Board also considered the expected profitability of Columbia Management and
its affiliates in connection with Columbia Management providing investment
- --------------------------------------------------------------------------------
72 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT
- --------------------------------------------------------------------------------
management services to the Fund. In this regard, the Board referred to a
detailed profitability report, discussing the profitability to Columbia
Management and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. In
this regard, the Board observed slightly reduced profitability in 2009 vs. 2008.
The Board also considered the services acquired by the investment manager
through the use of commission dollars paid by the legacy RiverSource 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 Columbia Management 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, 2010, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement for an additional annual period.
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 800.345.6611; contacting your financial intermediary; visiting
columbiamanagement.com; 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 columbiamanagement.com; or searching the website of
the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 ANNUAL REPORT 73
RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND
P.O. Box 8081
Boston, MA 02266-8081
COLUMBIAMANAGEMENT.COM
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. The Fund is distributed by Columbia
Management Investment Distributors, Inc., member FINRA, and
managed by Columbia Management Investment Advisers, LLC
(C)2010 Columbia Management Investment Advisers, LLC. All
(COLUMBIA MANAGEMENT LOGO) rights reserved. S-6397 G (9/10)
</Table>
Item 2. Code of Ethics.
(a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial officer.
(b) During the period covered by this report, there were not any amendments
to a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were no waivers,
including any implicit waivers, from a provision of the code of ethics
described in 2(a) above that relates to one or more of the items set forth
in paragraph (b) of this item's instructions.
Item 3. Audit Committee Financial Expert.
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
(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 Dimensions Series, Inc. were as follows:
2010 - $40,254 2009 - $40,142
(b) Audit-Related Fees. The fees for the year ended July 31, to Ernst & Young
LLP for additional audit-related services rendered related to the
semiannual financial statement review and the 2010 transfer agent 17Ad-13
review for RiverSource Dimensions Series, Inc. were as follows:
2010 - $865 2009 - $750
(c) Tax Fees. The fees for the year ended July 31, to Ernst & Young LLP for tax
compliance related services rendered for RiverSource Dimensions Series,
Inc. were as follows:
2010 - $6,392 2009 - $6,360
(d) All Other Fees. The fees for the year ended July 31, to Ernst & Young LLP
for additional professional services rendered for RiverSource Dimensions
Series, Inc. were as follows:
2010 - $0 2009 - $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
2010 and 2009 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:
2010 - $2,118,218 2009 - $829,596
(h) 100% of the services performed in item (g) above during 2010 and 2009 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. Investments.
(a) The registrant's "Schedule 1 - Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this
Form N-CSR.
(b) Not applicable.
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. Purchases 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.
There were no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer, based on their evaluation of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing of this report,
have concluded that such controls and procedures are adequately designed to
ensure that information required to be disclosed by the registrant in Form
N-CSR is accumulated and communicated to the registrant's management,
including principal executive officer and principal financial officer, or
persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
(b) There was no change in the registrant's internal controls over
financial reporting that occurred during the registrant's second fiscal
quarter of the period covered by this 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 required to be disclosed under Item 2 of Form N-CSR,
is attached as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as
Exhibit99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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 Dimensions Series, Inc.
By /s/ J. Kevin Connaughton
----------------------------------
J. Kevin Connaughton
President and Principal Executive
Officer
Date October 7, 2010
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/ J. Kevin Connaughton
----------------------------------
J. Kevin Connaughton
President and Principal Executive
Officer
Date October 7, 2010
By /s/ Jeffrey P. Fox
----------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial
Officer
Date October 7, 2010