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>
LETTER TO SHAREHOLDERS ---------------------------------------------------------
(PHOTO - BANNIGAN - LEWIS)
Patrick T. Bannigan (left)
Stephen R. Lewis, Jr. (right)
Dear Fellow Shareholder,
The majority of today's workers are finding themselves responsible for funding
their own retirement through 401(k)s, 403(b)s and IRAs, which can be a positive
development. However, today's rising health care costs, inflation and dropping
retirement account values have hit many retirees hard, and put retirement dreams
on hold for approximately 27% of workers age 45 and older, according to an AARP
survey released in May 2008.
Since retirement could last up to 20 years or more for many retirees, it's
important to take the long-term view. Unfortunately, many investors now realize
they may not have adequately factored in the havoc a bear market could wreak on
their retirement savings or the impact of rising gas and food prices on daily
living expenses. Unexpected economic events such as these make careful planning
for retirement all the more important, as retirees today and in the future are
likely to see a number of up and down markets and economic cycles in their
lifetimes.
KEEPING UP WITH THE COST OF LIVING
Company medical plans for retirees have gone the way of the B&W TV; there are
still a few around, but they're disappearing rapidly. A July 2008 study by
Hewitt Research Associates concludes employees actually will need to replace
126% of their salary once inflation and increased medical costs are included in
the calculations. The 2008 Tiburon Consumer Wealth Report reports that a couple
planning to retire in 2008 at the age of 65 will need $225,000 just to cover
their medical expenses during retirement.
PLAN FOR YOUR RETIREMENT BY WORKING WITH A FINANCIAL PROFESSIONAL
A financial professional can help you establish goals for retirement income and
develop a plan for saving and investing to achieve those goals.
Several retirement-focused RiverSource investment strategies, such as
RiverSource(R) Portfolio Builder Series, RiverSource(R) Income Builder
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
- --------------------------------------------------------------------------------
Series and RiverSource Retirement Plus(R) Series, can help remove emotion from
your investing decisions through the application of
> built-in diversification and asset allocation,
> risk management,
> automatic rebalancing and
> professional portfolio management.
MORE INVESTMENT OPTIONS
RiverSource Investments also offers more than 50 single-strategy mutual funds
designed to help you fully diversify your portfolio, and our Advanced Alpha(SM)
Strategies funds, which are meant to potentially generate increased alpha (a
risk-adjusted measure of above-market returns).
Talk with your financial professional about which RiverSource funds or series of
funds might best meet your needs today and in the years to come.
Thank you for choosing RiverSource mutual funds and for your continued support.
<Table>
/s/ STEPHEN R. LEWIS, JR. /s/ PATRICK T. BANNIGAN
Stephen R. Lewis, Jr. Patrick T. Bannigan
Chairman of the Boards President, RiverSource Funds
</Table>
DID YOU KNOW . . .
- --------------------------------------------------------------------------------
> Two-thirds of baby boomers are dependent on their homes as a retirement
asset.(1)
> Nearly one-quarter of adults between the ages of 65 and 74 are in the
workforce, up from 19% in 2000.(2)
> Twenty-seven percent of workers age 45 and older said they had put their
retirement plans on hold because of the slowing economy.(3)
(1) Tiburon Strategic Advisors Consumer Wealth, Liquidation, & the Retirement
Income Challenge Report, May 23, 2008
(2) Bureau of Labor Statistics
(3) AARP survey, May 13, 2008
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
LETTER TO SHAREHOLDERS (continued) ---------------------------------------------
YOU SHOULD CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF A MUTUAL FUND CAREFULLY BEFORE INVESTING. FOR A
FREE PROSPECTUS, WHICH CONTAINS THIS AND OTHER IMPORTANT
INFORMATION ABOUT THE FUNDS, CALL (888) 791-3380. READ THE
PROSPECTUS CAREFULLY BEFORE INVESTING.
Neither diversification or asset allocation assure a profit or
protect against loss.
There is no guarantee that the strategies discussed will be
successful.
The RiverSource Retirement Plus, Income Builder, and Portfolio
Builder Series funds are "funds of funds" comprised of holdings
in several different RiverSource Funds, which may include small-
cap, mid-cap, large-cap, money market, international, bond,
and/or sector funds. Each of the underlying funds in which the
portfolio invests has its own investment risks, and those risks
can affect the value of each portfolio's shares and investments.
There are risks associated with fixed income investments,
including credit risk, interest rate risk, and prepayment and
extension risk. Non-investment grade securities generally have
more volatile prices and carry more risk to principal and income
than investment grade securities. International investing
involves increased risk and volatility due to potential
political and economic instability, currency fluctuations, and
differences in financial reporting and accounting standards and
oversight. Risks are particularly significant in emerging
markets. Investments in small- and mid-capitalization companies
often involve greater risks and potential volatility than
investments in larger, more established companies. See the
Funds' prospectus for more information on these and other risks
that may be associated with the underlying funds.
Alternative investments involve substantial risks and may be
more volatile than traditional investments, making them more
suitable for investors with an above average tolerance for risk.
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.
Not all products and all shares classes are available at all
firms offering RiverSource funds.
For more information
about any of our
RiverSource Funds, go
online to RiverSource.com
or call (888) 791-3380.
Customer Service
Representatives are
available to answer your
questions Monday through
Friday from 8 a.m. to
5 p.m. Central time.
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
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
NOTES --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
NOTES --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
NOTES --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
NOTES --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
NOTES --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
THROUGH THE RIVERSOURCE INVESTMENTS FAMILY OF FUNDS, YOU CAN BUILD A DIVERSIFIED
PORTFOLIO THAT IS DESIGNED TO HELP YOU REACH YOUR GOALS.
<Table>
ADVANCED ALPHA(SM) STRATEGIES
RiverSource 120/20 Contrarian Equity Fund
RiverSource 130/30 U.S. Equity Fund
RiverSource Absolute Return Currency and Income Fund
Threadneedle Global Extended Alpha Fund
ADVICE-BUILT(SM) SOLUTIONS
RIVERSOURCE INCOME BUILDER SERIES
RiverSource Income Builder Basic Income Fund
RiverSource Income Builder Enhanced Income Fund
RiverSource Income Builder Moderate Income Fund
RIVERSOURCE PORTFOLIO BUILDER SERIES
RiverSource Portfolio Builder Aggressive Fund
RiverSource Portfolio Builder Conservative Fund
RiverSource Portfolio Builder Moderate Fund
RiverSource Portfolio Builder Moderate Aggressive Fund
RiverSource Portfolio Builder Moderate Conservative Fund
RiverSource Portfolio Builder Total Equity Fund
RIVERSOURCE RETIREMENT PLUS(R) SERIES
RiverSource Retirement Plus 2010 Fund
RiverSource Retirement Plus 2015 Fund
RiverSource Retirement Plus 2020 Fund
RiverSource Retirement Plus 2025 Fund
RiverSource Retirement Plus 2030 Fund
RiverSource Retirement Plus 2035 Fund
RiverSource Retirement Plus 2040 Fund
RiverSource Retirement Plus 2045 Fund
RIVERSOURCE STRATEGIC ALLOCATION FUND
RIVERSOURCE BALANCED FUND
SINGLE-STRATEGY FUNDS
GROWTH FUNDS
RiverSource Partners Aggressive Growth Fund
RiverSource Disciplined Large Cap Growth Fund
RiverSource Global Technology Fund
RiverSource Growth Fund
RiverSource Mid Cap Growth Fund
RiverSource Partners Small Cap Growth Fund
BLEND FUNDS
RiverSource Disciplined Equity Fund
RiverSource Disciplined Small and Mid Cap Equity Fund
RiverSource Large Cap Equity Fund
RiverSource Precious Metals and Mining Fund
RiverSource S&P 500 Index Fund*
RiverSource Small Cap Advantage Fund
RiverSource Partners Small Cap Equity Fund
RiverSource Small Company Index Fund
VALUE FUNDS
RiverSource Disciplined Large Cap Value Fund
RiverSource Disciplined Small Cap Value Fund
RiverSource Diversified Equity Income Fund
RiverSource Dividend Opportunity Fund
RiverSource Equity Value Fund
RiverSource Partners Fundamental Value Fund
RiverSource Large Cap Value Fund
RiverSource Mid Cap Value Fund
RiverSource Real Estate Fund
RiverSource Partners Select Value Fund
RiverSource Partners Small Cap Value Fund
GLOBAL/INTERNATIONAL FUNDS
RiverSource Disciplined International Equity Fund
Threadneedle Emerging Markets Fund
Threadneedle European Equity Fund
Threadneedle Global Equity Fund
Threadneedle Global Equity Income Fund
RiverSource Partners International Select Growth Fund
Threadneedle International Opportunity Fund
RiverSource Partners International Select Value Fund
RiverSource Partners International Small Cap Fund
</Table>
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE ANNUAL REPORT
<Table>
TAXABLE INCOME FUNDS
RiverSource Cash Management Fund**
RiverSource Diversified Bond Fund
RiverSource Emerging Markets Bond Fund
RiverSource Floating Rate Fund
RiverSource Global Bond Fund
RiverSource High Yield Bond Fund
RiverSource Income Opportunities Fund
RiverSource Inflation Protected Securities Fund
RiverSource Limited Duration Bond Fund
RiverSource Short Duration U.S. Government Fund
RiverSource Strategic Income Allocation Fund
RiverSource U.S. Government Mortgage Fund
TAX-EXEMPT FUNDS
RiverSource California Tax-Exempt Fund
RiverSource Intermediate Tax-Exempt Fund
RiverSource Minnesota Tax-Exempt Fund
RiverSource New York Tax-Exempt Fund
RiverSource Tax-Exempt Bond Fund
RiverSource Tax-Exempt High Income Fund
RiverSource Tax-Exempt Money Market Fund**
</Table>
You should consider the investment objectives, risks, charges and expenses of a
mutual fund carefully before investing. For a free prospectus of any of the
funds listed above, which contains this and other important information about
the funds, contact your financial institution or visit riversource.com/funds.
Read the prospectus carefully before investing.
Investment products, including shares of mutual funds, involve risks including
possible loss of principal and fluctuation in value. Investing in certain funds
involves special risks, such as those related to investments in foreign
securities, small- and mid-capitalization stocks, fixed income securities
(especially high-yield securities), and funds which focus their investments in a
particular sector, such as real estate, technology and precious metals. See each
fund's prospectus for specific risks associated with the fund.
* "Standard & Poors(R)," "S&P," "S&P 500(R)," and "Standard & Poor's 500(R)"
are trademarks of the McGraw-Hill Companies, Inc. These trademarks have been
licensed for use by Ameriprise Financial, Inc. The fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's or any of their subsidiaries
or affiliates (the "Licensors") and the Licensors make no representation
regarding the advisability of investing in the fund.
** AN INVESTMENT IN MONEY MARKET FUNDS IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
ALTHOUGH THE FUND SEEKS TO MAINTAIN THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
- --------------------------------------------------------------------------------
THIS PAGE IS NOT PART OF THE 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>