UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-2111
RIVERSOURCE LARGE CAP SERIES, INC.
(Exact name of registrant as specified in charter)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
(Address of principal executive offices) (Zip code)
Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474
(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 671-1947
Date of fiscal year end: 7/31
Date of reporting period: 7/31
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
DISCIPLINED EQUITY FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2008
(Prospectus also enclosed)
RIVERSOURCE DISCIPLINED EQUITY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 6
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Financial Statements............... 23
Notes to Financial Statements...... 29
Report of Independent Registered
Public Accounting Firm........... 51
Federal Income Tax Information..... 53
Board Members and Officers......... 54
Approval of Investment Management
Services Agreement............... 58
Proxy Voting....................... 60
</Table>
(DALBAR LOGO)
The RiverSource mutual fund shareholder reports have
been awarded the Communications Seal from Dalbar Inc.,
an independent financial services research firm. The
Seal recognizes communications demonstrating a level
of excellence in the industry.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Disciplined Equity Fund (the Fund) Class A shares declined 13.40%
(excluding sales charge) for the 12 months ended July 31, 2008.
> The Fund underperformed the unmanaged Standard & Poor's 500 (S&P 500 Index)
Index which fell 11.09% for the annual period.
> The Fund also underperformed the Lipper Large-Cap Core Funds Index,
representing the Fund's peer group, which declined 10.11% for the same period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
1 year 3 years 5 years inception(a)
- -----------------------------------------------------------------------
RiverSource Disciplined Equity
Fund Class A (excluding
sales charge) -13.40% +2.17% +6.73% +8.09%
- -----------------------------------------------------------------------
S&P 500 Index (unmanaged) -11.09% +2.85% +7.03% +8.35%
- -----------------------------------------------------------------------
Lipper Large-Cap Core Funds
Index -10.11% +3.12% +6.31% +7.48%
- -----------------------------------------------------------------------
</Table>
(a) Fund data is from April 24, 2003. S&P 500 Index and Lipper peer group data
is from May 1, 2003.
(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 institution or
visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
LOGO
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Total Net Expenses(a)
- ----------------------------------------
Class A 0.96% 0.96%
- ----------------------------------------
Class B 1.72% 1.72%
- ----------------------------------------
Class C 1.72% 1.72%
- ----------------------------------------
Class I 0.61% 0.61%
- ----------------------------------------
Class R2 1.41% 1.41%
- ----------------------------------------
Class R3 1.15% 1.15%
- ----------------------------------------
Class R4 0.91% 0.84%
- ----------------------------------------
Class R5 0.66% 0.66%
- ----------------------------------------
Class W 1.06% 1.06%
- ----------------------------------------
</Table>
(a) The Investment Manager and its affiliates have contractually agreed to waive
certain fees and to absorb certain expenses until July 31, 2009, unless
sooner terminated at the discretion of the Fund's Board. Any amounts waived
will not be reimbursed by the Fund. Under this agreement, net fund expenses
(excluding fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment (that decreased the management fee by 0.04%
for the year ended July 31, 2008), will not exceed 1.05% for Class A, 1.81%
for Class B, 1.81% for Class C, 0.72% for Class I, 1.52% for Class R2, 1.27%
for Class R3, 0.88% for Class R4, 0.77% for Class R5 and 1.17% for Class W.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 4/24/03) -13.40% +2.17% +6.73% +8.09%
- -----------------------------------------------------------------------
Class B (inception 4/24/03) -14.07% +1.43% +5.89% +7.25%
- -----------------------------------------------------------------------
Class C (inception 4/24/03) -14.11% +1.42% +5.90% +7.25%
- -----------------------------------------------------------------------
Class I (inception 7/15/04) -12.98% +2.60% N/A +5.67%
- -----------------------------------------------------------------------
Class R2 (inception 12/11/06) -13.51% N/A N/A -6.65%
- -----------------------------------------------------------------------
Class R3 (inception 12/11/06) -13.26% N/A N/A -6.40%
- -----------------------------------------------------------------------
Class R4 (inception 4/24/03) -13.26% +2.37% +6.89% +8.28%
- -----------------------------------------------------------------------
Class R5 (inception 12/11/06) -13.09% N/A N/A -6.13%
- -----------------------------------------------------------------------
Class W (inception 12/1/06) -13.52% N/A N/A -5.63%
- -----------------------------------------------------------------------
With sales charge
Class A (inception 4/24/03) -18.38% +0.17% +5.48% +6.87%
- -----------------------------------------------------------------------
Class B (inception 4/24/03) -18.14% +0.28% +5.57% +7.11%
- -----------------------------------------------------------------------
Class C (inception 4/24/03) -14.93% +1.42% +5.90% +7.25%
- -----------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
4 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JUNE 30, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 4/24/03) -15.36% +4.05% +6.98% +8.55%
- -----------------------------------------------------------------------
Class B (inception 4/24/03) -16.04% +3.21% +6.14% +7.69%
- -----------------------------------------------------------------------
Class C (inception 4/24/03) -16.08% +3.21% +6.15% +7.70%
- -----------------------------------------------------------------------
Class I (inception 7/15/04) -15.08% +4.37% N/A +6.15%
- -----------------------------------------------------------------------
Class R2 (inception 12/11/06) -15.33% N/A N/A -5.98%
- -----------------------------------------------------------------------
Class R3 (inception 12/11/06) -15.22% N/A N/A -5.82%
- -----------------------------------------------------------------------
Class R4 (inception 4/24/03) -15.21% +4.20% +7.17% +8.74%
- -----------------------------------------------------------------------
Class R5 (inception 12/11/06) -15.05% N/A N/A -5.53%
- -----------------------------------------------------------------------
Class W (inception 12/1/06) -15.47% N/A N/A -5.01%
- -----------------------------------------------------------------------
With sales charge
Class A (inception 4/24/03) -20.25% +2.04% +5.73% +7.30%
- -----------------------------------------------------------------------
Class B (inception 4/24/03) -20.01% +2.04% +5.83% +7.55%
- -----------------------------------------------------------------------
Class C (inception 4/24/03) -16.87% +3.21% +6.15% +7.70%
- -----------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R2, Class R3, Class R4, Class R5 and Class W shares.
Class I, Class R2, Class R3, Class R4 and Class R5 are available to
institutional investors only. Class W shares are offered through qualifying
discretionary accounts.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY -------------------------------------------------------------
Dear Shareholder,
RiverSource Disciplined Equity Fund (the Fund) Class A shares declined 13.40%
(excluding sales charge) for the 12 months ended July 31, 2008. The Fund
underperformed the unmanaged Standard & Poor's 500 Index (S&P 500 Index), which
fell 11.09%, as well as the Lipper Large-Cap Core Funds Index, representing the
Fund's peer group, which declined 10.11%, for the same period.
SIGNIFICANT PERFORMANCE FACTORS
The annual period was a most challenging one, characterized by heightened
concerns about weakness in the economy, ongoing turmoil in the housing and
financial markets, a credit crunch and soaring commodity prices. As a result,
equity volatility increased as the year progressed, peaking in March with the
collapse of Bear Stearns and rearing its head again in June. Given the extreme
pressure on the financial system, it makes sense that the financials sector, the
largest weighting in the S&P 500 Index, performed worst. The resulting equity
market decline was only partially mitigated by the impressive double-digit gains
SECTOR DIVERSIFICATION(1) (at July 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Consumer Discretionary 10.1%
- ------------------------------------------------
Consumer Staples 11.3%
- ------------------------------------------------
Energy 15.6%
- ------------------------------------------------
Financials 20.0%
- ------------------------------------------------
Health Care 16.9%
- ------------------------------------------------
Industrials 7.6%
- ------------------------------------------------
Information Technology 10.3%
- ------------------------------------------------
Materials 5.6%
- ------------------------------------------------
Telecommunication Services 0.9%
- ------------------------------------------------
Utilities 0.7%
- ------------------------------------------------
Other(2) 1.0%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
(2) Cash & Cash Equivalents. The 1.0% is due to security lending activity.
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.
- --------------------------------------------------------------------------------
6 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
generated by the energy sector, as crude oil prices surged past $140 per barrel
before falling back a bit to end July at just over $124 per barrel.
The Fund's performance resulted from the three quantitative investment models we
employ in selecting stocks for the Fund's portfolio: momentum, value and
quality. During the 12-month period, the momentum and quality models
outperformed the S&P 500 Index, but not enough to offset the underperformance of
the value model. The momentum model is designed, in part, to capture investor
sentiment over the near to mid term, and it indeed did that, taking a strong
lead during these challenging months. The quality model was intended to serve,
in part, as a defensive measure during equity market corrections when investor
risk aversion increases, and it, too, performed strongly. The value model was
challenged primarily by exposure to financials and select consumer discretionary
names. However, the value model performed well when the beaten-up financials
sector rallied somewhat in January 2008 and again in July 2008. We believe that
the style diversification provided by the three quantitative models is
advantageous over the long-term, even though the Fund may experience
underperformance in the short term.
TOP TEN HOLDINGS (at July 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Johnson & Johnson 4.9%
- ------------------------------------------------
Pfizer 4.8%
- ------------------------------------------------
Chevron 4.5%
- ------------------------------------------------
Citigroup 3.0%
- ------------------------------------------------
Wal-Mart Stores 2.8%
- ------------------------------------------------
Apple 2.7%
- ------------------------------------------------
Occidental Petroleum 2.6%
- ------------------------------------------------
Monsanto 2.6%
- ------------------------------------------------
Exxon Mobil 2.6%
- ------------------------------------------------
Intel 2.3%
- ------------------------------------------------
</Table>
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 EQUITY FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
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 models led to a bias toward quality stocks, which boosted results
during the period, as these stocks performed comparatively well. At the same
time, the Fund's models positioned the equity portfolios toward the cheapest P/E
stocks and toward the mega-cap, or largest cap stocks, both of which detracted
from results, as these equity sectors posted weak results. Stock selection
within the mega-cap segment of the market, however, proved effective,
contributing to the Fund's results.
Overall, sector allocation contributed to the Fund's performance, with sizable
weightings in energy, health care and materials and only modest positions in
industrials and telecommunications particularly helpful. Partially offsetting
these positives were the detracting effects of having moderate allocations to
the strongly performing consumer staples and utilities sectors and a significant
exposure to the weaker financials and consumer discretionary sectors.
Because we use a bottom-up approach, it is not surprising that most of the
Fund's underperformance came from stock selection. Specifically, stock selection
in the financials sector detracted most, as it did to a lesser extent in
consumer discretionary, health care and energy. This more than offset the
combined effect of positive stock selection in industrials, materials and
telecommunications.
Among individual holdings, information technology company APPLE, selected by the
momentum model, contributed most to the Fund's
During the 12-month period, the momentum and quality models outperformed the
S&P 500 Index, but not enough to offset the underperformance of the value
model.
- --------------------------------------------------------------------------------
8 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
return. Other strong positive contributors included chemicals firm MONSANTO,
selected by the momentum model; pharmaceutical company JOHNSON & JOHNSON,
selected by the quality and momentum models; and energy companies OCCIDENTAL
PETROLEUM, favored by the momentum model, and CHEVRON, initially chosen by the
value model and then a quality model pick.
Stocks that detracted from the Fund's return included four financials companies,
each selected by the value model, namely FANNIE MAE, CITIGROUP, FREDDIE MAC and
WASHINGTON MUTUAL. Other poor performers during the period were pharmaceutical
giant PFIZER, a value and quality model choice, and retailer HOME DEPOT, also a
value and quality model selection.
At the end of July, the Fund's largest individual stock holdings were
pharmaceutical companies JOHNSON & JOHNSON and PFIZER, the former a quality and
momentum model choice and the latter a quality and value model pick; energy
company CHEVRON, a quality model selection; information technology company
APPLE, selected by the momentum model; and retailing giant WAL-MART STORES, a
momentum and quality model pick.
CHANGES TO THE FUND'S PORTFOLIO
As a result of quantitative models-driven stock selection during the period, the
Fund's sector allocations changed somewhat. For example, the Fund's exposure to
financials, health care and materials increased relative to the S&P 500 Index.
The Fund's positions in utilities and telecommunications decreased.
Our risk models limit the size of individual holdings, as well as sector and
industry allocations, relative to the S&P 500 Index. For instance, the Fund's
weightings by sector and industry can never be more than 6% overweighted or
underweighted relative to the S&P 500 Index. We also apply additional risk
measures that impose constraints on market capitalization, price, quality,
turnover, transaction costs and other variables.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
OUR FUTURE STRATEGY
We intend to continue seeking optimal returns for the Fund through the style
diversification offered by our three quantitative investment models. We are
convinced of the merit of our multifaceted, disciplined approach to managing
risk in the portfolio and believe this combination of style diversification and
rigorous risk management will allow us to maintain the high quality of the
Fund's portfolio in whatever market conditions lie ahead.
<Table>
(PHOTO - Dimitris Bertsimas) (PHOTO - Gina Mourtzinou)
Dimitris Bertsimas, Ph.D. Gina Mourtzinou, Ph.D.
Senior Portfolio Manager Portfolio Manager
</Table>
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
- --------------------------------------------------------------------------------
10 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Disciplined Equity Fund Class A shares (from 5/1/03 to
7/31/08)* as compared to the performance of two widely cited performance
indices, the Standard & Poor's 500 Index and the Lipper Large-Cap Core Funds
Index. In comparing the Fund's Class A shares to these indices, you should take
into account the fact that the Fund's performance reflects the maximum sales
charge of 5.75%, while such charges are not reflected in the performance of the
indices. Returns for the Fund include the reinvestment of any distribution 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 institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
* Fund data is from April 24, 2003. S&P 500 Index and Lipper peer group data is
from May 1, 2003.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2008
SINCE
1 YEAR 3 YEARS 5 YEARS INCEPTION(3)
RIVERSOURCE DISCIPLINED EQUITY FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $8,162 $10,051 $13,057 $14,202
- ----------------------------------------------------------------------------------------------
Average annual total return -18.38% +0.17% +5.48% +6.87%
- ----------------------------------------------------------------------------------------------
S&P 500 INDEX(1)
Cumulative value of $10,000 $8,891 $10,880 $14,045 $15,236
- ----------------------------------------------------------------------------------------------
Average annual total return -11.09% +2.85% +7.03% +8.35%
- ----------------------------------------------------------------------------------------------
LIPPER LARGE-CAP CORE FUNDS INDEX(2)
Cumulative value of $10,000 $8,989 $10,966 $13,579 $14,602
- ----------------------------------------------------------------------------------------------
Average annual total return -10.11% +3.12% +6.31% +7.48%
- ----------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on pages 4 and 5.
- --------------------------------------------------------------------------------
12 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE DISCIPLINED EQUITY
FUND LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE DISCIPLINED
EQUITY FUND
CLASS A LIPPER LARGE-CAP
(INCLUDES SALES S&P 500 CORE FUNDS
CHARGE) INDEX(1) INDEX(2)
----------------------- ------------------ ------------------
5/1/03 $ 9,425 $10,000 $10,000
7/03 10,254 10,849 10,755
7/04 11,483 12,278 11,832
7/05 13,315 14,003 13,318
7/06 14,147 14,756 13,984
7/07 16,399 17,136 16,244
7/08 14,202 15,236 14,602
</Table>
(1) The Standard & Poor's 500 Index (S&P 500 Index), an unmanaged index of
common stocks, is frequently used as a general measure of market
performance. The index reflects reinvestment of all distributions and
changes in market prices.
(2) The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap core
funds tracked by Lipper Inc. The index's returns include net reinvested
dividends. The Fund's performance is currently measured against this index
for purposes of determining the performance incentive adjustment.
(3) Fund data is from April 24, 2003. S&P 500 Index and Lipper peer group data
is from May 1, 2003.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the 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). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the 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, 2008.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2008 JULY 31, 2008 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 910.20 $4.46 .94%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.19 $4.72 .94%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 906.20 $8.06 1.70%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.41 $8.52 1.70%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 906.00 $8.01 1.69%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.46 $8.47 1.69%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 912.30 $2.76 .58%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.98 $2.92 .58%
- ------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 908.80 $6.64 1.40%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,017.90 $7.02 1.40%
- ------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 910.40 $5.46 1.15%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.14 $5.77 1.15%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 910.60 $3.85 .81%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.84 $4.07 .81%
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 911.90 $3.04 .64%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.68 $3.22 .64%
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 15
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2008 JULY 31, 2008 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 908.50 $4.89 1.03%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.74 $5.17 1.03%
- ------------------------------------------------------------------------------------------
</Table>
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 182/366 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended July 31, 2008: -8.98%
for Class A, -9.38% for Class B, -9.40% for Class C, -8.77% for Class I,
-9.12% for Class R2, -8.96% for Class R3, -8.94% for Class R4, -8.81% for
Class R5 and -9.15% for Class W.
- --------------------------------------------------------------------------------
16 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (99.3%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (0.8%)
General Dynamics 150,467 $13,412,629
United Technologies 170,133 10,885,109
---------------
Total 24,297,738
- -------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.2%)
CH Robinson Worldwide 104,757 5,049,287
United Parcel Service Cl B 29,657 1,870,764
---------------
Total 6,920,051
- -------------------------------------------------------------------------------------
AUTO COMPONENTS (0.7%)
Johnson Controls 666,450 20,100,132
- -------------------------------------------------------------------------------------
AUTOMOBILES (0.6%)
Ford Motor 1,207,269(b) 5,794,891
General Motors 561,121(d) 6,211,609
Harley-Davidson 144,208 5,456,831
---------------
Total 17,463,331
- -------------------------------------------------------------------------------------
BEVERAGES (2.6%)
Coca-Cola 523,483 26,959,375
Coca-Cola Enterprises 139,108 2,355,098
Pepsi Bottling Group 80,083 2,230,312
PepsiCo 690,410 45,953,689
---------------
Total 77,498,474
- -------------------------------------------------------------------------------------
BIOTECHNOLOGY (1.4%)
Biogen Idec 170,084(b) 11,865,060
Gilead Sciences 566,217(b) 30,564,394
---------------
Total 42,429,454
- -------------------------------------------------------------------------------------
BUILDING PRODUCTS (0.2%)
Masco 390,239 6,435,041
- -------------------------------------------------------------------------------------
CAPITAL MARKETS (3.2%)
Charles Schwab 175,448 4,016,005
E*TRADE Financial 256,004(b) 773,132
Goldman Sachs Group 25,923 4,770,869
Lehman Brothers Holdings 433,434 7,515,746
Merrill Lynch & Co 719,901 19,185,362
Morgan Stanley 998,145 39,406,764
State Street 238,016 17,051,466
T Rowe Price Group 28,175 1,686,274
---------------
Total 94,405,618
- -------------------------------------------------------------------------------------
CHEMICALS (4.6%)
Air Products & Chemicals 55,173 5,253,021
Ashland 8,000 334,160
Dow Chemical 471,165 15,694,506
Ecolab 67,323 3,009,338
Monsanto 650,758 77,511,786
PPG Inds 66,308 4,020,917
Praxair 254,218 23,827,853
Sigma-Aldrich 99,276 6,030,024
---------------
Total 135,681,605
- -------------------------------------------------------------------------------------
COMMERCIAL BANKS (1.6%)
BB&T 447,110(d) 12,528,022
Comerica 171,854 4,935,647
Fifth Third Bancorp 368,605 5,149,412
First Horizon Natl 264,891(d) 2,489,975
Huntington Bancshares 363,386 2,550,970
KeyCorp 218,200 2,302,010
Marshall & Ilsley 55,025 836,380
Natl City 934,379(d) 4,419,613
SunTrust Banks 64,075 2,630,920
Synovus Financial 135,983(d) 1,293,198
US Bancorp 128,076 3,920,406
Wachovia 285,836 4,936,388
---------------
Total 47,992,941
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 17
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
COMMERCIAL SERVICES & SUPPLIES (0.1%)
Avery Dennison 38,795 $1,707,368
RR Donnelley & Sons 79,664 2,127,029
---------------
Total 3,834,397
- -------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (0.1%)
Juniper Networks 104,860(b) 2,729,506
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (3.2%)
Apple 513,868(b) 81,679,319
IBM 34,285 4,387,794
Lexmark Intl Cl A 180,264(b) 6,323,661
QLogic 139,178(b) 2,622,114
---------------
Total 95,012,888
- -------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (0.2%)
Fluor 35,437 2,882,800
Jacobs Engineering Group 46,748(b) 3,615,490
---------------
Total 6,498,290
- -------------------------------------------------------------------------------------
CONSUMER FINANCE (0.1%)
SLM 101,227(b) 1,734,019
- -------------------------------------------------------------------------------------
DISTRIBUTORS (0.2%)
Genuine Parts 157,293 6,309,022
- -------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (0.1%)
H&R Block 128,936 3,137,013
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (5.5%)
Bank of America 819,279 26,954,279
CIT Group 293,875 2,492,060
Citigroup 4,776,349 89,269,962
CME Group 10,890 3,921,816
JPMorgan Chase & Co 1,027,716 41,756,101
---------------
Total 164,394,218
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.9%)
Embarq 90,976 4,163,972
Verizon Communications 706,965 24,065,088
---------------
Total 28,229,060
- -------------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.5%)
Duke Energy 113,096 1,988,228
FirstEnergy 187,110 13,761,940
---------------
Total 15,750,168
- -------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.2%)
Emerson Electric 124,001 6,038,849
- -------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (1.6%)
BJ Services 67,770 1,992,438
Cameron Intl 68,834(b) 3,287,512
ENSCO Intl 20,563 1,421,726
Nabors Inds 113,617(b,c) 4,142,476
Natl Oilwell Varco 82,932(b) 6,520,943
Smith Intl 877 65,231
Transocean 113,792(b) 15,479,125
Weatherford Intl 396,020(b) 14,941,835
---------------
Total 47,851,286
- -------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (3.7%)
Costco Wholesale 183,079 11,475,392
Safeway 318,606 8,513,152
SUPERVALU 79,252 2,030,436
Walgreen 155,755 5,348,627
Wal-Mart Stores 1,428,204 83,721,318
---------------
Total 111,088,925
- -------------------------------------------------------------------------------------
FOOD PRODUCTS (0.5%)
Archer-Daniels-Midland 133,678 3,827,201
Dean Foods 27,032(b) 575,782
HJ Heinz 77,259 3,892,308
Sara Lee 476,830 6,513,498
---------------
Total 14,808,789
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.5%)
Becton Dickinson & Co 52,477 4,455,822
CR Bard 61,637 5,722,379
Varian Medical Systems 97,154(b) 5,829,240
---------------
Total 16,007,441
- -------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (3.1%)
Aetna 110,399 4,527,463
Cardinal Health 193,112 10,375,908
CIGNA 511,572 18,938,395
Express Scripts 312,689(b) 22,057,082
Health Management Associates Cl A 67,300(b) 413,895
Humana 103,989(b) 4,566,157
Laboratory Corp of America Holdings 9,029(b) 610,180
Medco Health Solutions 554,391(b) 27,486,706
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HEALTH CARE PROVIDERS & SERVICES (CONT.)
Quest Diagnostics 37,962 $2,018,060
Tenet Healthcare 456,110(b) 2,640,877
---------------
Total 93,634,723
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.2%)
Intl Game Technology 192,159 4,171,772
McDonald's 493,202 29,488,548
Wendy's Intl 50,234 1,152,870
Wyndham Worldwide 46,479 833,833
---------------
Total 35,647,023
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.7%)
Black & Decker 29,679 1,781,334
Centex 168,771 2,477,558
DR Horton 693,693 7,713,867
KB Home 68,347 1,202,224
Lennar Cl A 165,396 2,001,292
Pulte Homes 202,526 2,472,842
Snap-On 23,267 1,309,699
Stanley Works 13,005 578,462
---------------
Total 19,537,278
- -------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (3.5%)
Colgate-Palmolive 392,107 29,121,787
Kimberly-Clark 257,974 14,918,636
Procter & Gamble 898,023 58,802,546
---------------
Total 102,842,969
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (2.5%)
3M 664,986 46,808,365
Textron 180,304 7,837,815
Tyco Intl 422,577(c) 18,830,031
---------------
Total 73,476,211
- -------------------------------------------------------------------------------------
INSURANCE (7.9%)
ACE 378,651(c) 19,197,606
AFLAC 447,992 24,912,835
Allstate 913,087 42,202,881
Ambac Financial Group 288,197 726,256
American Intl Group 803,418 20,929,039
Assurant 27,878 1,676,025
Chubb 428,603 20,590,088
Cincinnati Financial 28,900 804,576
Genworth Financial Cl A 656,721 10,487,834
Lincoln Natl 18,186 867,472
Marsh & McLennan Companies 236,739 6,687,877
MBIA 209,475(d) 1,242,187
Progressive 1,404,343 28,437,946
Prudential Financial 81,341 5,610,089
Safeco 97,345 6,440,345
Torchmark 89,376 5,188,277
Travelers Companies 639,459 28,212,931
Unum Group 358,253 8,655,392
XL Capital Cl A 94,342(c) 1,687,778
---------------
Total 234,557,434
- -------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL (0.2%)
Amazon.com 61,740(b) 4,713,232
- -------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (0.7%)
Google Cl A 46,428(b) 21,995,265
- -------------------------------------------------------------------------------------
IT SERVICES (1.6%)
Affiliated Computer Services Cl A 18,684(b) 900,569
Automatic Data Processing 78,311 3,344,663
MasterCard Cl A 86,337 21,079,178
Paychex 98,702 3,249,270
Total System Services 65,805 1,288,462
Western Union 593,498 16,404,285
---------------
Total 46,266,427
- -------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (0.5%)
Brunswick 100,213 1,292,748
Eastman Kodak 232,404 3,402,395
Mattel 530,174 10,629,988
---------------
Total 15,325,131
- -------------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.3%)
Applied Biosystems 96,483(g) 3,563,117
Waters 59,289(b) 4,028,095
---------------
Total 7,591,212
- -------------------------------------------------------------------------------------
MACHINERY (1.4%)
Deere & Co 337,116 23,652,058
Illinois Tool Works 99,790 4,675,162
Ingersoll-Rand Cl A 296,130(c) 10,660,680
Manitowoc 41,277 1,088,062
Parker Hannifin 19,313 1,191,226
---------------
Total 41,267,188
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 19
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
MEDIA (0.8%)
CBS Cl B 836,744 $13,689,132
Gannett 498,635 9,035,266
Meredith 14,134 361,265
New York Times Cl A 109,515(d) 1,378,794
---------------
Total 24,464,457
- -------------------------------------------------------------------------------------
METALS & MINING (1.0%)
Freeport-McMoRan Copper & Gold 37,306 3,609,356
Newmont Mining 264,476 12,684,269
Nucor 251,492 14,390,372
---------------
Total 30,683,997
- -------------------------------------------------------------------------------------
MULTILINE RETAIL (0.2%)
Family Dollar Stores 102,849 2,396,382
Kohl's 85,519(b) 3,584,101
---------------
Total 5,980,483
- -------------------------------------------------------------------------------------
MULTI-UTILITIES (0.2%)
NiSource 121,389 2,073,324
TECO Energy 83,991 1,558,033
Xcel Energy 89,446 1,794,287
---------------
Total 5,425,644
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (14.0%)
Anadarko Petroleum 273,837 15,857,901
Apache 49,069 5,504,070
Chevron 1,592,569 134,667,634
ConocoPhillips 213,132 17,395,834
CONSOL Energy 146,591 10,904,904
Devon Energy 48,553 4,607,194
EOG Resources 152,412 15,321,978
Exxon Mobil 962,007 77,374,223
Hess 54,510 5,527,314
Marathon Oil 363,777 17,996,048
Massey Energy 64,559 4,793,506
Murphy Oil 110,749 8,830,018
Occidental Petroleum 1,003,658 79,118,360
Peabody Energy 262,364 17,748,925
Sunoco 29,899 1,214,198
Tesoro 98,048 1,513,861
---------------
Total 418,375,968
- -------------------------------------------------------------------------------------
PERSONAL PRODUCTS (0.1%)
Estee Lauder Companies Cl A 46,161 2,035,700
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (11.6%)
Allergan 56,596 2,939,030
Barr Pharmaceuticals 9,508(b) 627,338
Eli Lilly & Co 295,088 13,901,596
Forest Laboratories 149,667(b) 5,314,675
Johnson & Johnson 2,120,920 145,219,392
King Pharmaceuticals 400,546(b) 4,610,284
Merck & Co 772,283 25,408,111
Mylan 138,890(b) 1,801,403
Pfizer 7,750,509 144,702,003
---------------
Total 344,523,832
- -------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (0.5%)
HCP 198,201 7,149,110
Public Storage 99,036 8,110,058
---------------
Total 15,259,168
- -------------------------------------------------------------------------------------
ROAD & RAIL (1.8%)
Burlington Northern Santa Fe 118,327 12,321,391
CSX 248,524 16,795,252
Norfolk Southern 72,837 5,238,437
Ryder System 35,293 2,327,926
Union Pacific 208,552 17,193,027
---------------
Total 53,876,033
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.4%)
Intel 3,083,693 68,427,147
MEMC Electronic Materials 44,937(b) 2,076,539
NVIDIA 95,822(b) 1,096,204
Xilinx 54,132 1,344,098
---------------
Total 72,943,988
- -------------------------------------------------------------------------------------
SOFTWARE (2.4%)
BMC Software 153,194(b) 5,038,551
Electronic Arts 70,423(b) 3,040,865
Microsoft 1,151,519 29,617,069
Oracle 1,507,562(b) 32,457,809
---------------
Total 70,154,294
- -------------------------------------------------------------------------------------
SPECIALTY RETAIL (4.0%)
Abercrombie & Fitch Cl A 47,279 2,610,746
AutoNation 173,695(b) 1,792,532
AutoZone 41,363(b) 5,389,185
Bed Bath & Beyond 172,209(b) 4,792,576
Best Buy 144,404 5,735,727
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SPECIALTY RETAIL (CONT.)
GameStop Cl A 92,505(b) $3,747,378
Gap 368,056 5,933,063
Home Depot 2,249,714 53,610,686
Lowe's Companies 1,222,095 24,832,970
Office Depot 149,209(b) 1,014,621
RadioShack 168,700 2,813,916
Sherwin-Williams 53,160 2,830,770
Staples 28,256 635,760
TJX Companies 93,120 3,139,075
---------------
Total 118,879,005
- -------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (1.0%)
Coach 206,729(b) 5,273,657
Jones Apparel Group 116,009 1,941,991
Liz Claiborne 229,550 3,000,219
Nike Cl B 250,207 14,682,146
VF 80,201 5,740,787
---------------
Total 30,638,800
- -------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (1.3%)
Fannie Mae 1,336,093 15,365,070
Freddie Mac 794,150 6,488,206
Hudson City Bancorp 416,370 7,602,916
MGIC Investment 217,148(d) 1,389,747
Sovereign Bancorp 259,714 2,472,477
Washington Mutual 1,140,168(d) 6,077,095
---------------
Total 39,395,511
- -------------------------------------------------------------------------------------
TOBACCO (1.0%)
Altria Group 377,005 7,672,052
Philip Morris Intl 377,005 19,472,308
UST 30,691 1,614,654
---------------
Total 28,759,014
- -------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (0.1%)
WW Grainger 42,704 3,822,435
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $3,449,006,497) $2,958,720,678
- -------------------------------------------------------------------------------------
<Caption>
MONEY MARKET FUND (1.0%)(e)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 2.54% 29,160,041(f) $29,160,041
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $29,160,041) $29,160,041
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $3,478,166,538)(h) $2,987,880,719
=====================================================================================
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2008, the
value of foreign securities represented 1.8% of net assets.
(d) At July 31, 2008, security was partially or fully on loan. See Note 5 to
the financial statements.
(e) Cash collateral received from security lending activity is invested in an
affiliated money market fund and represents 1.0% of net assets. See Note 5
to the financial statements.
(f) Affiliated Money Market Fund -- See Note 6 to the financial statements. The
rate shown is the seven-day current annualized yield at July 31, 2008.
(g) 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 21
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(h) At July 31, 2008, the cost of securities for federal income tax purposes
was $3,482,874,307 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $182,589,649
Unrealized depreciation (677,583,237)
- ------------------------------------------------------------
Net unrealized depreciation $(494,993,588)
- ------------------------------------------------------------
</Table>
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.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at riversource.com/funds.
- --------------------------------------------------------------------------------
22 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
FINANCIAL STATEMENTS -----------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $3,449,006,497) $2,958,720,678
Affiliated money market fund (identified cost $29,160,041) 29,160,041
- -----------------------------------------------------------------------------
Total investments in securities (identified cost
$3,478,166,538) 2,987,880,719
Capital shares receivable 7,901,741
Dividends receivable 3,662,482
Receivable for investment securities sold 18,579,000
- -----------------------------------------------------------------------------
Total assets 3,018,023,942
- -----------------------------------------------------------------------------
LIABILITIES
Capital shares payable 4,942,098
Payable for investment securities purchased 5,434,457
Payable upon return of securities loaned 28,947,000
Accrued investment management services fees 47,412
Accrued distribution fees 17,809
Accrued transfer agency fees 8,141
Accrued administrative services fees 4,325
Accrued plan administration services fees 874
Other accrued expenses 245,899
- -----------------------------------------------------------------------------
Total liabilities 39,648,015
- -----------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $2,978,375,927
- -----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 23
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
JULY 31, 2008
<Table>
<Caption>
REPRESENTED BY
Capital stock -- $.01 par value $ 5,066,590
Additional paid-in capital 3,372,897,811
Undistributed net investment income 26,278,639
Accumulated net realized gain (loss) 64,376,402
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (490,243,515)
- -----------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $2,978,375,927
- -----------------------------------------------------------------------------
*Including securities on loan, at value $ 26,940,910
- -----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $1,067,408,739 181,520,585 $5.88(1)
Class B $ 35,383,368 6,102,723 $5.80
Class C $ 2,787,743 482,134 $5.78
Class I $ 391,424,906 66,059,325 $5.93
Class R2 $ 3,886 661 $5.88
Class R3 $ 3,892 661 $5.89
Class R4 $ 126,215,819 21,367,300 $5.91
Class R5 $ 3,897 661 $5.90
Class W $1,355,143,677 231,124,956 $5.86
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $6.24. 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.
- --------------------------------------------------------------------------------
24 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 73,023,497
Interest 34,939
Income distributions from affiliated money market fund 2,535,607
Fee income from securities lending 371,237
- ----------------------------------------------------------------------------
Total income 75,965,280
- ----------------------------------------------------------------------------
Expenses:
Investment management services fees 17,556,244
Distribution fees
Class A 3,199,228
Class B 550,860
Class C 31,395
Class R2 22
Class R3 11
Class W 3,483,017
Transfer agency fees
Class A 1,263,544
Class B 61,169
Class C 3,295
Class R2 3
Class R3 3
Class R4 71,684
Class R5 3
Class W 2,786,414
Administrative services fees 1,701,542
Plan administration services fees
Class R2 11
Class R3 11
Class R4 358,419
Compensation of board members 63,212
Custodian fees 246,979
Printing and postage 231,535
Registration fees 174,925
Professional fees 73,045
Other 117,553
- ----------------------------------------------------------------------------
Total expenses 31,974,124
Expenses waived/reimbursed by the Investment Manager and
its affiliates (101,556)
Earnings and bank fee credits on cash balances (79,613)
- ----------------------------------------------------------------------------
Total net expenses 31,792,955
- ----------------------------------------------------------------------------
Investment income (loss) -- net 44,172,325
- ----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 25
STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED JULY 31, 2008
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $ 112,424,784
Futures contracts (8,587,777)
- ----------------------------------------------------------------------------
Net realized gain (loss) on investments 103,837,007
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (641,572,651)
- ----------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (537,735,644)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(493,563,319)
- ----------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 44,172,325 $ 26,328,359
Net realized gain (loss) on investments 103,837,007 175,329,400
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (641,572,651) 99,972,248
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (493,563,319) 301,630,007
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (11,230,396) (11,770,748)
Class B -- (119,376)
Class C (4,379) (7,167)
Class I (5,698,153) (4,503,510)
Class R2 (28) (53)
Class R3 (40) (53)
Class R4 (1,390,578) (2,093,617)
Class R5 (54) (54)
Class W (14,867,518) (4,357)
Net realized gain
Class A (68,772,061) (98,698,411)
Class B (3,058,960) (5,457,193)
Class C (169,022) (199,900)
Class I (24,176,366) (28,282,528)
Class R2 (244) (338)
Class R3 (244) (338)
Class R4 (7,584,972) (15,612,336)
Class R5 (244) (338)
Class W (74,056,615) (27,397)
- ---------------------------------------------------------------------------------------------
Total distributions (211,009,874) (166,777,714)
- ---------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 27
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 49,740,163 $ 88,546,740
Class B shares 5,505,096 11,644,836
Class C shares 976,461 962,793
Class I shares 120,762,575 268,920,269
Class R2 shares -- 5,000
Class R3 shares -- 5,000
Class R4 shares 25,111,692 96,913,115
Class R5 shares -- 5,000
Class W shares 1,465,443,768 847,280,579
Reinvestment of distributions at net asset value
Class A shares 74,058,485 101,787,281
Class B shares 3,022,150 5,504,829
Class C shares 167,943 204,516
Class I shares 29,873,023 32,784,089
Class R4 shares 8,975,550 17,705,953
Class W shares 88,923,836 31,356
Payments for redemptions
Class A shares (215,746,354) (248,119,981)
Class B shares (24,117,349) (34,806,536)
Class C shares (1,059,851) (749,148)
Class I shares (108,422,258) (138,117,054)
Class R4 shares (37,030,416) (203,796,200)
Class W shares (622,614,805) (82,651,517)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions 863,569,709 764,060,920
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 158,996,516 898,913,213
Net assets at beginning of year 2,819,379,411 1,920,466,198
- ---------------------------------------------------------------------------------------------
Net assets at end of year $2,978,375,927 $2,819,379,411
- ---------------------------------------------------------------------------------------------
Undistributed net investment income $ 26,278,639 $ 15,309,316
- ---------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Disciplined Equity Fund (the Fund) is a series of RiverSource Large
Cap Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. RiverSource
Large Cap Series, Inc. has 10 billion authorized shares of capital stock that
can be allocated among the separate series as designated by the Board of
Directors (the Board). The Fund invests primarily in equity securities of
companies listed on U.S. exchanges with market capitalizations greater than $5
billion at the time of purchase.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class
R4, Class R5 and Class W shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a
front-end sales charge or CDSC and are offered to qualifying institutional
investors.
- - Class W shares are sold without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At July 31, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the affiliated funds-of-funds owned 100% of Class I
shares and the Investment Manager owned 100% of Class R2, Class R3 and Class R5
shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 29
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
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 New York Stock Exchange 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 New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange.
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; those maturing in 60 days or less are valued at amortized cost.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
Cash collateral may be collected by the Fund to secure certain over-the-counter
options trades. Cash collateral held by the Fund for such option trades must be
returned to the counterparty upon closure, exercise or expiration of the
contract. The Fund also may buy and sell put and call options and write covered
call options on portfolio securities as well as write cash-secured put options.
The risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of
- --------------------------------------------------------------------------------
30 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
the security increases. The risk in writing a put option is that the Fund may
incur a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Fund pays a premium whether
or not the option is exercised. The Fund also has the additional risk of being
unable to enter into a closing transaction if a liquid secondary market does not
exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid. At
July 31, 2008, and for the year then ended, the Fund had no outstanding option
contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include 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.
Futures are valued daily based upon the last sale price at the close of 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. At July 31, 2008, the Fund
had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 31
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the other party will not
complete its contract obligations. At July 31, 2008, the Fund had no outstanding
forward foreign currency contracts.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes," clarifies the accounting for
uncertainty in income taxes recognized in accordance with FASB Statement 109,
"Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize
and measure a tax position taken or expected to be taken in a tax return. The
first step is to determine whether a tax position has met the more-likely-than-
not recognition threshold and the second step is to measure a tax position that
meets the threshold to determine the amount of benefit to recognize. Management
of the Fund has concluded that there are no significant uncertain tax positions
that would require recognition in the financial statements. Generally the tax
authorities can examine all the tax returns filed for the last three years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of futures contracts, re-
characterization of REIT distributions and losses deferred due to wash sales.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Fund.
- --------------------------------------------------------------------------------
32 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $11,856
and accumulated net realized gain has been increased by $11,856.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007*
- -----------------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income.................... $29,513,520 $55,821,524
Long-term capital gain............. 50,488,937 54,647,635
CLASS B
Distributions paid from:
Ordinary income.................... 813,265 2,555,014
Long-term capital gain............. 2,245,695 3,021,555
CLASS C
Distributions paid from:
Ordinary income.................... 49,313 96,386
Long-term capital gain............. 124,088 110,681
CLASS I
Distributions paid from:
Ordinary income.................... 12,125,448 17,126,482
Long-term capital gain............. 17,749,071 15,659,556
CLASS R2
Distributions paid from:
Ordinary income.................... 93 204
Long-term capital gain............. 179 187
CLASS R3
Distributions paid from:
Ordinary income.................... 105 204
Long-term capital gain............. 179 187
CLASS R4
Distributions paid from:
Ordinary income.................... 3,407,046 9,061,667
Long-term capital gain............. 5,568,504 8,644,286
CLASS R5
Distributions paid from:
Ordinary income.................... 119 205
Long-term capital gain............. 179 187
CLASS W
Distributions paid from:
Ordinary income.................... 34,555,495 16,585
Long-term capital gain............. 54,368,638 15,169
</Table>
* Class R2, Class R3 and Class R5 are for the period from Dec. 11, 2006
(inception Date) to July 31, 2007. Class W is for the period from Dec. 1, 2006
(inception date) to July 31, 2007.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 33
At July 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................. $ 26,316,607
Undistributed accumulated long-term gain....... $ 69,084,171
Unrealized appreciation (depreciation)......... $(494,989,252)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. Funds are required
to provide enhanced disclosures about (a) how and why a fund uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect a fund's financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
Nov. 15, 2008. As of July 31, 2008, management does not believe the adoption of
SFAS 161 will impact the financial statement amounts; however, additional
footnote disclosures may be required about the use of derivative instruments and
hedging items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. The application of SFAS 157
will be effective for the Fund's fiscal year beginning Aug. 1, 2008. The
adoption of SFAS 157 is not anticipated to have a material impact on the Fund's
financial statements; however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of certain
measurements reported in the Statement of Operations for a fiscal period.
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.
- --------------------------------------------------------------------------------
34 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
2. 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 a percentage of the Fund's average daily net assets that declines from 0.60%
to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Large-Cap Core Funds Index. In certain circumstances,
the Board may approve a change in the index. The maximum adjustment is 0.12% per
year. If the performance difference is less than 0.50%, the adjustment will be
zero. The adjustment decreased the management fee by $1,361,345 for the year
ended July 31, 2008. The management fee for the year ended July 31, 2008 was
0.53% 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 a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.06% to 0.03% annually as the
Fund's assets increase. The fee for the year ended July 31, 2008 was 0.05% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended July 31,
2008, other expenses paid to this company were $12,086.
COMPENSATION OF BOARD MEMBERS
Compensation of board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 35
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares and an annual asset-based fee at a rate of 0.20% of the Fund's average
daily net assets attributable to Class W shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees on the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Prior to Oct. 1, 2007, Ameriprise
Financial Services, Inc. also served as a principal underwriter and distributor
to the Fund. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1,
the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily
net assets attributable to Class A, Class R3 and Class W shares, a fee at 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, up to 0.75% of the fee is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $923,000 and $23,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of July 31, 2008, 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 CHARGE
Sales charges received by the Distributor for distributing Fund shares were
$384,412 for Class A, $28,089 for Class B and $320 for Class C for the year
ended July 31, 2008.
- --------------------------------------------------------------------------------
36 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2008, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*) were as follows:
<Table>
Class R2............................................ 1.16%
Class R3............................................ 0.90
Class R4............................................ 0.84
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class R4.......................................... $99,480
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2.......................................... $ 11
Class R3.......................................... 11
Class R4.......................................... 2,054
</Table>
Under an agreement which was effective until July 31, 2008, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would not
exceed the following percentage of the Fund's average daily net assets:
<Table>
Class A............................................. 1.09%
Class B............................................. 1.85
Class C............................................. 1.85
Class I............................................. 0.78
Class R2............................................ 1.58
Class R3............................................ 1.33
Class R4............................................ 0.88
Class R5............................................ 0.83
Class W............................................. 1.23
</Table>
Effective August 1, 2008, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until July 31, 2009,
unless sooner terminated at the discretion of the Board, such that net expenses
(excluding fees and expenses of acquired funds*), before giving effect to any
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 37
performance incentive adjustment, will not exceed the following percentage of
the Fund's average daily net assets:
<Table>
Class A............................................. 1.05%
Class B............................................. 1.81
Class C............................................. 1.81
Class I............................................. 0.72
Class R2............................................ 1.52
Class R3............................................ 1.27
Class R4............................................ 0.88
Class R5............................................ 0.77
Class W............................................. 1.17
</Table>
* 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.
EARNINGS AND BANK FEE CREDITS
During the year ended July 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $79,613 as a result of earnings and bank fee credits from
overnight cash balances. The Fund pays custodian fees to Ameriprise Trust
Company, a subsidiary of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $2,581,232,117 and $1,875,992,176, respectively, for the
year ended July 31, 2008. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ------------------------------------------------------------------------------------
Class A 7,609,621 10,923,080 (32,329,627) (13,796,926)
Class B 826,089 449,725 (3,897,874) (2,622,060)
Class C 150,658 25,066 (161,175) 14,549
Class I 17,804,029 4,380,209 (16,813,974) 5,370,264
Class R4 3,752,567 1,317,996 (5,442,436) (371,873)
Class W 213,069,694 13,134,983 (98,243,751) 127,960,926
- ------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
38 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
YEAR ENDED JULY 31, 2007
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ------------------------------------------------------------------------------------
Class A 12,174,430 14,582,705 (34,507,399) (7,750,264)
Class B 1,639,136 796,647 (4,750,576) (2,314,793)
Class C 135,752 29,640 (105,911) 59,481
Class I 37,783,228 4,670,098 (18,989,372) 23,463,954
Class R2(a) 661 -- -- 661
Class R3(a) 661 -- -- 661
Class R4 13,970,887 2,529,422 (27,927,795) (11,427,486)
Class R5(a) 661 -- -- 661
Class W(b) 114,252,036 4,492 (11,092,498) 103,164,030
- ------------------------------------------------------------------------------------
</Table>
(a) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(b) For the period from Dec. 1, 2006 (inception date) to July 31, 2007.
5. LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend securities
representing up to one-third of the value of its total assets (which includes
collateral for securities on loan) to broker-dealers, banks, or other
institutional borrowers of securities. The Fund receives collateral in the form
of cash and U.S. government securities, equal to at least 100% of the value of
securities loaned, which is marked to the market value of the loaned securities
daily until the securities are returned, e.g., if the value of the securities on
loan increases, additional cash collateral is provided by the borrower. The
Investment Manager serves as securities lending agent for the Fund under the
Investment Management Services Agreement pursuant to which the Fund has agreed
to reimburse the Investment Manager for expenses incurred by it in connection
with the lending program, and pursuant to guidelines adopted by and under the
oversight of the Board. At July 31, 2008, securities valued at $26,940,910 were
on loan to brokers. For collateral, the Fund received $28,947,000 in cash. Cash
collateral received is invested in an affiliated money market fund and short-
term securities, including U.S. government securities or other high-grade debt
obligations, which are included in the Portfolio of Investments. Income from
securities lending amounted to $371,237 for the year ended July 31, 2008.
Expenses paid to the Investment Manager as securities lending agent were $9,660
for the year ended July 31, 2008, which are included in other expenses on the
Statement of Operations. The risks to the Fund of securities lending are that
the borrower may not provide additional collateral when required or return the
securities when due.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 39
6. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $1,215,814,562 and $1,194,979,908, respectively, for the
year ended July 31, 2008. The income distributions received with respect to the
Fund's investment in RiverSource Short-Term Cash Fund can be found on the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at July 31, 2008, can be found in the Portfolio of Investments.
7. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A. (JPMCB), 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. 18, 2007, replacing a
prior credit facility. The credit facility agreement, which is a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permits collective borrowings up to $500 million. Interest is
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum. Under the prior credit facility, a Fund paid interest on its
outstanding borrowings at a rate equal to either the higher of the federal funds
effective rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. The Fund
had no borrowings during the year ended July 31, 2008.
8. 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 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. In response to defendants' motion to dismiss the
complaint, the Court dismissed one of plaintiffs' four claims and granted
plaintiffs limited discovery.
- --------------------------------------------------------------------------------
40 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
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 on August 8, 2007.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
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 EQUITY FUND -- 2008 ANNUAL REPORT 41
9. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $7.22 $6.74 $6.70 $5.95 $5.44
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .09(b) .08(b) .06 .04 .02
Net gains (losses) (both realized and
unrealized) (1.00) .97 .35 .90 .63
- ---------------------------------------------------------------------------------------------------------
Total from investment operations (.91) 1.05 .41 .94 .65
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.06) (.06) (.03) (.02)
Distributions from realized gains (.37) (.51) (.31) (.16) (.12)
- ---------------------------------------------------------------------------------------------------------
Total distributions (.43) (.57) (.37) (.19) (.14)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.88 $7.22 $6.74 $6.70 $5.95
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1,067 $1,410 $1,368 $28 $13
- ---------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .96% 1.05% 1.05% 1.35% 1.91%
- ---------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .96% 1.03% 1.02% 1.25% 1.13%
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.35% 1.13% .95% .84% .65%
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62% 137% 64% 64%
- ---------------------------------------------------------------------------------------------------------
(13.4-
Total return(g) 0%) 15.92% 6.25% 15.95% 11.99%
- ---------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
42 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $7.12 $6.65 $6.62 $5.90 $5.43
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04(b) .03(b) .01 .02 (.02)
Net gains (losses) (both realized and
unrealized) (.99) .96 .34 .86 .61
- ---------------------------------------------------------------------------------------------------------
Total from investment operations (.95) .99 .35 .88 .59
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.01) (.01) -- --
Distributions from realized gains (.37) (.51) (.31) (.16) (.12)
- ---------------------------------------------------------------------------------------------------------
Total distributions (.37) (.52) (.32) (.16) (.12)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.80 $7.12 $6.65 $6.62 $5.90
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $35 $62 $73 $9 $3
- ---------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.72% 1.82% 1.85% 2.13% 2.73%
- ---------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.72% 1.79% 1.82% 2.04% 1.95%
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) .59% .37% .20% .06% (.16%)
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62% 137% 64% 64%
- ---------------------------------------------------------------------------------------------------------
(14.0-
Total return(g) 7%) 15.18% 5.42% 15.03% 10.95%
- ---------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 43
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $7.11 $6.65 $6.62 $5.90 $5.43
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04(b) .03(b) .01 .01 (.02)
Net gains (losses) (both realized and
unrealized) (.99) .96 .35 .87 .61
- ---------------------------------------------------------------------------------------------------------
Total from investment operations (.95) .99 .36 .88 .59
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01) (.02) (.02) -- --
Distributions from realized gains (.37) (.51) (.31) (.16) (.12)
- ---------------------------------------------------------------------------------------------------------
Total distributions (.38) (.53) (.33) (.16) (.12)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.78 $7.11 $6.65 $6.62 $5.90
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3 $3 $3 $-- $--
- ---------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.72% 1.81% 1.84% 2.13% 2.73%
- ---------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.72% 1.79% 1.81% 2.06% 1.95%
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) .59% .36% .20% .02% (.17%)
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62% 137% 64% 64%
- ---------------------------------------------------------------------------------------------------------
(14.1-
Total return(g) 1%) 15.14% 5.51% 15.03% 10.96%
- ---------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
44 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004(b)
Net asset value, beginning of period $7.27 $6.78 $6.73 $5.96 $5.99
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .11(c) .11(c) .08 .04 .02
Net gains (losses) (both realized and
unrealized) (.99) .97 .36 .92 (.05)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.88) 1.08 .44 .96 (.03)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.09) (.08) (.08) (.03) --
Distributions from realized gains (.37) (.51) (.31) (.16) --
- --------------------------------------------------------------------------------------------------------------
Total distributions (.46) (.59) (.39) (.19) --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.93 $7.27 $6.78 $6.73 $5.96
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $391 $441 $252 $82 $9
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) .61% .70% .72% .91% 1.27%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .61% .67% .70% .91% .93%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.69% 1.47% 1.41% 1.19% 5.35%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62% 137% 64% 64%
- --------------------------------------------------------------------------------------------------------------
Total return (12.98%) 16.29% 6.73% 16.29% (.50%)(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from July 15, 2004 (inception date) to July 31, 2004.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 45
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007(b)
Net asset value, beginning of period $7.21 $7.57
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08 .03
Net gains (losses) (both realized and
unrealized) (1.00) .20
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.92) .23
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.08)
Distributions from realized gains (.37) (.51)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.41) (.59)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.88 $7.21
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.41% 1.49%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.16% 1.48%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.15% .55%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62%
- --------------------------------------------------------------------------------------------------------------
Total return (13.51%) 3.31%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
46 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007(b)
Net asset value, beginning of period $7.22 $7.57
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .09 .04
Net gains (losses) (both realized and
unrealized) (.99) .20
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.90) .24
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.08)
Distributions from realized gains (.37) (.51)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.43) (.59)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.89 $7.22
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.15% 1.24%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .90% 1.22%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss)(f) 1.41% .81%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62%
- --------------------------------------------------------------------------------------------------------------
Total return (13.26%) 3.46%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 47
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $7.25 $6.76 $6.71 $5.95 $5.45
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(b) .09(b) .07 .05 .03
Net gains (losses) (both realized and
unrealized) (1.00) .98 .36 .91 .61
- ---------------------------------------------------------------------------------------------------------
Total from investment operations (.90) 1.07 .43 .96 .64
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.07) (.07) (.04) (.02)
Distributions from realized gains (.37) (.51) (.31) (.16) (.12)
- ---------------------------------------------------------------------------------------------------------
Total distributions (.44) (.58) (.38) (.20) (.14)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.91 $7.25 $6.76 $6.71 $5.95
- ---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $126 $158 $224 $-- $--
- ---------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .91% .95% .87% 1.18% 1.76%
- ---------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .84% .87% .84% 1.06% .98%
- ---------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.47% 1.29% 1.10% 1.03% .78%
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62% 137% 64% 64%
- ---------------------------------------------------------------------------------------------------------
(13.2-
Total return 6%) 16.15% 6.48% 16.25% 11.87%
- ---------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
- --------------------------------------------------------------------------------
48 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007(b)
Net asset value, beginning of period $7.24 $7.57
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .11 .06
Net gains (losses) (both realized and
unrealized) (1.00) .20
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.89) .26
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.08)
Distributions from realized gains (.37) (.51)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.45) (.59)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.90 $7.24
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) .66% .75%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .66% .74%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.66% 1.28%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62%
- --------------------------------------------------------------------------------------------------------------
Total return (13.09%) 3.76%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 49
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007(b)
Net asset value, beginning of period $7.22 $7.46
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08 .03
Net gains (losses) (both realized and
unrealized) (1.00) .32
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (.92) .35
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.08)
Distributions from realized gains (.37) (.51)
- --------------------------------------------------------------------------------------------------------------
Total distributions (.44) (.59)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $5.86 $7.22
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1,355 $745
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.06% 1.18%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.06% 1.13%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.22% .59%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 58% 62%
- --------------------------------------------------------------------------------------------------------------
Total return (13.52%) 5.01%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
50 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE DISCIPLINED EQUITY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Disciplined Equity Fund (the Fund)
(one of the portfolios constituting the RiverSource Large Cap Series, Inc.) as
of July 31, 2008, and the related statement of operations for the year then
ended, the statements of changes in net assets and the financial highlights for
each of the two years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights of the Fund
for the periods presented through July 31, 2006, were audited by other auditors
whose report dated September 20, 2006, expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2008, by correspondence with the custodian and
brokers, or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 51
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Disciplined Equity Fund of the RiverSource Large Cap
Series, Inc. at July 31, 2008, the results of its operations for the year then
ended, and changes in its net assets and the financial highlights for each of
the two years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 22, 2008
- --------------------------------------------------------------------------------
52 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 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, 2008
<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%
<Caption>
CAPITAL GAIN DISTRIBUTION - the Fund designates $130,545,470 to be taxed as
long-term capital gain.
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 53
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 member oversees 104
RiverSource funds. Board members serve until the next regular shareholders'
meeting or until he or she reaches the mandatory retirement age established by
the Board. Under the current Board policy, members may serve until the end of
the meeting following their 75th birthday, or the fifteenth anniversary of the
first Board meeting they attended as members of the Board, whichever occurs
first. This policy does not apply to Ms. Jones who may retire after her 75th
birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 53
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 72
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Board member since President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. 2002 and Chair of College Inc. (manufactures
Minneapolis, MN 55402 the Board since 2007 irrigation systems)
Age 69
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
54 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 47 President and Chief Executive Officer, Ameriprise
Certificate Company since 2006; Chairman of the Board,
Chief Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 55
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 42 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 42 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. since 2006; Vice
Minneapolis, MN 55474 President, General Counsel and Secretary, Ameriprise
Age 49 Certificate Company since 2005; Vice President -- Asset
Management Compliance, Ameriprise Financial, Inc.,
2004-2005; Senior Vice President and Chief Compliance
Officer, USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 47 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
56 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 57
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement") RiverSource Investments
provides investment advice and other services to the Fund and all RiverSource
funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2008, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 9-10, 2008 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, particularly in the areas of
trading systems, new product initiatives, legal and compliance. Further, in
connection with the Board's evaluation of the overall package of services
provided by RiverSource Investments, the Board considered the quality of the
administrative and transfer agency services provided by RiverSource Investments'
affiliates to the Fund. The Board also reviewed the financial condition of
RiverSource Investments (and its affiliates) and each entity's ability to carry
out its responsibilities under the IMS Agreement. The Board also discussed the
acceptability of the terms of the IMS Agreement (including the relatively broad
scope of services required to be performed by RiverSource Investments). The
Board concluded that the services
- --------------------------------------------------------------------------------
58 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
being performed under the IMS Agreement were of a reasonably high quality,
particularly in light of recent market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods (including since inception), recent Fund
inflows (and outflows) and a comparison of the Fund's net assets from December
2006 to December 2007. The Board observed that the Fund's investment performance
was appropriate in light of the particular management style and market
conditions involved
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability.
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund, with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) was below the peer group's median expense ratio shown in the
reports. The Board also considered the Fund's performance incentive adjustment
and noted its
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT 59
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
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 the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 10, 2008, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement.
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote all 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 RiverSource Funds at (888) 791-3380; contacting your financial
institution; visiting riversource.com/funds; or searching the website of the
Securities and Exchange Commission (SEC) at http://www.sec.gov. Information
regarding how the Fund voted proxies relating to portfolio securities is filed
with the SEC by August 31 for the most recent 12-month period ending June 30 of
that year, and is available without charge by visiting riversource.com/funds; or
searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
60 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2008 ANNUAL REPORT
RIVERSOURCE DISCIPLINED EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., Member FINRA,
and managed by RiverSource Investments, LLC. These companies
are part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6263 H (9/08)
</Table>
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
GROWTH FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2008
(Prospectus also enclosed)
RIVERSOURCE GROWTH FUND SEEKS TO PROVIDE SHAREHOLDERS
WITH LONG-TERM CAPITAL GROWTH.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective,
investment strategy, risks, sales charges,
fees and other matters of interest. Please
read the prospectus carefully before you
invest or send money. (SINGLE-STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Manager Commentary................. 5
The Fund's Long-term Performance... 12
Fund Expenses Example.............. 14
Portfolio of Investments........... 17
Financial Statements............... 23
Notes to Financial Statements...... 29
Report of Independent Registered
Public Accounting Firm........... 53
Federal Income Tax Information..... 55
Board Members and Officers......... 56
Approval of Investment Management
Services Agreement............... 60
Proxy Voting....................... 63
</Table>
(DALBAR LOGO)
The RiverSource mutual fund shareholder reports have
been awarded the Communications Seal from Dalbar Inc.,
an independent financial services research firm. The
Seal recognizes communications demonstrating a level
of excellence in the industry.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Growth Fund (the Fund) Class A shares declined 16.14%, excluding
sales charge, for the 12 months ended July 31, 2008.
> The Fund underperformed its benchmark, the Russell 1000(R) Growth Index, which
fell 6.29% for the same 12-month period.
> The Fund also underperformed its peer group as represented by the Lipper
Large-Cap Growth Funds Index, which declined 4.89% for the same period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------
RiverSource Growth Fund Class A
(excluding sales charge) -16.14% -0.82% +3.94% -1.59%
- ---------------------------------------------------------------------
Russell 1000 Growth Index
(unmanaged) -6.29% +3.57% +6.39% +0.83%
- ---------------------------------------------------------------------
Lipper Large-Cap Growth Funds
Index -4.89% +3.18% +6.20% +0.43%
- ---------------------------------------------------------------------
</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 institution or
visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Net Fund and
Acquired Fund
Total (Underlying Fund)(a)
- ---------------------------------------------
Class A 1.00% 1.04%
- ---------------------------------------------
Class B 1.76% 1.80%
- ---------------------------------------------
Class C 1.76% 1.80%
- ---------------------------------------------
Class I 0.54% 0.58%
- ---------------------------------------------
Class R2 1.36% 1.40%
- ---------------------------------------------
Class R3 1.12% 1.16%
- ---------------------------------------------
Class R4 0.84% 0.88%
- ---------------------------------------------
Class R5 0.61% 0.65%
- ---------------------------------------------
Class W 1.00% 1.04%
- ---------------------------------------------
</Table>
(a) In addition to the Fund's total annual operating expenses that the Fund
bears directly, the Fund's shareholders indirectly bear the expenses of the
acquired funds (affiliated and unaffiliated funds) in which the Fund
invests. The Fund's "Acquired fund fees and expenses," based on its
investment in the acquired funds, was 0.04% for the year ended July 31,
2008.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
3/1/72) -16.14% -0.82% +3.94% -1.59% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -16.78% -1.59% +3.13% -2.35% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -16.78% -1.59% +3.14% N/A -8.18%
- ---------------------------------------------------------------------------
Class I (inception
3/4/04) -15.74% -0.37% N/A N/A +2.54%
- ---------------------------------------------------------------------------
Class R2 (inception
12/11/06) -16.11% N/A N/A N/A -8.04%
- ---------------------------------------------------------------------------
Class R3 (inception
12/11/06) -15.91% N/A N/A N/A -7.82%
- ---------------------------------------------------------------------------
Class R4 (inception
3/20/95) -15.85% -0.59% +4.15% -1.42% N/A
- ---------------------------------------------------------------------------
Class R5 (inception
12/11/06) -15.80% N/A N/A N/A -7.57%
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) -16.15% N/A N/A N/A -7.22%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
3/1/72) -20.97% -2.76% +2.72% -2.10% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -20.95% -2.92% +2.77% -2.35% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -17.61% -1.59% +3.14% N/A -8.18%
- ---------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AT JUNE 30, 2008
SINCE
Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION*
Class A (inception
3/1/72) -17.65% +0.32% +3.84% -1.64% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -18.29% -0.46% +3.04% -2.40% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -18.26% -0.45% +3.05% N/A -8.18%
- ---------------------------------------------------------------------------
Class I (inception
3/4/04) -17.26% +0.77% N/A N/A +2.74%
- ---------------------------------------------------------------------------
Class R2 (inception
12/11/06) -17.62% N/A N/A N/A -8.06%
- ---------------------------------------------------------------------------
Class R3 (inception
12/11/06) -17.43% N/A N/A N/A -7.85%
- ---------------------------------------------------------------------------
Class R4 (inception
3/20/95) -17.37% +0.54% +4.05% -1.47% N/A
- ---------------------------------------------------------------------------
Class R5 (inception
12/11/06) -17.32% N/A N/A N/A -7.60%
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) -17.66% N/A N/A N/A -7.21%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
3/1/72) -22.39% -1.64% +2.62% -2.15% N/A
- ---------------------------------------------------------------------------
Class B (inception
3/20/95) -22.38% -1.81% +2.68% -2.40% N/A
- ---------------------------------------------------------------------------
Class C (inception
6/26/00) -19.08% -0.45% +3.05% N/A -8.18%
- ---------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 3%; fifth year
2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to
a 1% CDSC if shares are sold within one year after purchase. Sales charges do
not apply to Class I, Class R2, Class R3, Class R4, Class R5 and Class W shares.
Class I, Class R2, Class R3, Class R4 and Class R5 are available to
institutional investors only. Class W shares are offered through qualifying
discretionary accounts.
* For classes with less than 10 years performance.
- --------------------------------------------------------------------------------
4 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Dear Shareholder,
RiverSource Growth Fund's Class A shares declined 16.14%, excluding sales
charge, for the fiscal year ended July 31, 2008. The Fund underperformed its
benchmark, the Russell 1000(R) Growth Index (Russell Index), which fell 6.29%,
and its peer group as represented by the Lipper Large-Cap Growth Funds Index,
which declined 4.89% for the same period.
SIGNIFICANT PERFORMANCE FACTORS
Two market trends created a significant headwind for the Fund during the past
fiscal year. Paying attention to value within the growth universe, as we do, was
detrimental during the past year. Additionally, a very narrow group of
companies, mainly global cyclical stocks, led the Russell Index during this
period. The Fund has been underweight in this group compared with the Russell
Index, and became more underweight during the year. We believed these stocks
would come under pressure from slowing global growth, particularly as economic
slowing in developed nations spread to emerging markets and began to depress
commodity prices.
SECTOR DIVERSIFICATION(1) (at July 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Consumer Discretionary 15.7%
- ------------------------------------------------
Consumer Staples 8.5%
- ------------------------------------------------
Energy 1.2%
- ------------------------------------------------
Financials 5.7%
- ------------------------------------------------
Health Care 20.4%
- ------------------------------------------------
Industrials 5.7%
- ------------------------------------------------
Information Technology 20.5%
- ------------------------------------------------
Materials 2.5%
- ------------------------------------------------
Options Purchased 1.0%
- ------------------------------------------------
Telecommunication Services 15.6%
- ------------------------------------------------
Other(2) 3.2%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
(2) Cash & Cash Equivalents. Of the 3.2%, 1.1% is due to security lending
activity and 2.1% is the Fund's cash equivalent position.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
The Fund's stock selections and sector allocations detracted from return
relative to the Russell Index. Positioning in the consumer discretionary,
industrials and energy sectors had the largest negative effect on relative
performance. Conversely, positioning in the consumer staples and technology
sectors added value.
In the consumer discretionary sector, stock selection had a negative effect on
performance. The Fund's media holdings, such as VIRGIN MEDIA and SIRIUS XM
RADIO, underperformed during the period. VIRGIN MEDIA, a British
telecommunications company, received an attractive acquisition bid in July 2007
and subsequently conducted an auction where multiple suitors showed interest.
However, difficulties in the high-yield bond market prevented the company from
completing the auction. Since then the stock price has fallen sharply amid
additional concerns about the company's leverage and susceptibility to economic
weakness. We believe VIRGIN MEDIA'S fundamentals are now better than they were a
year ago, while the stock stands at about half the price. In our view, the
stock's market price has disconnected from the underlying value of the company,
creating an attractive opportunity. We held SIRIUS XM RADIO because we believed
the merger with XM Satellite Radio had a high probability of occurring and that
SIRIUS XM RADIO was worth more as a combined
TOP TEN HOLDINGS (at July 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Virgin Media 6.8%
- ------------------------------------------------
Vodafone Group 5.3%
- ------------------------------------------------
Microsoft 4.1%
- ------------------------------------------------
Sirius XM Radio 4.0%
- ------------------------------------------------
Telefonica 3.6%
- ------------------------------------------------
Pfizer 3.1%
- ------------------------------------------------
Boeing 2.8%
- ------------------------------------------------
Bristol-Myers Squibb 2.7%
- ------------------------------------------------
KKR Private Equity Investors LP Unit 2.6%
- ------------------------------------------------
Genentech 2.4%
- ------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
entity. However, now that the merger has been approved, the market seems to
doubt the viability of the satellite radio business model and is also worried
about the effect of slower automotive sales on the company. We believe SIRIUS XM
RADIO has the ability to make its model work longer term and, in the meantime,
can benefit from merger-related synergies.
Another consumer discretionary company, HARMAN INTERNATIONAL INDUSTRIES, which
manufactures audio and electronic products for automotive, consumer and
professional use, also detracted from return. Early in the period, the stock
declined when a private equity deal to purchase the company fell apart amid the
credit market difficulties. The company now has a new CEO with a long-term plan
to bring the company's cost structure in line. However, weak auto sales and
near-term challenges in executing the strategic plan forced the company to lower
earnings forecasts. We reduced the Fund's holdings of HARMAN INTERNATIONAL
because the fundamental story has weakened. On the positive side, consumer
products company AVON PRODUCTS was a leading contributor to return, benefiting
from strong global growth and a corporate restructuring that is improving
margins and driving earnings growth.
In the industrials sector, stock selection was the main detractor. Having a
smaller energy allocation than the Russell Index was disadvantageous, as energy
stocks led the market during the past fiscal year.
Our focus remains on stocks that appear reasonably valued, can grow faster and
exhibit a better earnings trend than their peers.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
Stock selection in the technology and consumer staples sectors added to return.
In technology, particularly strong results came from communications technology
stocks, including QUALCOMM. In July 2008, the company finally settled its
litigation with Nokia, presenting a clearer outlook for earnings growth. The
company is also benefiting from the transitioning of cell phones to third
generation technology where QUALCOMM has a dominant position across all
technologies.
Also adding to return were biotherapeutics company GENENTECH and German
telecommunications company DEUTSCHE TELEKOM. GENENTECH'S minority owner Roche is
trying to buy out GENENTECH and offered a substantial premium. The market has
also become more optimistic about the company's growth potential in anticipation
of several upcoming studies on GENENTECH cancer treatments. DEUTSCH TELEKOM was
an inexpensive stock that has appreciated based on some improvement in its
earnings trend.
CHANGES TO THE FUND'S PORTFOLIO
We reduced the Fund's energy component because commodity prices rose even
higher, increasing the risk of a reversal. We also believe economic growth rates
in emerging markets appear likely to slow, potentially reducing or eliminating a
key support for energy demand and high commodity prices. We also reduced the
Fund's weighting in the materials sector, selling some precious metals stocks
that had performed well.
We shifted some assets from consumer staples to health care. Consumer staples
was one of the few stable growth segments to perform well in the tough economic
environment and as a result, we believed the stocks had become overvalued
compared to other stable growth groups, such as health care and
telecommunications services.
The Fund had a very small financials allocation at the start of the period. We
made some highly selective purchases during the year, focusing on stocks that
don't seem to have bad news in their futures, but rather, suffered from extreme
weakness due to negative sentiment toward financial stocks as a whole. The Fund
continues to hold moderate exposure to financial stocks.
- --------------------------------------------------------------------------------
8 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
We added to individual stocks where we thought company fundamentals were strong,
but the market bid the stock prices down. Examples include Spanish
telecommunications company TELEFONICA, pharmaceutical firm BRISTOL-MEYERS SQUIBB
and software giant MICROSOFT. We also increased the Fund's holdings of SIRIUS XM
RADIO.
We reduced holdings of HARMAN INTERNATIONAL as discussed above. We also trimmed
the Fund's holdings of technology communications company CISCO because we
consider nearer term fundamentals questionable and the stock valuation
unappealing. We moved to a very small position in GENERAL ELECTRIC because we
see risks to both its financial and global industrial businesses. The turnover
rate for the Fund was 112%.
OUR FUTURE STRATEGY
Our focus remains on stocks that appear reasonably valued, can grow faster and
exhibit a better earnings trend than their peers. Valuation has not worked as a
determinant of stock performance for some time, but we believe there are
indications that sensitivity to value will become more critical. The differences
in valuation among stocks have become increasingly wide, reaching a historically
rare level. In the past, such extreme valuation spreads have foreshadowed a
period when valuation was more important to investors.
With no meaningful signs of an economic turnaround, we believe weakness is
spreading globally and could begin to affect emerging markets. We doubt that the
emerging markets have fully decoupled from the developed nations as many are
suggesting. Consequently, a key driver of results for global cyclical companies
may disappear. Such a scenario should make the earnings growth of more stable
growth stocks, like those in the Fund, more appealing to investors.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
We conclude that whether you are investing in growth stocks or value stocks, the
equity markets are probably entering a period when a stock's valuation will be a
more important factor and its momentum less important.
(PHOTO - NICK THAKORE)
Nick Thakore
Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
- --------------------------------------------------------------------------------
10 RIVERSOURCE GROWTH FUND -- 2008 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 Growth Fund Class A shares (from 8/1/98 to 7/31/08) as
compared to the performance of two widely cited performance indices, the Russell
1000 Growth Index and the Lipper Large-Cap Growth Funds Index. In comparing the
Fund's Class A shares to these indices, you should take into account the fact
that the Fund's performance reflects the maximum sales charge of 5.75%, while
such charges are not reflected in the performance of the indices. Returns for
the Fund include the reinvestment of any distribution 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 institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2008
1 YEAR 3 YEARS 5 YEARS 10 YEARS
RIVERSOURCE GROWTH FUND
(INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $7,903 $9,195 $11,436 $8,025
- ------------------------------------------------------------------------------------------
Average annual total return -20.97% -2.76% +2.72% -2.10%
- ------------------------------------------------------------------------------------------
RUSSELL 1000 GROWTH INDEX(1)
Cumulative value of $10,000 $9,371 $11,110 $13,630 $10,862
- ------------------------------------------------------------------------------------------
Average annual total return -6.29% +3.57% +6.39% +0.83%
- ------------------------------------------------------------------------------------------
LIPPER LARGE-CAP GROWTH FUNDS INDEX(2)
Cumulative value of $10,000 $9,511 $10,985 $13,509 $10,436
- ------------------------------------------------------------------------------------------
Average annual total return -4.89% +3.18% +6.20% +0.43%
- ------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 4.
- --------------------------------------------------------------------------------
12 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE GROWTH FUND LINE
GRAPH)
<Table>
<Caption>
RIVERSOURCE GROWTH
FUND CLASS LIPPER LARGE-CAP
A (INCLUDES RUSSELL 1000 GROWTH FUNDS
SALES CHARGE) GROWTH INDEX(1) INDEX(2)
------------------ --------------- ------------------
'98 $9,425 $10,000 $10,000
'99 11,356 12,404 12,293
'00 14,877 15,428 15,005
'01 8,608 10,019 9,843
'02 6,067 7,139 7,089
'03 6,615 7,970 7,725
'04 6,888 8,648 8,199
'05 8,226 9,776 9,502
'06 8,307 9,702 9,325
'07 9,570 11,591 10,973
'08 8,025 10,862 10,436
</Table>
(1) The Russell 1000 Growth Index, an unmanaged index, measures the performance
of those stocks in the Russell 1000 Index with higher price-to-book ratios
and higher forecasted growth values. The index reflects reinvestment of all
distributions and changes in market prices.
(2) The Lipper Large-Cap Growth Funds Index includes the 30 largest large-cap
growth funds tracked by Lipper Inc. The index's returns include net
reinvested dividends. The Fund's performance is currently measured against
this index for purposes of determining the performance incentive adjustment.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the 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). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the 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, 2008.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
DIRECT DIRECT AND INDIRECT
BEGINNING ENDING EXPENSES EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING
FEB. 1, 2008 JULY 31, 2008 THE PERIOD(A) THE PERIOD(B)
- ------------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 896.00 $4.76 $5.00
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.84 $5.07 $5.32
- ------------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 892.40 $8.33 $8.56
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.06 $8.87 $9.12
- ------------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 892.50 $8.33 $8.56
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.06 $8.87 $9.12
- ------------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 898.30 $2.55 $2.78
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.18 $2.72 $2.97
- ------------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 896.10 $6.41 $6.65
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.10 $6.82 $7.07
- ------------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 897.40 $5.24 $5.47
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.34 $5.57 $5.82
- ------------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 897.60 $3.87 $4.10
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.79 $4.12 $4.37
- ------------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 897.80 $2.93 $3.16
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.78 $3.12 $3.37
- ------------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------------
Actual(c) $1,000 $ 895.90 $4.71 $4.95
- ------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.89 $5.02 $5.27
- ------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 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 1.01% .05% 1.06%
- ----------------------------------------------------------------------
Class B 1.77% .05% 1.82%
- ----------------------------------------------------------------------
Class C 1.77% .05% 1.82%
- ----------------------------------------------------------------------
Class I .54% .05% .59%
- ----------------------------------------------------------------------
Class R2 1.36% .05% 1.41%
- ----------------------------------------------------------------------
Class R3 1.11% .05% 1.16%
- ----------------------------------------------------------------------
Class R4 .82% .05% .87%
- ----------------------------------------------------------------------
Class R5 .62% .05% .67%
- ----------------------------------------------------------------------
Class W 1.00% .05% 1.05%
- ----------------------------------------------------------------------
</Table>
(a) Expenses are equal to the Fund's annualized expense ratio for each class,
multiplied by the average account value over the period, multiplied by
182/366 (to reflect the one-half year period).
(b) Expenses are equal to the Fund's annualized expense ratio for each class
plus the acquired fund fees and expenses, multiplied by the average account
value over the period, multiplied by 182/366 (to reflect the one-half year
period).
(c) Based on the actual return for the six months ended July 31, 2008: -10.40%
for Class A, -10.76% for Class B, -10.75% for Class C, -10.17% for Class I,
-10.39% for Class R2, -10.26% for Class R3, -10.24% for Class R4, -10.22%
for Class R5 and -10.41% for Class W.
- --------------------------------------------------------------------------------
16 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (95.3%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (2.8%)
Boeing 1,009,089 $61,665,429
- -------------------------------------------------------------------------------------
AIRLINES (0.3%)
Northwest Airlines 523,670(b) 4,796,817
UAL 256,858 2,134,490
---------------
Total 6,931,307
- -------------------------------------------------------------------------------------
BEVERAGES (2.4%)
Coca-Cola 640,617 32,991,775
Molson Coors Brewing Cl B 130,344 7,034,666
PepsiCo 187,892 12,506,092
---------------
Total 52,532,533
- -------------------------------------------------------------------------------------
BIOTECHNOLOGY (4.7%)
Amgen 526,236(b) 32,958,161
Genentech 553,388(b) 52,710,207
Genzyme 148,199(b) 11,359,453
ImClone Systems 96,773(b) 6,186,698
---------------
Total 103,214,519
- -------------------------------------------------------------------------------------
CAPITAL MARKETS (3.1%)
KKR Private Equity Investors LP Unit 4,197,361 55,406,164
Lehman Brothers Holdings 347,240 6,021,142
Oaktree Capital Group LLC Cl A Unit 246,000(d,h) 6,888,000
---------------
Total 68,315,306
- -------------------------------------------------------------------------------------
COMMERCIAL BANKS (--%)
Wachovia 41,820 722,231
- -------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (7.0%)
Cisco Systems 1,111,240(b) 24,436,168
Motorola 342,377 2,958,137
Nokia 1,177,400(c,j) 32,131,033
Nokia ADR 1,261,829(c) 34,473,168
Nortel Networks 549(b,c) 4,194
QUALCOMM 919,526 50,886,569
Starent Networks 565,584(b,e) 7,409,150
---------------
Total 152,298,419
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (2.1%)
Apple 115,848(b) 18,414,039
EMC 583,727(b) 8,761,742
Hewlett-Packard 352,176 15,777,485
SanDisk 156,076(b) 2,200,672
---------------
Total 45,153,938
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (1.7%)
Apollo Mgmt LP 1,690,500(d,h) 23,667,000
Interactive Brokers Group Cl A 196,880(b) 5,524,453
KKR Financial Holdings LLC 799,612 8,212,015
---------------
Total 37,403,468
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (8.5%)
AT&T 412,927 12,722,281
Deutsche Telekom 2,485,460(c) 43,020,807
Embarq 122,360 5,600,417
Qwest Communications Intl 4,745,445 18,175,054
Telefonica 2,995,486(c) 77,718,236
Telefonica ADR 157,260(c) 12,239,546
Verizon Communications 423,090 14,401,984
---------------
Total 183,878,325
- -------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (--%)
Gamesa Tecnologica 22,505(c) 1,069,918
- -------------------------------------------------------------------------------------
FOOD PRODUCTS (0.2%)
Sara Lee 367,423 5,018,998
- -------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.4%)
Boston Scientific 1,965,620(b) 23,371,222
Medtronic 140,934 7,445,543
---------------
Total 30,816,765
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 17
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HEALTH CARE PROVIDERS & SERVICES (4.2%)
AmerisourceBergen 321,167 $13,447,262
Cardinal Health 337,722 18,145,803
Express Scripts 67,879(b) 4,788,185
Humana 280,672(b) 12,324,308
McKesson 465,383 26,056,794
Medco Health Solutions 242,748(b) 12,035,446
UnitedHealth Group 175,540 4,929,163
---------------
Total 91,726,961
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (0.1%)
Starbucks 158,099(b) 2,322,474
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.5%)
Harman Intl Inds 251,890 10,370,311
Jarden 36,185(b) 869,526
---------------
Total 11,239,837
- -------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (1.4%)
Colgate-Palmolive 190,043 14,114,494
Procter & Gamble 247,700 16,219,396
---------------
Total 30,333,890
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (0.6%)
Siemens 47,944(c) 5,827,378
Textron 155,787 6,772,061
---------------
Total 12,599,439
- -------------------------------------------------------------------------------------
INSURANCE (0.3%)
AFLAC 102,950 5,725,049
Prudential Financial 16,782 1,157,455
---------------
Total 6,882,504
- -------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL (0.7%)
Expedia 823,655(b) 16,118,928
- -------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (1.5%)
Google Cl A 65,124(b) 30,852,495
Yahoo! 52,282(b) 1,039,889
---------------
Total 31,892,384
- -------------------------------------------------------------------------------------
IT SERVICES (0.7%)
MasterCard Cl A 59,864 14,615,796
Redecard 63,600(c) 1,174,466
---------------
Total 15,790,262
- -------------------------------------------------------------------------------------
MACHINERY (0.1%)
Flowserve 10,826 1,443,539
- -------------------------------------------------------------------------------------
MEDIA (14.4%)
Comcast Cl A 1,163,000 23,981,060
Liberty Entertainment Series A 488,465(b,g) 12,026,008
Liberty Media -- Capital Series A 52,545(b,g) 816,549
News Corp Cl A 1,131,017 15,981,270
Sirius XM Radio 54,167,369(b,j) 86,667,790
Time Warner 1,188,300 17,016,456
Time Warner Cable Cl A 189,731(b) 5,394,052
Virgin Media 13,151,621(h) 147,561,188
WorldSpace Cl A 447,419(b,e) 590,593
---------------
Total 310,034,966
- -------------------------------------------------------------------------------------
METALS & MINING (2.5%)
Coeur d'Alene Mines 7,242,276(b,e) 20,930,178
Lihir Gold 4,979,621(b,c) 12,939,420
Newmont Mining 246,590 11,826,456
Timminco 379,173(b,c,e) 8,963,550
---------------
Total 54,659,604
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (1.2%)
Chevron 26,954 2,279,230
ConocoPhillips 27,224 2,222,023
Exxon Mobil 264,068 21,238,989
---------------
Total 25,740,242
- -------------------------------------------------------------------------------------
PERSONAL PRODUCTS (2.0%)
Avon Products 791,974 33,579,697
Herbalife 240,929(c) 10,405,724
---------------
Total 43,985,421
- -------------------------------------------------------------------------------------
PHARMACEUTICALS (10.1%)
Bristol-Myers Squibb 2,769,452 58,490,826
Elan ADR 94,982(b,c) 1,904,389
Eli Lilly & Co 161,691 7,617,263
Johnson & Johnson 55,266 3,784,063
Merck & Co 1,335,016 43,922,026
Pfizer 3,608,236 67,365,766
Schering-Plough 689,509 14,534,850
Wyeth 475,433 19,264,545
---------------
Total 216,883,728
- -------------------------------------------------------------------------------------
ROAD & RAIL (1.8%)
Hertz Global Holdings 4,662,027(b) 39,767,090
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.2%)
Advanced Micro Devices 918,531(b) 3,867,016
Cypress Semiconductor 78,257(b) 2,132,503
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (CONT.)
Himax Technologies ADR 1,204,350(c) $4,576,530
Infineon Technologies 946,516(b,c) 7,105,431
Intel 1,177,376 26,125,974
Micron Technology 971,352(b) 4,691,630
ON Semiconductor 144,324(b) 1,355,202
Spansion Cl A 4,774,024(b) 10,932,515
Texas Instruments 382,833 9,333,469
---------------
Total 70,120,270
- -------------------------------------------------------------------------------------
SOFTWARE (5.9%)
Electronic Arts 115,262(b) 4,977,013
Microsoft 3,473,733 89,344,413
Nintendo ADR 576,794(c) 33,381,953
---------------
Total 127,703,379
- -------------------------------------------------------------------------------------
SPECIALTY RETAIL (--%)
Office Depot 49,757(b) 338,348
- -------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.4%)
Freddie Mac 1,105,068 9,028,406
- -------------------------------------------------------------------------------------
TOBACCO (2.4%)
Altria Group 761,251 15,491,458
Philip Morris Intl 702,635 36,291,098
---------------
Total 51,782,556
- -------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (7.1%)
Sprint Nextel 178,341 1,451,696
Turkcell ADR 170,844(c) 3,297,289
Vodafone Group 42,642,386(c) 114,228,498
Vodafone Group ADR 1,317,422(c) 35,346,432
---------------
Total 154,323,915
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $2,392,119,954) $2,073,739,299
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
OPTIONS PURCHASED (1.0%)
EXERCISE EXPIRATION
ISSUER CONTRACTS PRICE DATE VALUE(a)
CALLS
Altria Group(i)
Virgin Media(i)
Vodafone Group ADR(i) 409,530 $100.00 Jan. 2009 $483,245
AmeriSource-Bergen(i)
Bristol-Myers Squibb(i)
Nokia ADR(i) 370,200 100.00 Jan. 2009 818,142
Hertz Global Holdings(i)
Telefonica(i)
Vodafone Group ADR(i) 322,776 100.00 Jan. 2009 226,201
Hong Kong Dollar 1,727,158 7.73 March 2009 384,465
Nokia 8,158 15.00 Dec. 2008 4,389,791
Nokia 12,254 18.00 Dec. 2008 3,029,341
Nokia ADR 3,548 25.00 Jan. 2009 1,507,900
Sirius XM Radio 14,542 9.00 Aug. 2008 72,710
Sirius XM Radio(i)
Virgin Media(i)
Vodafone Group ADR(i) 364,026 100.00 Jan. 2009 91,007
- -------------------------------------------------------------------------------------
PUTS
Goldman Sachs Group 401,882 446.25 Aug. 2008 1,811,321
NASDAQ 100 Index 46,514 43.00 Aug. 2008 1,162,850
Research in Motion 1,808 115.00 Dec. 2008 2,165,081
S&P 500 Index 1,749 1,240.00 Aug. 2008 2,317,425
S&P 500 Index 1,980 1,260.00 Aug. 2008 3,969,900
- -------------------------------------------------------------------------------------
TOTAL OPTIONS PURCHASED
(Cost: $37,731,398) $22,429,379
- -------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (3.2%)(f)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 2.54% 68,827,880(k) $68,827,880
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $68,827,880) $68,827,880
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $2,498,679,232)(l) $2,164,996,558
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 19
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JULY 31, 2008
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION
- -----------------------------------------------------------------------------------------
Aug. 5, 2008 1,079,383 692,391 $538
U.S. Dollar European Monetary Unit
- -----------------------------------------------------------------------------------------
Sept. 4, 2008 36,028,000 71,855,324 608,274
British Pound U.S. Dollar
- -----------------------------------------------------------------------------------------
Sept. 5, 2008 10,586,000 10,075,967 150,112
Australian Dollar U.S. Dollar
- -----------------------------------------------------------------------------------------
Sept. 5, 2008 27,368,000 54,592,044 474,837
British Pound U.S. Dollar
- -----------------------------------------------------------------------------------------
Sept. 11, 2008 70,034,000 109,379,802 308,884
European Monetary Unit U.S. Dollar
- -----------------------------------------------------------------------------------------
Sept. 12, 2008 60,462,000 94,320,720 157,230
European Monetary Unit U.S. Dollar
- -----------------------------------------------------------------------------------------
Total $1,699,875
- -----------------------------------------------------------------------------------------
</Table>
OPEN OPTIONS CONTRACTS WRITTEN AT JULY 31, 2008
<Table>
<Caption>
NUMBER OF EXERCISE PREMIUM EXPIRATION
ISSUER PUTS/CALLS CONTRACTS PRICE RECEIVED DATE VALUE(a)
- ----------------------------------------------------------------------------------------
Nokia Call 12,254 E 18 $1,515,038 Dec. 2008 $3,029,341
Research in Put 1,808 $ 100 1,378,502 Dec. 2008 1,184,240
Motion
S&P 500 Index Put 1,980 1,220 1,281,060 Aug. 2008 1,712,700
S&P 500 Index Put 1,749 1,200 1,307,937 Aug. 2008 953,205
Sirius XM Radio Call 14,542 10 647,535 Aug. 2008 36,355
- ----------------------------------------------------------------------------------------
Total $6,915,841
- ----------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in U.S. dollar currency unless otherwise
noted. At July 31, 2008, the value of foreign securities represented 20.2%
of net assets.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At July 31,
2008, the value of these securities amounted to $30,555,000 or 1.4% of net
assets.
(e) At July 31, 2008, security was partially or fully on loan. See Note 5 to
the financial statements.
(f) Cash collateral received from security lending activity is invested in an
affiliated money market fund and represents 1.1% of net assets. See Note 5
to the financial statements. The Fund's cash equivalent position is 2.1% of
net assets.
- --------------------------------------------------------------------------------
20 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(g) 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.
(h) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). These securities may be valued at fair
value according to procedures approved, in good faith, by the Fund's Board
of Directors. Information concerning such security holdings at July 31,
2008, is as follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
- ----------------------------------------------------------------------------
Apollo Mgmt LP* 08-02-07 thru 03-07-08 $37,534,010
Oaktree Capital Group LLC Cl A
Unit* 05-21-07 thru 11-19-07 9,952,680
Virgin Media 07-19-06 thru 07-09-08 255,754,031
</Table>
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(i) Represents a worst-of-call-option that is a bundle of long forwards. All
mature on the option's expiration date but have different underliers. At
expiration, only one settles and this is chosen in the issuer's favor.
(j) At July 31, 2008, securities valued at $35,767,664 were held to cover open
call options written. See Note 6 to the financial statements.
(k) Affiliated Money Market Fund -- See Note 7 to the financial statements. The
rate shown is the seven-day current annualized yield at July 31, 2008.
(l) At July 31, 2008, the cost of securities for federal income tax purposes
was $2,575,032,211 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $77,946,593
Unrealized depreciation (487,982,246)
- ------------------------------------------------------------
Net unrealized depreciation $(410,035,653)
- ------------------------------------------------------------
</Table>
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 21
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at riversource.com/funds.
- --------------------------------------------------------------------------------
22 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
FINANCIAL STATEMENTS -----------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $2,429,851,352) $2,096,168,678
Affiliated money market fund (identified cost $68,827,880) 68,827,880
- -----------------------------------------------------------------------------
Total investments in securities (identified cost
$2,498,679,232) 2,164,996,558
Cash 2,150,010
Capital shares receivable 436,884
Dividends and accrued interest receivable 7,065,881
Receivable for investment securities sold 82,731,017
Unrealized appreciation on forward foreign currency contracts 1,699,875
- -----------------------------------------------------------------------------
Total assets 2,259,080,225
- -----------------------------------------------------------------------------
LIABILITIES
Options contracts written, at value (premiums received
$6,130,072) 6,915,841
Capital shares payable 4,510,976
Payable for investment securities purchased 45,582,789
Payable upon return of securities loaned 24,777,000
Accrued investment management services fees 34,992
Accrued distribution fees 16,524
Accrued transfer agency fees 7,695
Accrued administrative services fees 3,200
Accrued plan administration services fees 391
Other accrued expenses 337,340
Collateral and deposits payable 1,578,358
- -----------------------------------------------------------------------------
Total liabilities 83,765,106
- -----------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $2,175,315,119
- -----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 23
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
JULY 31, 2008
<Table>
<Caption>
REPRESENTED BY
Capital stock -- $.01 par value $ 803,094
Additional paid-in capital 2,783,876,357
Undistributed net investment income 1,574,083
Accumulated net realized gain (loss) (278,240,488)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (332,697,927)
- -----------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $2,175,315,119
- -----------------------------------------------------------------------------
*Including securities on loan, at value $ 18,554,548
- -----------------------------------------------------------------------------
</Table>
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $1,590,672,418 58,435,801 $27.22(1)
Class B $ 189,224,073 7,631,999 $24.79
Class C $ 13,114,426 530,243 $24.73
Class I $ 326,363,923 11,697,509 $27.90
Class R2 $ 4,280 155 $27.61
Class R3 $ 4,286 155 $27.65
Class R4 $ 55,923,087 2,013,270 $27.78
Class R5 $ 4,290 155 $27.68
Class W $ 4,336 157 $27.62
- -------------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $28.88. 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.
- --------------------------------------------------------------------------------
24 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 48,200,617
Interest 7,186
Income distributions from affiliated money market fund 4,168,447
Fee income from securities lending 931,265
Less foreign taxes withheld (1,469,526)
- ----------------------------------------------------------------------------
Total income 51,837,989
- ----------------------------------------------------------------------------
Expenses:
Investment management services fees 12,541,267
Distribution fees
Class A 5,186,203
Class B 3,166,050
Class C 179,547
Class R2 24
Class R3 12
Class W 12
Transfer agency fees
Class A 4,354,973
Class B 712,528
Class C 38,952
Class R2 3
Class R3 3
Class R4 56,338
Class R5 3
Class W 10
Administrative services fees 1,477,804
Plan administration services fees
Class R2 12
Class R3 12
Class R4 281,689
Compensation of board members 52,406
Custodian fees 333,560
Printing and postage 536,305
Registration fees 83,595
Professional fees 65,391
Other 98,773
- ----------------------------------------------------------------------------
Total expenses 29,165,472
Expenses waived/reimbursed by the Investment Manager and
its affiliates (195,742)
Earnings and bank fee credits on cash balances (123,553)
- ----------------------------------------------------------------------------
Total net expenses 28,846,177
- ----------------------------------------------------------------------------
Investment income (loss) -- net 22,991,812
- ----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 25
STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED JULY 31, 2008
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $ 41,629,262
Foreign currency transactions (22,669,790)
Options contracts written (3,638,346)
Swap transactions 3,123,946
- ----------------------------------------------------------------------------
Net realized gain (loss) on investments 18,445,072
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (492,536,692)
- ----------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (474,091,620)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(451,099,808)
- ----------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 22,991,812 $ 22,797,497
Net realized gain (loss) on investments 18,445,072 245,132,519
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (492,536,692) 227,422,901
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (451,099,808) 495,352,917
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (18,613,899) (17,087,134)
Class C (35,082) (21,069)
Class I (3,250,974) (3,983,286)
Class R2 (34) (55)
Class R3 (46) (55)
Class R4 (1,320,924) (1,999,289)
Class R5 (63) (56)
Class W (42) (55)
- ----------------------------------------------------------------------------------------------
Total distributions (23,221,064) (23,090,999)
- ----------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 27
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 158,922,224 $ 279,305,597
Class B shares 21,028,069 40,223,465
Class C shares 2,204,302 3,730,834
Class I shares 38,802,667 102,896,983
Class R2 shares -- 5,000
Class R3 shares -- 5,000
Class R4 shares 25,787,191 28,815,906
Class R5 shares -- 5,000
Class W shares -- 5,000
Fund merger (Note 10)
Class A shares 18,206,825 N/A
Class B shares 5,395,871 N/A
Class C shares 739,026 N/A
Class I shares 161,620,525 N/A
Class R4 shares 39,465 N/A
Reinvestment of distributions at net asset value
Class A shares 18,132,589 16,669,054
Class C shares 34,035 20,543
Class I shares 3,250,578 3,983,218
Class R4 shares 1,320,795 1,999,289
Payments for redemptions
Class A shares (642,466,071) (574,909,608)
Class B shares (151,381,443) (201,026,288)
Class C shares (7,113,707) (4,753,464)
Class I shares (132,345,429) (110,663,694)
Class R4 shares (99,292,710) (184,854,678)
- ----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions (577,115,198) (598,542,843)
- ----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (1,051,436,070) (126,280,925)
Net assets at beginning of year 3,226,751,189 3,353,032,114
- ----------------------------------------------------------------------------------------------
Net assets at end of year $ 2,175,315,119 $3,226,751,189
- ----------------------------------------------------------------------------------------------
Undistributed net investment income $ 1,574,083 $ 21,380,472
- ----------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Growth Fund (the Fund) is a series of RiverSource Large Cap Series,
Inc. and is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. RiverSource Large Cap
Series, Inc. has 10 billion authorized shares of capital stock that can be
allocated among the separate series as designated by the Board of Directors (the
Board). The Fund invests primarily in common stocks of U.S. and foreign
companies that appear to offer growth opportunities.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class
R4, Class R5 and Class W shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a
front-end sales charge or CDSC and are offered to qualifying institutional
investors.
- - Class W shares are sold without a front-end sales charge or CDSC and are
offered through qualifying discretionary accounts.
At July 31, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares and the Investment Manager owned 100% of Class R2, Class R3,
Class R5 and Class W shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
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.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 29
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
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 New York Stock Exchange 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 New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange. Swap transactions are valued through an authorized pricing
service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost.
ILLIQUID SECURITIES
At July 31, 2008, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at July 31, 2008 was
$178,116,188 representing 8.2% of net assets. These securities may be valued at
fair value according to procedures approved, in good faith, by the Board.
According to Board guidelines, certain unregistered securities are determined to
be liquid and are not included within the 15% limitation specified above. Assets
are liquid if they can be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the asset is valued by the
Fund.
- --------------------------------------------------------------------------------
30 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Fund may buy and write options traded on any
U.S. or foreign exchange or in the over-the-counter market where completing the
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options trades.
Cash collateral held by the Fund for such option trades must be returned to the
counterparty upon closure, exercise or expiration of the contract. The Fund also
may buy and sell put and call options and write covered call options on
portfolio securities as well as write cash-secured put options. The risk in
writing a call option is that the Fund gives up the opportunity for profit if
the market price of the security increases. The risk in writing a put option is
that the Fund may incur a loss if the market price of the security decreases and
the option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include 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.
Futures are valued daily based upon the last sale price at the close of 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. At July 31, 2008, the Fund
had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
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
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 31
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.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the other party will not
complete its contract obligations.
TOTAL RETURN EQUITY SWAP TRANSACTIONS
The Fund may enter into swap agreements to gain exposure to the total return on
a specified security, basket of securities or security indexes during the
specified period, in return for periodic payments based on a fixed or variable
interest rate. Total return swap agreements may be used to obtain exposure to a
security or market without owning or taking physical custody of such security or
market. Under the terms of a total return equity swap agreement, payments made
by the Fund or the counterparty are based on the total return of a particular
reference asset or assets (such as an equity security, a combination of such
securities, or an index). That is, one party agrees to pay another party the
return on a stock, basket of stocks, or stock index in return for a specified
interest rate.
The notional amounts of swap contracts are not recorded in the financial
statements. Swap contracts are valued daily, and the change in value is recorded
as unrealized appreciation (depreciation) until the termination of the swap, at
which time realized gain (loss) is recorded. Payments received or made are
recorded as realized gains (losses).
Swap agreements may be subject to liquidity risk, which exists when a particular
swap is difficult to purchase or sell. It may not be possible for the Fund to
initiate a transaction or liquidate a position at an advantageous time or price,
which may result in significant losses. Total return swaps are subject to the
risk associated with the investment in the underlying securities and also the
risk of the counterparty not fulfilling its obligations under the agreement. At
July 31, 2008, the Fund had no outstanding total return equity swap contracts.
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
- --------------------------------------------------------------------------------
32 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
providers contain general indemnification clauses. The Fund's maximum exposure
under these arrangements is unknown since the amount of any future claims that
may be made against the Fund cannot be determined and the Fund has no historical
basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes," clarifies the accounting for
uncertainty in income taxes recognized in accordance with FASB Statement 109,
"Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize
and measure a tax position taken or expected to be taken in a tax return. The
first step is to determine whether a tax position has met the more-likely-than-
not recognition threshold and the second step is to measure a tax position that
meets the threshold to determine the amount of benefit to recognize. Management
of the Fund has concluded that there are no significant uncertain tax positions
that would require recognition in the financial statements. Generally, the tax
authorities can examine all the tax returns filed for the last three years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of options contracts,
foreign currency transactions, recognition of unrealized appreciation
(depreciation) for certain derivative investments, investments in partnerships,
post-October losses and losses deferred due to wash sales. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions, the fiscal year in
which amounts are distributed may differ from the year that the income or
realized gains (losses) were recorded by the Fund.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by
$15,360,642 and accumulated net realized loss has been decreased by $12,893,994
resulting in a net reclassification adjustment to increase paid-in capital by
$2,466,648.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 33
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007*
- -----------------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income.................... $18,613,899 $17,087,134
Long-term capital gain............. -- --
CLASS B
Distributions paid from:
Ordinary income.................... -- --
Long-term capital gain............. -- --
CLASS C
Distributions paid from:
Ordinary income.................... 35,082 21,069
Long-term capital gain............. -- --
CLASS I
Distributions paid from:
Ordinary income.................... 3,250,974 3,983,286
Long-term capital gain............. -- --
CLASS R2
Distributions paid from:
Ordinary income.................... 34 55
Long-term capital gain............. -- --
CLASS R3
Distributions paid from:
Ordinary income.................... 46 55
Long-term capital gain............. -- --
CLASS R4
Distributions paid from:
Ordinary income.................... 1,320,924 1,999,289
Long-term capital gain............. -- --
CLASS R5
Distributions paid from:
Ordinary income.................... 63 56
Long-term capital gain............. -- --
CLASS W
Distributions paid from:
Ordinary income.................... 42 55
Long-term capital gain............. -- --
</Table>
* Class R2, Class R3 and Class R5 are for the period from Dec. 11, 2006
(inception date) to July 31, 2007. Class W is for the period from Dec. 1, 2006
(inception date) to July 31, 2007.
- --------------------------------------------------------------------------------
34 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
At July 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income................. $ 5,844,093
Undistributed accumulated long-term gain...... $ --
Accumulated realized loss..................... $(202,027,584)
Unrealized appreciation (depreciation)........ $(413,180,841)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. Funds are required
to provide enhanced disclosures about (a) how and why a fund uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect a fund's financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
Nov. 15, 2008. As of July 31, 2008, management does not believe the adoption of
SFAS 161 will impact the financial statement amounts; however, additional
footnote disclosures may be required about the use of derivative instruments and
hedging items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. The application of SFAS 157
will be effective for the Fund's fiscal year beginning Aug. 1, 2008. The
adoption of SFAS 157 is not anticipated to have a material impact on the Fund's
financial statements; however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of certain
measurements reported in the Statement of Operations for a fiscal period.
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,
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 35
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
2. 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 a percentage of the Fund's average daily net assets that declines from 0.60%
to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Large-Cap Growth Funds Index. In certain
circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than 0.50%,
the adjustment will be zero. The adjustment decreased the management fee by
$3,707,468 for the year ended July 31, 2008. The management fee for the year
ended July 31, 2008 was 0.45% of the Fund's average daily net assets, including
the adjustment under the terms of the performance incentive arrangement.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.06% to 0.03% annually as the
Fund's assets increase. The fee for the year ended July 31, 2008 was 0.05% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended, July 31,
2008, other expenses paid to this company were $12,107.
COMPENSATION OF BOARD MEMBERS
Compensation of board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
- --------------------------------------------------------------------------------
36 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares and an annual asset-based fee at a rate of 0.20% of the Fund's average
daily net assets attributable to Class W shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees on the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Prior to Oct. 1, 2007, Ameriprise
Financial Services, Inc. also served as a principal underwriter and distributor
to the Fund. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1,
the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily
net assets attributable to Class A, Class R3 and Class W shares, a fee at an
annual rate of up to 0.50% of the Fund's average daily net assets attributable
to Class R2 shares and a fee at an annual rate of up to 1.00% of the Fund's
average daily net assets attributable to Class B and Class C shares. For Class B
and Class C shares, up to 0.75% of the fee is reimbursed for distribution
expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $5,875,000 and $128,000
for Class B and Class C shares, respectively. These amounts are based on the
most recent information available as of July 31, 2008, 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 received by the Distributor for distributing Fund shares were
$1,732,402 for Class A, $267,901 for Class B and $3,193 for Class C for the year
ended July 31, 2008.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 37
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2008, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*) were as follows:
<Table>
Class R2............................................ 1.11%
Class R3............................................ 0.86
Class R4............................................ 0.66
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2......................................... $ 12
Class R3......................................... 12
Class R4......................................... 195,718
</Table>
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until July 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the Fund's average daily net assets:
<Table>
Class R4............................................ 0.97%
</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.
EARNINGS AND BANK FEE CREDITS
During the year ended July 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $123,553 as a result of earnings and bank fee credits from
overnight cash balances. The Fund pays custodian fees to Ameriprise Trust
Company, a subsidiary of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $3,235,230,035 (including $199,606,656 from RiverSource
Fundamental Growth Fund that was acquired in the fund merger as described in
Note 10) and $3,845,558,468, respectively, for the year ended July 31, 2008.
Realized gains and losses are determined on an identified cost basis.
- --------------------------------------------------------------------------------
38 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008
ISSUED FOR
FUND REINVESTED NET
SOLD MERGER DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------------
Class A 5,325,900 647,067 561,728 (21,198,973) (14,664,278)
Class B 733,992 209,948 -- (5,712,960) (4,769,020)
Class C 78,462 28,823 1,155 (261,120) (152,680)
Class I 1,272,282 5,614,412 98,532 (4,180,720) 2,804,506
Class R4 815,040 1,376 40,170 (3,217,095) (2,360,509)
- ----------------------------------------------------------------------------------------
<Caption>
YEAR ENDED JULY 31, 2007
ISSUED FOR
FUND REINVESTED NET
SOLD MERGER DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------------
Class A 8,592,129 N/A 525,999 (18,184,913) (9,066,785)
Class B 1,395,545 N/A -- (6,731,640) (5,336,095)
Class C 129,341 N/A 709 (165,607) (35,557)
Class I 3,255,973 N/A 123,015 (3,216,500) 162,488
Class R2* 155 N/A -- -- 155
Class R3* 155 N/A -- -- 155
Class R4 887,179 N/A 62,013 (5,678,782) (4,729,590)
Class R5* 155 N/A -- -- 155
Class W** 157 N/A -- -- 157
- ----------------------------------------------------------------------------------------
</Table>
*For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
**For the period from Dec. 1, 2006 (inception date) to July 31, 2007.
5. LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend securities
representing up to one-third of the value of its total assets (which includes
collateral for securities on loan) to broker-dealers, banks, or other
institutional borrowers of securities. The Fund receives collateral in the form
of cash and U.S. government securities, equal to at least 100% of the value of
securities loaned, which is marked to the market value of the loaned securities
daily until the securities are returned, e.g., if the value of the securities on
loan increases, additional cash collateral is provided by the borrower. The
Investment Manager serves as securities lending agent for the Fund under the
Investment Management Services Agreement pursuant to which the Fund has agreed
to reimburse the Investment Manager for expenses incurred by it in connection
with the lending program, and pursuant to guidelines adopted by and under the
oversight of the Board. At July 31, 2008, securities valued at $18,554,548 were
on loan to brokers. For collateral, the Fund received $24,777,000 in cash. Cash
collateral received is
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 39
invested in an affiliated money market fund and short-term securities, including
U.S. government securities or other high-grade debt obligations, which are
included in the Portfolio of Investments. Income from securities lending
amounted to $931,265 for the year ended July 31, 2008. Expenses paid to the
Investment Manager as securities lending agent were $10,108 for the year ended
July 31, 2008, which are included in other expenses on the Statement of
Operations. The risks to the Fund of securities lending are that the borrower
may not provide additional collateral when required or return the securities
when due.
6. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written are as follows:
<Table>
<Caption>
CALLS PUTS
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- ---------------------------------------------------------------------------
Balance July 31, 2007 36,314 $ 5,116,314 25,224 $ 3,203,448
Opened 304,969 11,137,724 90,000 19,502,848
Closed (224,770) (11,868,541) (107,979) (17,746,415)
Expired (89,717) (2,222,924) (1,708) (992,382)
- ---------------------------------------------------------------------------
Balance July 31, 2008 26,796 $ 2,162,573 5,537 $ 3,967,499
- ---------------------------------------------------------------------------
</Table>
See Note 1 "Summary of Significant Accounting Policies."
7. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Funds purchases and proceeds from sales of shares of RiverSource Short-Term Cash
Fund aggregated $1,541,962,691 and $1,549,005,592, respectively, for the year
ended July 31, 2008. The income distributions received with respect to the
Fund's investment in RiverSource Short-Term Cash Fund can be found on the
Statement of Operations and the Fund's invested balance in RiverSource Short-
Term Cash Fund at July 31, 2008, can be found in the Portfolio of Investments.
8. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A. (JPMCB), 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. 18, 2007, replacing a
prior credit facility. The credit facility agreement, which is a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permits collective borrowings up to $500 million. Interest is
charged to each Fund based on its borrowings at a rate equal to the
- --------------------------------------------------------------------------------
40 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
federal funds rate plus 0.30%. Each borrowing under the credit facility matures
no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the amount of the credit facility
at a rate of 0.06% per annum. Under the prior credit facility, a Fund paid
interest on its outstanding borrowings at a rate equal to either the higher of
the federal funds effective rate plus 0.40% or the JPMCB Prime Commercial
Lending Rate. The Fund had no borrowings during the year ended July 31, 2008.
9. CAPITAL LOSS CARRY-OVER, POST OCTOBER LOSS AND RECOGNIZED BUILT-IN LOSSES
For federal income tax purposes, the Fund had a capital loss carry-over of
$178,158,939 at July 31, 2008, that if not offset by capital gains will expire
in 2011.
Because the measurement periods for a regulated investment company's income are
different for excise tax purposes versus income tax purposes, special rules are
in place to protect the amount of earnings and profits needed to support excise
tax distributions. As a result, the Fund is permitted to treat net capital
losses realized between Nov. 1, 2007 and its fiscal year end ("post-October
loss") as occurring on the first day of the following tax year. At July 31,
2008, the Fund had a post October loss of $22,735,098 that is treated for income
tax purposes as occurring on Aug. 1, 2008.
The Fund had recognized built-in losses of $1,133,547 at July 31, 2008, that if
not offset by capital gains will expire in 2017. As a result of the fund merger
(Note 10) the Fund acquired unrealized capital losses, which are limited by
Internal Revenue Code section 382.
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over and recognized built-
in losses have been offset or expire.
10. FUND MERGER
At the close of business on March 14, 2008, RiverSource Growth Fund acquired the
assets and assumed the identified liabilities of RiverSource Fundamental Growth
Fund. The reorganization was completed after shareholders approved the plan on
Jan. 29, 2008.
The aggregate net assets of RiverSource Growth Fund immediately before the
acquisition were $2,444,672,413 and the combined net assets immediately after
the acquisition were $2,630,674,125.
The merger was accomplished by a tax-free exchange of 36,872,082 shares of
RiverSource Fundamental Growth Fund valued at $186,001,712.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 41
In exchange for the RiverSource Fundamental Growth Fund shares and net assets,
RiverSource Growth Fund issued the following number of shares:
<Table>
<Caption>
SHARES
- ------------------------------------------------------------
Class A.......................................... 647,067
Class B.......................................... 209,948
Class C.......................................... 28,823
Class I.......................................... 5,614,412
Class R4......................................... 1,376
</Table>
RiverSource Fundamental Growth Fund's net assets after adjustments for any
permanent book-to-tax differences at the merger date were as follows, which
include the following amounts of capital stock, unrealized depreciation,
accumulated net realized gain and excess of distributions over net investment
income.
<Table>
<Caption>
EXCESS OF
ACCUMULATED DISTRIBUTIONS OVER
TOTAL CAPITAL UNREALIZED NET NET INVESTMENT
NET ASSETS STOCK DEPRECIATION REALIZED GAIN INCOME
- ----------------------------------------------------------------------------------------------
RiverSource
Fundamental
Growth Fund $186,001,712 $209,335,799 $(24,043,308) $4,925,716 $(4,216,495)
</Table>
11. 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 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. In response to defendants' motion to dismiss the
complaint, the 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 on
August 8, 2007.
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
- --------------------------------------------------------------------------------
42 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
Commerce (MDOC) related to market timing activities. As a result, AEFC was
censured and ordered to cease and desist from committing or causing any
violations of certain provisions of the Investment Advisers Act of 1940, the
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
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 GROWTH FUND -- 2008 ANNUAL REPORT 43
12. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $32.73 $28.61 $28.34 $23.73 $22.80
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .26(b) .23(b) .18 .04 .02
Net gains (losses) (both realized and
unrealized) (5.50) 4.11 .10 4.57 .91
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (5.24) 4.34 .28 4.61 .93
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.27) (.22) (.01) -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.22 $32.73 $28.61 $28.34 $23.73
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1,591 $2,393 $2,351 $2,101 $2,117
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.00% 1.19% 1.14% 1.19% 1.03%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .84% .71% .72% .16% .07%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98% 134% 136% 171%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (16.14%) 15.20% .98% 19.43% 4.08%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
44 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $29.79 $26.06 $26.01 $21.95 $21.25
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02(b) (.02)(b) (.05) (.16) (.16)
Net gains (losses) (both realized and
unrealized) (5.02) 3.75 .10 4.22 .86
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (5.00) 3.73 .05 4.06 .70
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.79 $29.79 $26.06 $26.01 $21.95
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $189 $369 $462 $578 $598
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.76% 1.96% 1.91% 1.97% 1.81%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .08% (.06%) (.06%) (.62%) (.71%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98% 134% 136% 171%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (16.78%) 14.31% .19% 18.50% 3.29%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 45
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $29.77 $26.07 $26.01 $21.95 $21.25
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02(b) (.01)(b) (.04) (.16) (.16)
Net gains (losses) (both realized and
unrealized) (5.01) 3.74 .10 4.22 .86
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (4.99) 3.73 .06 4.06 .70
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.03) -- -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $24.73 $29.77 $26.07 $26.01 $21.95
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $13 $20 $19 $15 $13
- --------------------------------------------------------------------------------------------------------------
Total expenses(c),(d) 1.76% 1.95% 1.91% 1.97% 1.81%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .08% (.03%) (.03%) (.62%) (.71%)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98% 134% 136% 171%
- --------------------------------------------------------------------------------------------------------------
Total return(e) (16.78%) 14.31% .23% 18.50% 3.29%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
46 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004(B)
Net asset value, beginning of period $33.54 $29.31 $28.93 $24.10 $25.61
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .44(c) .40(c) .32 .12 .09
Net gains (losses) (both realized and
unrealized) (5.66) 4.19 .10 4.71 (1.60)
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (5.22) 4.59 .42 4.83 (1.51)
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.42) (.36) (.04) -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.90 $33.54 $29.31 $28.93 $24.10
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $326 $298 $256 $147 $18
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) .54% .74% .68% .75% .57%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.40% 1.21% 1.22% .55% .43%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98% 134% 136% 171%
- --------------------------------------------------------------------------------------------------------------
Total return (15.74%) 15.70% 1.44% 20.04% (5.90%)(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 4, 2004 (inception date) to July 31, 2004.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 47
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007(b)
Net asset value, beginning of period $33.13 $32.23
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .24 .13
Net gains (losses) (both realized and
unrealized) (5.54) 1.12
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (5.30) 1.25
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.35)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.61 $33.13
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.36% 1.50%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after
waiver/reimbursement(e),(g),(h) 1.11% 1.50%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .76% .63%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98%
- --------------------------------------------------------------------------------------------------------------
Total return (16.11%) 3.93%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
48 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007(b)
Net asset value, beginning of period $33.18 $32.23
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .31 .18
Net gains (losses) (both realized and
unrealized) (5.54) 1.13
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (5.23) 1.31
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.30) (.36)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.65 $33.18
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.12% 1.27%(f)
- --------------------------------------------------------------------------------------------------------------
Net expenses after
waiver/reimbursement(e),(g),(h) .86% 1.27%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.00% .87%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98%
- --------------------------------------------------------------------------------------------------------------
Total return (15.91%) 4.09%(i)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 49
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $33.34 $29.13 $28.81 $24.07 $23.09
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .35(b) .25(b) .24 .09 .07
Net gains (losses) (both realized and
unrealized) (5.58) 4.22 .10 4.65 .91
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (5.23) 4.47 .34 4.74 .98
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.33) (.26) (.02) -- --
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.78 $33.34 $29.13 $28.81 $24.07
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $56 $146 $265 $304 $350
- --------------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .84% 1.03% .95% 1.02% .86%
- --------------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .66% 1.03% .95% 1.02% .86%
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.11% .79% .89% .34% .25%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98% 134% 136% 171%
- --------------------------------------------------------------------------------------------------------------
Total return (15.85%) 15.39% 1.17% 19.69% 4.24%
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
- --------------------------------------------------------------------------------
50 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007(b)
Net asset value, beginning of period $33.28 $32.23
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .39 .29
Net gains (losses) (both realized and
unrealized) (5.59) 1.12
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (5.20) 1.41
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.40) (.36)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.68 $33.28
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) .61% .76%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.25% 1.38%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98%
- --------------------------------------------------------------------------------------------------------------
Total return (15.80%) 4.41%(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 51
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2008 2007(b)
Net asset value, beginning of period $33.21 $31.89
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .27 .24
Net gains (losses) (both realized and
unrealized) (5.59) 1.43
- --------------------------------------------------------------------------------------------------------------
Total from investment operations (5.32) 1.67
- --------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.27) (.35)
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.62 $33.21
- --------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- --------------------------------------------------------------------------------------------------------------
Total expenses(d),(e) 1.00% 1.17%(f)
- --------------------------------------------------------------------------------------------------------------
Net investment income (loss) .86% 1.09%(f)
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 112% 98%
- --------------------------------------------------------------------------------------------------------------
Total return (16.15%) 5.29%(g)
- --------------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 1, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
- --------------------------------------------------------------------------------
52 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE GROWTH FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Growth Fund (the Fund) (one of the
portfolios constituting the RiverSource Large Cap Series, Inc.) as of July 31,
2008, and the related statement of operations for the year then ended, the
statements of changes in net assets and the financial highlights for each of the
two years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights of the Fund for the periods
presented through July 31, 2006, were audited by other auditors whose report
dated September 20, 2006, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2008, by correspondence with the custodian and
brokers, or by other appropriate auditing procedures where replies from brokers
were not received. We believe that our audits provide a reasonable basis for our
opinion.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 53
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Growth Fund of the RiverSource Large Cap Series, Inc. at
July 31, 2008, the results of its operations for the year then ended, and
changes in its net assets and the financial highlights for each of the two years
in the period then ended, in conformity with U.S. generally accepted accounting
principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 22, 2008
- --------------------------------------------------------------------------------
54 RIVERSOURCE GROWTH FUND -- 2008 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, 2008
<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.................................. 0.08%
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 55
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 member oversees 104
RiverSource funds. Board members serve until the next regular shareholders'
meeting or until he or she reaches the mandatory retirement age established by
the Board. Under the current Board policy, members may serve until the end of
the meeting following their 75th birthday, or the fifteenth anniversary of the
first Board meeting they attended as members of the Board, whichever occurs
first. This policy does not apply to Ms. Jones who may retire after her 75th
birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 53
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 72
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Board member since President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. 2002 and Chair of College Inc. (manufactures
Minneapolis, MN 55402 the Board since 2007 irrigation systems)
Age 69
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
56 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 47 President and Chief Executive Officer, Ameriprise
Certificate Company since 2006; Chairman of the Board,
Chief Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 57
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President, Asset Management;
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 42 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 42 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. since 2006; Vice
Minneapolis, MN 55474 President, General Counsel and Secretary, Ameriprise
Age 49 Certificate Company since 2005; Vice President -- Asset
Management Compliance, Ameriprise Financial, Inc.,
2004-2005; Senior Vice President and Chief Compliance
Officer, USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 47 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
58 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 59
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement") RiverSource Investments
provides investment advice and other services to the Fund and all RiverSource
funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2008, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 9-10, 2008 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, particularly in the areas of
trading systems, new product initiatives, legal and compliance. Further, in
connection with the Board's evaluation of the overall package of services
provided by RiverSource Investments, the Board considered the quality of the
administrative and transfer agency services provided by RiverSource Investments'
affiliates to the Fund. The Board also reviewed the financial condition of
RiverSource Investments (and its affiliates) and each entity's ability to carry
out its responsibilities under the IMS Agreement. The Board also discussed the
acceptability of the terms of the IMS Agreement (including the relatively broad
scope of services required to be performed by RiverSource Investments). The
Board concluded that the services
- --------------------------------------------------------------------------------
60 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
being performed under the IMS Agreement were of a reasonably high quality,
particularly in light of recent market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods (including since inception), recent Fund
inflows (and outflows) and a comparison of the Fund's net assets from December
2006 to December 2007. The Board observed that the Fund's investment
performance, although somewhat weaker than previous years, reflected the
interrelationship of particularly volatile market conditions with the investment
strategies employed by the portfolio management team. Further, the Board noted
that measures have been taken to enhance risk management oversight.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability.
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund, 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
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 61
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
Fund's total expense ratio (after considering proposed expense caps/waivers) was
slightly below the peer group's median expense ratio shown in the reports. The
Board also considered the Fund's performance incentive adjustment and noted its
continued appropriateness. 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 the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 10, 2008, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement.
- --------------------------------------------------------------------------------
62 RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote all 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 RiverSource Funds at (888) 791-3380; contacting your financial
institution; visiting riversource.com/funds; or searching the website of the
Securities and Exchange Commission (SEC) at http://www.sec.gov. Information
regarding how the Fund voted proxies relating to portfolio securities is filed
with the SEC by August 31 for the most recent 12-month period ending June 30 of
that year, and is available without charge by visiting riversource.com/funds; or
searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND -- 2008 ANNUAL REPORT 63
RIVERSOURCE GROWTH FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by the Fund's
current prospectus. RiverSource(R) mutual funds are
distributed by RiverSource Distributors, Inc., Member FINRA,
and managed by RiverSource Investments, LLC. These companies
are part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6455 AD (9/08)
</Table>
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
LARGE CAP EQUITY FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2008
(Prospectus also enclosed)
RIVERSOURCE LARGE CAP EQUITY FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH
LONG-TERM GROWTH OF CAPITAL.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective, investment
strategy, risks, sales charges, fees and other
matters of interest. Please read the prospectus
carefully before you invest or send money. (SINGLE STRATEGY FUND ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance............... 2
Manager Commentary.................. 5
The Fund's Long-term Performance ... 10
Fund Expenses Example............... 12
Portfolio of Investments............ 15
Financial Statements................ 26
Notes to Financial Statements....... 32
Report of Independent Registered
Public Accounting Firm........... 55
Federal Income Tax Information...... 57
Board Members and Officers.......... 58
Approval of Investment Management
Services Agreement............... 62
Proxy Voting........................ 64
</Table>
(DALBAR LOGO)
The RiverSource mutual fund
shareholder reports have been
awarded the Communications Seal
from Dalbar Inc., an independent
financial services research firm.
The Seal recognizes communications
demonstrating a level of
excellence in the industry.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Large Cap Equity Fund (the Fund) Class A shares declined 15.40%,
excluding sales charge, for the fiscal year ended July 31, 2008.
> The Fund underperformed its benchmarks, the Russell 1000(R) Index and the
Standard & Poor's 500 Index (S&P 500 Index), which fell 10.62% and 11.09%,
respectively, for the same 12-month period.
> The Fund's peer group, the Lipper Large-Cap Core Funds Index, declined 10.11%
during the same time period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
1 year 3 years 5 years inception(a)
- --------------------------------------------------------------------------------
RiverSource Large Cap Equity
Fund Class A (excluding sales
charge) -15.40% +0.48% +4.39% +1.86%
- --------------------------------------------------------------------------------
Russell 1000 Index (unmanaged) -10.62% +3.08% +7.55% +4.00%
- --------------------------------------------------------------------------------
S&P 500 Index (unmanaged) -11.09% +2.85% +7.03% +3.47%
- --------------------------------------------------------------------------------
Lipper Large-Cap Core Funds
Index -10.11% +3.12% +6.31% +2.86%
- --------------------------------------------------------------------------------
</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 institution or
visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. 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.
(a) Fund data is from March 28, 2002. Russell 1000 Index, S&P 500 Index and
Lipper peer group data is from April 1, 2002.
- --------------------------------------------------------------------------------
2 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- ----------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- ----------------------------------------
<Table>
<Caption>
Net Fund and
Acquired Fund
Total Net (Underlying
Fund Expenses(a) Fund)(b)
- --------------------------------------------------------------
Class A 1.03% 0.96% 0.98%
- --------------------------------------------------------------
Class B 1.79% 1.73% 1.75%
- --------------------------------------------------------------
Class C 1.79% 1.72% 1.74%
- --------------------------------------------------------------
Class I 0.57% 0.54% 0.56%
- --------------------------------------------------------------
Class R2 1.39% 1.34% 1.36%
- --------------------------------------------------------------
Class R3 1.14% 1.09% 1.11%
- --------------------------------------------------------------
Class R4 0.87% 0.82% 0.84%
- --------------------------------------------------------------
Class R5 0.67% 0.59% 0.61%
- --------------------------------------------------------------
</Table>
(a) The Investment Manager and its affiliates
have contractually agreed to waive certain fees and to absorb certain
expenses until July 31, 2009, unless sooner terminated at the discretion of
the Fund's Board. Any amounts waived will not be reimbursed by the Fund.
Under this agreement, net fund expenses (excluding fees and expenses of
acquired funds), before giving effect to any performance incentive
adjustment (that decreased the management fee by 0.08% for the year ended
July 31, 2008), will not exceed 1.04% for Class A, 1.81% for Class B, 1.80%
for Class C, 0.62% for Class I, 1.42% for Class R2, 1.17% for Class R3,
0.90% for Class R4 and 0.67% for Class R5.
(b) In addition to the Fund's total annual
operating expenses that the Fund bears directly, the Fund's shareholders
indirectly bear the expenses of acquired funds (affiliated and unaffiliated
funds) in which the Fund invests. The Fund's "Acquired fund fees and
expenses," based on its investment in the acquired funds, was 0.02% for the
year ended July 31, 2008.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2008
SINCE
WITHOUT SALES CHARGE 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 3/28/02) -15.40% +0.48% +4.39% +1.86%
- --------------------------------------------------------------------------------
Class B (inception 3/28/02) -15.97% -0.33% +3.58% +1.05%
- --------------------------------------------------------------------------------
Class C (inception 3/28/02) -16.11% -0.36% +3.55% +1.06%
- --------------------------------------------------------------------------------
Class I (inception 3/4/04) -15.02% +0.89% N/A +2.41%
- --------------------------------------------------------------------------------
Class R2 (inception 12/11/06) -15.45% N/A N/A -7.72%
- --------------------------------------------------------------------------------
Class R3 (inception 12/11/06) -15.19% N/A N/A -7.45%
- --------------------------------------------------------------------------------
Class R4 (inception 3/28/02) -15.40% +0.64% +4.55% +2.02%
- --------------------------------------------------------------------------------
Class R5 (inception 12/11/06) -15.38% N/A N/A -7.39%
- --------------------------------------------------------------------------------
WITH SALES CHARGE
Class A (inception 3/28/02) -20.30% -1.48% +3.14% +0.90%
- --------------------------------------------------------------------------------
Class B (inception 3/28/02) -19.70% -1.49% +3.24% +1.05%
- --------------------------------------------------------------------------------
Class C (inception 3/28/02) -16.85% -0.36% +3.55% +1.06%
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
AT JUNE 30, 2008
SINCE
WITHOUT SALES CHARGE 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 3/28/02) -17.04% +1.76% +4.62% +2.06%
- --------------------------------------------------------------------------------
Class B (inception 3/28/02) -17.66% +0.90% +3.77% +1.24%
- --------------------------------------------------------------------------------
Class C (inception 3/28/02) -17.61% +0.94% +3.79% +1.29%
- --------------------------------------------------------------------------------
Class I (inception 3/4/04) -16.68% +2.17% N/A +2.72%
- --------------------------------------------------------------------------------
Class R2 (inception 12/11/06) -17.06% N/A N/A -7.35%
- --------------------------------------------------------------------------------
Class R3 (inception 12/11/06) -16.86% N/A N/A -7.19%
- --------------------------------------------------------------------------------
Class R4 (inception 3/28/02) -16.87% +1.92% +4.77% +2.26%
- --------------------------------------------------------------------------------
Class R5 (inception 12/11/06) -17.05% N/A N/A -7.13%
- --------------------------------------------------------------------------------
WITH SALES CHARGE
Class A (inception 3/28/02) -21.80% -0.22% +3.37% +1.09%
- --------------------------------------------------------------------------------
Class B (inception 3/28/02) -21.32% -0.27% +3.42% +1.24%
- --------------------------------------------------------------------------------
Class C (inception 3/28/02) -18.34% +0.94% +3.79% +1.29%
- --------------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 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 institutional
investors only.
- --------------------------------------------------------------------------------
4 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Dear Shareholder,
RiverSource Large Cap Equity Fund (the Fund) Class A shares declined 15.40%,
excluding sales charge, for the fiscal year ended July 31, 2008. The Fund
underperformed its benchmarks, the Russell 1000(R) Index (Russell Index) and the
Standard & Poor's 500 Index (S&P 500 Index), which declined 10.62% and 11.09%,
respectively. The Fund's peer group, the Lipper Large-Cap Core Funds Index, fell
10.11% during the same time frame.
SIGNIFICANT PERFORMANCE FACTORS
Through most of the fiscal year, valuation was not an effective characteristic
for choosing stocks that would outperform. Though the Fund includes a
value-oriented and a growth-oriented portfolio segment in its strategy,
consideration of stock valuations is a thread running through the entire
portfolio. Given the Fund's valuation sensitivity, the market's aversion to
value was an insurmountable headwind during this fiscal period.
Stock selection detracted from the Fund's return relative to the Russell Index.
Though stock selection in the consumer staples, information
SECTOR DIVERSIFICATION(1) (at July 31, 2008; % of portfolio assets)
- -----------------------------------------------------------------
<Table>
Consumer Discretionary 10.8%
- --------------------------------------------------------------
Consumer Staples 9.0%
- --------------------------------------------------------------
Energy 10.5%
- --------------------------------------------------------------
Financials 13.4%
- --------------------------------------------------------------
Health Care 13.8%
- --------------------------------------------------------------
Industrials 9.3%
- --------------------------------------------------------------
Information Technology 15.6%
- --------------------------------------------------------------
Materials 2.8%
- --------------------------------------------------------------
Options Purchased 0.3%
- --------------------------------------------------------------
Telecommunication Services 8.7%
- --------------------------------------------------------------
Utilities 2.7%
- --------------------------------------------------------------
Other(2) 3.1%
- --------------------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
(2) Cash & Cash Equivalents. Of the 3.1%, 0.8% is due to security lending
activity and 2.3% is the Fund's cash equivalent position.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
technology and utilities sectors was advantageous, the Fund holdings in the
consumer discretionary, financials, industrials and energy sectors significantly
underperformed the respective sectors of the Russell Index.
Sector allocations had a positive impact. The Fund's cash position was
beneficial, as would be expected in a declining equity market. Having a
substantially smaller financials position than the Russell Index was a
meaningful contributor to relative performance, as was a larger-than-Russell
Index health care weighting. However, the Fund had a smaller energy position
than the Russell Index and a larger telecommunications position, which were both
disadvantageous.
Individual contributors to return included QUALCOMM, GENENTECH, AVON PRODUCTS
and FLOWSERVE, all positions that were larger than those in the Russell Index.
We owned technology stock QUALCOMM because we believe the company can benefit
from a strong upcoming product cycle. The market has recently been gaining
conviction that the product cycle will be favorable, as the company has begun to
see traction with its third-generation cell phone chip. In July 2008, QUALCOMM
settled its protracted litigation with Nokia. Biotherapeutics company
GENENTECH'S minority owner Roche is trying to buy out GENENTECH and offered a
substantial premium. The stock price has also risen on a promising outlook for
growth in GENENTECH'S cancer treatments, fueled by favorable
TOP TEN HOLDINGS (at July 31, 2008; % of portfolio assets)
- -----------------------------------------------------------------
<Table>
Exxon Mobil 3.8%
- --------------------------------------------------------------
Virgin Media 2.5%
- --------------------------------------------------------------
Pfizer 2.3%
- --------------------------------------------------------------
Microsoft 2.3%
- --------------------------------------------------------------
Vodafone Group 1.9%
- --------------------------------------------------------------
Chevron 1.8%
- --------------------------------------------------------------
Boeing 1.7%
- --------------------------------------------------------------
Bristol-Myers Squibb 1.7%
- --------------------------------------------------------------
AT&T 1.6%
- --------------------------------------------------------------
Philip Morris Intl 1.5%
- --------------------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
6 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Given the Fund's valuation sensitivity, the market's aversion to value was an
insurmountable headwind during this fiscal period.
expectations for several upcoming studies. FLOWSERVE
makes valves and pumping machinery for industrial
companies, particularly oil, gas and chemical
companies, and has benefited from the high level of
activity in those end markets.
Individual detractors from return included VIRGIN
MEDIA, HARMAN INTERNATIONAL INDUSTRIES, COUNTRYWIDE
FINANCIAL and FEDERAL HOME LOAN MORTGAGE CORP.
(FREDDIE MAC). British telecommunications company
VIRGIN MEDIA received an attractive acquisition bid
in July 2007 and subsequently conducted an auction
where multiple suitors showed interest. However,
difficulties in the high-yield bond market prevented
the company from completing the auction. Since then,
the stock price has fallen sharply amid additional
concerns about the company's leverage levels and
susceptibility to economic weakness. We believe
VIRGIN MEDIA'S fundamentals are now better than they
were a year ago, while the stock stands at about
half the price. In our view, the stock's market
price has disconnected from the underlying value of
the company, creating an attractive opportunity.
HARMAN INTERNATIONAL'S main business is producing
car radios, and the company suffered as auto
production has come under intense pressure in the
difficult economic environment. Mortgage lender
COUNTRYWIDE FINANCIAL continued to suffer from
credit market difficulties, but BANK OF AMERICA
finally completed its takeover of the company and
the Fund's small remaining holdings of Countrywide
converted into BANK OF AMERICA stock. Though the
majority of government-sponsored FREDDIE MAC'S
business isn't directly connected to the subprime
mortgage breakdown,
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
continued weakness in the North American residential market has hurt the company
due to mortgage losses and performance of securities owned by the company.
CHANGES TO THE FUND'S PORTFOLIO
In the first half of the fiscal year, we decreased the Fund's health care
weighting relative to the Russell Index. We trimmed exposure to biotechnology
stocks and some large-cap pharmaceutical stocks because of valuation concerns
and, in the case of pharmaceuticals, worry that they might be negatively
affected by the change in presidential administrations.
Also in the first half, the Fund's weighting in materials stocks decreased, as
we reduced exposure to gold stocks. We increased exposure to the consumer
staples sector relative to the Russell Index, focusing on stocks with a consumer
cyclical dimension rather than food and consumer goods companies.
In the latter half of the Fund's fiscal year, the Fund's position in the
financials sector decreased. Market performance was partially responsible for
the reduction, as financial stocks generally declined in value. We also cut back
the Fund's holdings of lending-based financial companies, specifically banks and
savings and loans.
The Fund's energy position increased in the second half of the year, also due to
a combination of market results and active management. The energy sector's steep
appreciation boosted the Fund's energy weighting. Meanwhile, we increased the
Fund's holdings of energy services companies. Selected energy services stocks
became relatively inexpensive and we believe they will benefit from increased
exploration and production activity.
We increased the Fund's information technology position in the second half of
the year. Technology stocks, particularly some of the larger, more mature
companies, seem inexpensive to us. They appear to have relatively limited
downside risk due to attractive valuations, with the ability to capitalize on
any improvement in economic activity.
OUR FUTURE STRATEGY
We manage the Fund's portfolio in three segments - a growth-oriented strategy, a
value-oriented strategy and an analyst-driven segment. A
- --------------------------------------------------------------------------------
8 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
common theme across the three segments is our belief that valuation as a
selection criterion is likely to be more effective going forward. Differences in
valuations among stocks have become increasingly wide, reaching a historically
rare level. In the past, such extreme valuation spreads have foreshadowed a
period when valuation was more important to investors. Because each portfolio
segment takes value into consideration when selecting stocks, we believe we are
entering a period that could be more favorable for the Fund's strategy.
Large-cap companies still have roughly the same valuation as mid- and small-cap
companies. However, larger companies tend to have more stable business models,
which can better withstand a decelerating economic environment, and they tend to
have more international exposure, which may benefit from the tail end of the
current period of dollar depreciation.
<Table>
(PHOTO - BOB (PHOTO - NICK
EWING) THAKORE)
Bob Ewing, Nick Thakore
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 RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 9
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Large Cap Equity Fund Class A shares (from 4/1/02 to
7/31/08)* as compared to the performance of three widely cited performance
indices, the Russell 1000 Index, the Standard & Poor's 500 Index (S&P 500 Index)
and the Lipper Large-Cap Core Funds Index. In comparing the Fund's Class A
shares to these indices, you should take into account the fact that the Fund's
performance reflects the maximum sales charge of 5.75%, while such charges are
not reflected in the performance of the indices. Returns for the Fund include
the reinvestment of any distribution 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 institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
* Fund data is from March 28, 2002. Russell 1000 Index, S&P 500 Index and Lipper
peer group data is from April 1, 2002.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
SINCE
Results at July 31, 2008 1 YEAR 3 YEARS 5 YEARS INCEPTION(4)
RIVERSOURCE LARGE CAP EQUITY FUND (INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $7,970 $9,563 $11,672 $10,590
- ---------------------------------------------------------------------------------------------------
Average annual total return -20.30% -1.48% +3.14% +0.90%
- ---------------------------------------------------------------------------------------------------
RUSSELL 1000 INDEX(1)
Cumulative value of $10,000 $8,938 $10,953 $14,390 $12,819
- ---------------------------------------------------------------------------------------------------
Average annual total return -10.62% +3.08% +7.55% +4.00%
- ---------------------------------------------------------------------------------------------------
S&P 500 INDEX(2)
Cumulative value of $10,000 $8,891 $10,880 $14,045 $12,409
- ---------------------------------------------------------------------------------------------------
Average annual total return -11.09% +2.85% +7.03% +3.47%
- ---------------------------------------------------------------------------------------------------
LIPPER LARGE-CAP CORE FUNDS INDEX(3)
Cumulative value of $10,000 $8,989 $10,966 $13,579 $11,958
- ---------------------------------------------------------------------------------------------------
Average annual total return -10.11% +3.12% +6.31% +2.86%
- ---------------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on page 4.
- --------------------------------------------------------------------------------
10 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE LARGE CAP EQUITY FUND
LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE LARGE
CAP EQUITY FUND
CLASS A (INCLUDES SALES LIPPER LARGE-CAP
CHARGE) RUSSELL 1000 INDEX(1) S&P 500 INDEX(2) CORE FUNDS INDEX(3)
----------------------- --------------------- ---------------- -------------------
4/1/02 $ 9,425 $10,000 $10,000 $10,000
7/02 7,766 8,014 7,985 8,108
7/03 8,546 8,911 8,835 8,808
7/04 9,160 10,072 9,999 9,690
7/05 10,441 11,704 11,404 10,907
7/06 10,807 12,316 12,018 11,452
7/07 12,493 14,342 13,957 13,303
7/08 10,590 12,819 12,409 11,958
</Table>
(1) The Russell 1000 Index, an unmanaged index, measures the performance of the
1,000 largest companies in the Russell 3000(R) Index, which represents
approximately 92% of the total market capitalization of the Russell 3000
Index. The index reflects reinvestment of all distributions and changes in
market prices.
(2) The Standard & Poor's 500 Index (S&P 500 Index), an unmanaged index of
common stocks, is frequently used as a general measure of market
performance. The index reflects reinvestment of all distributions and
changes in market prices.
(3) The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap
core funds tracked by Lipper Inc. The index's returns include net
reinvested dividends. The Fund's performance is currently measured against
this index for purposes of determining the performance incentive
adjustment.
(4) Fund data is from March 28, 2002. Russell 1000 Index, S&P 500 Index and
Lipper peer group data is from April 1, 2002.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 11
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the 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). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the 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, 2008.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
12 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
DIRECT AND
DIRECT INDIRECT
BEGINNING ENDING EXPENSES EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING
FEB. 1, 2008 JULY 31, 2008 THE PERIOD(A),(B) THE PERIOD(B),(C)
- -------------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 900.40 $4.35 $4.44
- -------------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,020.29 $4.62 $4.72
- -------------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 896.30 $7.87 $7.97
- -------------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,016.56 $8.37 $8.47
- -------------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 894.50 $7.87 $7.96
- -------------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,016.56 $8.37 $8.47
- -------------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 901.00 $2.46 $2.55
- -------------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,022.28 $2.61 $2.72
- -------------------------------------------------------------------------------------------------
Class R2
- -------------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 897.40 $6.32 $6.42
- -------------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,018.20 $6.72 $6.82
- -------------------------------------------------------------------------------------------------
Class R3
- -------------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 899.40 $5.15 $5.24
- -------------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,019.44 $5.47 $5.57
- -------------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 898.00 $3.63 $3.73
- -------------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,021.03 $3.87 $3.97
- -------------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------------
Actual(d) $1,000 $ 900.40 $2.79 $2.88
- -------------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,021.93 $2.97 $3.07
- -------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
ANNUALIZED EXPENSE RATIOS
<Table>
<Caption>
FUND'S ACQUIRED FUND
ANNUALIZED FEES AND NET FUND
EXPENSE RATIO EXPENSES EXPENSES
- -------------------------------------------------------------------------------------
Class A .92% .02% .94%
- -------------------------------------------------------------------------------------
Class B 1.67% .02% 1.69%
- -------------------------------------------------------------------------------------
Class C 1.67% .02% 1.69%
- -------------------------------------------------------------------------------------
Class I .52% .02% .54%
- -------------------------------------------------------------------------------------
Class R2 1.34% .02% 1.36%
- -------------------------------------------------------------------------------------
Class R3 1.09% .02% 1.11%
- -------------------------------------------------------------------------------------
Class R4 .77% .02% .79%
- -------------------------------------------------------------------------------------
Class R5 .59% .02% .61%
- -------------------------------------------------------------------------------------
</Table>
(a) Expenses are equal to the Fund's annualized expense ratio for each class,
multiplied by the average account value over the period, multiplied by
182/366 (to reflect the one-half year period).
(b) The Investment Manager and its affiliates have contractually agreed to
waive certain fees and to absorb certain expenses until July 31, 2009,
unless sooner terminated at the discretion of the Fund's Board, such that
net expenses (excluding fees and expenses of acquired funds), before giving
effect to any performance incentive adjustment, will not exceed 1.04% for
Class A, 1.81% for Class B, 1.80% for Class C, 0.62% for Class I, 1.42% for
Class R2, 1.17% for Class R3, 0.90% for Class R4 and 0.67% for Class R5.
Any amounts waived will not be reimbursed by the Fund. This change was
effective August 1, 2008. Had this change been in place for the entire six
month period ended July 31, 2008, the actual direct expenses paid would
have been: $4.30 for Class A, $8.53 for Class B, $7.82 for Class C, $2.27
for Class I, $6.09 for Class R2, $4.91 for Class R3, $3.63 for Class R4 and
$2.55 for Class R5; the hypothetical direct expenses paid would have been:
$4.57 for Class A, $9.07 for Class B, $8.32 for Class C, $2.41 for Class I,
$6.47 for Class R2, $5.22 for Class R3, $3.87 for Class R4 and $2.72 for
Class R5. Additionally, had this change been in place for the entire six
month period ended July 31, 2008, the actual direct and indirect expenses
paid would have been: $4.39 for Class A, $8.63 for Class B, $7.91 for Class
C, $2.36 for Class I, $6.18 for Class R2, $5.01 for Class R3, $3.73 for
Class R4 and $2.65 for Class R5; the hypothetical direct and indirect
expenses paid would have been: $4.67 for Class A, $9.17 for Class B, $8.42
for Class C, $2.51 for Class I, $6.57 for Class R2, $5.32 for Class R3,
$3.97 for Class R4 and $2.82 for Class R5.
(c) Expenses are equal to the Fund's annualized expense ratio for each class
plus the acquired fund fees and expenses, multiplied by the average account
value over the period, multiplied by 182/366 (to reflect the one-half year
period).
(d) Based on the actual return for the six months ended July 31, 2008: -9.96%
for Class A, - 10.37% for Class B, -10.55% for Class C, -9.90% for Class I,
-10.26% for Class R2, -10.06% for Class R3, -10.20% for Class R4 and -9.96%
for Class R5.
- --------------------------------------------------------------------------------
14 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (97.1%)
ISSUER SHARES VALUE(A)
AEROSPACE & DEFENSE (4.1%)
Boeing 1,158,424 $70,791,290
General Dynamics 52,948 4,719,785
Goodrich 138,405 6,801,222
Honeywell Intl 531,950 27,044,338
L-3 Communications Holdings 118,424 11,687,265
Lockheed Martin 184,756 19,275,593
Spirit AeroSystems Holdings Cl A 241,611(b) 5,233,294
United Technologies 306,402 19,603,600
---------------
Total 165,156,387
- --------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.1%)
United Parcel Service Cl B 32,815 2,069,970
- --------------------------------------------------------------------------------------
AIRLINES (0.1%)
Northwest Airlines 401,506(b) 3,677,795
UAL 173,328 1,440,356
---------------
Total 5,118,151
- --------------------------------------------------------------------------------------
AUTO COMPONENTS (0.1%)
Goodyear Tire & Rubber 28,780(b) 564,951
Johnson Controls 70,967 2,140,365
---------------
Total 2,705,316
- --------------------------------------------------------------------------------------
AUTOMOBILES (0.1%)
Ford Motor 526,712(b) 2,528,217
General Motors 67,728(f) 749,749
Harley-Davidson 28,277 1,070,002
---------------
Total 4,347,968
- --------------------------------------------------------------------------------------
BEVERAGES (2.5%)
Anheuser-Busch Companies 39,259 2,660,190
Coca-Cola 1,040,306 53,575,759
Molson Coors Brewing Cl B 302,505 16,326,195
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
BEVERAGES (CONT.)
Pepsi Bottling Group 14,745 $410,648
PepsiCo 443,504 29,519,626
---------------
Total 102,492,418
- --------------------------------------------------------------------------------------
BIOTECHNOLOGY (2.9%)
Amgen 714,833(b) 44,769,991
Genentech 377,556(b) 35,962,209
Genzyme 249,477(b) 19,122,412
ImClone Systems 262,974(b) 16,811,928
---------------
Total 116,666,540
- --------------------------------------------------------------------------------------
BUILDING PRODUCTS (0.1%)
Masco 250,330 4,127,942
- --------------------------------------------------------------------------------------
CAPITAL MARKETS (3.3%)
Bank of New York Mellon 281,459 9,991,795
BlackRock 9,386 2,034,040
Blackstone Group LP 139,163 2,584,257
Goldman Sachs Group 122,537 22,551,709
KKR Private Equity Investors LP Unit 2,752,976 36,339,938
Legg Mason 116,839 4,714,454
Lehman Brothers Holdings 1,142,970 19,819,100
Merrill Lynch & Co 163,870 4,367,136
Morgan Stanley 433,275 17,105,697
Oaktree Capital Group LLC Cl A Unit 331,941(d,h) 9,294,348
Och-Ziff Capital Management Group LLC Cl A 78,518 1,282,984
State Street 38,363 2,748,325
---------------
Total 132,833,783
- --------------------------------------------------------------------------------------
CHEMICALS (1.1%)
Air Products & Chemicals 25,197 2,399,006
Ashland 6,745 281,739
Dow Chemical 404,782 13,483,289
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 15
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
CHEMICALS (CONT.)
Eastman Chemical 47,239 $2,832,450
Ecolab 20,992 938,342
EI du Pont de Nemours & Co 266,501 11,675,409
Hercules 13,504 270,755
Intl Flavors & Fragrances 9,639 387,681
Monsanto 65,630 7,817,189
PPG Inds 19,619 1,189,696
Praxair 37,441 3,509,345
Rohm & Haas 15,002 1,125,150
---------------
Total 45,910,051
- --------------------------------------------------------------------------------------
COMMERCIAL BANKS (1.5%)
BancorpSouth 57,883 1,232,908
BB&T 162,258(f) 4,546,469
Comerica 18,838 541,027
Fifth Third Bancorp 756,147 10,563,374
PNC Financial Services Group 99,353 7,082,875
Regions Financial 1 9
SunTrust Banks 102,054 4,190,337
Wachovia 1,178,853 20,358,792
Wells Fargo & Co 387,434 11,727,628
---------------
Total 60,243,419
- --------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.2%)
Allied Waste Inds 40,342(b) 488,138
Avery Dennison 12,748 561,039
Cintas 15,638 444,745
Equifax 15,374 539,474
Monster Worldwide 14,877(b) 263,918
Pitney Bowes 24,852 787,560
Robert Half Intl 18,984 480,105
RR Donnelley & Sons 25,417 678,634
Waste Management 58,668 2,085,061
---------------
Total 6,328,674
- --------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (4.0%)
Cisco Systems 1,131,946(b) 24,891,493
Corning 215,740 4,316,957
Motorola 610,279 5,272,811
Nokia 729,400(c,k) 19,905,194
Nokia ADR 1,879,494(c) 51,347,775
Nortel Networks 342(b,c) 2,613
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
COMMUNICATIONS EQUIPMENT (CONT.)
QUALCOMM 926,698 $51,283,467
Starent Networks 356,126(b,f) 4,665,251
---------------
Total 161,685,561
- --------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (3.1%)
Apple 187,048(b) 29,731,280
Dell 266,915(b) 6,558,102
EMC 645,118(b) 9,683,221
Hewlett-Packard 940,865 42,150,752
IBM 261,527 33,470,225
SanDisk 221,899(b) 3,128,776
---------------
Total 124,722,356
- --------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING (0.3%)
Fluor 83,260 6,773,201
KBR 189,049 5,387,897
---------------
Total 12,161,098
- --------------------------------------------------------------------------------------
CONSTRUCTION MATERIALS (--%)
Vulcan Materials 13,081 839,669
- --------------------------------------------------------------------------------------
CONSUMER FINANCE (0.3%)
American Express 180,325 6,693,664
Capital One Financial 82,648 3,459,645
SLM 55,909(b) 957,721
---------------
Total 11,111,030
- --------------------------------------------------------------------------------------
CONTAINERS & PACKAGING (--%)
Ball 11,691 521,186
Bemis 11,926 335,836
Pactiv 15,630(b) 376,839
Sealed Air 19,132 415,164
---------------
Total 1,649,025
- --------------------------------------------------------------------------------------
DISTRIBUTORS (--%)
Genuine Parts 19,592 785,835
- --------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (--%)
Apollo Group Cl A 16,503(b) 1,027,972
H&R Block 38,956 947,799
---------------
Total 1,975,771
- --------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (4.4%)
Apollo Mgmt LP 1,426,700(d,h) 19,973,800
Bank of America 1,605,532 52,822,002
CIT Group 22,723 192,691
Citigroup 1,394,941 26,071,447
CME Group 6,127 2,206,517
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
DIVERSIFIED FINANCIAL SERVICES (CONT.)
Interactive Brokers Group Cl A 447,495(b) $12,556,710
IntercontinentalExchange 76,455(b) 7,630,209
iShares Dow Jones US Healthcare Sector Index
Fund 1 65
JPMorgan Chase & Co 1,177,978 47,861,246
KKR Financial Holdings LLC 580,995 5,966,819
Leucadia Natl 21,149 946,841
Materials Select Sector SPDR Fund 71,566(f) 2,889,835
NYSE Euronext 30,511 1,441,340
---------------
Total 180,559,522
- --------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (5.9%)
AT&T 2,177,373 67,084,863
Chunghwa Telecom ADR 1(c) 25
Deutsche Telekom 1,804,355(c) 31,231,566
Embarq 77,675 3,555,185
Frontier Communications 180,802 2,090,071
Qwest Communications Intl 4,256,424(f) 16,302,104
Telefonica 2,070,662(c) 53,723,568
Telefonica ADR 97,827(c) 7,613,875
Verizon Communications 1,646,345 56,041,584
Windstream 175,967 2,097,527
---------------
Total 239,740,368
- --------------------------------------------------------------------------------------
ELECTRIC UTILITIES (1.8%)
Allegheny Energy 20,100 972,840
American Electric Power 48,037 1,897,462
Duke Energy 151,259 2,659,133
Edison Intl 38,965 1,883,568
Entergy 132,929 14,212,769
Exelon 232,129 18,249,982
FirstEnergy 36,460 2,681,633
FPL Group 98,810 6,376,209
Pepco Holdings 24,087 600,730
Pinnacle West Capital 12,030 403,847
PPL 112,549 5,285,301
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
ELECTRIC UTILITIES (CONT.)
Progress Energy 31,715 $1,341,862
Southern 461,644 16,337,581
---------------
Total 72,902,917
- --------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.4%)
Emerson Electric 338,633 16,491,428
Gamesa Tecnologica 13,814(c) 656,736
---------------
Total 17,148,164
- --------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.1%)
Agilent Technologies 3,004(b) 108,324
Tyco Electronics 136,863(c) 4,535,640
---------------
Total 4,643,964
- --------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (1.6%)
Baker Hughes 70,053 5,808,094
ENSCO Intl 15,095 1,043,668
Halliburton 207,050 9,279,981
Nabors Inds 30,012(b,c) 1,094,238
Natl Oilwell Varco 122,206(b) 9,609,058
Noble 29,594 1,535,041
Pride Intl 55,056(b) 2,133,971
Rowan Companies 12,564 500,047
Schlumberger 165,535 16,818,355
Transocean 80,630(b) 10,968,099
Weatherford Intl 129,293(b) 4,878,225
---------------
Total 63,668,777
- --------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (1.5%)
Costco Wholesale 56,905 3,566,805
CVS Caremark 268,637 9,805,251
Kroger 79,418 2,245,941
Safeway 132,565 3,542,137
SUPERVALU 23,305 597,074
SYSCO 69,319 1,965,887
Walgreen 169,526 5,821,523
Wal-Mart Stores 595,006 34,879,251
---------------
Total 62,423,869
- --------------------------------------------------------------------------------------
FOOD PRODUCTS (0.4%)
Archer-Daniels-Midland 73,221 2,096,317
Kellogg 144,371 7,660,325
Kraft Foods Cl A 92,141 2,931,927
Sara Lee 228,562 3,122,157
---------------
Total 15,810,726
- --------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 17
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
GAS UTILITIES (0.1%)
Nicor 5,402 $215,108
ONEOK 96,709 4,398,325
Questar 20,732 1,096,308
---------------
Total 5,709,741
- --------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.3%)
Becton Dickinson & Co 32,876 2,791,501
Boston Scientific 2,059,138(b) 24,483,151
China Medical Technologies ADR 110,635(c,f) 5,301,629
Covidien 198,175 9,758,137
Medtronic 216,057 11,414,291
---------------
Total 53,748,709
- --------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (2.6%)
Aetna 193,362 7,929,776
AmerisourceBergen 219,065 9,172,252
Cardinal Health 327,758 17,610,437
CIGNA 126,376 4,678,440
Coventry Health Care 18,160(b) 642,319
Express Scripts 73,371(b) 5,175,590
Humana 261,683(b) 11,490,501
Laboratory Corp of America Holdings 13,323(b) 900,368
McKesson 365,600 20,469,944
Medco Health Solutions 211,662(b) 10,494,202
Patterson Companies 14,526(b) 453,647
Quest Diagnostics 18,891 1,004,246
Tenet Healthcare 57,375(b) 332,201
UnitedHealth Group 356,181 10,001,562
WellPoint 62,989(b) 3,303,773
---------------
Total 103,659,258
- --------------------------------------------------------------------------------------
HEALTH CARE TECHNOLOGY (--%)
IMS Health 21,711 453,760
- --------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
HOTELS, RESTAURANTS & LEISURE (0.6%)
Chipotle Mexican Grill Cl B 1(b) $64
Darden Restaurants 260,562 8,486,504
Intl Game Technology 252,174 5,474,698
Marriott Intl Cl A 173,799 4,503,132
Starbucks 290,004(b) 4,260,159
Starwood Hotels & Resorts Worldwide 24,972 856,290
---------------
Total 23,580,847
- --------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (1.0%)
Black & Decker 7,305 438,446
Centex 251,388 3,690,376
DR Horton 427,706 4,756,091
Harman Intl Inds 226,936 9,342,954
Hovnanian Enterprises Cl A 314,091(b,f) 2,208,060
Jarden 22,309(b) 536,085
KB Home 372,092(f) 6,545,098
Leggett & Platt 19,887 387,797
Lennar Cl A 220,369 2,666,465
Meritage Homes 58,457(b) 1,055,149
Newell Rubbermaid 96,030 1,587,376
NVR 1,977(b) 1,091,937
Snap-On 6,903 388,570
Stanley Works 9,373 416,911
Whirlpool 54,642 4,136,399
---------------
Total 39,247,714
- --------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (1.2%)
Clorox 71,006 3,869,827
Colgate-Palmolive 212,982 15,818,173
Procter & Gamble 449,018 29,401,699
---------------
Total 49,089,699
- --------------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
AES 80,357(b) 1,296,962
Constellation Energy Group 21,336 1,774,301
Dynegy Cl A 59,446(b) 400,072
---------------
Total 3,471,335
- --------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
INDUSTRIAL CONGLOMERATES (1.8%)
3M 36,650 $2,579,794
General Electric 2,016,361 57,042,852
Siemens 29,231(c) 3,552,897
Textron 98,300 4,273,101
Tyco Intl 105,559(c) 4,703,709
---------------
Total 72,152,353
- --------------------------------------------------------------------------------------
INSURANCE (3.3%)
ACE LTD 428,806(c) 21,740,464
AFLAC 442,260 24,594,080
Allstate 21,365 987,490
American Intl Group 661,931 17,243,303
Aon 7,738 354,400
Arch Capital Group 36,503(b,c) 2,545,354
Assurant 14,256 857,071
Assured Guaranty 126,640(c,f) 1,451,294
Chubb 146,361 7,031,182
Endurance Specialty Holdings 61,099(c) 1,869,629
Hartford Financial Services Group 254,581 16,137,890
Max Capital Group 143,701(c) 3,372,662
MetLife 140,630 7,139,785
Principal Financial Group 19,201 816,235
Prudential Financial 346,699 23,911,830
Validus Holdings 97,234(c) 2,217,908
XL Capital Cl A 67,497(c) 1,207,521
---------------
Total 133,478,098
- --------------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL (0.3%)
Amazon.com 37,016(b) 2,825,801
Expedia 537,369(b) 10,516,312
IAC/InterActiveCorp 21,698(b) 378,847
---------------
Total 13,720,960
- --------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (1.1%)
Akamai Technologies 20,111(b) 469,391
eBay 132,377(b) 3,331,929
Equinix 22,237(b) 1,809,202
Google Cl A 69,127(b) 32,748,916
VeriSign 23,302(b) 758,247
Yahoo! 197,291(b) 3,924,118
---------------
Total 43,041,803
- --------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
IT SERVICES (1.2%)
Affiliated Computer Services Cl A 11,529(b) $555,698
Automatic Data Processing 165,598 7,072,691
Broadridge Financial Solutions 1 21
Cognizant Technology Solutions Cl A 34,291(b) 962,548
Computer Sciences 17,942(b) 849,913
Convergys 14,670(b) 186,309
Electronic Data Systems 168,116 4,170,958
Fidelity Natl Information Services 20,379 386,182
Fiserv 19,460(b) 930,577
MasterCard Cl A 83,783(f) 20,455,618
Paychex 38,069 1,253,231
Redecard 254,120(c) 4,692,695
Total System Services 23,527 460,659
Unisys 42,291(b) 156,054
Visa Cl A 33,382(b) 2,438,889
Western Union 87,834 2,427,732
---------------
Total 46,999,775
- --------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (0.1%)
Eastman Kodak 34,500 505,080
Hasbro 27,327 1,058,102
Mattel 45,784 917,969
---------------
Total 2,481,151
- --------------------------------------------------------------------------------------
MACHINERY (1.5%)
Caterpillar 195,634 13,600,476
Danaher 33,928 2,702,365
Deere & Co 232,541 16,315,077
Flowserve 147,120 19,616,980
Ingersoll-Rand Cl A 37,369(c) 1,345,284
Navistar Intl 7,584(b) 427,624
Parker Hannifin 118,219 7,291,748
---------------
Total 61,299,554
- --------------------------------------------------------------------------------------
MEDIA (7.3%)
Comcast Cl A 1,441,247 29,718,513
Comcast Special Cl A 186,779 3,836,441
DIRECTV Group 195,760(b) 5,289,435
EW Scripps Cl A 3,689 25,530
Gannett 21,746 394,038
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 19
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
MEDIA (CONT.)
Liberty Entertainment Series A 303,858(b,e) $7,480,984
Liberty Media - Capital Series A 32,687(b,e) 507,956
McGraw-Hill Companies 31,647 1,287,083
Meredith 3,593 91,837
New York Times Cl A 13,438 169,184
News Corp Cl A 1,737,878 24,556,216
Scripps Networks Interactive Cl A 11,068(b) 448,697
Sirius XM Radio 36,484,405(b,k) 58,375,048
Time Warner 2,278,213 32,624,010
Time Warner Cable Cl A 118,025(b) 3,355,451
Viacom Cl B 211,741(b) 5,913,926
Virgin Media 9,044,507(h) 101,479,370
Vivendi 232,631(c) 9,725,494
Walt Disney 349,839 10,617,614
Washington Post Cl B 553 341,892
WorldSpace Cl A 263,942(b,f) 348,403
---------------
Total 296,587,122
- --------------------------------------------------------------------------------------
METALS & MINING (1.3%)
Alcoa 280,794(i) 9,476,798
Allegheny Technologies 12,083 571,405
Coeur d'Alene Mines 4,505,183(b,f) 13,019,979
Freeport-McMoRan Copper & Gold 45,827 4,433,762
Lihir Gold 3,224,058(b,c) 8,377,633
Newmont Mining 207,694 9,960,985
Nucor 36,494 2,088,187
Timminco 265,292(b,c) 6,271,433
Titanium Metals 11,658 131,269
---------------
Total 54,331,451
- --------------------------------------------------------------------------------------
MULTILINE RETAIL (0.3%)
JC Penney 137,459 4,237,861
Kohl's 96,693(b) 4,052,404
Macy's 57,315 1,078,095
Target 79,614 3,600,941
---------------
Total 12,969,301
- --------------------------------------------------------------------------------------
MULTI-UTILITIES (0.7%)
Ameren 25,059 1,029,674
CenterPoint Energy 39,263 619,178
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
MULTI-UTILITIES (CONT.)
CMS Energy 26,962 $363,987
Consolidated Edison 32,613 1,294,736
Dominion Resources 236,970 10,469,334
DTE Energy 19,512 799,602
Integrys Energy Group 9,142 466,791
NiSource 32,787 560,002
PG&E 42,734 1,646,541
Public Service Enterprise Group 60,818 2,542,192
Sempra Energy 29,947 1,681,824
TECO Energy 25,205 467,553
Xcel Energy 307,787 6,174,207
---------------
Total 28,115,621
- --------------------------------------------------------------------------------------
OFFICE ELECTRONICS (--%)
Xerox 106,725 1,455,729
- --------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (9.1%)
Anadarko Petroleum 57,901 3,353,047
Apache 20,018 2,245,419
BP ADR 141,792(c) 8,711,700
Chesapeake Energy 32,146 1,612,122
Chevron 886,464 74,959,396
ConocoPhillips 474,900 38,761,338
CONSOL Energy 24,334 1,810,206
Devon Energy 123,144 11,685,134
El Paso 85,556 1,534,019
EOG Resources 15,627 1,570,982
Exxon Mobil 1,915,009 154,024,174
Marathon Oil 139,671 6,909,524
Massey Energy 9,624 714,582
Occidental Petroleum 113,036 8,910,628
Patriot Coal 3,558(b) 448,842
Peabody Energy 34,016 2,301,182
Range Resources 2,370 115,087
Royal Dutch Shell ADR 68,458(c) 4,846,142
Ship Finance Intl 104,732(c) 3,114,730
Spectra Energy 78,605 2,135,698
Sunoco 62,954 2,556,562
Tesoro 17,661 272,686
Total 305,847(c) 23,416,154
Valero Energy 181,512 6,064,316
Williams Companies 75,121 2,407,628
XTO Energy 32,351 1,527,938
---------------
Total 366,009,236
- --------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
20 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
PAPER & FOREST PRODUCTS (0.3%)
Intl Paper 234,954 $6,512,925
MeadWestvaco 20,757 556,495
Weyerhaeuser 98,119 5,245,442
---------------
Total 12,314,862
- --------------------------------------------------------------------------------------
PERSONAL PRODUCTS (1.2%)
Avon Products 877,466 37,204,558
Herbalife 256,100(c) 11,060,959
---------------
Total 48,265,517
- --------------------------------------------------------------------------------------
PHARMACEUTICALS (7.1%)
Bristol-Myers Squibb 3,256,206 68,771,071
Elan ADR 58,998(b,c) 1,182,910
Eli Lilly & Co 102,634 4,835,088
Johnson & Johnson 311,557 21,332,308
Merck & Co 1,642,017 54,022,359
Pfizer 5,088,066 94,994,192
Schering-Plough 515,979 10,876,837
Shire ADR 29,747(c) 1,497,464
Wyeth 795,773 32,244,722
---------------
Total 289,756,951
- --------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (0.3%)
Apartment Investment & Management Cl A 80,423 2,748,054
AvalonBay Communities 4,673 465,945
Boston Properties 9,881 950,453
HCP 28,116 1,014,144
Kimco Realty 12,399 437,561
Plum Creek Timber 20,135 980,977
ProLogis 26,369 1,288,917
Public Storage 11,000 900,790
Simon Property Group 15,787 1,462,350
Vornado Realty Trust 11,357 1,079,710
---------------
Total 11,328,901
- --------------------------------------------------------------------------------------
ROAD & RAIL (0.8%)
CSX 31,756 2,146,070
Hertz Global Holdings 3,057,405(b) 26,079,665
Norfolk Southern 45,485 3,271,281
---------------
Total 31,497,016
- --------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.7%)
Advanced Micro Devices 1,585,279(b) $6,674,025
Applied Materials 149,554 2,590,275
Atmel 684,885(b) 2,417,644
Broadcom Cl A 48,957(b) 1,189,166
Cypress Semiconductor 47,876(b) 1,304,621
Himax Technologies ADR 742,532(c) 2,821,622
Infineon Technologies 766,243(b,c) 5,752,134
Infineon Technologies ADR 271,122(b,c) 2,038,837
Intel 2,050,731 45,505,720
LSI 2(b) 14
MEMC Electronic Materials 16,280(b) 752,299
Micron Technology 1,922,816(b) 9,287,201
Microsemi 28,004(b) 726,984
Natl Semiconductor 43,190 904,831
ON Semiconductor 362,514(b) 3,404,006
Skyworks Solutions 84,398(b) 798,405
Spansion Cl A 3,791,334(b) 8,682,155
Teradyne 574,117(b) 5,379,476
Texas Instruments 466,539 11,374,221
---------------
Total 111,603,636
- --------------------------------------------------------------------------------------
SOFTWARE (3.5%)
Adobe Systems 63,649(b) 2,631,886
Autodesk 26,806(b) 854,843
BMC Software 22,854(b) 751,668
CA 46,727 1,114,906
Citrix Systems 21,966(b) 585,174
Compuware 31,307(b) 344,377
Electronic Arts 111,588(b) 4,818,370
Intuit 38,420(b) 1,050,019
Microsoft 3,657,420 94,068,843
Nintendo ADR 363,822(c) 21,056,199
Oracle 664,725(b) 14,311,529
SAP 4,190(c) 243,499
Symantec 100,556(b) 2,118,715
---------------
Total 143,950,028
- --------------------------------------------------------------------------------------
SPECIALTY RETAIL (0.9%)
Abercrombie & Fitch Cl A 26,590 1,468,300
AutoNation 16,031(b) 165,440
AutoZone 5,144(b) 670,212
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 21
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
SPECIALTY RETAIL (CONT.)
Bed Bath & Beyond 34,454(b) $958,855
Gap 112,983 1,821,286
Home Depot 481,084 11,464,231
Lowe's Companies 486,644(i) 9,888,605
Office Depot 30,952(b) 210,474
RadioShack 15,719 262,193
Sherwin-Williams 11,888 633,036
Staples 88,968 2,001,780
Tiffany & Co 17,789 672,246
TJX Companies 191,512 6,455,870
---------------
Total 36,672,528
- --------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (0.1%)
Nike Cl B 48,509 2,846,508
VF 21,966 1,572,326
---------------
Total 4,418,834
- --------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.4%)
Freddie Mac 2,057,347 16,808,526
Hudson City Bancorp 48,993 894,607
Washington Federal 12,857 239,140
---------------
Total 17,942,273
- --------------------------------------------------------------------------------------
TOBACCO (2.2%)
Altria Group 1,150,407 23,410,782
Lorillard 17,965(b) 1,205,631
Philip Morris Intl 1,183,814 61,143,994
UST 67,961 3,575,428
---------------
Total 89,335,835
- --------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (--%)
WW Grainger 7,786 696,925
- --------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (2.8%)
American Tower Cl A 21,603(b) 905,166
Sprint Nextel 619,353 5,041,533
Turkcell ADR 106,276(c) 2,051,127
Vodafone Group 28,897,564(c) 77,409,489
Vodafone Group ADR 1,110,412(c) 29,792,354
---------------
Total 115,199,669
- --------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $4,277,268,678) $3,944,415,463
- --------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
OPTIONS PURCHASED (0.3%)
EXERCISE EXPIRATION
ISSUER CONTRACTS PRICE DATE VALUE(A)
CALLS
Altria Group(j)
Virgin Media(j)
Vodafone Group ADR(j) 240,674 $100.00 Jan. 2009 $283,995
AmeriSourceBergen(j)
Bristol-Myers Squibb(j)
Nokia ADR(j) 224,040 100.00 Jan. 2009 495,128
Hertz Global Holdings(j)
Telefonica(j)
Vodafone Group ADR(j) 194,617 100.00 Jan. 2009 136,388
Hong Kong Dollar 1,012,421 7.73 March 2009 225,365
Nokia 5,033 15.00 Dec. 2008 2,708,239
Nokia 7,559 18.00 Dec. 2008 1,868,679
Nokia ADR 2,180 25.00 Jan. 2009 926,500
Sirius XM Radio 8,852 9.00 Aug. 2008 44,260
Sirius XM Radio(j)
Virgin Media(j)
Vodafone Group ADR(j) 213,932 100.00 Jan. 2009 53,483
- --------------------------------------------------------------------------------------------------------------------------
PUTS
Goldman Sachs Group 239,727 446.25 Aug. 2008 1,080,474
NASDAQ 100 Index 28,351 43.00 Aug. 2008 708,775
Research in Motion 1,123 115.00 Dec. 2008 1,344,792
S&P 500 Index 1,072 1,240.00 Aug. 2008 1,420,400
S&P 500 Index 1,232 1,260.00 Aug. 2008 2,470,160
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS PURCHASED
(Cost: $22,945,180) $13,766,638
- --------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (3.1%)(g)
SHARES VALUE(A)
RiverSource Short-Term
Cash Fund, 2.54% 124,337,493(l) $124,337,493
- -----------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $124,337,493) $124,337,493
- -----------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $4,424,551,351)(m) $4,082,519,594
===================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
22 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT JULY 31, 2008
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------
S&P 500 Index 60 $19,006,500 Sept. 2008 $365,881
</Table>
OPEN OPTIONS CONTRACTS WRITTEN AT JULY 31, 2008
<Table>
<Caption>
NUMBER OF EXERCISE PREMIUM EXPIRATION
ISSUER PUTS/CALLS CONTRACTS PRICE RECEIVED DATE VALUE(A)
- --------------------------------------------------------------------------------------------------------------
Nokia Call 7,559 18 $934,566 Dec. 2008 $1,868,679
Research in Motion Put 1,123 100 856,227 Dec. 2008 735,565
S&P 500 Index Put 1,072 1,200 801,663 Aug. 2008 584,240
S&P 500 Index Put 1,232 1,220 797,104 Aug. 2008 1,065,680
Sirius XM Radio Call 8,852 10 394,191 Aug. 2008 22,130
- --------------------------------------------------------------------------------------------------------------
Total $4,276,294
- --------------------------------------------------------------------------------------------------------------
</Table>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JULY 31, 2008
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED APPRECIATION DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------
Aug. 1, 2008 805,674 1,255,519 $-- $(1,902)
European Monetary Unit U.S. Dollar
- ---------------------------------------------------------------------------------------------------------------
Aug. 5, 2008 662,546 425,003 331 --
U.S. Dollar European Monetary Unit
- ---------------------------------------------------------------------------------------------------------------
Sept. 4, 2008 22,571,000 45,016,280 381,074 --
British Pound U.S. Dollar
- ---------------------------------------------------------------------------------------------------------------
Sept. 5, 2008 6,683,000 6,361,013 94,766 --
Australian Dollar U.S. Dollar
- ---------------------------------------------------------------------------------------------------------------
Sept. 5, 2008 17,493,000 34,893,987 303,505 --
British Pound U.S. Dollar
- ---------------------------------------------------------------------------------------------------------------
Sept. 11, 2008 44,722,000 69,847,267 197,246 --
European Monetary Unit U.S. Dollar
- ---------------------------------------------------------------------------------------------------------------
Sept. 12, 2008 36,981,000 57,690,360 96,168 --
European Monetary Unit U.S. Dollar
- ---------------------------------------------------------------------------------------------------------------
Total $1,073,090 $(1,092)
- ---------------------------------------------------------------------------------------------------------------
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2008, the
value of foreign securities represented 10.9% of net assets.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 23
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At July 31,
2008, the value of these securities amounted to $29,268,148 or 0.7% of net
assets.
(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) At July 31, 2008, security was partially or fully on loan. See Note 5 to
the financial statements.
(g) Cash collateral received from security lending activity is invested in an
affiliated money market fund and represents 0.8% of net assets. See Note 5
to the financial statements. The Fund's cash equivalent position is 2.3% of
net assets.
(h) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). These securities may be valued at fair
value according to procedures approved, in good faith, by the Fund's Board
of Directors. Information concerning such security holdings at July 31,
2008, is as follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
- ----------------------------------------------------------------------------------
Apollo Mgmt LP* 08-02-07 thru 07-10-08 $31,700,520
Oaktree Capital Group LLC Cl A
Unit* 05-21-07 thru 03-14-08 12,205,136
Virgin Media 11-15-06 thru 04-15-08 182,208,894
</Table>
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(i) At July 31, 2008, investments in securities included securities valued at
$4,835,700 that were partially pledged as collateral to cover initial
margin deposits on open stock index futures contracts.
(j) Represents a worst-of-call-option that is a bundle of long forwards. All
mature on the option's expiration date but have different underliers. At
expiration, only one settles and this is chosen in the issuer's favor.
(k) At July 31, 2008, securities valued at $22,044,694 were held to cover open
call options written. See Note 6 to the financial statements.
(l) Affiliated Money Market Fund - See Note 7 to the financial statements. The
rate shown is the seven-day current annualized yield at July 31, 2008.
(m) At July 31, 2008, the cost of securities for federal income tax purposes
was $4,609,836,302 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $300,203,674
Unrealized depreciation (827,520,382)
- ------------------------------------------------------------------------------
Net unrealized depreciation $(527,316,708)
- ------------------------------------------------------------------------------
</Table>
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.
- --------------------------------------------------------------------------------
24 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at riversource.com/funds.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 25
FINANCIAL STATEMENTS -----------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2008
<Table>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $4,300,213,858) $3,958,182,101
Affiliated money market fund (identified cost
$124,337,493) 124,337,493
- ------------------------------------------------------------------------------
Total investments in securities (identified cost
$4,424,551,351) 4,082,519,594
Cash 1,338,804
Foreign currency holdings (identified cost $1) 1
Capital shares receivable 376,695
Dividends and accrued interest receivable 9,079,663
Receivable for investment securities sold 84,128,464
Unrealized appreciation on forward foreign currency
contracts 1,073,090
- ------------------------------------------------------------------------------
Total assets 4,178,516,311
- ------------------------------------------------------------------------------
LIABILITIES
Options contracts written, at value (premiums received
$3,783,751) 4,276,294
Capital shares payable 15,079,716
Payable for investment securities purchased 64,094,744
Payable upon return of securities loaned 32,299,100
Variation margin payable 308,000
Unrealized depreciation on forward foreign currency
contracts 1,092
Accrued investment management services fees 63,204
Accrued distribution fees 35,986
Accrued transfer agency fees 12,123
Accrued administrative services fees 5,528
Accrued plan administration services fees 1,300
Other accrued expenses 681,310
Collateral and deposits payable 1,175,000
- ------------------------------------------------------------------------------
Total liabilities 118,033,397
- ------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $4,060,482,914
==============================================================================
REPRESENTED BY
Capital stock -- $.01 par value $ 9,010,201
Additional paid-in capital 4,751,328,658
Undistributed net investment income 47,429,271
Accumulated net realized gain (loss) (406,243,610)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (341,041,606)
- ------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $4,060,482,914
==============================================================================
*Including securities on loan, at value $ 28,188,444
- ------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
26 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
JULY 31, 2008
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $3,388,815,212 750,529,476 $4.52(1)
Class B $ 432,695,950 98,119,285 $4.41
Class C $ 20,752,067 4,701,508 $4.41
Class I $ 38,943,788 8,562,931 $4.55
Class R2 $ 3,743 822 $4.55
Class R3 $ 3,749 822 $4.56
Class R4 $ 179,264,616 39,104,432 $4.58
Class R5 $ 3,789 822 $4.61
- -------------------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $4.80. 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 LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 27
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2008
<Table>
INVESTMENT INCOME
Income:
Dividends $ 113,500,028
Interest 4,306
Income distributions from affiliated money market fund 8,770,462
Fee income from securities lending 1,125,485
Less foreign taxes withheld (1,262,602)
- -----------------------------------------------------------------------------
Total income 122,137,679
- -----------------------------------------------------------------------------
Expenses:
Investment management services fees 25,467,893
Distribution fees
Class A 10,775,702
Class B 7,098,566
Class C 270,367
Class R2 22
Class R3 11
Transfer agency fees
Class A 9,066,345
Class B 1,605,617
Class C 59,194
Class R2 3
Class R3 3
Class R4 128,910
Class R5 3,535
Administrative services fees 2,524,199
Plan administration services fees
Class R2 11
Class R3 11
Class R4 644,550
Compensation of board members 99,527
Custodian fees 589,410
Printing and postage 1,398,700
Registration fees 91,517
Professional fees 119,264
Other 186,595
- -----------------------------------------------------------------------------
Total expenses 60,129,952
Expenses waived/reimbursed by the Investment Manager and
its affiliates (3,079,363)
Earnings and bank fee credits on cash balances (400,856)
- -----------------------------------------------------------------------------
Total net expenses 56,649,733
- -----------------------------------------------------------------------------
Investment income (loss) -- net 65,487,946
- -----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
28 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED JULY 31, 2008
<Table>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $ 10,407,715
Foreign currency transactions (14,523,705)
Futures contracts (11,520,899)
Options contracts written (2,376,453)
Swap transactions (2,348,917)
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments (20,362,259)
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities
in foreign currencies (865,038,637)
- -----------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (885,400,896)
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(819,912,950)
=============================================================================
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 29
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 65,487,946 $ 63,564,209
Net realized gain (loss) on investments (20,362,259) 703,349,838
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and
liabilities in foreign currencies (865,038,637) 323,820,329
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (819,912,950) 1,090,734,376
- ----------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (36,389,921) (51,279,745)
Class B -- (2,969,618)
Class C -- (121,537)
Class I (866,696) (1,522,653)
Class R2 (32) (65)
Class R3 (44) (66)
Class R4 (2,588,075) (5,679,767)
Class R5 -- (322,641)
Net realized gain
Class A (503,800,045) (125,265,857)
Class B (85,854,373) (27,693,216)
Class C (3,230,993) (831,229)
Class I (7,554,314) (2,640,713)
Class R2 (539) (115)
Class R3 (539) (115)
Class R4 (31,125,821) (13,607,896)
Class R5 (539) (560,037)
- ----------------------------------------------------------------------------------------
Total distributions (671,411,931) (232,495,270)
- ----------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
30 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 211,484,181 $ 370,676,879
Class B shares 33,647,160 57,068,487
Class C shares 2,226,679 2,755,399
Class I shares 10,561,864 15,570,677
Class R2 shares -- 5,000
Class R3 shares -- 5,000
Class R4 shares 34,516,064 28,329,694
Class R5 shares -- 26,931,801
Reinvestment of distributions at net asset value
Class A shares 523,659,899 171,429,375
Class B shares 85,230,086 30,416,192
Class C shares 3,174,765 939,571
Class I shares 8,419,823 4,163,008
Class R4 shares 33,713,417 19,287,529
Class R5 shares -- 882,497
Payments for redemptions
Class A shares (1,190,365,828) (1,564,111,579)
Class B shares (315,875,480) (569,109,428)
Class C shares (8,714,618) (10,923,150)
Class I shares (30,081,251) (69,035,113)
Class R4 shares (150,506,498) (882,819,499)
Class R5 shares (26,533,250) (2,629,011)
- ----------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions (775,442,987) (2,370,166,671)
- ----------------------------------------------------------------------------------------
Total increase (decrease) in net assets (2,266,767,868) (1,511,927,565)
Net assets at beginning of year 6,327,250,782 7,839,178,347
- ----------------------------------------------------------------------------------------
Net assets at end of year $ 4,060,482,914 $ 6,327,250,782
========================================================================================
Undistributed net investment income $ 47,429,271 $ 40,157,282
- ----------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Large Cap Equity Fund (the Fund) is a series of RiverSource Large
Cap Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. RiverSource
Large Cap Series, Inc. has 10 billion authorized shares of capital stock that
can be allocated among the separate series as designated by the Board of
Directors (the Board). The Fund invests primarily in equity securities of
companies with a market capitalization greater than $5 billion at the time of
purchase.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4
and Class R5 shares.
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a
front-end sales charge or CDSC and are offered to qualifying institutional
investors.
At July 31, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds, owned 100% of
Class I shares and the Investment Manager owned 100% of Class R2, Class R3 and
Class R5 shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
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 each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by
- --------------------------------------------------------------------------------
32 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
dealers in these securities or by an independent pricing service. 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 New York Stock Exchange 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 New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange. Swap transactions are valued through an authorized pricing
service, broker, or an internal model.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost.
ILLIQUID SECURITIES
At July 31, 2008, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at July 31, 2008 was
$130,747,518 representing 3.22% of net assets. These securities may be valued at
fair value according to procedures approved, in good faith, by the Board.
According to Board guidelines, certain unregistered securities are determined to
be liquid and are not included within the 15% limitation specified above. Assets
are liquid if they can be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the asset is valued by the
Fund.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 33
obligation depends upon the credit standing of the other party. Cash collateral
may be collected by the Fund to secure certain over-the-counter options trades.
Cash collateral held by the Fund for such option trades must be returned to the
counterparty upon closure, exercise or expiration of the contract. The Fund also
may buy and sell put and call options and write covered call options on
portfolio securities as well as write cash-secured put options. The risk in
writing a call option is that the Fund gives up the opportunity for profit if
the market price of the security increases. The risk in writing a put option is
that the Fund may incur a loss if the market price of the security decreases and
the option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include 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.
Futures are valued daily based upon the last sale price at the close of 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.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
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
- --------------------------------------------------------------------------------
34 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
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. At July 31,
2008, foreign currency holdings were entirely comprised of Taiwan dollars.
The Fund may enter into forward foreign currency contracts for operational
purposes. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates from an independent pricing service. The Fund is subject to the credit
risk that the other party will not complete its contract obligations.
TOTAL RETURN EQUITY SWAP TRANSACTIONS
The Fund may enter into swap agreements to gain exposure to the total return on
a specified security, basket of securities or security indexes during the
specified period, in return for periodic payments based on a fixed or variable
interest rate. Total return swap agreements may be used to obtain exposure to a
security or market without owning or taking physical custody of such security or
market. Under the terms of a total return equity swap agreement, payments made
by the Fund or the counterparty are based on the total return of a particular
reference asset or assets (such as an equity security, a combination of such
securities, or an index). That is, one party agrees to pay another party the
return on a stock, basket of stocks, or stock index in return for a specified
interest rate.
The notional amounts of swap contracts are not recorded in the financial
statements. Swap contracts are valued daily, and the change in value is recorded
as unrealized appreciation (depreciation) until the termination of the swap, at
which time realized gain (loss) is recorded. Payments received or made are
recorded as realized gains (losses).
Swap agreements may be subject to liquidity risk, which exists when a particular
swap is difficult to purchase or sell. It may not be possible for the Fund to
initiate a transaction or liquidate a position at an advantageous time or price,
which may result in significant losses. Total return swaps are subject to the
risk associated with the investment in the underlying securities and also the
risk of the counterparty not fulfilling its obligations under the agreement.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 35
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 to shareholders. No provision for income or excise
taxes is thus required.
Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes," clarifies the accounting for
uncertainty in income taxes recognized in accordance with FASB Statement 109,
"Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize
and measure a tax position taken or expected to be taken in a tax return. The
first step is to determine whether a tax position has met the more-likely-than-
not recognition threshold and the second step is to measure a tax position that
meets the threshold to determine the amount of benefit to recognize. Management
of the Fund has concluded that there are no significant uncertain tax positions
that would require recognition in the financial statements. Generally, the tax
authorities can examine all the tax returns filed for the last three years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of futures and options
contracts, foreign currency transactions, recognition of unrealized appreciation
(depreciation) for certain derivative investments, re-characterization of REIT
distributions, investments in partnerships, post-October losses and losses
deferred due to wash sales. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by
$18,371,189 and accumulated net realized loss has been decreased by $18,360,779
resulting in a net reclassification adjustment to increase paid-in capital by
$10,410.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007*
- -----------------------------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income....................... $211,882,459 $ 114,060,835
Long-term capital gain................ 328,307,507 62,484,767
CLASS B
Distributions paid from:
Ordinary income....................... 29,908,842 16,848,997
Long-term capital gain................ 55,945,531 13,813,837
</Table>
- --------------------------------------------------------------------------------
36 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007*
- -----------------------------------------------------------------------------
CLASS C
Distributions paid from:
Ordinary income....................... $ 1,125,566 $ 538,139
Long-term capital gain................ 2,105,427 414,627
CLASS I
Distributions paid from:
Ordinary income....................... 3,498,173 2,846,125
Long-term capital gain................ 4,922,837 1,317,241
CLASS R2
Distributions paid from:
Ordinary income....................... 220 123
Long-term capital gain................ 351 57
CLASS R3
Distributions paid from:
Ordinary income....................... 232 124
Long-term capital gain................ 351 57
CLASS R4
Distributions paid from:
Ordinary income....................... 13,430,477 12,499,767
Long-term capital gain................ 20,283,419 6,787,896
CLASS R5
Distributions paid from:
Ordinary income....................... 188 603,320
Long-term capital gain................ 351 279,358
</Table>
* Class R2, Class R3 and Class R5 are for the period from Dec. 11, 2006
(inception date) to July 31, 2007.
At July 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income............................ $ 64,131,416
Undistributed accumulated long-term gain................. $ --
Accumulated realized loss................................ $(235,009,471)
Unrealized appreciation (depreciation)................... $(528,977,890)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities - an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. Funds are required
to provide enhanced disclosures about (a) how and why a fund uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect a fund's financial
position,
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 37
financial performance, and cash flows. SFAS 161 is effective for financial
statements issued for fiscal years and interim periods beginning after Nov. 15,
2008. As of July 31, 2008, management does not believe the adoption of SFAS 161
will impact the financial statement amounts; however, additional footnote
disclosures may be required about the use of derivative instruments and hedging
items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. The application of SFAS 157
will be effective for the Fund's fiscal year beginning Aug. 1, 2008. The
adoption of SFAS 157 is not anticipated to have a material impact on the Fund's
financial statements; however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of certain
measurements reported in the Statement of Operations for a fiscal period.
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.
2. 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 a percentage of the Fund's average daily net assets that declines from 0.60%
to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Large-Cap Core Funds Index. In certain circumstances,
the Board may approve a change in the index. The maximum adjustment is 0.12% per
year. If the performance difference is less than 0.50%, the adjustment will be
zero. The adjustment decreased the management fee by $4,214,418 for the year
- --------------------------------------------------------------------------------
38 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
ended July 31, 2008. The management fee for the year ended July 31, 2008 was
0.47% 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 a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.06% to 0.03% annually as the
Fund's assets increase. The fee for the year ended July 31, 2008 was 0.05% of
the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Funds and the Board. For the year ended July 31,
2008 other expenses paid to this company were $27,518.
COMPENSATION OF BOARD MEMBERS
Compensation of board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees on the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 39
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Prior to Oct. 1, 2007, Ameriprise
Financial Services, Inc. also served as a principal underwriter and distributor
to the Fund. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1,
the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily
net assets attributable to Class A and Class R3 shares, a fee at an annual rate
of up to 0.50% of the Fund's average daily net assets attributable to Class R2
shares and a fee at an annual rate of up to 1.00% of the Fund's average daily
net assets attributable to Class B and Class C shares. For Class B and Class C
shares, up to 0.75% of the fee is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $13,585,000 and $175,000
for Class B and Class C shares, respectively. These amounts are based on the
most recent information available as of July 31, 2008, 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 received by the Distributor for distributing Fund shares were
$2,642,943 for Class A, $697,051 for Class B and $2,614 for Class C for the year
ended July 31, 2008.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2008, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*) were as follows:
<Table>
Class A..................................................... 0.97%
Class B..................................................... 1.73
Class C..................................................... 1.73
Class R2.................................................... 1.14
Class R3.................................................... 0.89
Class R4.................................................... 0.82
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A..................................................... $2,485,731
Class B..................................................... 451,611
Class C..................................................... 15,549
Class R4.................................................... 118,737
</Table>
- --------------------------------------------------------------------------------
40 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2.................................................... $ 11
Class R3.................................................... 11
Class R4.................................................... 7,713
</Table>
Under an agreement which was effective until July 31, 2008, the Investment
Manager and its affiliates contractually agreed to waive certain fees and
expenses such that net expenses (excluding fees and expenses of acquired
funds*), before giving effect to any performance incentive adjustment, would not
exceed the following percentage of the Fund's average daily net assets:
<Table>
Class A..................................................... 1.05%
Class B..................................................... 1.81
Class C..................................................... 1.81
Class I..................................................... 0.67
Class R2.................................................... 1.47
Class R3.................................................... 1.22
Class R4.................................................... 0.90
Class R5.................................................... 0.72
</Table>
Effective Aug. 1, 2008, the Investment Manager and its affiliates have
contractually agreed to waive certain fees and expenses until July 31, 2009,
unless sooner terminated at the discretion of the Board, such that net expenses
(excluding fees and expenses of acquired funds*), before giving effect to any
performance incentive adjustment, will not exceed the following percentage of
the Fund's average daily net assets:
<Table>
Class A..................................................... 1.04%
Class B..................................................... 1.81
Class C..................................................... 1.80
Class I..................................................... 0.62
Class R2.................................................... 1.42
Class R3.................................................... 1.17
Class R4.................................................... 0.90
Class R5.................................................... 0.67
</Table>
* 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.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 41
EARNINGS AND BANK FEE CREDITS
During the year ended July 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $400,856 as a result of earnings and bank fee credits from
overnight cash balances. The Fund pays custodian fees to Ameriprise Trust
Company, a subsidiary of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $3,532,920,686 and $4,856,373,311, respectively, for the
year ended July 31, 2008. Realized gains and losses are determined on an
identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------------------
Class A 43,972,212 98,990,509 (225,955,886) (82,993,165)
Class B 6,351,542 16,421,985 (65,543,343) (42,769,816)
Class C 430,927 611,708 (1,682,294) (639,659)
Class I 2,016,152 1,585,654 (6,198,548) (2,596,742)
Class R4 6,389,837 6,289,817 (27,462,232) (14,782,578)
Class R5 -- -- (4,152,231) (4,152,231)
- ----------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED JULY 31, 2007
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------------------
Class A 59,268,105 29,154,657 (265,432,267) (177,009,505)
Class B 9,841,913 5,262,317 (95,077,518) (79,973,288)
Class C 475,544 162,555 (1,886,761) (1,248,662)
Class I 2,660,792 705,595 (11,591,197) (8,224,810)
Class R2 822 -- -- 822
Class R3 822 -- -- 822
Class R4 4,699,528 3,241,602 (149,629,106) (141,687,976)
Class R5 4,421,287 149,070 (417,304) 4,153,053
- ----------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
42 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
5. LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend securities
representing up to one-third of the value of its total assets (which includes
collateral for securities on loan) to broker-dealers, banks, or other
institutional borrowers of securities. The Fund receives collateral in the form
of cash and U.S. government securities, equal to at least 100% of the value of
securities loaned, which is marked to the market value of the loaned securities
daily until the securities are returned, e.g., if the value of the securities on
loan increases, additional cash collateral is provided by the borrower. The
Investment Manager serves as securities lending agent for the Fund under the
Investment Management Services Agreement pursuant to which the Fund has agreed
to reimburse the Investment Manager for expenses incurred by it in connection
with the lending program, and pursuant to guidelines adopted by and under the
oversight of the Board. At July 31, 2008, securities valued at $28,188,444 were
on loan to brokers. For collateral, the Fund received $32,299,100 in cash. Cash
collateral received is invested in an affiliated money market fund and
short-term securities, including U.S. government securities or other high-grade
debt obligations, which are included in the Portfolio of Investments. Income
from securities lending amounted to $1,125,485 for the year ended July 31, 2008.
Expenses paid to the Investment Manager as securities lending agent were $25,365
for the year ended July 31, 2008, which are included in other expenses on the
Statement of Operations. The risks to the Fund of securities lending are that
the borrower may not provide additional collateral when required or return the
securities when due.
6. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written during the year
ended July 31, 2008, are as follows:
<Table>
<Caption>
PUTS CALLS
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- ------------------------------------------------------------------------------------------
Balance July 31, 2007 20,639 $ 2,621,153 27,883 $ 3,953,892
Opened 67,904 13,043,749 189,456 7,088,685
Closed (84,243) (12,702,678) (147,275) (8,353,184)
Expired (873) (507,230) (53,653) (1,360,636)
- ------------------------------------------------------------------------------------------
Balance July 31, 2008 3,427 $ 2,454,994 16,411 $ 1,328,757
- ------------------------------------------------------------------------------------------
</Table>
See "Summary of Significant Accounting Policies."
7. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 43
fund aggregated $3,280,001,945 and $3,389,054,584, respectively, for the year
ended July 31, 2008. The income distributions received with respect to the
Fund's investment in RiverSource Short-Term Cash Fund can be found on the
Statement of Operations and the Fund's invested balance in RiverSource
Short-Term Cash Fund at July 31, 2008, can be found in the Portfolio of
Investments.
8. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A. (JPMCB), 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. 18, 2007, replacing a
prior credit facility. The credit facility agreement, which is a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permits collective borrowings up to $500 million. Interest is
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum. Under the prior credit facility, a Fund paid interest on its
outstanding borrowings at a rate equal to either the higher of the federal funds
effective rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. The Fund
had no borrowings during the year ended July 31, 2008.
9. CAPITAL LOSS CARRY-OVER AND POST-OCTOBER LOSS
For federal income tax purposes, the Fund had a capital loss carry-over of
$91,172,850 at July, 31, 2008, that if not offset by capital gains will expire
as follows:
<Table>
<Caption>
2009 2010 2011
$60,717,128 $20,982,455 $9,473,267
</Table>
Because the measurement periods for a regulated investment company's income are
different for excise tax purposes versus income tax purposes, special rules are
in place to protect the amount of earnings and profits needed to support excise
tax distributions. As a result, the Fund is permitted to treat net capital
losses realized between Nov. 1, 2007 and its fiscal year end ("post-October
loss") as occurring on the first day of the following tax year. At July 31,
2008, the Fund had a post-October loss of $143,836,621 that is treated for
income tax purposes as occurring on Aug. 1, 2008.
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.
- --------------------------------------------------------------------------------
44 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
10. 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 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. In response to defendants' motion to dismiss the
complaint, the 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 on
August 8, 2007.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of Directors/
Trustees.
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
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 45
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.
- --------------------------------------------------------------------------------
46 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
11. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $6.05 $5.40 $5.26 $4.64 $4.53
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .06(b) .06 .04 .01
Net gains (losses) (both realized and
unrealized) (.90) .79 .12 .61 .32
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.83) .85 .18 .65 .33
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.05) (.06) (.04) (.02) --
Distributions from realized gains (.65) (.14) -- (.01) (.22)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.70) (.20) (.04) (.03) (.22)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.52 $6.05 $5.40 $5.26 $4.64
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $3,389 $5,039 $5,461 $1,030 $1,248
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.03% 1.09% 1.06% 1.16% 1.23%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .97% 1.09% 1.06% 1.11% 1.20%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.31% .99% 1.08% .79% .36%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 66% 116% 128% 99%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (15.40%) 15.79% 3.51% 13.99% 7.19%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. The ratio of net expenses after expense waiver/reimbursement and
after reduction for earnings and bank fee credits was 0.96% for the year
ended July 31, 2008.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 47
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $5.91 $5.29 $5.15 $4.56 $4.48
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03(b) .01(b) .02 -- (.01)
Net gains (losses) (both realized and
unrealized) (.88) .76 .12 .60 .31
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.85) .77 .14 .60 .30
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.01) -- -- --
Distributions from realized gains (.65) (.14) -- (.01) (.22)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.65) (.15) -- (.01) (.22)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.41 $5.91 $5.29 $5.15 $4.56
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $433 $833 $1,169 $472 $572
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.79% 1.86% 1.84% 1.93% 1.98%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.73% 1.86% 1.84% 1.88% 1.95%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .56% .23% .28% .02% (.46%)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 66% 116% 128% 99%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (15.97%) 14.71% 2.72% 13.09% 6.48%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. The ratio of net expenses after expense waiver/reimbursement and
after reduction for earnings and bank fee credits was 1.72% for the year
ended July 31, 2008.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
48 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $5.92 $5.30 $5.16 $4.57 $4.49
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03(b) .01(b) .02 -- (.01)
Net gains (losses) (both realized and
unrealized) (.89) .77 .12 .60 .31
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.86) .78 .14 .60 .30
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.02) -- -- --
Distributions from realized gains (.65) (.14) -- (.01) (.22)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.65) (.16) -- (.01) (.22)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.41 $5.92 $5.30 $5.16 $4.57
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $21 $32 $35 $9 $11
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.79% 1.86% 1.84% 1.93% 2.01%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.73% 1.86% 1.84% 1.88% 1.98%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .55% .23% .28% .02% (.43%)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 66% 116% 128% 99%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (16.11%) 14.80% 2.71% 13.06% 6.46%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. The ratio of net expenses after expense waiver/reimbursement and
after reduction for earnings and bank fee credits was 1.72% for the year
ended July 31, 2008.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 49
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004(B)
Net asset value, beginning of period $6.09 $5.44 $5.31 $4.67 $5.08
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .09(c) .09(c) .10 .05 --
Net gains (losses) (both realized and
unrealized) (.90) .78 .12 .63 (.28)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.81) .87 .22 .68 (.28)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.08) (.09) (.03) --
Distributions from realized gains (.65) (.14) -- (.01) (.13)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.73) (.22) (.09) (.04) (.13)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.55 $6.09 $5.44 $5.31 $4.67
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $39 $68 $105 $43 $14
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement (d),(e) .57% .63% .59% .70% .72%(f)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .57% .63% .59% .65% .71%(f)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.74% 1.44% 1.53% 1.24% .74%(f)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 66% 116% 128% 99%
- -----------------------------------------------------------------------------------------------------------
Total return (15.02%) 16.13% 4.06% 14.64% (5.65%)(i)
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 4, 2004 (inception date) to July 31, 2004.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. The ratio of net expenses after expense waiver/reimbursement and
after reduction for earnings and bank fee credits was 0.56% for the year
ended July 31, 2008.
(i) Not annualized.
- --------------------------------------------------------------------------------
50 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007(B)
Net asset value, beginning of period $6.08 $6.08
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .06 .03
Net gains (losses) (both realized and
unrealized) (.90) .19
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.84) .22
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.08)
Distributions from realized gains (.65) (.14)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.69) (.22)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.55 $6.08
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $-- $--
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.39% 1.44%(f)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) 1.14% 1.44%(f)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.15% .67%(f)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 66%
- -----------------------------------------------------------------------------------------------------------
Total return (15.45%) 3.71%(i)
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 51
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007(B)
Net asset value, beginning of period $6.09 $6.08
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08 .04
Net gains (losses) (both realized and
unrealized) (.90) .19
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.82) .23
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.08)
Distributions from realized gains (.65) (.14)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.71) (.22)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.56 $6.09
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $-- $--
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) 1.14% 1.19%(f)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .89% 1.19%(f)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.40% .92%(f)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 66%
- -----------------------------------------------------------------------------------------------------------
Total return (15.19%) 3.88%(i)
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
52 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $6.13 $5.47 $5.28 $4.66 $4.54
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .08(b) .07(b) .09 .04 .01
Net gains (losses) (both realized and
unrealized) (.92) .79 .12 .61 .34
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.84) .86 .21 .65 .35
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.06) (.02) (.02) (.01)
Distributions from realized gains (.65) (.14) -- (.01) (.22)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.71) (.20) (.02) (.03) (.23)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.58 $6.13 $5.47 $5.28 $4.66
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $179 $330 $1,069 $-- $8
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .87% .90% .81% .95% 1.03%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .82% .89% .81% .90% 1.00%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.46% 1.14% 1.41% 1.08% .50%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 66% 116% 128% 99%
- -----------------------------------------------------------------------------------------------------------
Total return (15.40%) 15.80% 4.03% 14.06% 7.44%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. The ratio of net expenses after expense waiver/reimbursement and
after reduction for earnings and bank fee credits was 0.81% for the year
ended July 31, 2008.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 53
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007(B)
Net asset value, beginning of period $6.11 $6.08
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08 .06
Net gains (losses) (both realized and
unrealized) (.93) .19
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.85) .25
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.08)
Distributions from realized gains (.65) (.14)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.65) (.22)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.61 $6.11
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $-- $25
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) .67% .70%(f)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .67% .70%(f)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.21% 1.44%(f)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 68% 66%
- -----------------------------------------------------------------------------------------------------------
Total return (15.38%) 4.24%(i)
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees and expenses of acquired funds),
before giving effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. The ratio of net expenses after expense waiver/reimbursement and
after reduction for earnings and bank fee credits was 0.66% for the year
ended July 31, 2008.
(i) Not annualized.
- --------------------------------------------------------------------------------
54 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE LARGE CAP EQUITY FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Large Cap Equity Fund (the Fund)
(one of the portfolios constituting the RiverSource Large Cap Series, Inc.) as
of July 31, 2008, and the related statement of operations for the year then
ended, the statement of changes in net assets and the financial highlights for
the each of the two years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights of the Fund
for the periods presented through July 31, 2006, were audited by other auditors
whose report dated September 20, 2006, expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2008, 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 LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 55
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Large Cap Equity Fund of the RiverSource Large Cap
Series, Inc. at July 31, 2008, the results of its operations for the year then
ended, and changes in its net assets and the financial highlights for each of
the two years in the period then ended in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 22, 2008
- --------------------------------------------------------------------------------
56 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 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, 2008
<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%
CAPITAL GAIN DISTRIBUTION - the Fund designates $411,565,774 to be taxed as
long-term capital gain.
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 57
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board.
The following is a list of the Fund's Board members. Each member oversees 104
RiverSource funds. Board members serve until the next regular shareholders'
meeting or until he or she reaches the mandatory retirement age established by
the Board. Under the current Board policy, members may serve until the end of
the meeting following their 75th birthday, or the fifteenth anniversary of the
first Board meeting they attended as members of the Board, whichever occurs
first. This policy does not apply to Ms. Jones who may retire after her 75th
birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------
Kathleen Blatz Board member Chief Justice, Minnesota Supreme None
901 S. Marquette Ave. since 2006 Court, 1998-2006; Attorney
Minneapolis, MN 55402
Age 54
- -----------------------------------------------------------------------------------------------------
Arne H. Carlson Board member Chair, RiverSource Funds, None
901 S. Marquette Ave. since 1999 1999-2006; former Governor of
Minneapolis, MN 55402 Minnesota
Age 73
- -----------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member President, Springboard -- Partners None
901 S. Marquette Ave. since 2007 in Cross Cultural Leadership
Minneapolis, MN 55402 (consulting company)
Age 53
- -----------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member Trustee Professor of Economics and None
901 S. Marquette Ave. since 2004 Management, Bentley College; former
Minneapolis, MN 55402 Dean, McCallum Graduate School of
Age 57 Business, Bentley College
- -----------------------------------------------------------------------------------------------------
Anne P. Jones Board member Attorney and Consultant None
901 S. Marquette Ave. since 1985
Minneapolis, MN 55402
Age 73
- -----------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member Former Managing Director, Shikiar American Progressive
901 S. Marquette Ave. since 2005 Asset Management Insurance
Minneapolis, MN 55402
Age 72
- -----------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Board member President Emeritus and Professor of Valmont Industries,
901 S. Marquette Ave. since 2002 and Economics, Carleton College Inc. (manufactures
Minneapolis, MN 55402 Chair of the irrigation systems)
Age 69 Board since 2007
- -----------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
58 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------
Catherine James Paglia Board member Director, Enterprise Asset None
901 S. Marquette Ave. since 2004 Management, Inc. (private real
Minneapolis, MN 55402 estate and asset management
Age 55 company)
- -----------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member Chief Executive Officer and Idera
901 S. Marquette Ave. since 2002 Director, RiboNovix, Inc. since Pharmaceutical, Inc.
Minneapolis, MN 55402 2003 (biotechnology); former (biotechnology);
Age 64 President, Forester Biotech Healthways, Inc.
(health management
programs)
- -----------------------------------------------------------------------------------------------------
</Table>
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------
William F. Truscott Board member President -- U.S. Asset Management None
53600 Ameriprise since 2001, and Chief Investment Officer,
Financial Center Vice President Ameriprise Financial, Inc. and
Minneapolis, MN 55474 since 2002 President, Chairman of the Board
Age 47 and Chief Investment Officer,
RiverSource Investments, LLC since
2005; Director, President, and
Chief Executive Officer, Ameriprise
Certificate Company since 2006;
Chairman of the Board, Chief
Executive Officer and President,
RiverSource Distributors, Inc.
since 2006; Senior Vice
President -- Chief Investment
Officer, Ameriprise Financial, Inc.
and Chairman of the Board and Chief
Investment Officer, RiverSource
Investments, LLC, 2001-2005
- -----------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 59
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------
Patrick T. Bannigan President since Director and Senior Vice President, Asset
172 Ameriprise 2006 Management, Products and Marketing,
Financial Center RiverSource Investments, LLC since 2006;
Minneapolis, MN 55474 Director and Vice President -- Asset
Age 42 Management, Products and Marketing,
RiverSource Distributors, Inc. since 2006;
Managing Director and Global Head of Product,
Morgan Stanley Investment Management,
2004-2006; President, Touchstone Investments,
2002-2004
- ------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President Executive Vice President -- Equity and Fixed
172 Ameriprise since 2004 Income, Ameriprise Financial, Inc. and
Financial Center RiverSource Investments, LLC since 2006; Vice
Minneapolis, MN 55474 President -- Investments, Ameriprise
Age 44 Certificate Company since 2003; Senior Vice
President -- Fixed Income, Ameriprise
Financial, Inc., 2002-2006 and RiverSource
Investments, LLC, 2004-2006
- ------------------------------------------------------------------------------------------
Amy K. Johnson Vice President Vice President -- Asset Management and Trust
5228 Ameriprise since 2006 Company Services, RiverSource Investments, LLC
Financial Center since 2006; Vice President -- Operations and
Minneapolis, MN 55474 Compliance, RiverSource Investments, LLC,
Age 42 2004-2006; Director of Product
Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- ------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since Vice President -- Investment Accounting,
105 Ameriprise 2002 Ameriprise Financial, Inc. since 2002; Chief
Financial Center Financial Officer, RiverSource Distributors,
Minneapolis, MN 55474 Inc. since 2006
Age 53
- ------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset
5228 Ameriprise General Counsel Management, Ameriprise Financial, Inc. since
Financial Center and Secretary 2005; Chief Counsel, RiverSource Distributors,
Minneapolis, MN 55474 since 2006 Inc. since 2006; Vice President, General
Age 49 Counsel and Secretary, Ameriprise Certificate
Company since 2005; Vice President -- Asset
Management Compliance, Ameriprise Financial,
Inc., 2004-2005; Senior Vice President and
Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- ------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance
172 Ameriprise Officer since Officer, RiverSource Investments, LLC since
Financial Center 2006 2006; Director -- Mutual Funds, Voyageur Asset
Minneapolis, MN 55474 Management, 2003-2006; Director of Finance,
Age 47 Voyageur Asset Management, 2000-2003
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
60 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering
2934 Ameriprise Prevention Officer, Ameriprise Financial, Inc. since
Financial Center Officer since 2004; Manager Anti-Money Laundering,
Minneapolis, MN 55474 2004 Ameriprise Financial, Inc., 2003-2004;
Age 44 Compliance Director and Bank Secrecy Act
Officer, American Express Centurion Bank,
2000-2003
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 61
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement") RiverSource Investments
provides investment advice and other services to the Fund and all RiverSource
funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2008, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 9-10, 2008 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, particularly in the areas of
trading systems, new product initiatives, legal and compliance. Further, in
connection with the Board's evaluation of the overall package of services
provided by RiverSource Investments, the Board considered the quality of the
administrative and transfer agency services provided by RiverSource Investments'
affiliates to the Fund. The Board also reviewed the financial condition of
RiverSource Investments (and its affiliates) and each entity's ability to carry
out its responsibilities under the IMS Agreement. The Board also discussed the
acceptability of the terms of the IMS Agreement (including the relatively broad
scope of services required to be performed by RiverSource Investments). The
Board concluded that the services being performed under the IMS Agreement were
of a reasonably high quality, particularly in light of recent market conditions.
- --------------------------------------------------------------------------------
62 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods (including since inception), recent Fund
inflows (and outflows) and a comparison of the Fund's net assets from December
2006 to December 2007. The Board observed that the Fund's investment
performance, although somewhat weaker than previous years, reflected the
interrelationship of particularly volatile market conditions with the investment
strategies employed by the portfolio management team. Further, the Board noted
that measures had been taken to enhance risk management oversight.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability.
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund, with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board observed that
the Fund's expense ratio (after considering proposed expense caps/waivers)
approximated the peer group's median expense ratio. The Board also considered
the Fund's performance incentive adjustment and noted its continued
appropriateness. 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.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT 63
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 10, 2008, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement.
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 RiverSource Funds at (888) 791-3380; contacting your financial
institution; visiting riversource.com/funds; or searching the website of the
Securities and Exchange Commission (SEC) at http://www.sec.gov. Information
regarding how the Fund voted proxies relating to portfolio securities is filed
with the SEC by August 31 for the most recent 12-month period ending June 30 of
that year, and is available without charge by visiting riversource.com/funds; or
searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
64 RIVERSOURCE LARGE CAP EQUITY FUND -- 2008 ANNUAL REPORT
RIVERSOURCE LARGE CAP EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by
the Fund's current prospectus. RiverSource(R)
mutual funds are distributed by RiverSource
Distributors, Inc., Member FINRA, and managed by
RiverSource Investments, LLC. These companies are
part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6244 J (9/08)
</Table>
Annual Report
and Prospectus
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
LARGE CAP VALUE FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2008
(Prospectus also enclosed)
RIVERSOURCE LARGE CAP VALUE FUND
SEEKS TO PROVIDE SHAREHOLDERS WITH
LONG-TERM GROWTH OF CAPITAL.
<Table>
This annual report includes a prospectus that
describes in detail the Fund's objective, investment
strategy, risks, sales charges, fees and other
matters of interest. Please read the prospectus
carefully before you invest or send money. (SINGLE STRATEGY FUNDS ICON)
</Table>
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance............... 2
Manager Commentary.................. 6
The Fund's Long-term Performance ... 12
Fund Expenses Example............... 14
Portfolio of Investments............ 16
Financial Statements................ 22
Notes to Financial Statements....... 28
Report of Independent Registered
Public Accounting Firm........... 48
Federal Income Tax Information...... 50
Board Members and Officers.......... 51
Approval of Investment Management
Services Agreement............... 55
Proxy Voting........................ 58
</Table>
(DALBAR LOGO)
The RiverSource mutual fund
shareholder reports have been
awarded the Communications Seal
from Dalbar Inc., an independent
financial services research firm.
The Seal recognizes communications
demonstrating a level of
excellence in the industry.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Large Cap Value Fund (the Fund) Class A shares declined 18.65%,
excluding sales charge, for the 12-month period ended July 31, 2008.
> The Fund's benchmark, the Russell 1000(R) Value Index, fell 15.15% during the
same annual period.
> The Fund's peer group, the Lipper Large-Cap Value Funds Index, declined 14.23%
during the same period.
ANNUALIZED TOTAL RETURNS (for period ended July 31, 2008)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
1 year 3 years 5 years inception(a)
- -------------------------------------------------------------------------------------
RiverSource Large Cap Value
Fund Class A (excluding sales
charge) -18.65% +0.00% +5.26% +4.63%
- -------------------------------------------------------------------------------------
Russell 1000 Value Index
(unmanaged) -15.15% +2.42% +8.52% +7.03%
- -------------------------------------------------------------------------------------
Lipper Large-Cap Value Funds
Index -14.23% +2.27% +7.22% +5.76%
- -------------------------------------------------------------------------------------
</Table>
(a) Fund data is from June 27, 2002. Russell 1000 Value Index and Lipper peer
group data is from July 1, 2002.
(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 institution or
visiting riversource.com/funds.
The 5.75% sales charge applicable to Class A shares of the Fund is not reflected
in the table above. If reflected, returns would be lower than those shown. The
performance of other classes may vary from that shown because of differences in
expenses. See the Average Annual Total Returns table for performance of other
share classes of the Fund.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
2 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
STYLE MATRIX
- ----------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix indicates areas in which the Fund is designed to
generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a mutual fund, and may serve as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, are not federally or
FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
ANNUAL OPERATING EXPENSE RATIO
(as of the current prospectus)
- ----------------------------------------
<Table>
<Caption>
Total Net expenses
- ----------------------------------------------------
Class A 1.31% 1.31%
- ----------------------------------------------------
Class B 2.07% 2.07%
- ----------------------------------------------------
Class C 2.08% 2.08%
- ----------------------------------------------------
Class I 0.86% 0.86%
- ----------------------------------------------------
Class R2 1.65% 1.65%
- ----------------------------------------------------
Class R3 1.39% 1.39%
- ----------------------------------------------------
Class R4 1.15% 1.06%(a)
- ----------------------------------------------------
Class R5 0.92% 0.92%
- ----------------------------------------------------
</Table>
(a) The Investment Manager and its affiliates
have contractually agreed to waive certain fees and to absorb certain
expenses until July 31, 2009, unless sooner terminated at the discretion of
the Fund's Board. Any amounts waived will not be reimbursed by the Fund.
Under this agreement, net fund expenses (excluding fees and expenses of
acquired funds), before giving effect to any performance incentive
adjustment (that decreased the management fee by 0.07 for the year ended
July 31, 2008), will not exceed 1.13% for Class R4.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JULY 31, 2008
SINCE
WITHOUT SALES CHARGE 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 6/27/02) -18.65% +0.00% +5.26% +4.63%
- ----------------------------------------------------------------------------------
Class B (inception 6/27/02) -19.35% -0.77% +4.46% +3.84%
- ----------------------------------------------------------------------------------
Class C (inception 6/27/02) -19.25% -0.78% +4.48% +3.83%
- ----------------------------------------------------------------------------------
Class I (inception 3/4/04) -18.41% +0.43% N/A +2.62%
- ----------------------------------------------------------------------------------
Class R2 (inception 12/11/06) -18.44% N/A N/A -10.19%
- ----------------------------------------------------------------------------------
Class R3 (inception 12/11/06) -18.38% N/A N/A -10.05%
- ----------------------------------------------------------------------------------
Class R4 (inception 6/27/02) -17.99% +0.38% +5.59% +4.93%
- ----------------------------------------------------------------------------------
Class R5 (inception 12/11/06) -18.41% N/A N/A -9.88%
- ----------------------------------------------------------------------------------
WITH SALES CHARGE
Class A (inception 6/27/02) -23.34% -1.97% +4.04% +3.62%
- ----------------------------------------------------------------------------------
Class B (inception 6/27/02) -23.01% -1.75% +4.18% +3.84%
- ----------------------------------------------------------------------------------
Class C (inception 6/27/02) -19.98% -0.78% +4.48% +3.83%
- ----------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
4 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JUNE 30, 2008
SINCE
WITHOUT SALES CHARGE 1 YEAR 3 YEARS 5 YEARS INCEPTION
Class A (inception 6/27/02) -20.67% +1.24% +5.82% +4.95%
- ----------------------------------------------------------------------------------
Class B (inception 6/27/02) -21.38% +0.47% +4.97% +4.15%
- ----------------------------------------------------------------------------------
Class C (inception 6/27/02) -21.28% +0.46% +5.00% +4.14%
- ----------------------------------------------------------------------------------
Class I (inception 3/4/04) -20.29% +1.66% N/A +3.01%
- ----------------------------------------------------------------------------------
Class R2 (inception 12/11/06) -20.68% N/A N/A -10.04%
- ----------------------------------------------------------------------------------
Class R3 (inception 12/11/06) -20.42% N/A N/A -9.74%
- ----------------------------------------------------------------------------------
Class R4 (inception 6/27/02) -20.21% +1.53% +6.09% +5.21%
- ----------------------------------------------------------------------------------
Class R5 (inception 12/11/06) -20.33% N/A N/A -9.58%
- ----------------------------------------------------------------------------------
WITH SALES CHARGE
Class A (inception 6/27/02) -25.21% -0.75% +4.57% +3.91%
- ----------------------------------------------------------------------------------
Class B (inception 6/27/02) -24.95% -0.53% +4.69% +4.15%
- ----------------------------------------------------------------------------------
Class C (inception 6/27/02) -22.00% +0.46% +5.00% +4.14%
- ----------------------------------------------------------------------------------
</Table>
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied as
follows: first year 5%; second and third years 4%; fourth year 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 institutional
investors only.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 5
MANAGER COMMENTARY -------------------------------------------------------------
Dear Shareholder,
RiverSource Large Cap Value Fund (the Fund) Class A shares declined 18.65%,
excluding sales charge, for the fiscal year ended July 31, 2008. The Fund
underperformed its benchmark, the Russell 1000(R) Value Index (Russell Index),
which fell 15.15% and its peer group as represented by the Lipper Large-Cap
Value Funds Index, which declined 14.23% during the same time frame.
SIGNIFICANT PERFORMANCE FACTORS
The Fund's fiscal year was marked by intensified economic concerns and
widespread credit uncertainty precipitated by subprime mortgage lending
difficulties. The Fund faced a strong headwind because investors did not
consider low valuation to be an attractive characteristic in choosing stocks.
Given the Fund's emphasis on valuation as a selection criterion for portfolio
holdings, the stocks that we preferred were generally out of favor during this
time.
Stock selection had a negative impact on the Fund's return compared with the
Russell Index, while sector allocations added value. The Fund's holdings in the
information technology, consumer staples and industrials sectors outperformed
the corresponding sectors within the Russell Index,
SECTOR DIVERSIFICATION(1) (at July 31, 2008; % of portfolio assets)
- -----------------------------------------------------------------
<Table>
Consumer Discretionary 9.9%
- --------------------------------------------------------------
Consumer Staples 7.1%
- --------------------------------------------------------------
Energy 16.8%
- --------------------------------------------------------------
Financials 21.5%
- --------------------------------------------------------------
Health Care 8.6%
- --------------------------------------------------------------
Industrials 11.2%
- --------------------------------------------------------------
Information Technology 9.1%
- --------------------------------------------------------------
Materials 2.6%
- --------------------------------------------------------------
Telecommunication Services 7.4%
- --------------------------------------------------------------
Utilities 4.5%
- --------------------------------------------------------------
Other(2) 1.3%
- --------------------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
(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.
- --------------------------------------------------------------------------------
6 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
but this was overshadowed by stock selection in the financials, health care,
materials and consumer discretionary sectors.
Having a smaller financials position than the Russell Index was advantageous for
the Fund; financial stocks struggled under the weight of credit market upheaval
and the weak U.S. housing market. As expected in a declining equity market, the
Fund's small cash position helped cushion performance as well. Offsetting some
of this positive impact were the Fund's weightings in energy, utilities and
consumer staples, which were smaller than those of the Russell Index, and an
overweight in information technology.
Having smaller positions in WASHINGTON MUTUAL and GENERAL ELECTRIC compared with
the Russell Index was advantageous. West coast savings and loan WASHINGTON
MUTUAL is a large mortgage issuer and its stock was hard hit by the difficult
credit and housing environment. GENERAL ELECTRIC has a high degree of
sensitivity to economic activity and suffered as people began to worry more
about slower U.S. and global economic growth. The Fund also benefited from its
positions in QUALCOMM and FLOWSERVE, which were larger than those of the Russell
Index. Communications equipment company QUALCOMM has begun to see traction with
its third-generation cell phone chip and in July 2008 settled its legal issues
TOP TEN HOLDINGS (at July 31, 2008; % of portfolio assets)
- -----------------------------------------------------------------
<Table>
Exxon Mobil 5.6%
- --------------------------------------------------------------
Chevron 3.6%
- --------------------------------------------------------------
AT&T 3.1%
- --------------------------------------------------------------
Bank of America 3.0%
- --------------------------------------------------------------
Pfizer 2.6%
- --------------------------------------------------------------
Verizon Communications 2.6%
- --------------------------------------------------------------
ConocoPhillips 2.5%
- --------------------------------------------------------------
General Electric 2.3%
- --------------------------------------------------------------
JPMorgan Chase & Co 2.2%
- --------------------------------------------------------------
Citigroup 1.6%
- --------------------------------------------------------------
</Table>
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 LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
with Nokia. FLOWSERVE makes valves and pumping machinery for industrial
companies, particularly oil and gas and chemical companies, and has benefited
from the high level of activity in those end markets.
The Fund's holdings of the government-sponsored FEDERAL HOME LOAN MORTGAGE CORP.
(FREDDIE MAC) were the most significant individual detractor from return
relative to the Russell Index. Though the majority of FREDDIE MAC'S business
isn't directly connected to the subprime mortgage breakdown, continued weakness
in the North American residential market hurt the company due to mortgage losses
and performance of securities owned by the company. Mortgage lender COUNTRYWIDE
FINANCIAL continued to suffer from credit market difficulties, but BANK OF
AMERICA finally completed its takeover of the company and the Fund's small
remaining holdings of COUNTRYWIDE converted into BANK OF AMERICA stock. Holdings
of JOHNSON & JOHNSON also detracted from return. The consumer products firm
suffered as raw material costs rose to a greater extent than the company was
able to raise its prices.
Having no exposure to Occidental Petroleum detracted from return compared with
the Russell Index. As strong energy sector performance pushed stock prices to
levels that appeared overvalued to us, we focused on companies where we
considered valuations reasonable and growth potential attractive. We preferred
other energy stocks over Occidental Petroleum.
CHANGES TO THE FUND'S PORTFOLIO
In the first half of the year, we increased exposure to the consumer
discretionary sector relative to the Russell Index. Stocks in this sector had
become fairly inexpensive and we concluded that the Federal Reserve's efforts to
fight economic deceleration by reducing short-term interest rates would benefit
the sector. Also during the first half of the period, we decreased the Fund's
utilities position relative to the Russell Index and increased exposure to the
telecommunication services sector. Several telecommunication services stocks,
specifically telephone companies, had become inexpensive and consequently quite
attractive to us.
- --------------------------------------------------------------------------------
8 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
The Fund faced a strong headwind because investors did not consider low
valuation to be an attractive characteristic in choosing stocks.
The Fund's financials position decreased over the
year, due partly to our active repositioning and
market performance as financial stocks generally
declined in value. We reduced the Fund's holdings of
lending-based financial companies, specifically
banks and savings and loans.
The Fund's energy position increased during the
period and this also resulted from a combination of
market performance and active management. The energy
sector's steep appreciation boosted the Fund's
energy weighting. In addition, we added to the
Fund's holdings of energy services companies as
selected stocks became relatively inexpensive and
seemed poised to benefit from increased exploration
and production activity.
We increased the Fund's information technology
position. Technology stocks, particularly some of
the larger, more mature companies, appear
inexpensive to us. They also fit well with a
developing portfolio theme - an emphasis on
companies that we believe have relatively limited
downside risk due to attractive valuations, but are
positioned to capitalize on any improvement in
economic activity.
OUR FUTURE STRATEGY
For the past year or more, using valuation as a
factor in stock selection has been
counterproductive. Valuations in the equity market
were very tight, with little difference in a stock's
valuation, whether it was a traditional growth stock
or a traditional value stock. Under those
conditions, it made sense to emphasize growth over
value and growth stocks outperformed.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 9
MANAGER COMMENTARY (continued) -------------------------------------------------
Recently, we have begun to see greater variation in valuation, which leads us to
believe valuation is likely to be a greater determinant of a stock's performance
going forward. As a result, we have been increasing exposure to valuation-driven
opportunities. An example is technology stocks, as discussed above.
In addition, the Fund's portfolio is positioned for a period of global economic
deceleration, with a de-emphasis on global commodity-based industries. The Fund
has smaller-than-Russell Index positions in areas such as energy and materials,
particularly industrial metals such as aluminum and copper. We expect the tight
supply and demand equation in the commodities markets to ease amid economic
slowing, leading these companies to underperform.
Large-cap stocks still have roughly the same valuation as mid- and small-cap
stocks. However, larger companies tend to have more stable business models,
which can better withstand a decelerating economic environment, and they tend to
have more international exposure, which may benefit from the tail end of the
current period of dollar depreciation.
(PHOTO - BOB EWING)
Robert Ewing, CFA(R)
Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a RiverSource fund are based on numerous
factors, may not be relied on as an indication of trading intent on behalf of
any RiverSource fund.
- --------------------------------------------------------------------------------
10 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
THIS PAGE LEFT BLANK INTENTIONALLY
THE FUND'S LONG-TERM PERFORMANCE -----------------------------------------------
The chart on the facing page illustrates the total value of an assumed $10,000
investment in RiverSource Large Cap Value Fund Class A shares (from 7/1/02 to
7/31/08)* as compared to the performance of two widely cited performance
indices, the Russell 1000 Value Index and the Lipper Large-Cap Value Funds
Index. In comparing the Fund's Class A shares to these indices, you should take
into account the fact that the Fund's performance reflects the maximum sales
charge of 5.75%, while such charges are not reflected in the performance of the
indices. Returns for the Fund include the reinvestment of any distribution 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 institution or visiting riversource.com/funds. Also
see "Past Performance" in the Fund's current prospectus.
* Fund data is from June 27, 2002. Russell 1000 Value Index and Lipper peer
group data is from July 1, 2002.
COMPARATIVE RESULTS
- --------------------------------------------------------------------------------
<Table>
<Caption>
Results at July 31, 2008
SINCE
1 YEAR 3 YEARS 5 YEARS INCEPTION(3)
RIVERSOURCE LARGE CAP VALUE FUND (INCLUDES SALES CHARGE)
Class A Cumulative value of $10,000 $7,666 $9,421 $12,190 $12,421
- ---------------------------------------------------------------------------------------------------
Average annual total return -23.34% -1.97% +4.04% +3.62%
- ---------------------------------------------------------------------------------------------------
RUSSELL 1000 VALUE INDEX(1)
Cumulative value of $10,000 $8,485 $10,744 $15,050 $15,119
- ---------------------------------------------------------------------------------------------------
Average annual total return -15.15% +2.42% +8.52% +7.03%
- ---------------------------------------------------------------------------------------------------
LIPPER LARGE-CAP VALUE FUNDS INDEX(2)
Cumulative value of $10,000 $8,577 $10,697 $14,170 $14,060
- ---------------------------------------------------------------------------------------------------
Average annual total return -14.23% +2.27% +7.22% +5.76%
- ---------------------------------------------------------------------------------------------------
</Table>
Results for other share classes can be found on pages 4 and 5.
- --------------------------------------------------------------------------------
12 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
(VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE LARGE CAP VALUE FUND
LINE GRAPH)
<Table>
<Caption>
RIVERSOURCE LARGE CAP
VALUE FUND CLASS A RUSSELL 1000 LIPPER LARGE-CAP VALUE
(INCLUDES SALES CHARGE) VALUE INDEX(1) FUNDS INDEX(2)
----------------------- -------------- ------------------------
7/1/02 $ 9,425 $ 10,000 $ 10,000
7/02 8,695 9,070 9,136
7/03 9,610 10,045 9,923
7/04 10,845 11,821 11,424
7/05 12,420 14,072 13,144
7/06 13,338 15,703 14,276
7/07 15,268 17,818 16,393
7/08 12,421 15,119 14,060
</Table>
(1) The Russell 1000 Value Index, an unmanaged index, measures the performance
of those stocks in the Russell 1000 Index with lower price-to-book ratios
and lower forecasted growth values. The index reflects reinvestment of all
distributions and changes in market prices.
(2) The Lipper Large-Cap Value Funds Index includes the 30 largest large-cap
value funds tracked by Lipper Inc. The index's returns include net
reinvested dividends. The Fund's performance is currently measured against
this index for purposes of determining the performance incentive
adjustment.
(3) Fund data is from June 27, 2002. Russell 1000 Value Index and Lipper peer
group data is from July 1, 2002.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 13
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, which may include management fees; distribution and service (12b-1) fees;
and other Fund fees and expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
In addition to the ongoing expenses which the Fund bears directly, the Fund's
shareholders indirectly bear the 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). The
Fund's indirect expense from investing in the acquired funds is based on the
Fund's pro rata portion of the cumulative expenses charged by the 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, 2008.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
14 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2008 JULY 31, 2008 THE PERIOD(A) EXPENSE RATIO
- -------------------------------------------------------------------------------------------
Class A
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 876.30 $ 6.72 1.44%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,017.70 $ 7.22 1.44%
- -------------------------------------------------------------------------------------------
Class B
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 871.80 $10.24 2.20%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,013.92 $11.02 2.20%
- -------------------------------------------------------------------------------------------
Class C
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 871.30 $10.24 2.20%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,013.92 $11.02 2.20%
- -------------------------------------------------------------------------------------------
Class I
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 876.80 $ 4.57 .98%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,019.99 $ 4.92 .98%
- -------------------------------------------------------------------------------------------
Class R2
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 876.30 $ 7.98 1.71%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,016.36 $ 8.57 1.71%
- -------------------------------------------------------------------------------------------
Class R3
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 876.30 $ 6.72 1.44%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,017.70 $ 7.22 1.44%
- -------------------------------------------------------------------------------------------
Class R4
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 879.20 $ 4.77 1.02%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,019.79 $ 5.12 1.02%
- -------------------------------------------------------------------------------------------
Class R5
- -------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 876.50 $ 4.71 1.01%
- -------------------------------------------------------------------------------------------
Hypothetical
(5% return before
expenses) $1,000 $1,019.84 $ 5.07 1.01%
- -------------------------------------------------------------------------------------------
</Table>
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 182/366 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended July 31, 2008: -12.37%
for Class A, -12.82% for Class B, -12.87% for Class C, -12.32% for Class
I,-12.37% for Class R2, -12.37% for Class R3, -12.08% for Class R4 and
-12.35% for Class R5.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (98.4%)
ISSUER SHARES VALUE(A)
AEROSPACE & DEFENSE (4.6%)
Boeing 7,055 $431,131
General Dynamics 2,153 191,918
Goodrich 4,275 210,074
Honeywell Intl 10,525 535,091
L-3 Communications Holdings 2,536 250,278
Lockheed Martin 4,969 518,416
Spirit AeroSystems Holdings Cl A 3,905(b) 84,582
United Technologies 4,640 296,867
---------------
Total 2,518,357
- ------------------------------------------------------------------------------------
AUTOMOBILES (0.1%)
Ford Motor 10,412(b) 49,978
- ------------------------------------------------------------------------------------
BEVERAGES (1.3%)
Coca-Cola 7,809 402,163
Molson Coors Brewing Cl B 2,476 133,630
PepsiCo 2,852 189,829
---------------
Total 725,622
- ------------------------------------------------------------------------------------
BIOTECHNOLOGY (0.9%)
Amgen 3,923(b) 245,697
Genzyme 1,790(b) 137,204
ImClone Systems 1,795(b) 114,754
---------------
Total 497,655
- ------------------------------------------------------------------------------------
BUILDING PRODUCTS (0.3%)
Masco 8,420 138,846
- ------------------------------------------------------------------------------------
CAPITAL MARKETS (3.9%)
Bank of New York Mellon 7,429 263,730
Blackstone Group LP 5,659 105,088
Goldman Sachs Group 1,773 326,303
KKR Private Equity Investors LP Unit 5,866 77,433
Legg Mason 2,763 111,487
Lehman Brothers Holdings 21,149 366,723
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
CAPITAL MARKETS (CONT.)
Merrill Lynch & Co 6,517 $173,678
Morgan Stanley 11,799 465,824
Oaktree Capital Group LLC Cl A Unit 4,000(d,e) 112,000
State Street 1,556 111,472
---------------
Total 2,113,738
- ------------------------------------------------------------------------------------
CHEMICALS (1.4%)
Dow Chemical 11,730 390,726
Eastman Chemical 1,550 92,938
EI du Pont de
Nemours & Co 6,458 282,925
---------------
Total 766,589
- ------------------------------------------------------------------------------------
COMMERCIAL BANKS (2.7%)
Fifth Third Bancorp 14,281 199,506
PNC Financial Services Group 4,041 288,083
SunTrust Banks 2,954 121,291
Wachovia 27,982 483,249
Wells Fargo & Co 11,853 358,790
---------------
Total 1,450,919
- ------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (2.1%)
Cisco Systems 16,949(b) 372,709
Motorola 15,682 135,492
Nokia ADR 12,391(c) 338,522
QUALCOMM 4,985 275,870
---------------
Total 1,122,593
- ------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (2.5%)
Dell 3,489(b) 85,725
Hewlett-Packard 14,168 634,726
IBM 4,392 562,088
SanDisk 3,795(b) 53,510
---------------
Total 1,336,049
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
16 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
CONSTRUCTION & ENGINEERING (0.5%)
Fluor 1,566 $127,394
KBR 4,723 134,606
---------------
Total 262,000
- ------------------------------------------------------------------------------------
CONSUMER FINANCE (0.6%)
American Express 4,751 176,357
Capital One Financial 3,323 139,101
---------------
Total 315,458
- ------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (7.1%)
Apollo Mgmt LP 11,000(d,e) 154,000
Bank of America 49,900 1,641,709
Citigroup 47,000 878,430
JPMorgan Chase & Co 29,783 1,210,083
---------------
Total 3,884,222
- ------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (6.6%)
AT&T 55,258 1,702,499
Deutsche Telekom 9,220(c) 159,589
Frontier Communications 7,353 85,001
Qwest Communications Intl 12,281 47,036
Telefonica 3,200(c) 83,024
Verizon Communications 41,329 1,406,839
Windstream 7,157 85,311
---------------
Total 3,569,299
- ------------------------------------------------------------------------------------
ELECTRIC UTILITIES (3.2%)
Entergy 4,474 478,360
Exelon 6,249 491,296
FPL Group 2,032 131,125
PPL 2,763 129,750
Southern 15,043 532,373
---------------
Total 1,762,904
- ------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.4%)
Emerson Electric 4,023 195,920
- ------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (0.2%)
Tyco Electronics 3,241(c) 107,407
- ------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
ENERGY EQUIPMENT & SERVICES (2.1%)
Baker Hughes 2,244 $186,050
Halliburton 4,770 213,791
Natl Oilwell Varco 2,706(b) 212,773
Schlumberger 1,353 137,465
Transocean 1,683(b) 228,939
Weatherford Intl 4,084(b) 154,089
---------------
Total 1,133,107
- ------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (1.4%)
CVS Caremark 3,962 144,613
Safeway 3,367 89,966
Walgreen 2,069 71,049
Wal-Mart Stores 8,024 470,368
---------------
Total 775,996
- ------------------------------------------------------------------------------------
FOOD PRODUCTS (0.6%)
Kellogg 3,759 199,452
Kraft Foods Cl A 3,702 117,798
---------------
Total 317,250
- ------------------------------------------------------------------------------------
GAS UTILITIES (0.3%)
ONEOK 3,932 178,827
- ------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.4%)
Boston Scientific 16,981(b) 201,904
- ------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (1.6%)
Aetna 5,504 225,718
Cardinal Health 2,963 159,202
CIGNA 3,749 138,788
Humana 2,704(b) 118,733
McKesson 1,744 97,647
UnitedHealth Group 4,000 112,320
---------------
Total 852,408
- ------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (0.4%)
Darden Restaurants 2,021 65,824
Intl Game Technology 3,402 73,857
Marriott Intl Cl A 3,953 102,423
---------------
Total 242,104
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 17
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
HOUSEHOLD DURABLES (1.8%)
Centex 10,238 $150,294
DR Horton 17,395 193,432
Harman Intl Inds 2,504 103,090
Hovnanian Enterprises Cl A 12,778(b) 89,829
KB Home 12,588 221,423
Lennar Cl A 6,415 77,622
Whirlpool 1,820 137,774
---------------
Total 973,464
- ------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (1.1%)
Clorox 1,485 80,933
Colgate-Palmolive 1,237 91,872
Procter & Gamble 6,592 431,644
---------------
Total 604,449
- ------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (2.9%)
3M 1,489 104,811
General Electric 44,447 1,257,406
Tyco Intl 4,304(c) 191,786
---------------
Total 1,554,003
- ------------------------------------------------------------------------------------
INSURANCE (6.3%)
ACE 12,336(c) 625,435
AFLAC 8,764 487,366
American Intl Group 18,887 492,006
Arch Capital Group 1,483(b,c) 103,410
Assured Guaranty 2,840(c) 32,546
Chubb 4,870 233,955
Endurance Specialty Holdings 2,484(c) 76,010
Hartford Financial Services Group 8,021 508,451
Max Capital Group 2,561(c) 60,107
MetLife 3,986 202,369
Prudential Financial 8,080 557,278
Validus Holdings 1,388(c) 31,660
XL Capital Cl A 1,882(c) 33,669
---------------
Total 3,444,262
- ------------------------------------------------------------------------------------
IT SERVICES (0.6%)
Automatic Data Processing 4,232 180,749
Electronic Data Systems 4,409 109,387
MasterCard Cl A 237 57,864
---------------
Total 348,000
- ------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
MACHINERY (2.5%)
Caterpillar 3,092 $214,956
Danaher 1,340 106,731
Deere & Co 6,019 422,293
Flowserve 2,599 346,551
Ingersoll-Rand Cl A 1,519(c) 54,684
Parker Hannifin 3,555 219,272
---------------
Total 1,364,487
- ------------------------------------------------------------------------------------
MEDIA (5.5%)
Comcast Cl A 11,717 241,605
Comcast Special Cl A 7,596 156,022
News Corp Cl A 33,510 473,496
Sirius XM Radio 104,331(b) 166,930
Time Warner 42,098 602,844
Viacom Cl B 6,215(b) 173,585
Virgin Media 31,552(e) 354,013
Vivendi 9,607(c) 401,635
Walt Disney 14,078 427,267
---------------
Total 2,997,397
- ------------------------------------------------------------------------------------
METALS & MINING (0.5%)
Alcoa 7,455 251,606
- ------------------------------------------------------------------------------------
MULTILINE RETAIL (0.8%)
JC Penney 5,530 170,490
Kohl's 2,341(b) 98,111
Target 3,237 146,410
---------------
Total 415,011
- ------------------------------------------------------------------------------------
MULTI-UTILITIES (0.9%)
Dominion Resources 6,826 301,573
Xcel Energy 10,422 209,065
---------------
Total 510,638
- ------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (14.6%)
Anadarko Petroleum 1,142 66,133
BP ADR 4,276(c) 262,717
Chesapeake Energy 1,298 65,095
Chevron 22,856 1,932,703
ConocoPhillips 16,415 1,339,792
Devon Energy 3,863 366,560
Exxon Mobil 37,576 3,022,238
Marathon Oil 3,522 174,233
Royal Dutch Shell ADR 2,781(c) 196,867
Total 7,139(c) 546,574
---------------
Total 7,972,912
- ------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
18 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
PAPER & FOREST PRODUCTS (0.7%)
Intl Paper 7,476 $207,234
Weyerhaeuser 2,962 158,349
---------------
Total 365,583
- ------------------------------------------------------------------------------------
PERSONAL PRODUCTS (0.5%)
Avon Products 4,928 208,947
Herbalife 1,484(c) 64,094
---------------
Total 273,041
- ------------------------------------------------------------------------------------
PHARMACEUTICALS (5.7%)
Bristol-Myers Squibb 20,512 433,213
Johnson & Johnson 5,384 368,642
Merck & Co 13,623 448,197
Pfizer 75,357 1,406,914
Schering-Plough 3,536 74,539
Wyeth 9,159 371,123
---------------
Total 3,102,628
- ------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (0.2%)
Apartment Investment & Management Cl A 3,270 111,736
- ------------------------------------------------------------------------------------
ROAD & RAIL (0.1%)
Hertz Global Holdings 6,520(b) 55,616
- ------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.6%)
Advanced Micro Devices 30,146(b) 126,915
Atmel 27,856(b) 98,332
Infineon Technologies 6,770(b,c) 50,822
Infineon Technologies ADR 8,275(b,c) 62,228
Intel 21,913 486,250
Micron Technology 38,110(b) 184,071
ON Semiconductor 6,124(b) 57,504
Spansion Cl A 28,780(b) 65,906
Teradyne 18,655(b) 174,797
Texas Instruments 4,465 108,857
---------------
Total 1,415,682
- ------------------------------------------------------------------------------------
SOFTWARE (1.1%)
Microsoft 17,694 455,090
Oracle 7,653(b) 164,769
---------------
Total 619,859
- ------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(A)
SPECIALTY RETAIL (1.3%)
Gap 4,539 $73,169
Home Depot 9,240 220,189
Lowe's Companies 10,635 216,103
TJX Companies 5,067 170,809
---------------
Total 680,270
- ------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.6%)
Freddie Mac 42,734 349,137
- ------------------------------------------------------------------------------------
TOBACCO (2.1%)
Altria Group 13,961 284,106
Philip Morris Intl 15,131 781,517
UST 1,341 70,550
---------------
Total 1,136,173
- ------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.8%)
Sprint Nextel 14,119 114,929
Vodafone Group ADR 11,342(c) 304,306
---------------
Total 419,235
- ------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $58,190,075) $53,484,341
- ------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
MONEY MARKET FUND (1.3%)
SHARES VALUE(A)
RiverSource Short-Term Cash Fund, 2.54% 679,485(f) $679,485
- -----------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $679,485) $679,485
- -----------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $58,869,560)(g) $54,163,826
===================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 19
INVESTMENTS IN DERIVATIVES
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JULY 31, 2008
<Table>
<Caption>
CURRENCY TO BE CURRENCY TO BE UNREALIZED
EXCHANGE DATE DELIVERED RECEIVED DEPRECIATION
- --------------------------------------------------------------------------------------------------
Aug. 1, 2008 32,973 51,383 $(45)
European Monetary Unit U.S. Dollar
</Table>
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. At July 31, 2008, the
value of foreign securities represented 7.0% of net assets.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security
may be determined to be liquid under guidelines established by the Fund's
Board of Directors. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At July 31,
2008, the value of these securities amounted to $266,000 or 0.5% of net
assets.
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). These securities may be valued at fair
value according to procedures approved, in good faith, by the Fund's Board
of Directors. Information concerning such security holdings at July 31,
2008, is as follows:
<Table>
<Caption>
ACQUISITION
SECURITY DATES COST
- ----------------------------------------------------------------------------------
Apollo Mgmt LP* 08-02-07 thru 01-16-08 $242,920
Oaktree Capital Group LLC Cl A Unit* 05-21-07 thru 07-19-07 164,500
Virgin Media 01-05-06 thru 04-10-08 645,420
</Table>
* Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
(f) Affiliated Money Market Fund - See Note 5 to the financial statements. The
rate shown is the seven-day current annualized yield at July 31, 2008.
(g) At July 31, 2008, the cost of securities for federal income tax purposes
was $60,286,046 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<Table>
Unrealized appreciation $ 5,408,118
Unrealized depreciation (11,530,338)
- ------------------------------------------------------------------------------
Net unrealized depreciation $ (6,122,220)
- ------------------------------------------------------------------------------
</Table>
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.
- --------------------------------------------------------------------------------
20 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
can be found at riversource.com/funds.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 21
FINANCIAL STATEMENTS -----------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2008
<Table>
ASSETS
Investments in securities, at value
Unaffiliated issuers (identified cost $58,190,075) $53,484,341
Affiliated money market fund (identified cost $679,485) 679,485
- ---------------------------------------------------------------------------
Total investments in securities (identified cost
$58,869,560) 54,163,826
Capital shares receivable 25,614
Dividends receivable 120,368
Receivable for investment securities sold 726,237
- ---------------------------------------------------------------------------
Total assets 55,036,045
- ---------------------------------------------------------------------------
LIABILITIES
Capital shares payable 146,101
Payable for investment securities purchased 463,454
Unrealized depreciation on forward foreign currency
contracts 45
Accrued investment management services fees 905
Accrued distribution fees 466
Accrued transfer agency fees 65
Accrued administrative services fees 90
Other accrued expenses 90,754
- ---------------------------------------------------------------------------
Total liabilities 701,880
- ---------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $54,334,165
===========================================================================
REPRESENTED BY
Capital stock - $.01 par value $ 130,021
Additional paid-in capital 59,563,353
Undistributed net investment income 491,247
Accumulated net realized gain (loss) (1,144,717)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (4,705,739)
- ---------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $54,334,165
===========================================================================
</Table>
- --------------------------------------------------------------------------------
22 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
JULY 31, 2008
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $35,085,132 8,397,421 $4.18(1)
Class B $ 7,328,116 1,765,846 $4.15
Class C $ 659,182 159,562 $4.13
Class I $11,230,530 2,671,840 $4.20
Class R2 $ 3,187 763 $4.18
Class R3 $ 3,192 763 $4.18
Class R4 $ 21,573 5,115 $4.22
Class R5 $ 3,253 763 $4.26
- ------------------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $4.44. 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 LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 23
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2008
<Table>
INVESTMENT INCOME
Income:
Dividends $ 2,003,351
Income distributions from affiliated money market fund 89,627
Less foreign taxes withheld (12,625)
- ----------------------------------------------------------------------------
Total income 2,080,353
- ----------------------------------------------------------------------------
Expenses:
Investment management services fees 401,168
Distribution fees
Class A 123,733
Class B 118,887
Class C 8,842
Class R2 19
Class R3 9
Transfer agency fees
Class A 102,465
Class B 26,100
Class C 1,909
Class R2 2
Class R3 2
Class R4 15
Class R5 2
Administrative services fees 45,929
Plan administration services fees
Class R2 9
Class R3 9
Class R4 75
Compensation of board members 1,406
Custodian fees 48,440
Printing and postage 41,295
Registration fees 71,110
Professional fees 39,424
Other 6,027
- ----------------------------------------------------------------------------
Total expenses 1,036,877
Expenses waived/reimbursed by the Investment Manager and
its affiliates (123)
Earnings and bank fee credits on cash balances (2,151)
- ----------------------------------------------------------------------------
Total net expenses 1,034,603
- ----------------------------------------------------------------------------
Investment income (loss) - net 1,045,750
- ----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
24 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED JULY 31, 2008
<Table>
REALIZED AND UNREALIZED GAIN (LOSS) - NET
Net realized gain (loss) on:
Security transactions $ 930,456
Foreign currency transactions (649)
Futures contracts (2,300)
- ----------------------------------------------------------------------------
Net realized gain (loss) on investments 927,507
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (16,296,453)
- ----------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (15,368,946)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(14,323,196)
============================================================================
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 25
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 1,045,750 $ 917,420
Net realized gain (loss) on investments 927,507 7,965,867
Net change in unrealized appreciation (depreciation) on
investments and
on translation of assets and liabilities in foreign
currencies (16,296,453) 4,751,162
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (14,323,196) 13,634,449
- ---------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (682,628) (754,607)
Class B (32,633) (58,266)
Class C (4,493) (4,777)
Class I (311,395) (250,586)
Class R2 (49) (78)
Class R3 (60) (78)
Class R4 (623) (453)
Class R5 -- (79)
Net realized gain
Class A (4,625,594) (9,225,989)
Class B (1,148,253) (2,795,600)
Class C (84,730) (166,141)
Class I (1,493,181) (2,248,825)
Class R2 (369) (708)
Class R3 (369) (708)
Class R4 (3,183) (5,335)
Class R5 (369) (708)
- ---------------------------------------------------------------------------------------
Total distributions (8,387,929) (15,512,938)
- ---------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
26 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007
CAPITAL SHARE TRANSACTIONS
Proceeds from sales Class A shares $ 4,629,689 $ 10,152,788
Class B shares 701,838 1,711,166
Class C shares 135,278 211,888
Class I shares 2,612,695 2,650,378
Class R2 shares -- 5,000
Class R3 shares -- 5,000
Class R4 shares 1,000 1,000
Class R5 shares -- 2,488,893
Reinvestment of distributions at net asset value
Class A shares 5,196,120 9,755,373
Class B shares 1,166,160 2,826,941
Class C shares 87,581 162,715
Class I shares 1,804,061 2,498,502
Class R4 shares 2,650 3,775
Payments for redemptions
Class A shares (22,746,329) (19,024,336)
Class B shares (6,130,946) (8,203,518)
Class C shares (340,594) (420,058)
Class I shares (5,559,082) (1,080,983)
Class R4 shares (10,330) --
Class R5 shares -- (2,561,087)
- ---------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions (18,450,209) 1,183,437
- ---------------------------------------------------------------------------------------
Total increase (decrease) in net assets (41,161,334) (695,052)
Net assets at beginning of year 95,495,499 96,190,551
- ---------------------------------------------------------------------------------------
Net assets at end of year $ 54,334,165 $ 95,495,499
=======================================================================================
Undistributed net investment income $ 491,247 $ 496,785
- ---------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 27
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Large Cap Value Fund (the Fund) is a series of RiverSource Large Cap
Series, Inc. and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. RiverSource
Large Cap Series, Inc. has 10 billion authorized shares of capital stock that
can be allocated among the separate series as designated by the Board of
Directors (the Board). The Fund invests primarily in equity securities of
companies with a market capitalization greater than $5 billion.
The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4
and Class R5 shares
- - Class A shares are sold with a front-end sales charge.
- - Class B shares may be subject to a contingent deferred sales charge (CDSC)
and automatically convert to Class A shares during the ninth year of
ownership.
- - Class C shares may be subject to a CDSC.
- - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a
front-end sales charge or CDSC and are offered to qualifying institutional
investors.
At July 31, 2008, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares and the Investment Manager owned 100% of Class R2, Class R3 and
Class R5 shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
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 each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-
- --------------------------------------------------------------------------------
28 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
counter market and are valued at a price that reflects fair value as quoted by
dealers in these securities or by an independent pricing service. 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 New York Stock Exchange 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 New York Stock Exchange, including
significant movements in the U.S. market after foreign exchanges have closed.
Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise
Financial), parent company of the Investment Manager, as administrator to the
Fund, will fair value foreign securities pursuant to procedures adopted by the
Board, including utilizing a third party pricing service to determine these fair
values. These procedures take into account multiple factors, including movements
in the U.S. securities markets, to determine a good faith estimate that
reasonably reflects the current market conditions as of the close of the New
York Stock Exchange.
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; those maturing in 60 days or less are valued at amortized cost.
ILLIQUID SECURITIES
At July 31, 2008, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at July 31, 2008 was
$620,013 representing 1.14% of net assets. These securities may be valued at
fair value according to procedures approved, in good faith, by the Board.
According to Board guidelines, certain unregistered securities are determined to
be liquid and are not included within the 15% limitation specified above. Assets
are liquid if they can be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the asset is valued by the
Fund.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
Cash collateral may
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 29
be collected by the Fund to secure certain over-the-counter options trades. Cash
collateral held by the Fund for such option trades must be returned to the
counterparty upon closure, exercise or expiration of the contract. The Fund also
may buy and sell put and call options and write covered call options on
portfolio securities as well as write cash-secured put options. The risk in
writing a call option is that the Fund gives up the opportunity for profit if
the market price of the security increases. The risk in writing a put option is
that the Fund may incur a loss if the market price of the security decreases and
the option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the additional
risk of being unable to enter into a closing transaction if a liquid secondary
market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid. At
July 31, 2008, and for the year then ended, the Fund had no outstanding option
contracts.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include 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.
Futures are valued daily based upon the last sale price at the close of 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. At July 31, 2008, the Fund
had no outstanding futures contracts.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
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
- --------------------------------------------------------------------------------
30 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
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.
The Fund may enter into forward foreign currency contracts for operational
purposes and to protect against adverse exchange rate fluctuation. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Fund and the resulting unrealized appreciation or depreciation are
determined using foreign currency exchange rates from an independent pricing
service. The Fund is subject to the credit risk that the other party will not
complete its contract obligations.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes," clarifies the accounting for
uncertainty in income taxes recognized in accordance with FASB Statement 109,
"Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize
and measure a tax position taken or expected to be taken in a tax return. The
first step is to determine whether a tax position has met the more-likely-than-
not recognition threshold and the second step is to measure a tax position that
meets the threshold to determine the amount of benefit to recognize. Management
of the Fund has concluded that there are no significant uncertain tax positions
that would require recognition in the financial statements. Generally, the tax
authorities can examine all the tax returns filed for the last three years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of futures contracts, re-
characterization of REIT distributions, investments in partnerships 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
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 31
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been decreased by $19,407
and accumulated net realized loss has been decreased by $19,407.
The tax character of distributions paid for the years indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007*
- ----------------------------------------------------------------------------
CLASS A
Distributions paid from:
Ordinary income........................... $1,307,656 $2,470,246
Long-term capital gain.................... 4,000,566 7,510,350
CLASS B
Distributions paid from:
Ordinary income........................... 187,794 578,128
Long-term capital gain.................... 993,092 2,275,738
CLASS C
Distributions paid from:
Ordinary income........................... 15,942 35,672
Long-term capital gain.................... 73,281 135,246
CLASS I
Distributions paid from:
Ordinary income........................... 513,160 668,771
Long-term capital gain.................... 1,291,416 1,830,640
CLASS R2
Distributions paid from:
Ordinary income........................... 99 210
Long-term capital gain.................... 319 576
CLASS R3
Distributions paid from:
Ordinary income........................... 110 210
Long-term capital gain.................... 319 576
CLASS R4
Distributions paid from:
Ordinary income........................... 1,053 1,445
Long-term capital gain.................... 2,753 4,343
CLASS R5
Distributions paid from:
Ordinary income........................... 50 211
Long-term capital gain.................... 319 576
</Table>
* Class R2, Class R3 and Class R5 are for the period from Dec. 11, 2006
(inception date) to July 31, 2007.
- --------------------------------------------------------------------------------
32 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
At July 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.............................. $ 498,551
Undistributed accumulated long-term gain................... $ 265,156
Unrealized appreciation (depreciation)..................... $ (6,122,916)
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities - an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. Funds are required
to provide enhanced disclosures about (a) how and why a fund uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect a fund's financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
Nov. 15, 2008. As of July 31, 2008, management does not believe the adoption of
SFAS 161 will impact the financial statement amounts; however, additional
footnote disclosures may be required about the use of derivative instruments and
hedging items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. The application of SFAS 157
will be effective for the Fund's fiscal year beginning Aug. 1, 2008. The
adoption of SFAS 157 is not anticipated to have a material impact on the Fund's
financial statements; however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of certain
measurements reported in the Statement of Operations for a fiscal period.
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.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 33
2. 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 a percentage of the Fund's average daily net assets that declines from 0.60%
to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Large-Cap Value Funds Index. In certain circumstances,
the Board may approve a change in the index. 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 $58,120 for the year ended
July 31, 2008. The management fee for the year ended July 31, 2008 was 0.53% 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 a
fee for administration and accounting services at a percentage of the Fund's
average daily net assets that declines from 0.06% to 0.03% annually as the
Fund's assets increase. The fee for the year ended July 31, 2008 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,
2008, other expenses paid to this company were $447.
COMPENSATION OF BOARD MEMBERS
Compensation of board members includes, for a former Board Chair, compensation
as well as retirement benefits. Certain other aspects of a former Board Chair's
compensation, including health benefits and payment of certain other expenses,
are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
- --------------------------------------------------------------------------------
34 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares.
The Transfer Agent charges an annual fee of $5 per inactive account, charged on
a pro rata basis for 12 months from the date the account becomes inactive. These
fees are included in the transfer agency fees on the Statement of Operations.
PLAN ADMINISTRATION SERVICES FEES
Under a Plan Administration Services Agreement with the Transfer Agent, the Fund
pays an annual fee at a rate of 0.25% of the Fund's average daily net assets
attributable to Class R2, Class R3 and Class R4 shares for the provision of
various administrative, recordkeeping, communication and educational services.
DISTRIBUTION FEES
The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor)
for distribution and shareholder services. Prior to Oct. 1, 2007, Ameriprise
Financial Services, Inc. also served as a principal underwriter and distributor
to the Fund. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1,
the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily
net assets attributable to Class A and Class R3 shares, a fee at an annual rate
of up to 0.50% of the Fund's average daily net assets attributable to Class R2
shares and a fee at an annual rate of up to 1.00% of the Fund's average daily
net assets attributable to Class B and Class C shares. For Class B and Class C
shares, up to 0.75% of the fee is reimbursed for distribution expenses.
The amount of distribution expenses incurred by the Distributor and not yet
reimbursed ("unreimbursed expense") was approximately $228,000 and $5,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of July 31, 2008, 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 received by the Distributor for distributing Fund shares were
$51,849 for Class A, $12,242 for Class B and $43 for Class C for the year ended
July 31, 2008.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 35
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the year ended July 31, 2008, the Investment Manager and its affiliates
waived/reimbursed certain fees and expenses such that net expenses (excluding
fees and expenses of acquired funds*) were as follows:
<Table>
Class R2.................................................... 1.41%
Class R3.................................................... 1.15
Class R4.................................................... 0.81
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class R4.................................................... $30
</Table>
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2.................................................... $ 9
Class R3.................................................... 9
Class R4.................................................... 75
</Table>
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until July 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the Fund's average daily net assets:
<Table>
Class R4.................................................... 1.13%
</Table>
* In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
funds in which it invests (also referred to as "acquired funds"), including
affiliated and non-affiliated pooled investment vehicles (including mutual
funds and exchange traded funds). Because the acquired funds have varied
expense and fee levels and the Fund may own different proportions of
acquired funds at different times, the amount of fees and expenses incurred
indirectly by the Fund will vary.
EARNINGS AND BANK FEE CREDITS
During the year ended July 31, 2008, the Fund's custodian and transfer agency
fees were reduced by $2,151 as a result of earnings and bank fee credits from
overnight cash balances. The Fund pays custodian fees to Ameriprise Trust
Company, a subsidiary of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $18,259,592 and $41,262,559, respectively, for the year
ended July 31, 2008. Realized gains and losses are determined on an identified
cost basis.
- --------------------------------------------------------------------------------
36 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the years indicated are as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------------------
Class A 972,781 1,043,398 (4,547,178) (2,530,999)
Class B 144,597 234,640 (1,285,647) (906,410)
Class C 26,989 17,693 (69,667) (24,985)
Class I 513,889 361,535 (1,138,246) (262,822)
Class R4 213 530 (2,217) (1,474)
- ----------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
YEAR ENDED JULY 31, 2007
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------------------
Class A 1,700,418 1,738,926 (3,203,244) 236,100
Class B 290,285 506,620 (1,386,106) (589,201)
Class C 36,321 29,213 (71,502) (5,968)
Class I 440,786 443,784 (184,695) 699,875
Class R2* 763 -- -- 763
Class R3* 763 -- -- 763
Class R4 165 671 -- 836
Class R5* 439,307 -- (438,544) 763
- ----------------------------------------------------------------------------------------------
</Table>
* For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
5. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the RiverSource funds
and other institutional clients of RiverSource Investments. The cost of the
Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term
Cash Fund aggregated $25,920,004 and $28,557,816, respectively, for the year
ended July 31, 2008. The income distributions received with respect to the
Fund's investment in RiverSource Short-Term Cash Fund can be found on the
Statement of Operations and the Fund's invested balance in RiverSource
Short-Term Cash Fund at July 31, 2008, can be found in the Portfolio of
Investments.
6. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A. (JPMCB), 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. 18, 2007, replacing a
prior credit facility. The credit facility agreement, which is a collective
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 37
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permits collective borrowings up to $500 million. Interest is
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum. Under the prior credit facility, a Fund paid interest on its
outstanding borrowings at a rate equal to either the higher of the federal funds
effective rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. The Fund
had no borrowings during the year ended July 31, 2008.
7. 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 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. In response to defendants' motion to dismiss the
complaint, the 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 on
August 8, 2007.
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,
- --------------------------------------------------------------------------------
38 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
and have made regular reports to the RiverSource 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 LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 39
8. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $5.71 $5.88 $5.83 $5.34 $4.98
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .07(b) .06(b) .09 .06 .04
Net gains (losses) (both realized and
unrealized) (1.05) .77 .32 .70 .59
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.98) .83 .41 .76 .63
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.07) (.07) (.04) (.03)
Distributions from realized gains (.48) (.93) (.29) (.23) (.24)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.55) (1.00) (.36) (.27) (.27)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.18 $5.71 $5.88 $5.83 $5.34
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $35 $62 $63 $74 $67
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.31% 1.28% 1.21% 1.29% 1.54%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 1.31% 1.28% 1.21% 1.29% 1.24%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.41% .99% 1.35% 1.07% .95%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 24% 35% 46% 57% 59%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (18.65%) 14.47% 7.39% 14.52% 12.85%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees of acquired funds), before giving
effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
40 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $5.66 $5.82 $5.77 $5.29 $4.95
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03(b) .01(b) .04 .01 --
Net gains (losses) (both realized and
unrealized) (1.04) .78 .32 .70 .59
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (1.01) .79 .36 .71 .59
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.02) (.02) -- (.01)
Distributions from realized gains (.48) (.93) (.29) (.23) (.24)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.50) (.95) (.31) (.23) (.25)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.15 $5.66 $5.82 $5.77 $5.29
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $7 $15 $19 $28 $25
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 2.07% 2.05% 1.97% 2.05% 2.30%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 2.07% 2.05% 1.97% 2.05% 2.00%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .65% .23% .59% .30% .16%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 24% 35% 46% 57% 59%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (19.35%) 13.75% 6.51% 13.66% 12.00%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees of acquired funds), before giving
effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 41
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $5.64 $5.82 $5.77 $5.29 $4.94
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03(b) .01(b) .04 .01 --
Net gains (losses) (both realized and
unrealized) (1.03) .76 .32 .70 .60
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (1.00) .77 .36 .71 .60
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.03) (.02) (.02) -- (.01)
Distributions from realized gains (.48) (.93) (.29) (.23) (.24)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.51) (.95) (.31) (.23) (.25)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.13 $5.64 $5.82 $5.77 $5.29
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $1 $1 $1 $1 $1
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 2.08% 2.04% 1.98% 2.06% 2.30%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) 2.08% 2.04% 1.98% 2.06% 2.00%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) .65% .23% .58% .30% .19%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 24% 35% 46% 57% 59%
- -----------------------------------------------------------------------------------------------------------
Total return(g) (19.25%) 13.50% 6.56% 13.62% 12.19%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees of acquired funds), before giving
effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(g) Total return does not reflect payment of a sales charge.
- --------------------------------------------------------------------------------
42 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004(B)
Net asset value, beginning of period $5.75 $5.91 $5.86 $5.36 $5.57
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(c) .08(c) .12 .07 .03
Net gains (losses) (both realized and
unrealized) (1.07) .79 .32 .72 (.24)
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.97) .87 .44 .79 (.21)
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.10) (.10) (.06) --
Distributions from realized gains (.48) (.93) (.29) (.23) --
- -----------------------------------------------------------------------------------------------------------
Total distributions (.58) (1.03) (.39) (.29) --
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.20 $5.75 $5.91 $5.86 $5.36
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $11 $17 $13 $38 $16
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(d),(e) .86% .85% .75% .86% 1.02%(f)
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(e),(g),(h) .86% .85% .75% .86% .93%(f)
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.87% 1.41% 1.85% 1.50% 1.33%(f)
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 24% 35% 46% 57% 59%
- -----------------------------------------------------------------------------------------------------------
Total return (18.41%) 15.10% 7.86% 14.97% (3.77%)(i)
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from March 4, 2004 (inception date) to July 31, 2004.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees of acquired funds), before giving
effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 43
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007(B)
Net asset value, beginning of period $5.69 $6.55
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .07 .02
Net gains (losses) (both realized and unrealized) (1.03) .15
- -------------------------------------------------------------------------------------
Total from investment operations (.96) .17
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.10)
Distributions from realized gains (.48) (.93)
- -------------------------------------------------------------------------------------
Total distributions (.55) (1.03)
- -------------------------------------------------------------------------------------
Net asset value, end of period $4.18 $5.69
- -------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- -------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/reimbursement(d),(e) 1.65% 1.63%(f)
- -------------------------------------------------------------------------------------
Net expenses after expense waiver/reimbursement(e),(g),(h) 1.41% 1.63%(f)
- -------------------------------------------------------------------------------------
Net investment income (loss) 1.32% .55%(f)
- -------------------------------------------------------------------------------------
Portfolio turnover rate 24% 35%
- -------------------------------------------------------------------------------------
Total return (18.44%) 2.84%(i)
- -------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees of acquired funds), before giving
effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
44 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007(B)
Net asset value, beginning of period $5.70 $6.55
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .08 .03
Net gains (losses) (both realized and unrealized) (1.04) .15
- -------------------------------------------------------------------------------------
Total from investment operations (.96) .18
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.10)
Distributions from realized gains (.48) (.93)
- -------------------------------------------------------------------------------------
Total distributions (.56) (1.03)
- -------------------------------------------------------------------------------------
Net asset value, end of period $4.18 $5.70
- -------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- -------------------------------------------------------------------------------------
Gross expenses prior to expense waiver/reimbursement(d),(e) 1.39% 1.38%(f)
- -------------------------------------------------------------------------------------
Net expenses after expense waiver/reimbursement(e),(g),(h) 1.15% 1.38%(f)
- -------------------------------------------------------------------------------------
Net investment income (loss) 1.58% .80%(f)
- -------------------------------------------------------------------------------------
Portfolio turnover rate 24% 35%
- -------------------------------------------------------------------------------------
Total return (18.38%) 3.03%(i)
- -------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(e) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(f) Adjusted to an annual basis.
(g) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees of acquired funds), before giving
effect to any performance incentive adjustment.
(h) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(i) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 45
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007 2006 2005 2004
Net asset value, beginning of period $5.74 $5.90 $5.85 $5.36 $4.99
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10(b) .07(b) .10 .07 .04
Net gains (losses) (both realized and
unrealized) (1.04) .78 .32 .70 .61
- -----------------------------------------------------------------------------------------------------------
Total from investment operations (.94) .85 .42 .77 .65
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.08) (.08) (.05) (.04)
Distributions from realized gains (.48) (.93) (.29) (.23) (.24)
- -----------------------------------------------------------------------------------------------------------
Total distributions (.58) (1.01) (.37) (.28) (.28)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $4.22 $5.74 $5.90 $5.85 $5.36
- -----------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $-- $-- $-- $-- $--
- -----------------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.15% 1.13% 1.00% 1.11% 1.36%
- -----------------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reimbursement(d),(e),(f) .81% 1.12% 1.00% 1.11% 1.06%
- -----------------------------------------------------------------------------------------------------------
Net investment income (loss) 1.90% 1.14% 1.69% 1.25% 1.12%
- -----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 24% 35% 46% 57% 59%
- -----------------------------------------------------------------------------------------------------------
Total return (17.99%) 14.67% 7.55% 14.67% 13.14%
- -----------------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(e) The Investment Manager and its affiliates have agreed to waive/reimburse
certain fees and expenses (excluding fees of acquired funds), before giving
effect to any performance incentive adjustment.
(f) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
- --------------------------------------------------------------------------------
46 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
FISCAL PERIOD ENDED JULY 31, 2008 2007(B)
Net asset value, beginning of period $5.72 $6.55
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(c) .09 .05
Net gains (losses) (both realized and unrealized) (1.07) .15
- -------------------------------------------------------------------------------------
Total from investment operations (.98) .20
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income -- (.10)
Distributions from realized gains (.48) (.93)
- -------------------------------------------------------------------------------------
Total distributions (.48) (1.03)
- -------------------------------------------------------------------------------------
Net asset value, end of period $4.26 $5.72
- -------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $-- $--
- -------------------------------------------------------------------------------------
Total expenses(d),(e) .92% .83%(f)
- -------------------------------------------------------------------------------------
Net investment income (loss) 1.81% 1.45%(f)
- -------------------------------------------------------------------------------------
Portfolio turnover rate 24% 35%
- -------------------------------------------------------------------------------------
Total return (18.41%) 3.40%(g)
- -------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007.
(c) Per share amounts have been calculated using the average shares outstanding
method.
(d) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(e) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not included
in the above reported expense ratios.
(f) Adjusted to an annual basis.
(g) Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 47
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM ----------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE LARGE CAP VALUE FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Large Cap Value Fund (the Fund)
(one of the portfolios constituting the RiverSource Large Cap Series, Inc.) as
of July 31, 2008, and the related statement of operations for the year then
ended, the statements of changes in net assets and the financial highlights for
the each of the two years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights of the Fund
for the periods presented through July 31, 2006, were audited by other auditors
whose report dated September 20, 2006, expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of July 31, 2008, 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.
- --------------------------------------------------------------------------------
48 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
In our opinion, the financial statements and financial highlights audited by us
as referred to above present fairly, in all material respects, the financial
position of RiverSource Large Cap Value Fund of the RiverSource Large Cap
Series, Inc. at July 31, 2008, the results of its operations for the year then
ended, and changes in its net assets and the financial highlights for each of
the two years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/ Ernst & Young
LLP
Minneapolis, Minnesota
September 22, 2008
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 49
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, 2008
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
<Table>
Qualified Dividend Income for individuals............. 100%
Dividends Received Deduction for corporations......... 100%
U.S. Government Obligations........................... 1.83%
</Table>
CAPITAL GAIN DISTRIBUTION - the Fund designates $6,362,065 to be taxed as
long-term capital gain.
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
50 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 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 member oversees 104
RiverSource funds. Board members serve until the next regular shareholders'
meeting or until he or she reaches the mandatory retirement age established by
the Board. Under the current Board policy, members may serve until the end of
the meeting following their 75th birthday, or the fifteenth anniversary of the
first Board meeting they attended as members of the Board, whichever occurs
first. This policy does not apply to Ms. Jones who may retire after her 75th
birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------
Kathleen Blatz Board member Chief Justice, Minnesota Supreme None
901 S. Marquette Ave. since 2006 Court, 1998-2006; Attorney
Minneapolis, MN 55402
Age 54
- -----------------------------------------------------------------------------------------------------
Arne H. Carlson Board member Chair, RiverSource Funds, None
901 S. Marquette Ave. since 1999 1999-2006; former Governor of
Minneapolis, MN 55402 Minnesota
Age 73
- -----------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member President, Springboard -- Partners None
901 S. Marquette Ave. since 2007 in Cross Cultural Leadership
Minneapolis, MN 55402 (consulting company)
Age 53
- -----------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member Trustee Professor of Economics and None
901 S. Marquette Ave. since 2004 Management, Bentley College; former
Minneapolis, MN 55402 Dean, McCallum Graduate School of
Age 57 Business, Bentley College
- -----------------------------------------------------------------------------------------------------
Anne P. Jones Board member Attorney and Consultant None
901 S. Marquette Ave. since 1985
Minneapolis, MN 55402
Age 73
- -----------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member Former Managing Director, Shikiar American Progressive
901 S. Marquette Ave. since 2005 Asset Management Insurance
Minneapolis, MN 55402
Age 72
- -----------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Board member President Emeritus and Professor of Valmont Industries,
901 S. Marquette Ave. since 2002 and Economics, Carleton College Inc. (manufactures
Minneapolis, MN 55402 Chair of the irrigation systems)
Age 69 Board since 2007
- -----------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 51
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------
Catherine James Paglia Board member Director, Enterprise Asset None
901 S. Marquette Ave. since 2004 Management, Inc. (private real
Minneapolis, MN 55402 estate and asset management
Age 55 company)
- -----------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member Chief Executive Officer and Idera
901 S. Marquette Ave. since 2002 Director, RiboNovix, Inc. since Pharmaceutical, Inc.
Minneapolis, MN 55402 2003 (biotechnology); former (biotechnology);
Age 64 President, Forester Biotech Healthways, Inc.
(health management
programs)
- -----------------------------------------------------------------------------------------------------
</Table>
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- -----------------------------------------------------------------------------------------------------
William F. Truscott Board member President -- U.S. Asset Management None
53600 Ameriprise since 2001, and Chief Investment Officer,
Financial Center Vice President Ameriprise Financial, Inc. and
Minneapolis, MN 55474 since 2002 President, Chairman of the Board
Age 47 and Chief Investment Officer,
RiverSource Investments, LLC since
2005; Director, President, and
Chief Executive Officer, Ameriprise
Certificate Company since 2006;
Chairman of the Board, Chief
Executive Officer and President,
RiverSource Distributors, Inc.
since 2006; Senior Vice
President -- Chief Investment
Officer, Ameriprise Financial, Inc.
and Chairman of the Board and Chief
Investment Officer, RiverSource
Investments, LLC, 2001-2005
- -----------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380; contacting your financial institution; or visiting
riversource.com/funds.
- --------------------------------------------------------------------------------
52 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 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 FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------
Patrick T. Bannigan President since Director and Senior Vice President, Asset
172 Ameriprise 2006 Management, Products and Marketing,
Financial Center RiverSource Investments, LLC since 2006;
Minneapolis, MN 55474 Director and Vice President -- Asset
Age 42 Management, Products and Marketing,
RiverSource Distributors, Inc. since 2006;
Managing Director and Global Head of Product,
Morgan Stanley Investment Management,
2004-2006; President, Touchstone Investments,
2002-2004
- ------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President Executive Vice President -- Equity and Fixed
172 Ameriprise since 2004 Income, Ameriprise Financial, Inc. and
Financial Center RiverSource Investments, LLC since 2006; Vice
Minneapolis, MN 55474 President -- Investments, Ameriprise
Age 44 Certificate Company since 2003; Senior Vice
President -- Fixed Income, Ameriprise
Financial, Inc., 2002-2006 and RiverSource
Investments, LLC, 2004-2006
- ------------------------------------------------------------------------------------------
Amy K. Johnson Vice President Vice President -- Asset Management and Trust
5228 Ameriprise since 2006 Company Services, RiverSource Investments, LLC
Financial Center since 2006; Vice President -- Operations and
Minneapolis, MN 55474 Compliance, RiverSource Investments, LLC,
Age 42 2004-2006; Director of Product
Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
- ------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since Vice President -- Investment Accounting,
105 Ameriprise 2002 Ameriprise Financial, Inc. since 2002; Chief
Financial Center Financial Officer, RiverSource Distributors,
Minneapolis, MN 55474 Inc. since 2006
Age 53
- ------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset
5228 Ameriprise General Counsel Management, Ameriprise Financial, Inc. since
Financial Center and Secretary 2005; Chief Counsel, RiverSource Distributors,
Minneapolis, MN 55474 since 2006 Inc. since 2006; Vice President, General
Age 49 Counsel and Secretary, Ameriprise Certificate
Company since 2005; Vice President -- Asset
Management Compliance, Ameriprise Financial,
Inc., 2004-2005; Senior Vice President and
Chief Compliance Officer, USBancorp Asset
Management, 2002-2004
- ------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance
172 Ameriprise Officer since Officer, RiverSource Investments, LLC since
Financial Center 2006 2006; Director -- Mutual Funds, Voyageur Asset
Minneapolis, MN 55474 Management, 2003-2006; Director of Finance,
Age 47 Voyageur Asset Management, 2000-2003
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 53
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering
2934 Ameriprise Prevention Officer, Ameriprise Financial, Inc. since
Financial Center Officer since 2004; Manager Anti-Money Laundering,
Minneapolis, MN 55474 2004 Ameriprise Financial, Inc., 2003-2004;
Age 44 Compliance Director and Bank Secrecy Act
Officer, American Express Centurion Bank,
2000-2003
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
54 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement") RiverSource Investments
provides investment advice and other services to the Fund and all RiverSource
funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2008, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 9-10, 2008 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, particularly in the areas of
trading systems, new product initiatives, legal and compliance. Further, in
connection with the Board's evaluation of the overall package of services
provided by RiverSource Investments, the Board considered the quality of the
administrative and transfer agency services provided by RiverSource Investments'
affiliates to the Fund. The Board also reviewed the financial condition of
RiverSource Investments (and its affiliates) and each entity's ability to carry
out its responsibilities under the IMS Agreement. The Board also discussed the
acceptability of the terms of the IMS Agreement (including the relatively broad
scope of services required to be performed by RiverSource Investments). The
Board concluded that the services being performed under the
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 55
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
IMS Agreement were of a reasonably high quality, particularly in light of recent
market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered: (i) detailed reports containing data prepared by an independent
organization showing, for various periods, the performance of the Fund, the
performance of a benchmark index, the percentage ranking of the Fund among its
comparison group and the net assets of the Fund; and (ii) a report detailing the
Fund's performance over various periods (including since inception), recent Fund
inflows (and outflows) and a comparison of the Fund's net assets from December
2006 to December 2007. The Board observed that the Fund's investment performance
was appropriate in light of the particular management style and market
conditions involved.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to
RiverSource Investments' profitability.
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the Funds' family, while assuring that the overall fees for each fund
are generally in line with the "pricing philosophy" (i.e., that the total
expense ratio of each fund, with few exceptions, is at or below the median
expense ratio of funds in the same comparison group). The Board took into
account that the Fund's total expense ratio (after considering proposed expense
caps/waivers) was slightly below the peer group's median expense ratio shown in
the reports. The Board also considered the Fund's performance incentive
adjustment and noted its continued
- --------------------------------------------------------------------------------
56 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
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 the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. The
Board also considered the services acquired by the investment manager through
the use of commission dollars paid by the Funds on portfolio transactions. The
Board noted that the fees paid by the Fund should permit the investment manager
to offer competitive compensation to its personnel, make necessary investments
in its business and earn an appropriate profit. The Board concluded that
profitability levels were reasonable.
Economies of Scale to be Realized: The Board also considered the economies of
scale that might be realized by RiverSource Investments as the Fund grows and
took note of the extent to which Fund shareholders might also benefit from such
growth. The Board considered that the IMS Agreement provides for lower fees as
assets increase at pre-established breakpoints and concluded that the IMS
Agreement satisfactorily provided for sharing these economies of scale.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees were fair and reasonable
in light of the extent and quality of services provided. In reaching this
conclusion, no single factor was determinative. On April 10, 2008, the Board,
including all of the Independent Directors, approved the renewal of the IMS
Agreement.
- --------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT 57
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 RiverSource Funds at (888) 791-3380; contacting your financial
institution; visiting riversource.com/funds; or searching the website of the
Securities and Exchange Commission (SEC) at http://www.sec.gov. Information
regarding how the Fund voted proxies relating to portfolio securities is filed
with the SEC by August 31 for the most recent 12-month period ending June 30 of
that year, and is available without charge by visiting riversource.com/funds; or
searching the website of the SEC at www.sec.gov.
- --------------------------------------------------------------------------------
58 RIVERSOURCE LARGE CAP VALUE FUND -- 2008 ANNUAL REPORT
RIVERSOURCE LARGE CAP VALUE FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
<Table>
This report must be accompanied or preceded by
the Fund's current prospectus. RiverSource(R)
mutual funds are distributed by RiverSource
Distributors, Inc., Member FINRA, and managed by
RiverSource Investments, LLC. These companies are
part of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6246 J (9/08)
</Table>
Item 2. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial
officer. A copy of the code of ethics is filed as an exhibit to this
form N-CSR.
(b) During the period covered by this report, there were not any
amendments to the provisions of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any
implicit or explicit waivers to the provisions of the code of ethics
adopted in 2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Pamela G. Carlton, Jeffrey Laikind and Anne P. Jones, each
qualify as audit committee financial experts.
Item 4. Principal Accountant Fees and Services
Fund - Related Fees
(a) Audit Fees. The fees for the year ended July 31, to Ernst & Young LLP for
professional services rendered for the audits of the annual financial
statements for RiverSource Large Cap Series, Inc. were as follows:
2008 - $79,060 2007 - $74,600
(b) Audit - Related Fees. The fees for the year ended July 31, to Ernst & Young
LLP for additional professional services rendered in connection with the
registrant's security count pursuant to Rule 17f-2 and the semiannual
financial statement reviews for RiverSource Large Cap Series, Inc. were as
follows:
2008 - $3,500 2007 - $3,180
(c) Tax Fees. The fees for the year ended July 31, to Ernst & Young LLP for tax
compliance related services for RiverSource Large Cap Series, Inc. were as
follows:
2008 - $51,540 2007 - $11,400
(d) All Other Fees. The fees for the year ended July 31, to Ernst & Young LLP
for additional professional services rendered for RiverSource Large Cap
Series, Inc. were as follows:
2008 - $0 2007 - $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
2008 and 2007 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:
2008 - $668,240 2007 - $246,660
(h) 100% of the services performed in item (g) above during 2008 and 2007 were
pre-approved by the Ameriprise Financial Audit Committee and/or the
RiverSource Mutual Funds Audit Committee.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not
applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing date
of this Form N-CSR, the registrant's Principal Financial
Officer and Principal Executive Officer have concluded that those
disclosure controls and procedures provide reasonable assurance that
the material information required to be disclosed by the registrant on
this report is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's
rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a)(1) Code of ethics as applies to the Registrant's principal
executive officer and principal financial officer, as required to be
disclosed under Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(a)(2) Separate certification for the Registrant's principal executive
officer and principal financial officer, as required by Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are attached as EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) RiverSource Large Cap Series, Inc.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date October 3, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
----------------------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date October 3, 2008
By /s/ Jeffrey P. Fox
----------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date October 3, 2008