Semiannual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
DISCIPLINED EQUITY FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
JANUARY 31, 2009
RIVERSOURCE DISCIPLINED EQUITY FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH.
(SINGLE STRATEGY FUNDS ICON)
LETTER TO SHAREHOLDERS ---------------------------------------------------------
(PHOTO - BANNIGAN - LEWIS)
Patrick T. Bannigan (left)
Stephen R. Lewis, Jr. (right)
Dear Fellow Shareholders,
2008 was an unprecedented year in many ways. Investors watched the precipitous
decline in all the major U.S. and international equity indexes as concerns about
the economy gave way to fear and selling of securities. In response to
substantial losses in the markets and weakening economic indicators, the
government stepped in swiftly and aggressively to encourage liquidity and credit
availability in an attempt to make credit markets function. By the end of the
calendar year, these actions still needed time to gain traction in the markets.
During a severe economic environment like the one we are experiencing, it is
essential that investors try not to let short-term losses in the market distract
from a long-term investment plan. Such discipline may be easier said than done
in the presence of negative news in the media. However, the financial choices
you make today -- practicing patience or locking in losses -- will influence
your portfolio's performance.
GETTING BACK ON TRACK
Whether you look at the glass as half empty or half full, every broad based
market decline creates investment opportunities. The financial markets are
expected to recover, although it is impossible to know when. In the meantime,
make sure your portfolio is positioned to benefit from the next sources of
growth.
Market recoveries often occur before the reported end of a recession. If you
wait for validation of economic recovery before reinvesting in the markets, you
may well miss out on market returns associated with an economic rebound.
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THIS PAGE IS NOT PART OF THE SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
TIME ELAPSED
BETWEEN BEAR
MARKET AND
BEAR MARKET RECESSION RETURNS
RECESSION ENDED END DATES MISSED*
- -----------------------------------------------------------------
August 1929 - March
1933 June 1932 9 months 39.21%
August 1957 - April
1958 December 1957 4 months 9.94%
December 1969 -
November 1970 June 1970 5 months 21.81%
November 1973 - March
1975 September 1974 6 months 34.47%
July 1981 - November
1982 July 1982 4 months 31.72%
July 1990 - March 1991 October 1990 5 months 25.33%
- -----------------------------------------------------------------
</Table>
* S&P 500(R) Index total returns for the number of months
between the recession and bear market end dates.
Be sure your portfolio is on track today. Talk with your
financial professional about opportunities that have been
created in the markets and take advantage of our solutions and
strategies that can help position portfolios for the next market
recovery cycle.
OUR FAMILY OF FUNDS
We also want to share some good news with our fellow
shareholders. Last November, RiverSource Investments, a wholly-
owned subsidiary of Ameriprise Financial, Inc., acquired J. & W.
Seligman & Co. Incorporated. Seligman's long heritage of
investing and exceptional wealth of experience is a valuable
addition to RiverSource Investments. Along with RiverSource and
Threadneedle, Seligman joins our comprehensive family of mutual
funds we offer investors.
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.
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THIS PAGE IS NOT PART OF THE SEMIANNUAL REPORT
LETTER TO SHAREHOLDERS (continued) ---------------------------------------------
In addition, we are excited to welcome John Maher and Leroy Richie to the
RiverSource Funds' Boards of Directors. Mr. Maher and Mr. Richie join us from
the Seligman Funds' Boards of Directors. The acquisition of Seligman creates
several new opportunities for RiverSource Funds' shareholders, including access
to talented portfolio managers and competitive mutual fund solutions to help you
reach your investment goals. We hope you are as excited by these opportunities
as we are. Thank you for investing with us.
<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>
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.
Asset allocation, diversification, and dollar cost averaging do not assure a
profit or protect against loss and past performance is no guarantee of future
results.
Standard & Poor's 500 Index (S&P 500 Index) is an unmanaged list of common
stocks and is frequently used as a general measure of U.S. market performance.
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THIS PAGE IS NOT PART OF THE SEMIANNUAL REPORT
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 8
Portfolio of Investments........... 11
Statement of Assets and
Liabilities...................... 19
Statement of Operations............ 21
Statements of Changes in Net
Assets........................... 23
Financial Highlights............... 25
Notes to Financial Statements...... 34
Proxy Voting....................... 49
</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.
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RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
- --------------------------------------------------------------------------------
> RiverSource Disciplined Equity Fund (the Fund) Class A shares declined 36.05%
(excluding sales charge) for the six months ended Jan. 31, 2009.
> The Fund underperformed the unmanaged Standard & Poor's 500 Index (S&P 500
Index), which fell 33.95% for the same period.
> The Fund also underperformed the Lipper Large-Cap Core Funds Index,
representing the Fund's peer group, which declined 33.98%, for the same
period.
ANNUALIZED TOTAL RETURNS (for period ended Jan. 31, 2009)
- --------------------------------------------------------------------------------
<Table>
<Caption>
Since
inception
6 months* 1 year 3 years 5 years 4/24/03
- ---------------------------------------------------------------------------
RiverSource Disciplined
Equity Fund Class A
(excluding sales charge) -36.05% -41.79% -13.95% -5.24% -0.64%
- ---------------------------------------------------------------------------
S&P 500 Index
(unmanaged)(1) -33.95% -38.63% -11.78% -4.24% +0.22%
- ---------------------------------------------------------------------------
Lipper Large-Cap Core
Funds Index(2) -33.98% -38.34% -11.95% -4.55% -0.54%
- ---------------------------------------------------------------------------
</Table>
* Not annualized.
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 -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
(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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT JAN. 31, 2009
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS INCEPTION
- ---------------------------------------------------------------------------
Class A (inception
4/24/03) -36.05% -41.79% -13.95% -5.24% -0.64%
- ---------------------------------------------------------------------------
Class B (inception
4/24/03) -36.36% -42.33% -14.63% -6.00% -1.43%
- ---------------------------------------------------------------------------
Class C (inception
4/24/03) -36.26% -42.26% -14.61% -6.00% -1.40%
- ---------------------------------------------------------------------------
Class I (inception
7/15/04) -36.07% -41.52% -13.58% N/A -4.76%
- ---------------------------------------------------------------------------
Class R2 (inception
12/11/06) -36.15% -41.97% N/A N/A -23.05%
- ---------------------------------------------------------------------------
Class R3 (inception
12/11/06) -36.03% -41.76% N/A N/A -22.84%
- ---------------------------------------------------------------------------
Class R4 (inception
4/24/03) -36.05% -41.77% -13.84% -5.12% -0.48%
- ---------------------------------------------------------------------------
Class R5 (inception
12/11/06) -35.97% -41.61% N/A N/A -22.64%
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) -36.10% -41.94% N/A N/A -22.21%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
4/24/03) -39.74% -45.10% -15.63% -6.37% -1.67%
- ---------------------------------------------------------------------------
Class B (inception
4/24/03) -39.43% -45.11% -15.59% -6.30% -1.56%
- ---------------------------------------------------------------------------
Class C (inception
4/24/03) -36.88% -42.81% -14.61% -6.00% -1.40%
- ---------------------------------------------------------------------------
</Table>
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4 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
AT DEC. 31, 2008
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS INCEPTION
- ---------------------------------------------------------------------------
Class A (inception
4/24/03) -29.09% -38.74% -9.10% -2.59% +1.44%
- ---------------------------------------------------------------------------
Class B (inception
4/24/03) -29.24% -39.16% -9.76% -3.31% +0.68%
- ---------------------------------------------------------------------------
Class C (inception
4/24/03) -29.26% -39.20% -9.79% -3.31% +0.67%
- ---------------------------------------------------------------------------
Class I (inception
7/15/04) -28.85% -38.47% -8.78% N/A -2.30%
- ---------------------------------------------------------------------------
Class R2 (inception
12/11/06) -29.15% -38.77% N/A N/A -19.27%
- ---------------------------------------------------------------------------
Class R3 (inception
12/11/06) -28.90% -38.56% N/A N/A -19.04%
- ---------------------------------------------------------------------------
Class R4 (inception
4/24/03) -29.12% -38.72% -9.00% -2.43% +1.60%
- ---------------------------------------------------------------------------
Class R5 (inception
12/11/06) -29.00% -38.55% N/A N/A -18.91%
- ---------------------------------------------------------------------------
Class W (inception
12/1/06) -29.13% -38.89% N/A N/A -18.48%
- ---------------------------------------------------------------------------
With sales charge
Class A (inception
4/24/03) -33.13% -42.25% -10.87% -3.74% +0.37%
- ---------------------------------------------------------------------------
Class B (inception
4/24/03) -32.65% -42.09% -10.78% -3.61% +0.54%
- ---------------------------------------------------------------------------
Class C (inception
4/24/03) -29.94% -39.79% -9.79% -3.31% +0.67%
- ---------------------------------------------------------------------------
</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.
*Not annualized.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
- --------------------------------------------------------------------------------
<Table>
<Caption>
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
</Table>
Shading within the style matrix 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
fund fund
expenses 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.
- --------------------------------------------------------------------------------
6 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION(1) (at Jan. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Consumer Discretionary 10.3%
- ------------------------------------------------
Consumer Staples 13.3%
- ------------------------------------------------
Energy 15.6%
- ------------------------------------------------
Financials 12.7%
- ------------------------------------------------
Health Care 16.2%
- ------------------------------------------------
Industrials 8.0%
- ------------------------------------------------
Information Technology 10.6%
- ------------------------------------------------
Materials 2.9%
- ------------------------------------------------
Telecommunication Services 0.4%
- ------------------------------------------------
Utilities 0.8%
- ------------------------------------------------
Other(2) 9.2%
- ------------------------------------------------
</Table>
(1) Sectors can be comprised of several industries. Please refer to the section
entitled "Portfolio of Investments" for a complete listing. No single
industry exceeds 25% of portfolio assets.
(2) Cash & Cash Equivalents. Of the 9.2%, 7.3% is due to security lending
activity and 1.9% is the Fund's cash equivalent position.
The sectors identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
TOP TEN HOLDINGS (at Jan. 31, 2009; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Chevron 5.7%
- ------------------------------------------------
Johnson & Johnson 4.7%
- ------------------------------------------------
Wal-Mart Stores 4.4%
- ------------------------------------------------
Pfizer 4.4%
- ------------------------------------------------
Home Depot 2.4%
- ------------------------------------------------
IBM 2.2%
- ------------------------------------------------
Exxon Mobil 2.2%
- ------------------------------------------------
Intel 1.8%
- ------------------------------------------------
PepsiCo 1.7%
- ------------------------------------------------
Comcast Cl A 1.5%
- ------------------------------------------------
</Table>
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 7
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 Jan. 31, 2009.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
8 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2008 JAN. 31, 2009 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class A
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 639.50 $4.03 .98%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,020.16 $4.96 .98%
- ------------------------------------------------------------------------------------------
Class B
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 636.40 $7.14 1.74%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.34 $8.80 1.74%
- ------------------------------------------------------------------------------------------
Class C
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 637.40 $7.14 1.74%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,016.34 $8.80 1.74%
- ------------------------------------------------------------------------------------------
Class I
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 641.00 $2.43 .59%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.11 $2.99 .59%
- ------------------------------------------------------------------------------------------
Class R2
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 638.50 $5.63 1.37%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,018.20 $6.93 1.37%
- ------------------------------------------------------------------------------------------
Class R3
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 639.70 $4.69 1.14%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.35 $5.77 1.14%
- ------------------------------------------------------------------------------------------
Class R4
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 639.50 $3.33 .81%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,021.01 $4.10 .81%
- ------------------------------------------------------------------------------------------
Class R5
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 640.30 $2.51 .61%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,022.01 $3.09 .61%
- ------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 9
FUND EXPENSES EXAMPLE (continued) ---------------------------------------------
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2008 JAN. 31, 2009 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Class W
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $ 639.00 $4.27 1.04%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,019.85 $5.27 1.04%
- ------------------------------------------------------------------------------------------
</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 183/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Jan. 31, 2009: -36.05%
for Class A, -36.36% for Class B, -36.26% for Class C, -36.07% for Class I,
-36.15% for Class R2, -36.03% for Class R3, -36.05% for Class R4, -35.97%
for Class R5 and -36.10% for Class W.
- --------------------------------------------------------------------------------
10 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JAN. 31, 2009 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
COMMON STOCKS (98.1%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (0.6%)
General Dynamics 144,205 $8,180,750
United Technologies 64,197 3,080,814
---------------
Total 11,261,564
- -------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.2%)
CH Robinson Worldwide 92,540 4,254,989
- -------------------------------------------------------------------------------------
AIRLINES (0.1%)
Southwest Airlines 273,867(e) 1,925,285
- -------------------------------------------------------------------------------------
AUTOMOBILES (0.3%)
Ford Motor 1,518,855(b,e) 2,840,260
General Motors 561,121(e) 1,688,974
Harley-Davidson 144,208(e) 1,756,453
---------------
Total 6,285,687
- -------------------------------------------------------------------------------------
BEVERAGES (3.2%)
Brown-Forman Cl B 42,720 1,939,915
Coca-Cola 568,927 24,304,561
PepsiCo 690,410 34,679,295
---------------
Total 60,923,771
- -------------------------------------------------------------------------------------
BIOTECHNOLOGY (2.4%)
Amgen 397,145(b) 21,783,403
Cephalon 51,854(b,e) 4,002,092
Gilead Sciences 365,720(b) 18,567,604
---------------
Total 44,353,099
- -------------------------------------------------------------------------------------
BUILDING PRODUCTS (0.1%)
Masco 274,495 2,146,551
- -------------------------------------------------------------------------------------
CAPITAL MARKETS (1.6%)
E*TRADE Financial 256,004(b,e) 291,845
Goldman Sachs Group 74,459 6,011,075
Morgan Stanley 998,145 20,192,472
State Street 155,918(e) 3,628,212
T Rowe Price Group 28,175 777,067
---------------
Total 30,900,671
- -------------------------------------------------------------------------------------
CHEMICALS (2.0%)
CF Inds Holdings 31,771 1,493,237
Dow Chemical 1,666,654 19,316,519
Ecolab 34,297 1,164,726
EI du Pont de Nemours & Co 125,659 2,885,131
PPG Inds 66,308(e) 2,491,855
Praxair 157,495(e) 9,805,639
---------------
Total 37,157,107
- -------------------------------------------------------------------------------------
COMMERCIAL BANKS (1.6%)
Banco Santander ADR 83,264(c) 652,792
BB&T 289,577(e) 5,730,729
Comerica 118,453 1,973,427
Fifth Third Bancorp 601,610 1,437,848
First Horizon Natl 181,074(e) 1,723,826
Huntington Bancshares 363,386(e) 1,046,552
KeyCorp 328,985 2,395,011
Marshall & Ilsley 169,248(e) 966,406
PNC Financial Services Group 351,414 11,427,982
SunTrust Banks 164,950 2,022,287
Synovus Financial 135,983(e) 538,493
Wells Fargo & Co 56,909 1,075,580
---------------
Total 30,990,933
- -------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.9%)
Avery Dennison 38,795(e) 940,003
Republic Services 243,219 6,289,643
RR Donnelley & Sons 79,664 777,521
Waste Management 264,866 8,261,170
---------------
Total 16,268,337
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
COMMUNICATIONS EQUIPMENT (1.0%)
Corning 734,439(e) $7,425,178
Motorola 248,544 1,101,050
QUALCOMM 297,886(e) 10,291,962
---------------
Total 18,818,190
- -------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (3.9%)
Apple 155,131(b) 13,981,957
Dell 817,705(b,e) 7,768,198
IBM 494,262 45,299,111
Lexmark Intl Cl A 180,264(b) 4,268,652
QLogic 139,178(b,e) 1,575,495
---------------
Total 72,893,413
- -------------------------------------------------------------------------------------
CONSUMER FINANCE (0.2%)
American Express 68,310 1,142,826
SLM 210,091(b,e) 2,405,542
---------------
Total 3,548,368
- -------------------------------------------------------------------------------------
DISTRIBUTORS (0.2%)
Genuine Parts 104,179 3,335,812
- -------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (0.4%)
H&R Block 391,532 8,116,458
- -------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (3.7%)
Bank of America 3,198,568 21,046,577
CIT Group 293,875 819,911
Citigroup 5,968,599(e) 21,188,526
JPMorgan Chase & Co 1,027,716 26,217,036
---------------
Total 69,272,050
- -------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.3%)
Embarq 97,099 3,468,376
Frontier Communications 173,926 1,410,540
---------------
Total 4,878,916
- -------------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.6%)
FirstEnergy 121,190 6,058,289
Southern 146,152 4,888,784
---------------
Total 10,947,073
- -------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.3%)
Emerson Electric 155,014 5,068,958
- -------------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (0.2%)
FLIR Systems 132,734(b) 3,314,368
Tyco Electronics 80,159(c) 1,135,051
---------------
Total 4,449,419
- -------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (1.7%)
BJ Services 200,667 2,207,337
ENSCO Intl 84,641 2,315,778
Halliburton 535,561 9,238,428
Nabors Inds 236,334(b,c,e) 2,587,857
Natl Oilwell Varco 197,191(b) 5,213,730
Noble 146,159(e) 3,968,217
Smith Intl 50,852 1,154,340
Weatherford Intl 430,448(b) 4,747,841
---------------
Total 31,433,528
- -------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (5.7%)
Costco Wholesale 88,113 3,967,728
Safeway 216,984 4,649,967
SUPERVALU 79,252 1,390,080
SYSCO 103,485 2,306,681
Walgreen 155,755(e) 4,269,245
Wal-Mart Stores 1,914,179 90,196,115
---------------
Total 106,779,816
- -------------------------------------------------------------------------------------
FOOD PRODUCTS (2.3%)
Archer-Daniels-Midland 133,678 3,660,104
Campbell Soup 74,438(e) 2,260,682
Dean Foods 27,032(b,e) 522,799
General Mills 388,802(e) 22,997,637
HJ Heinz 77,259 2,819,954
JM Smucker 66,166 2,987,395
Kellogg 91,146 3,982,169
Sara Lee 351,117 3,521,704
Tyson Foods Cl A 112,926(e) 999,395
---------------
Total 43,751,839
- -------------------------------------------------------------------------------------
GAS UTILITIES (0.1%)
Questar 71,190(e) 2,419,036
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
12 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HEALTH CARE EQUIPMENT & SUPPLIES (0.7%)
Becton Dickinson & Co 52,477 $3,813,504
Covidien 182,195(c) 6,985,356
Varian Medical Systems 52,680(b,e) 1,956,008
---------------
Total 12,754,868
- -------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (0.7%)
Cardinal Health 71,711 2,699,919
CIGNA 399,133 6,928,948
Quest Diagnostics 59,390 2,930,897
Tenet Healthcare 456,110(b,e) 488,038
---------------
Total 13,047,802
- -------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.4%)
Intl Game Technology 117,047(e) 1,240,698
McDonald's 423,142 24,550,699
Wyndham Worldwide 46,479 284,916
---------------
Total 26,076,313
- -------------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.5%)
Black & Decker 29,679(e) 858,020
Centex 121,143 1,030,927
DR Horton 313,448 1,868,150
KB Home 36,839(e) 393,072
Leggett & Platt 116,545 1,455,647
Lennar Cl A 85,838 660,094
Pulte Homes 111,499 1,131,715
Snap-On 47,778 1,441,940
Stanley Works 13,005 406,536
---------------
Total 9,246,101
- -------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (2.6%)
Colgate-Palmolive 212,124 13,796,545
Kimberly-Clark 79,020 4,067,159
Procter & Gamble 563,360 30,703,120
---------------
Total 48,566,824
- -------------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
Constellation Energy Group 94,112 2,475,145
Dynegy Cl A 200,023(b) 422,049
---------------
Total 2,897,194
- -------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (1.4%)
3M 233,882 12,580,512
Textron 114,451 1,033,493
Tyco Intl 577,631(c) 12,141,804
---------------
Total 25,755,809
- -------------------------------------------------------------------------------------
INSURANCE (6.3%)
ACE 224,162(c) 9,786,913
AFLAC 239,320 5,554,617
Allstate 913,087 19,786,594
Ambac Financial Group 288,197(e) 328,545
American Intl Group 1,536,860 1,967,181
Aon 101,123 3,746,607
Assurant 63,505 1,676,532
Chubb 186,118 7,924,904
Cincinnati Financial 28,900 633,777
Genworth Financial Cl A 656,721 1,523,593
Hartford Financial Services Group 200,394(e) 2,637,185
Lincoln Natl 120,907 1,829,323
Marsh & McLennan Companies 383,572 7,414,447
MBIA 209,475(b,e) 808,574
MetLife 374,982 10,773,233
Progressive 1,189,984(b) 14,458,306
Prudential Financial 200,346 5,158,910
Torchmark 66,836(e) 2,005,080
Travelers Companies 454,944 17,579,036
Unum Group 120,100 1,700,616
XL Capital Cl A 210,930(c) 611,697
---------------
Total 117,905,670
- -------------------------------------------------------------------------------------
IT SERVICES (1.0%)
Affiliated Computer Services Cl A 57,245(b) 2,625,256
Automatic Data Processing 183,752(e) 6,675,709
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
IT SERVICES (CONT.)
MasterCard Cl A 28,772(e) $3,906,662
Paychex 98,702(e) 2,397,472
Total System Services 17,806 225,424
Western Union 151,118 2,064,272
---------------
Total 17,894,795
- -------------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (0.4%)
Brunswick 100,213(e) 278,592
Eastman Kodak 232,404(e) 1,052,790
Hasbro 92,091(e) 2,222,156
Mattel 221,386 3,141,467
---------------
Total 6,695,005
- -------------------------------------------------------------------------------------
MACHINERY (1.3%)
Cummins 95,151 2,281,721
Deere & Co 154,045 5,351,523
Dover 34,526 976,395
Eaton 77,917 3,429,906
Flowserve 23,515 1,253,585
Illinois Tool Works 99,790 3,259,141
Ingersoll-Rand Cl A 250,754(c) 4,064,722
Manitowoc 41,277(e) 227,024
Pall 21,838 569,317
Parker Hannifin 58,170 2,222,676
---------------
Total 23,636,010
- -------------------------------------------------------------------------------------
MEDIA (2.4%)
CBS Cl B 599,908 3,431,474
Comcast Cl A 2,148,695 31,478,381
DIRECTV Group 204,716(b) 4,483,280
Gannett 498,635(e) 2,877,124
Meredith 14,134(e) 225,720
New York Times Cl A 109,515(e) 544,290
News Corp Cl A 259,074 1,655,483
---------------
Total 44,695,752
- -------------------------------------------------------------------------------------
METALS & MINING (1.1%)
AK Steel Holding 105,674(e) 852,789
Alcoa 474,946 3,699,829
Freeport-McMoRan Copper & Gold 63,591(e) 1,598,678
Nucor 278,500(e) 11,360,015
United States Steel 107,701 3,234,261
---------------
Total 20,745,572
- -------------------------------------------------------------------------------------
MULTILINE RETAIL (0.4%)
Big Lots 49,161(b,e) 661,215
Family Dollar Stores 137,895 3,829,345
JC Penney 50,077(e) 838,790
Kohl's 65,693(b,e) 2,411,590
Macy's 66,493 595,112
---------------
Total 8,336,052
- -------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (15.1%)
Anadarko Petroleum 227,182 8,346,667
Apache 49,069 3,680,175
Cabot Oil & Gas 61,226 1,683,103
Chesapeake Energy 304,346 4,811,710
Chevron 1,644,212 115,949,829
ConocoPhillips 561,368 26,681,821
CONSOL Energy 72,035 1,963,674
Devon Energy 48,553 2,990,865
EOG Resources 104,193 7,061,160
Exxon Mobil 586,725(d) 44,872,728
Hess 134,042(e) 7,454,076
Marathon Oil 363,777 9,905,648
Massey Energy 104,037 1,579,282
Murphy Oil 90,076 3,979,558
Occidental Petroleum 405,601 22,125,535
Peabody Energy 124,318 3,107,950
Pioneer Natural Resources 100,107 1,465,566
Southwestern Energy 203,387(b,e) 6,437,199
Spectra Energy 242,810 3,523,173
Sunoco 54,967(e) 2,546,071
Tesoro 98,048(e) 1,689,367
Valero Energy 170,934(e) 4,122,928
---------------
Total 285,978,085
- -------------------------------------------------------------------------------------
PERSONAL PRODUCTS (0.1%)
Estee Lauder Companies Cl A 92,113(e) 2,417,966
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
14 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
<Table>
<Caption>
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
PHARMACEUTICALS (13.7%)
Bristol-Myers Squibb 373,524 $7,997,149
Eli Lilly & Co 295,088(e) 10,865,140
Forest Laboratories 200,439(b) 5,018,993
Johnson & Johnson 1,640,525 94,641,886
King Pharmaceuticals 400,546(b) 3,500,772
Merck & Co 772,283 22,048,680
Mylan 53,769(b,e) 609,203
Pfizer 6,118,008 89,200,557
Schering-Plough 908,187 15,947,764
Wyeth 235,581 10,122,916
---------------
Total 259,953,060
- -------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (0.2%)
Public Storage 58,068(e) 3,592,667
- -------------------------------------------------------------------------------------
ROAD & RAIL (3.6%)
Burlington Northern Santa Fe 219,040 14,511,400
CSX 390,872 11,319,653
Norfolk Southern 430,857 16,527,675
Ryder System 54,245(e) 1,832,396
Union Pacific 547,180 23,961,012
---------------
Total 68,152,136
- -------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.9%)
Altera 284,124 4,369,827
Intel 2,783,428 35,906,221
Linear Technology 166,697(e) 3,904,044
LSI 237,133(b,e) 754,083
MEMC Electronic Materials 144,127(b) 1,960,127
Microchip Technology 138,807 2,633,169
NVIDIA 95,822(b,e) 761,785
Xilinx 255,847 4,311,022
---------------
Total 54,600,278
- -------------------------------------------------------------------------------------
SOFTWARE (2.5%)
Microsoft 1,151,519 19,690,975
Oracle 1,507,562(b,e) 25,372,268
Salesforce.com 11,626(b,e) 309,368
Symantec 154,679(b) 2,371,229
---------------
Total 47,743,840
- -------------------------------------------------------------------------------------
SPECIALTY RETAIL (4.7%)
Abercrombie & Fitch Cl A 133,207(e) 2,377,745
AutoNation 173,695(b,e) 1,611,890
AutoZone 28,942(b,e) 3,846,102
Bed Bath & Beyond 144,495(b,e) 3,356,619
Best Buy 144,404 4,046,200
Gap 286,082 3,227,005
Home Depot 2,249,714(d) 48,436,343
Limited Brands 114,145(e) 904,028
Lowe's Companies 752,480 13,747,810
Office Depot 149,209(b) 322,291
RadioShack 168,700(e) 1,933,302
Sherwin-Williams 53,160(e) 2,538,390
Staples 28,256 450,401
TJX Companies 76,140 1,478,639
---------------
Total 88,276,765
- -------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (0.5%)
Coach 206,729(b) 3,018,243
Jones Apparel Group 116,009 401,391
Liz Claiborne 229,550(e) 505,010
Nike Cl B 51,608 2,335,262
VF 55,629 3,116,337
---------------
Total 9,376,243
- -------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.1%)
Fannie Mae 1,336,093 809,139
Freddie Mac 794,150 472,519
MGIC Investment 154,094(e) 425,299
---------------
Total 1,706,957
- -------------------------------------------------------------------------------------
TOBACCO (0.4%)
Philip Morris Intl 191,327 7,107,798
- -------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (0.2%)
Fastenal 47,200(e) 1,613,296
WW Grainger 29,299(e) 2,137,362
---------------
Total 3,750,658
- -------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (0.2%)
Sprint Nextel 1,511,110(b) 3,671,997
- -------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $3,080,078,855) $1,846,763,087
- -------------------------------------------------------------------------------------
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 15
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
<Table>
<Caption>
MONEY MARKET FUND (2.0%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.47% 38,574,554(f) $38,574,554
- -------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $38,574,554) $38,574,554
- -------------------------------------------------------------------------------------
<Caption>
INVESTMENTS OF CASH COLLATERAL
RECEIVED FOR SECURITIES ON LOAN (7.9%)
SHARES VALUE(a)
CASH COLLATERAL REINVESTMENT FUND
JPMorgan Prime
Money Market Fund 149,027,673 $149,027,673
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $149,027,673) $149,027,673
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $3,267,681,082)(g) $2,034,365,314
=====================================================================================
</Table>
INVESTMENTS IN DERIVATIVES
FUTURES CONTRACTS OUTSTANDING AT JAN. 31, 2009
<Table>
<Caption>
NUMBER OF UNREALIZED
CONTRACTS NOTIONAL EXPIRATION APPRECIATION
CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION)
- -----------------------------------------------------------------------------------
S&P 500 Index 184 $37,835,000 March 2009 $(2,208,635)
- -----------------------------------------------------------------------------------
</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 Jan. 31, 2009, the
value of foreign securities represented 2.0% of net assets.
(d) At Jan. 31, 2009, investments in securities included securities valued at
$19,236,164 that were partially pledged as collateral to cover initial
margin deposits on open stock index futures contracts.
(e) At Jan. 31, 2009, security was partially or fully on loan. 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 Jan. 31, 2009.
(g) At Jan. 31, 2009, the cost of securities for federal income tax purposes
was approximately $3,267,681,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
<Table>
Unrealized appreciation $19,778,000
Unrealized depreciation (1,253,094,000)
-------------------------------------------------------------
Net unrealized depreciation $(1,233,316,000)
-------------------------------------------------------------
</Table>
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
- --------------------------------------------------------------------------------
16 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
FAIR VALUE MEASUREMENTS
Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to
implement more uniform reporting relating to the fair valuation of securities
for financial statement purposes. Mutual funds are required to implement the
requirements of this standard for fiscal years beginning after Nov. 15, 2007.
While uniformity of presentation is the objective of the standard, it is likely
that there may be a range of practices utilized and it may be some period of
time before industry practices become more uniform. For this reason care should
be exercised in interpreting this information and/or using it for comparison
with other mutual funds.
Various inputs are used in determining the value of the Fund's investments.
These inputs are summarized in the three broad levels listed below:
- Level 1 -- quoted prices in active markets for identical securities
- Level 2 -- other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds, credit risks,
etc.)
- Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
Observable inputs are those based on market data obtained from sources
independent of the fund, and unobservable inputs reflect the fund's own
assumptions based on the best information available. The input levels are not
necessarily an indication of the risk or liquidity associated with investments
at that level.
The following table is a summary of the inputs used to value the Fund's
investments as of Jan. 31, 2009:
<Table>
<Caption>
FAIR VALUE AT JAN. 31, 2009
------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
- ------------------------------------------------------------------------------------
Investments in
securities $2,034,365,314 $-- $-- $2,034,365,314
Other financial
instruments* (2,208,635) -- -- (2,208,635)
- ------------------------------------------------------------------------------------
Total $2,032,156,679 $-- $-- $2,032,156,679
- ------------------------------------------------------------------------------------
</Table>
* Other financial instruments are derivative instruments, such as futures, which
are valued at the unrealized appreciation/depreciation on the instrument.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 17
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
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.
- --------------------------------------------------------------------------------
18 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
JAN. 31, 2009 (UNAUDITED)
<Table>
<Caption>
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $3,080,078,855) $ 1,846,763,087
Affiliated money market fund (identified cost $38,574,554) 38,574,554
Investments of cash collateral received for securities on loan
(identified cost $149,027,673) 149,027,673
- -----------------------------------------------------------------------------------------
Total investments in securities (identified cost $3,267,681,082) 2,034,365,314
Capital shares receivable 66,185,449
Dividends and accrued interest receivable 2,055,385
Receivable for investment securities sold 93,236,508
- -----------------------------------------------------------------------------------------
Total assets 2,195,842,656
- -----------------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 3,547,314
Payable for investment securities purchased 158,103,932
Payable upon return of securities loaned 149,027,673
Variation margin payable on futures contracts 2,517,200
Accrued investment management services fees 31,159
Accrued distribution fees 11,214
Accrued transfer agency fees 8,253
Accrued administrative services fees 2,855
Accrued plan administration services fees 546
Other accrued expenses 267,753
- -----------------------------------------------------------------------------------------
Total liabilities 313,517,899
- -----------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 1,882,324,757
- -----------------------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 5,262,532
Additional paid-in capital 3,403,669,559
Undistributed net investment income 21,936,708
Accumulated net realized gain (loss) (313,048,070)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (1,235,495,972)
- -----------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $ 1,882,324,757
- -----------------------------------------------------------------------------------------
*Including securities on loan, at value $ 140,468,510
- -----------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 19
STATEMENT OF ASSETS AND LIABILITIES (continued) --------------------------------
JAN. 31, 2009 (UNAUDITED)
<Table>
<Caption>
NET ASSET VALUE PER SHARE
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
Class A $620,051,403 173,305,774 $3.58(1)
Class B $ 19,832,792 5,570,594 $3.56
Class C $ 1,814,010 512,826 $3.54
Class I $276,904,563 77,058,471 $3.59
Class R2 $ 2,365 661 $3.58
Class R3 $ 2,365 661 $3.58
Class R4 $ 77,831,387 21,684,784 $3.59
Class R5 $ 2,364 661 $3.58
Class W $885,883,508 248,118,779 $3.57
- -----------------------------------------------------------------------------------------
</Table>
(1) The maximum offering price per share for Class A is $3.80. The offering
price is calculated by dividing the net asset value by 1.0 minus the maximum
sales charge of 5.75%.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
20 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
SIX MONTHS ENDED JAN. 31, 2009 (UNAUDITED)
<Table>
<Caption>
INVESTMENT INCOME
Income:
Dividends $ 32,351,835
Income distributions from affiliated money market fund 257,424
Fee income from securities lending 353,713
- -----------------------------------------------------------------------------
Total income 32,962,972
- -----------------------------------------------------------------------------
Expenses:
Investment management services fees 5,895,042
Distribution fees
Class A 1,034,280
Class B 135,737
Class C 11,125
Class R2 8
Class R3 4
Class W 1,278,447
Transfer agency fees
Class A 573,318
Class B 21,290
Class C 1,643
Class R2 1
Class R3 1
Class R4 25,031
Class R5 1
Class W 1,022,756
Administrative services fees 614,408
Plan administration services fees
Class R2 4
Class R3 4
Class R4 125,156
Compensation of board members 37,256
Custodian fees 89,895
Printing and postage 80,050
Registration fees 64,275
Professional fees 32,297
Other 30,170
- -----------------------------------------------------------------------------
Total expenses 11,072,199
Expenses waived/reimbursed by the Investment Manager and
its affiliates (43,631)
Earnings and bank fee credits on cash balances (7,886)
- -----------------------------------------------------------------------------
Total net expenses 11,020,682
- -----------------------------------------------------------------------------
Investment income (loss) -- net 21,942,290
- -----------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 21
STATEMENT OF OPERATIONS (continued) -------------------------------------------
SIX MONTHS ENDED JAN. 31, 2009 (UNAUDITED)
<Table>
<Caption>
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions $ (289,383,497)
Futures contracts (18,917,134)
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments (308,300,631)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies (745,252,457)
- -----------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (1,053,553,088)
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $(1,031,610,798)
- -----------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
22 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
JAN. 31, 2009 JULY 31, 2008
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 21,942,290 $ 44,172,325
Net realized gain (loss) on investments (308,300,631) 103,837,007
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities
in foreign currencies (745,252,457) (641,572,651)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (1,031,610,798) (493,563,319)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (9,214,668) (11,230,396)
Class C (7,117) (4,379)
Class I (5,438,440) (5,698,153)
Class R2 (33) (28)
Class R3 (41) (40)
Class R4 (1,326,570) (1,390,578)
Class R5 (49) (54)
Class W (10,297,303) (14,867,518)
Net realized gain
Class A (24,419,810) (68,772,061)
Class B (803,415) (3,058,960)
Class C (70,547) (169,022)
Class I (10,144,769) (24,176,366)
Class R2 (97) (244)
Class R3 (96) (244)
Class R4 (2,985,348) (7,584,972)
Class R5 (96) (244)
Class W (30,699,663) (74,056,615)
- ----------------------------------------------------------------------------------------------
Total distributions (95,408,062) (211,009,874)
- ----------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 23
STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
<Table>
<Caption>
SIX MONTHS ENDED YEAR ENDED
JAN. 31, 2009 JULY 31, 2008
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS
Proceeds from sales
Class A shares $ 21,635,577 $ 49,740,163
Class B shares 1,577,268 5,505,096
Class C shares 405,262 976,461
Class I shares 62,015,970 120,762,575
Class R4 shares 5,399,913 25,111,692
Class W shares 288,169,838 1,465,443,768
Reinvestment of distributions at net asset value
Class A shares 31,099,175 74,058,485
Class B shares 793,672 3,022,150
Class C shares 73,505 167,943
Class I shares 15,582,928 29,873,023
Class R4 shares 4,311,918 8,975,550
Class W shares 40,996,838 88,923,836
Payments for redemptions
Class A shares (97,184,696) (215,746,354)
Class B shares (4,836,168) (24,117,349)
Class C shares (363,398) (1,059,851)
Class I shares (30,431,811) (108,422,258)
Class R4 shares (9,097,585) (37,030,416)
Class W shares (299,180,516) (622,614,805)
- ----------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions 30,967,690 863,569,709
- ----------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (1,096,051,170) 158,996,516
Net assets at beginning of period 2,978,375,927 2,819,379,411
- ----------------------------------------------------------------------------------------------
Net assets at end of period $ 1,882,324,757 $2,978,375,927
- ----------------------------------------------------------------------------------------------
Undistributed net investment income $ 21,936,708 $ 26,278,639
- ----------------------------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
24 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
FINANCIAL HIGHLIGHTS ----------------------------------------------------------
CLASS A
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005
Net asset value, beginning of
period $5.88 $7.22 $6.74 $6.70 $5.95
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) .04(b) .09(b) .08(b) .06 .04
Net gains (losses) (both
realized and unrealized) (2.14) (1.00) .97 .35 .90
- ------------------------------------------------------------------------------------------------
Total from investment
operations (2.10) (.91) 1.05 .41 .94
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.05) (.06) (.06) (.06) (.03)
Distributions from realized
gains (.15) (.37) (.51) (.31) (.16)
- ------------------------------------------------------------------------------------------------
Total distributions (.20) (.43) (.57) (.37) (.19)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $3.58 $5.88 $7.22 $6.74 $6.70
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $620 $1,067 $1,410 $1,368 $28
- ------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .98%(e) .96% 1.05% 1.05% 1.35%
- ------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(d),(f),(g) .98%(e) .96% 1.03% 1.02% 1.25%
- ------------------------------------------------------------------------------------------------
Net investment income (loss) 1.88%(e) 1.35% 1.13% .95% .84%
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62% 137% 64%
- ------------------------------------------------------------------------------------------------
Total return(h) (36.05%)(i) (13.40%) 15.92% 6.25% 15.95%
- ------------------------------------------------------------------------------------------------
</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) Adjusted to an annual basis.
(f) 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.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 25
FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
CLASS B
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005
Net asset value, beginning of
period $5.80 $7.12 $6.65 $6.62 $5.90
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) .03(b) .04(b) .03(b) .01 .02
Net gains (losses) (both
realized and unrealized) (2.12) (.99) .96 .34 .86
- ------------------------------------------------------------------------------------------------
Total from investment
operations (2.09) (.95) .99 .35 .88
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income -- -- (.01) (.01) --
Distributions from realized
gains (.15) (.37) (.51) (.31) (.16)
- ------------------------------------------------------------------------------------------------
Total distributions (.15) (.37) (.52) (.32) (.16)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $3.56 $5.80 $7.12 $6.65 $6.62
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $20 $35 $62 $73 $9
- ------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.74%(e) 1.72% 1.82% 1.85% 2.13%
- ------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(d),(f),(g) 1.74%(e) 1.72% 1.79% 1.82% 2.04%
- ------------------------------------------------------------------------------------------------
Net investment income (loss) 1.12%(e) .59% .37% .20% .06%
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62% 137% 64%
- ------------------------------------------------------------------------------------------------
Total return(h) (36.36%)(i) (14.07%) 15.18% 5.42% 15.03%
- ------------------------------------------------------------------------------------------------
</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) Adjusted to an annual basis.
(f) 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.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
26 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS C
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005
Net asset value, beginning of
period $5.78 $7.11 $6.65 $6.62 $5.90
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) .03(b) .04(b) .03(b) .01 .01
Net gains (losses) (both
realized and unrealized) (2.11) (.99) .96 .35 .87
- ------------------------------------------------------------------------------------------------
Total from investment
operations (2.08) (.95) .99 .36 .88
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.01) (.01) (.02) (.02) --
Distributions from realized
gains (.15) (.37) (.51) (.31) (.16)
- ------------------------------------------------------------------------------------------------
Total distributions (.16) (.38) (.53) (.33) (.16)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $3.54 $5.78 $7.11 $6.65 $6.62
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $2 $3 $3 $3 $--
- ------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) 1.74%(e) 1.72% 1.81% 1.84% 2.13%
- ------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(d),(f),(g) 1.74%(e) 1.72% 1.79% 1.81% 2.06%
- ------------------------------------------------------------------------------------------------
Net investment income (loss) 1.10%(e) .59% .36% .20% .02%
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62% 137% 64%
- ------------------------------------------------------------------------------------------------
Total return(h) (36.26%)(i) (14.11%) 15.14% 5.51% 15.03%
- ------------------------------------------------------------------------------------------------
</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) Adjusted to an annual basis.
(f) 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.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(h) Total return does not reflect payment of a sales charge.
(i) Not annualized.
(j) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 27
FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
CLASS I
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of
period $5.93 $7.27 $6.78 $6.73 $5.96
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) .05(b) .11(b) .11(b) .08 .04
Net gains (losses) (both
realized and unrealized) (2.17) (.99) .97 .36 .92
- ------------------------------------------------------------------------------------------------
Total from investment
operations (2.12) (.88) 1.08 .44 .96
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.07) (.09) (.08) (.08) (.03)
Distributions from realized
gains (.15) (.37) (.51) (.31) (.16)
- ------------------------------------------------------------------------------------------------
Total distributions (.22) (.46) (.59) (.39) (.19)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $3.59 $5.93 $7.27 $6.78 $6.73
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $277 $391 $441 $252 $82
- ------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .59%(e) .61% .70% .72% .91%
- ------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(d),(f),(g) .59%(e) .61% .67% .70% .91%
- ------------------------------------------------------------------------------------------------
Net investment income (loss) 2.26%(e) 1.69% 1.47% 1.41% 1.19%
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62% 137% 64%
- ------------------------------------------------------------------------------------------------
Total return (36.07%)(h) (12.98%) 16.29% 6.73% 16.29%
- ------------------------------------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) Per share amounts have been calculated using the average shares outstanding
method.
(c) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances.
(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) Adjusted to an annual basis.
(f) 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.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(h) Not annualized.
(i) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
28 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R2
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(j) 2008 2007(b)
Net asset value, beginning of
period $5.88 $7.21 $7.57
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(c) .04 .08 .03
Net gains (losses) (both
realized and unrealized) (2.15) (1.00) .20
- -----------------------------------------------------------------------------------------------
Total from investment
operations (2.11) (.92) .23
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.04) (.04) (.08)
Distributions from realized
gains (.15) (.37) (.51)
- -----------------------------------------------------------------------------------------------
Total distributions (.19) (.41) (.59)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $3.58 $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) 1.37%(f) 1.41% 1.49%(f)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(e),(g),(h) 1.11%(f) 1.16% 1.48%(f)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 1.78%(f) 1.15% .55%(f)
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62%
- -----------------------------------------------------------------------------------------------
Total return (36.15%)(i) (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 were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(i) Not annualized.
(j) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 29
FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
CLASS R3
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(j) 2008 2007(b)
Net asset value, beginning of
period $5.89 $7.22 $7.57
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(c) .05 .09 .04
Net gains (losses) (both
realized and unrealized) (2.15) (.99) .20
- -----------------------------------------------------------------------------------------------
Total from investment
operations (2.10) (.90) .24
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.06) (.06) (.08)
Distributions from realized
gains (.15) (.37) (.51)
- -----------------------------------------------------------------------------------------------
Total distributions (.21) (.43) (.59)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $3.58 $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) 1.14%(f) 1.15% 1.24%(f)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(e),(g),(h) .87%(f) .90% 1.22%(f)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 1.99%(f) 1.41% .81%(f)
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62%
- -----------------------------------------------------------------------------------------------
Total return (36.03%)(i) (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 were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(i) Not annualized.
(j) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
30 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS R4
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(i) 2008 2007 2006 2005
Net asset value, beginning of
period $5.91 $7.25 $6.76 $6.71 $5.95
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) .05(b) .10(b) .09(b) .07 .05
Net gains (losses) (both
realized and unrealized) (2.16) (1.00) .98 .36 .91
- ------------------------------------------------------------------------------------------------
Total from investment
operations (2.11) (.90) 1.07 .43 .96
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.06) (.07) (.07) (.07) (.04)
Distributions from realized
gains (.15) (.37) (.51) (.31) (.16)
- ------------------------------------------------------------------------------------------------
Total distributions (.21) (.44) (.58) (.38) (.20)
- ------------------------------------------------------------------------------------------------
Net asset value, end of period $3.59 $5.91 $7.25 $6.76 $6.71
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $78 $126 $158 $224 $--
- ------------------------------------------------------------------------------------------------
Gross expenses prior to expense
waiver/reimbursement(c),(d) .89%(e) .91% .95% .87% 1.18%
- ------------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(d),(f),(g) .81%(e) .84% .87% .84% 1.06%
- ------------------------------------------------------------------------------------------------
Net investment income (loss) 2.05%(e) 1.47% 1.29% 1.10% 1.03%
- ------------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62% 137% 64%
- ------------------------------------------------------------------------------------------------
Total return (36.05%)(h) (13.26%) 16.15% 6.48% 16.25%
- ------------------------------------------------------------------------------------------------
</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) Adjusted to an annual basis.
(f) 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.
(g) Includes the impact of a performance incentive adjustment, if any. Expense
ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(h) Not annualized.
(i) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 31
FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
CLASS R5
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(j) 2008 2007(b)
Net asset value, beginning of
period $5.90 $7.24 $7.57
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(c) .05 .11 .06
Net gains (losses) (both
realized and unrealized) (2.15) (1.00) .20
- -----------------------------------------------------------------------------------------------
Total from investment
operations (2.10) (.89) .26
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.07) (.08) (.08)
Distributions from realized
gains (.15) (.37) (.51)
- -----------------------------------------------------------------------------------------------
Total distributions (.22) (.45) (.59)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $3.58 $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) .61%(f) .66% .75%(f)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(e),(g),(h) .61%(f) .66% .74%(f)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 2.25%(f) 1.66% 1.28%(f)
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62%
- -----------------------------------------------------------------------------------------------
Total return (35.97%)(i) (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 were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(i) Not annualized.
(j) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
32 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
CLASS W
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2009(j) 2008 2007(b)
Net asset value, beginning of
period $5.86 $7.22 $7.46
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(c) .04 .08 .03
Net gains (losses) (both
realized and unrealized) (2.14) (1.00) .32
- -----------------------------------------------------------------------------------------------
Total from investment
operations (2.10) (.92) .35
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment
income (.04) (.07) (.08)
Distributions from realized
gains (.15) (.37) (.51)
- -----------------------------------------------------------------------------------------------
Total distributions (.19) (.44) (.59)
- -----------------------------------------------------------------------------------------------
Net asset value, end of period $3.57 $5.86 $7.22
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in
millions) $886 $1,355 $745
- -----------------------------------------------------------------------------------------------
Gross expenses prior to
expense
waiver/reimbursement(d),(e) 1.04%(f) 1.06% 1.18%(f)
- -----------------------------------------------------------------------------------------------
Net expenses after expense
waiver/reim-
bursement(e),(g),(h) 1.04%(f) 1.06% 1.13%(f)
- -----------------------------------------------------------------------------------------------
Net investment income (loss) 1.80%(f) 1.22% .59%(f)
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 35% 58% 62%
- -----------------------------------------------------------------------------------------------
Total return (36.10%)(i) (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 were less than 0.01% of average net
assets for the six months ended Jan. 31, 2009 and for the year ended July
31, 2008.
(i) Not annualized.
(j) Six months ended Jan. 31, 2009 (Unaudited).
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
(UNAUDITED AS TO JAN. 31, 2009)
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 Jan. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the
Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of
Class I shares and the Investment Manager owned 100% of Class R2, Class R3 and
Class R5 shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration services fees) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized gains or losses
on investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
- --------------------------------------------------------------------------------
34 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
Effective Aug. 1, 2008, the Fund adopted 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. There was no impact to the
Fund's net assets or results of operations upon adoption. The fair valuation
measurements disclosure can be found following the Notes to Portfolio of
Investments.
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.
When market quotes are not readily available, the pricing service, in
determining fair values of debt securities, takes into consideration such
factors as current quotations by broker/dealers, coupon, maturity, quality, type
of issue, trading characteristics, and other yield and risk factors it deems
relevant in determining valuations. Foreign securities are valued based on
quotations from the principal market in which such securities are normally
traded. The procedures adopted by the Board generally contemplate the use of
fair valuation in the event that price quotations or valuations are not readily
available, price quotations or valuations from other sources are not reflective
of market value and thus deemed unreliable, or a significant event has occurred
in relation to a security or class of securities (such as foreign securities)
that is not reflected in price quotations or valuations from other sources. A
fair value price is a good faith estimate of the value of a security at a given
point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the 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
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 35
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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, which
approximates fair value.
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 (OTC options) trades. Cash collateral held by the Fund for such option
trades must be returned to the counterparty upon closure, exercise or expiration
of the contract. The Fund also may buy and sell put and call options and write
covered call options on portfolio securities as well as write cash-secured put
options. The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security increases. The risk
in writing a put option is that the Fund may incur a loss if the market price of
the security decreases and the option is exercised. The risk in buying an option
is that the Fund pays a premium whether or not the option is exercised. The Fund
also has the additional risk of being unable to enter into a closing transaction
if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. Option
contracts, including OTC option contracts, with no readily available market
value are valued using quotations obtained from independent brokers as of the
close of the New York Stock Exchange. 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 Jan. 31, 2009, and for the six
months 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
- --------------------------------------------------------------------------------
36 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
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 and options on futures are valued daily based upon the last sale price
at the close of the market on the principal exchange on which they are traded.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
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.
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 counterparty will not
complete its contract obligations. At Jan. 31, 2009, 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.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 37
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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 provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in the
financial statements. 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.
RECENT ACCOUNTING PRONOUNCEMENTS
The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS
133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain
Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No.
45". The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures
about a fund's derivatives and guarantees. 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, (c) how derivative instruments and
related hedged items affect a fund's financial position, financial performance,
and cash flows and (d) the current status of the payment/performance risk of the
credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require
additional disclosures about the current status of the payment/performance risk
of a guarantee. At Jan. 31, 2009, the Fund did not own nor was it a party to any
credit derivative contracts within the scope of these amendments.
- --------------------------------------------------------------------------------
38 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
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. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods
beginning after Nov. 15, 2008. As of Jan. 31, 2009, 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.
DIVIDENDS TO SHAREHOLDERS
An annual dividend from net investment income, declared and paid at the end of
the calendar year, when available, is reinvested in additional shares of the
Fund at net asset value or payable in cash. Capital gains, when available, are
distributed along with the income dividend.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date and interest income,
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
2. EXPENSES AND SALES CHARGES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager
determines which securities will be purchased, held or sold. The management fee
is a percentage of the Fund's average daily net assets that declines from 0.60%
to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward
or downward by a performance incentive adjustment determined monthly by
measuring the percentage difference over a rolling 12-month period between the
annualized performance of one Class A share of the Fund and the annualized
performance of the Lipper Large-Cap Core Funds Index. In certain circumstances,
the Board may approve a change in the index. The maximum adjustment is 0.12% per
year. If the performance difference is less than 0.50%, the adjustment will be
zero. The adjustment decreased the management fee by $823,118 for the six months
ended Jan. 31, 2009. The management fee for the six months ended Jan. 31, 2009
was 0.51% of the Fund's average daily net assets, including the adjustment under
the terms of the performance incentive arrangement.
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 39
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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 six months ended Jan. 31, 2009 was 0.05%
of the Fund's average daily net assets.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the six months ended Jan.
31, 2009, other expenses paid to this company were $9,182.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), non-interested board members may
defer receipt of their compensation. Deferred amounts are treated as though
equivalent dollar amounts had been invested in shares of the Fund or other
RiverSource funds. The Fund's liability for these amounts is adjusted for market
value changes and remains in the Fund until distributed in accordance with the
Plan.
TRANSFER AGENCY FEES
Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer
Agent) maintains shareholder accounts and records. The Fund pays the Transfer
Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50
for Class B and $20.00 for Class C for this service. The Fund also pays the
Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and Class
R5 shares 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.
- --------------------------------------------------------------------------------
40 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
DISTRIBUTION FEES
The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund
Distributors, Inc. (collectively, the Distributor) for distribution and
shareholder services. Under a Plan and Agreement of Distribution pursuant to
Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's
average daily net assets attributable to Class A, Class R3 and Class W shares, a
fee at an annual rate of up to 0.50% of the Fund's average daily net assets
attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of
the Fund's average daily net assets attributable to Class B and Class C shares.
For Class B and Class C shares, 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 $794,000 and $24,000 for
Class B and Class C shares, respectively. These amounts are based on the most
recent information available as of Jan. 31, 2009, and may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed expense has been fully recovered, the distribution fee is reduced.
SALES CHARGE
Sales charges received by the Distributor for distributing Fund shares were
$127,507 for Class A, $9,742 for Class B and $168 for Class C for the six months
ended Jan. 31, 2009.
EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES
For the six months ended Jan. 31, 2009, the Investment Manager and its
affiliates waived/reimbursed certain fees and expenses such that net expenses
(excluding fees and expenses of acquired funds*), including the adjustment under
the terms of a performance incentive adjustment, were as follows:
<Table>
Class A............................................. 0.98%
Class B............................................. 1.74
Class R2............................................ 1.11
Class R3............................................ 0.87
Class R4............................................ 0.81
</Table>
The waived/reimbursed fees and expenses for the transfer agency fees at the
class level were as follows:
<Table>
Class A........................................... $659
Class B........................................... 844
Class R4.......................................... 25,031
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 41
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
The waived/reimbursed fees and expenses for the plan administration services
fees at the class level were as follows:
<Table>
Class R2.......................................... $4
Class R3.......................................... 4
Class R4.......................................... 17,089
</Table>
The Investment Manager and its affiliates have contractually agreed to waive
certain fees and expenses until July 31, 2009, unless sooner terminated at the
discretion of the Board, such that net expenses (excluding fees and expenses of
acquired funds*), before giving effect to any performance incentive adjustment,
will not exceed the following percentage of the Fund's average daily net assets:
<Table>
Class 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 six months ended Jan. 31, 2009, the Fund's transfer agency fees were
reduced by $7,886 as a result of bank fee credits from overnight cash balances.
CUSTODIAN FEES
Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank,
N.A. Prior to Dec. 15, 2008, the Fund paid custodian fees amounting to $80,093
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 $810,453,672 and $889,997,817, respectively, for the six
months ended Jan. 31, 2009. Realized gains and losses are determined on an
identified cost basis.
- --------------------------------------------------------------------------------
42 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
<Table>
<Caption>
SIX MONTHS ENDED JAN. 31, 2009
ISSUED FOR
REINVESTED NET
SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE)
- ----------------------------------------------------------------------------------
Class A 4,912,041 7,833,545 (20,960,397) (8,214,811)
Class B 344,354 200,930 (1,077,413) (532,129)
Class C 88,401 18,704 (76,413) 30,692
Class I 13,540,925 3,905,496 (6,447,275) 10,999,146
Class R4 1,188,589 1,083,396 (1,954,501) 317,484
Class W 67,432,096 10,352,737 (60,791,010) 16,993,823
- ----------------------------------------------------------------------------------
<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>
5. LENDING OF PORTFOLIO SECURITIES
Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending
Agreement ("the Agreement") with JPMorgan Chase Bank, National Association
("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers on behalf of the Fund. Pursuant to the
Agreement, all loaned securities are initially collateralized in an amount
equivalent to 102% (for securities denominated in U.S. dollars) or 105% (for all
other securities) of the value of the loaned securities, including accrued
interest in the case of fixed income securities. Collateral is maintained over
the life of the loan thereafter in an amount not less than 100% of the market
value of loaned securities, as determined at the close of each business day,
except to the extent that a collateral shortfall is due to a diminution in the
market value of authorized investments in which cash collateral is invested. Any
additional collateral required to maintain those levels due to market
fluctuations of the loaned securities is delivered the following business day.
Collateral is either in the form of cash or U.S. government securities. Cash
collateral received is invested by the
- --------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 43
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
lending agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed on the
Portfolio of Investments and the value of cash collateral received at period end
is disclosed on the Statement of Assets and Liabilities along with the related
obligation to return the collateral upon return of the securities loaned. At
Jan. 31, 2009, securities valued at $140,468,510 were on loan secured by cash
collateral of $149,027,673 invested in short-term securities or cash
equivalents.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Income of
$136,882 earned from securities lending from Dec. 1, 2008 through Jan. 31, 2009
is included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Prior to Dec. 1, 2008, RiverSource Investments, LLC served as securities lending
agent for the Fund under the Securities Lending Agency Agreement pursuant to
which the Fund agreed to reimburse RiverSource Investments, LLC for expenses
incurred by it in connection with the lending program. Expenses paid to
RiverSource Investments, LLC as securities lending agent were $8,054 through
Nov. 30, 2008 and are included in other expenses on the Statement of Operations.
Cash collateral received on loaned securities had been invested in an affiliated
money market fund. Income of $216,831 earned from securities lending from Feb.
1, 2008 through Nov. 30, 2008 is included in the Statement of Operations.
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
- --------------------------------------------------------------------------------
44 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
Short-Term Cash Fund aggregated $312,879,084 and $303,464,571, respectively, for
the six months ended Jan. 31, 2009. 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 Jan. 31, 2009, 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
led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund
may borrow for the temporary funding of shareholder redemptions or for other
temporary or emergency purposes. The credit facility became effective on Oct.
16, 2008, replacing a prior credit facility. The credit facility agreement,
which is a collective agreement between the Fund and certain other RiverSource
funds, severally and not jointly, permits collective borrowings up to $475
million. The borrowers shall have the right, upon written notice to the
Administrative Agent to request an increase of up to $175 million in the
aggregate amount of the credit facility from new or existing lenders, provided
that the aggregate amount of the credit facility shall at no time exceed $650
million. Participation in such increase by any existing lender shall be at such
lender's sole discretion. Interest is charged to each Fund based on its
borrowings at a rate equal to the federal funds rate plus 0.75%. Each borrowing
under the credit facility matures no later than 60 days after the date of
borrowing. The Fund also pays a commitment fee equal to its pro rata share of
the amount of the credit facility at a rate of 0.06% per annum, in addition to
an upfront fee equal to its pro rata share of 0.02% of the amount of the credit
facility. The Fund had no borrowings during the six months ended Jan. 31, 2009.
Under the prior credit facility which was effective until Oct. 15, 2008, the
Fund had entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow
for the temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The credit facility agreement, which was a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permitted collective borrowings up to $500 million. Interest was
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matured no later
than 60 days after the date of borrowing. The Fund also paid a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum.
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RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 45
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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. 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.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003,
Seligman conducted an extensive internal review concerning mutual fund trading
practices. Seligman's review, which covered the period 2001-2003, noted one
arrangement that permitted frequent trading in certain open-end registered
investment companies managed by Seligman (the Seligman Funds);
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46 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
this arrangement was in the process of being closed down by Seligman before
September 2003. Seligman identified three other arrangements that permitted
frequent trading, all of which had been terminated by September 2002. In January
2004, Seligman, on a voluntary basis, publicly disclosed these four arrangements
to its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG). In September 2005, the
New York staff of the SEC indicated that it was considering recommending to the
Commissioners of the SEC the instituting of a formal action against Seligman and
the distributor of the Seligman Funds, Seligman Advisors, Inc. (which is now
known as RiverSource Fund Distributors, Inc.), relating to frequent trading in
the Seligman Funds. Seligman responded to the staff in October 2005 that it
believed that any action would be both inappropriate and unnecessary, especially
in light of the fact that Seligman had previously resolved the underlying issue
with the Independent Directors of the Seligman Funds and made recompense to the
affected Seligman Funds.
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc., Seligman Data Corp. and Brian
T. Zino (collectively, the Seligman Parties), alleging, in substance, that the
Seligman Parties permitted various persons to engage in frequent trading and, as
a result, the prospectus disclosure used by the registered investment companies
then managed by Seligman is and has been misleading. The NYAG included other
related claims and also claimed that the fees charged by Seligman to the
Seligman Funds were excessive. On March 13, 2009, without admitting or denying
any violations of law or wrongdoing, the Seligman Parties entered into a
stipulation of settlement with the NYAG and settled the claims made by the NYAG.
Under the terms of the settlement, Seligman will pay $11.3 million to four
Seligman Funds. This settlement resolved all outstanding matters between the
Seligman Parties and the NYAG. In addition to the foregoing matter, the New York
staff of the SEC indicated in September 2005 that it was considering
recommending to the Commissioners of the SEC the instituting of a formal action
against Seligman and Seligman Advisors, Inc. relating to frequent trading in the
Seligman Funds. Seligman responded to the staff in October 2005 that it believed
that any action would be both inappropriate and unnecessary, especially in light
of the fact that Seligman had previously resolved the underlying issue with the
Independent Directors of the Seligman Funds and made recompense to the affected
Seligman Funds. There have been no further developments with the SEC on this
matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine
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RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 47
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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.
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48 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling 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.
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RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 49
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 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 Recovery and Infrastructure 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>
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THIS PAGE IS NOT PART OF THE SEMIANNUAL 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.
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THIS PAGE IS NOT PART OF THE SEMIANNUAL 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., and
RiverSource Fund Distributors, Inc., Members FINRA, and
managed by RiverSource Investments, LLC. RiverSource is part
of Ameriprise Financial, Inc.
(RIVERSOURCE INVESTMENTS LOGO) (C) 2009 RiverSource Investments, LLC. S-6274 G (4/09)
</Table>