UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-2111
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RIVERSOURCE LARGE CAP SERIES, INC.
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(Exact name of registrant as specified in charter)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 671-1947
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Date of fiscal year end: 7/31
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Date of reporting period: 1/31
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Semiannual Report
RIVERSOURCE [LOGO](R)
INVESTMENTS
RIVERSOURCE(R)
DISCIPLINED EQUITY FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
JAN. 31, 2007
> RIVERSOURCE DISCIPLINED EQUITY
FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM
CAPITAL GROWTH.
TABLE OF CONTENTS
Fund Snapshot ........................................................... 3
Performance Summary ..................................................... 5
Questions & Answers with Portfolio Management ........................... 8
Fund Expenses Example ................................................... 11
Investments in Securities ............................................... 14
Financial Statements .................................................... 19
Notes to Financial Statements ........................................... 25
Proxy Voting ............................................................ 46
[LOGO]
DALBAR RATED
2006
FOR COMMUNICATION
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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2 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
FUND SNAPSHOT AT JAN. 31, 2007
FUND OVERVIEW
RiverSource Disciplined Equity Fund invests primarily in large cap stocks. The
Fund's managers utilize computer-based quantitative models to purchase large
cap stocks that they believe are undervalued or have the potential for
significant price appreciation at the time of investment. The team manages
risk on many dimensions in an effort to minimize volatility and maximize
risk-adjusted returns.
SECTOR BREAKDOWN*
Percentage of portfolio assets
Financials 20.1%
Consumer Discretionary 16.3%
Health Care 13.8%
Energy 13.6% [PIE CHART]
Information Technology 8.9%
Industrials 7.9%
Other(1) 19.4%
* Sectors can be comprised of several industries. Please refer to the
section entitled "Investments in Securities" for a complete listing. No
single industry exceeds 25% of portfolio assets.
(1) Includes Telecommunication Services 7.4%, Consumer Staples 6.9%,
Materials 1.9%, Utilities 1.8% and Cash & Cash Equivalents(2) 1.4%.
(2) Of the 1.4%, 1.1% is due to security lending activity and 0.3% is the
Fund's cash equivalent position.
TOP TEN HOLDINGS
Percentage of portfolio assets
AT&T 5.0%
Exxon Mobil 4.8%
Chevron 3.9%
Merck & Co 3.7%
Johnson & Johnson 3.5%
ConocoPhillips 2.5%
Citigroup 2.4%
Verizon Communications 2.3%
Home Depot 2.2%
Fannie Mae 2.2%
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
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.
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
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RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 3
FUND SNAPSHOT AT JAN. 31, 2007
STYLE MATRIX
[chart] Shading within the style matrix indicates areas in which the Fund
generally invests.
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
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 serves 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.
PORTFOLIO MANAGERS
YEARS IN INDUSTRY
Dimitris Bertsimas, Ph.D. 13
Gina Mourtzinou, Ph.D. 10
FUND FACTS
TICKER SYMBOL INCEPTION DATE
Class A AQEAX 4/24/03
Class B AQEBX 4/24/03
Class C -- 4/24/03
Class I ALEIX 7/15/04
Class R2 -- 12/11/06
Class R3 -- 12/11/06
Class R4(1) RQEYX 4/24/03
Class R5 -- 12/11/06
Class W -- 12/1/06
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4.
Total net assets $2.209 billion
Number of holdings 214
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4 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
PERFORMANCE SUMMARY
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PERFORMANCE COMPARISON
For the six-month period ended Jan. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
RiverSource Disciplined Equity Fund Class A (excluding sales charge) +14.15%
S&P 500 Index(1) (unmanaged) +13.17%
Lipper Large-Cap Core Funds Index(2) +13.75%
(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.
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 bar chart. If reflected, returns would be lower than those
shown. The performance of other classes may vary from that shown because of
differences in expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
CLASS A CLASS B CLASS C CLASS I
Total 1.07% 1.87% 1.86% 0.74%
Net Expenses(a) 1.01% 1.79% 1.78% 0.65%
CLASS R2(b) CLASS R3(b) CLASS R4(b) CLASS R5(b) CLASS W(b)
Total 1.49% 1.24% 0.99% 0.74% 1.14%
Net Expenses(a) 1.47% 1.22% 0.85% 0.72% 1.12%
(a) The investment manager and its affiliates have contractually agreed to
waive certain fees and to absorb certain expenses until July 31, 2007,
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 expenses will not exceed 1.00% for Class A; 1.78% for Class B; 1.77%
for Class C; 0.64% for Class I; 1.46% for Class R2; 1.21% for Class R3;
0.84% for Class R4; 0.71% for Class R5; and 1.11% for Class W.
(b) Effective Dec. 11, 2006, Class Y was renamed Class R4. Inception date
for Class R2, Class R3 and Class R5 is Dec. 11, 2006. Inception date for
Class W is Dec. 1, 2006. For Class R2, Class R3, Class R5 and Class W,
expenses are based on estimated amounts for the current fiscal year.
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RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 5
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS
AT JAN. 31, 2007
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 4/24/03) +14.15% +13.30% +10.75% +15.34%
Class B (inception 4/24/03) +13.72% +12.35% +9.84% +14.41%
Class C (inception 4/24/03) +13.68% +12.32% +9.79% +14.42%
Class I (inception 7/15/04) +14.37% +13.79% N/A +14.52%
Class R2 (inception 12/11/06) N/A N/A N/A +1.88%*
Class R3 (inception 12/11/06) N/A N/A N/A +1.89%*
Class R4** (inception 4/24/03) +14.22% +13.41% +10.89% +15.53%
Class R5 (inception 12/11/06) N/A N/A N/A +2.04%*
Class W (inception 12/1/06) N/A N/A N/A +3.41%*
With sales charge
Class A (inception 4/24/03) +7.59% +6.79% +8.58% +13.55%
Class B (inception 4/24/03) +8.72% +7.35% +8.72% +13.85%
Class C (inception 4/24/03) +12.68% +11.32% +9.79% +14.42%
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6 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS
AT DEC. 31, 2006
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 4/24/03) +12.73% +16.47% +10.79% +15.15%
Class B (inception 4/24/03) +12.45% +15.68% +9.98% +14.27%
Class C (inception 4/24/03) +12.41% +15.48% +9.95% +14.24%
Class I (inception 7/15/04) +12.96% +16.78% N/A +14.20%
Class R2 (inception 12/11/06) N/A N/A N/A +0.16%*
Class R3 (inception 12/11/06) N/A N/A N/A +0.17%*
Class R4** (inception 4/24/03) +12.97% +16.74% +11.05% +15.38%
Class R5 (inception 12/11/06) N/A N/A N/A +0.18%*
Class W (inception 12/1/06) N/A N/A N/A +1.67%*
With sales charge
Class A (inception 4/24/03) +6.25% +9.78% +8.63% +13.31%
Class B (inception 4/24/03) +7.45% +10.68% +8.87% +13.70%
Class C (inception 4/24/03) +11.41% +14.48% +9.95% +14.24%
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.
** Effective Dec. 11, 2006, Class Y was renamed Class R4.
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RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 7
QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT
Below, Portfolio Managers Dimitris Bertsimas and Gina Mourtzinou discuss
RiverSource Disciplined Equity Fund's positioning and results for the six
months ended Jan. 31, 2007.
Q: How did RiverSource Disciplined Equity Fund perform for the annual
period?
A: RiverSource Disciplined Equity Fund's Class A shares (excluding sales
charge) returned 14.15% for the six months ended Jan. 31, 2007. The Fund
outperformed the Standard & Poor's 500 Index (S&P 500 Index), which
gained 13.75%, as well as the Lipper Large-Cap Core Funds Index,
representing the Fund's peer group, which returned 13.17%, for the same
period.
Q: What factors most significantly affected the Fund's performance?
A: The performance of the Fund is highly correlated with the performance of
our three quantitative investment models (momentum, value and quality).
The three models are combined through a sophisticated optimization
process that trades-off expected excess return and risk.
For the six-month reporting period, the momentum and the value model
outperformed the S&P 500 Index, with the momentum model taking the
strong lead. Meanwhile, the quality model underperformed, relative to
the S&P 500 Index.
FOR THE SIX-MONTH REPORTING PERIOD, THE MOMENTUM AND THE VALUE MODEL
OUTPERFORMED THE S&P 500 INDEX, WITH THE MOMENTUM MODEL TAKING THE
STRONG LEAD.
Contributing to performance was our significant positions in
telecommunication services and consumer discretionary, two of the
best-performing sectors over the period. On the flipside, the Fund's
position in energy, about 13.6% of the Fund, hurt performance since
energy was the worst-performing sector of the S&P 500 Index over the
six-month period.
Overall, the Fund's performance can be attributed to strong stock
selection. In terms of stock selection, our energy stocks performed very
well, even though the energy sector did poorly. Moreover, our stock
selection within telecommunication services was very strong, making this
sector the best performing sector of the Fund's portfolio. We also had
very strong selection within financials, health care and utilities.
Conversely, our stock selections within
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8 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
QUESTIONS & ANSWERS
consumer discretionary and consumer staples detracted. Finally we
maintained a position in information technology that was below that of
the S&P 500 Index, and this hurt performance, especially since our stock
selection within information technology was not especially strong.
IN TERMS OF STOCK SELECTION, OUR ENERGY STOCKS PERFORMED VERY WELL, EVEN
THOUGH THE ENERGY SECTOR DID POORLY.
Our risk modeling also contributed to the Fund's strong performance
relative to the S&P 500 Index and Lipper peer group. Our risk models
limit the size of individual holdings, as well as sector and industry
allocations, relative to the S&P 500 Index. For example, the portfolio's
weightings by sector and industry can never be more than 6% overweighted
or underweighted relative to the S&P 500 Index. We also apply additional
risk controls that impose constraints on market capitalization, price,
quality, turnover, transaction costs and other variables.
Finally, the Fund has maintained a small exposure to international
markets through iShares MSCI EAFE Index Fund and this also helped
performance. The Fund's position in iShares MSCI EAFE Index Fund was
established based on a separate asset allocation model.
Individual holdings that contributed the most to the Fund's return
include: AT&T and Verizon Communications, two telecom stocks picked
primarily by the value model; pharmaceutical company Merck & Co., which
was favored by all three models (i.e., momentum, value and quality);
financial companies Merrill Lynch & Co., a momentum model pick; and
Fannie Mae, primarily a value model selection. Finally, Chevron and
Exxon Mobil, two energy companies that are selections from the value and
quality models, were strong performers for the period.
Detractors from performance include Schlumberger, an energy company and
a momentum model pick that posted losses of more that 3% for the period,
and Archer-Daniels-Midland, a consumer staples company and a momentum
model pick that posted serious losses for the period (down 21%).
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RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 9
QUESTIONS & ANSWERS
Q: What changes did you make to the Fund's portfolio during the period?
A: As a result of stock selection during the period, the portfolio's sector
allocations changed somewhat. Overall portfolio turnover was 31% for the
six months. We made no significant changes to the portfolio over this
six-month period.
Q: How do you intend to manage the Fund in the coming months?
A: We continue to hold a positive view of the U.S. equity market. We think
conditions may be especially favorable for large-cap stocks, which carry
lower valuations on average than stocks of smaller companies. In
addition, large-caps tend to appeal to investors seeking lower risk
investments during what may be the last stage of the current economic
recovery and a period when economic growth is expected to slow in what
we would characterize as a "soft landing."
INVESTMENT TERM
SOFT LANDING: A term used to describe a rate of economic growth high
enough to avoid recession but slow enough to avoid high inflation.
For our part, we intend to continue seeking optimal returns for the Fund
through the style diversification offered by our three quantitative
investment models. We are equally convinced of the merit of our
multifaceted, disciplined approach to controlling risk in the portfolio.
We believe this combination of style diversification and rigorous risk
control will allow us to maintain the high quality of the Fund's
portfolio in whatever market conditions lie ahead.
Any specific securities mentioned are for illustrative purposes only and are
not a complete list of securities that have increased or decreased in value.
The views expressed in this statement reflect those of the portfolio
manager(s) only through the end of the period of the report as stated on the
cover and do not necessarily represent the views of RiverSource Investments,
LLC (RiverSource) or any subadviser to the Fund or any other person in the
RiverSource or subadviser organizations. Any such views are subject to change
at any time based upon market or other conditions and RiverSource disclaims
any responsibility to update such views. These views may not be relied on as
investment advice and, because investment decisions for a RiverSource Fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any RiverSource Fund.
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10 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
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 acquired funds expense ratio as of the
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, 2007.
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.
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RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 11
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2006 JAN. 31, 2007 THE PERIOD(a) EXPENSE RATIO
Class A
Actual(b) $1,000 $1,141.50 $5.56 1.03%
Hypothetical
(5% return before expenses) $1,000 $1,020.01 $5.24 1.03%
Class B
Actual(b) $1,000 $1,137.20 $9.70 1.80%
Hypothetical
(5% return before expenses) $1,000 $1,016.13 $9.15 1.80%
Class C
Actual(b) $1,000 $1,136.80 $9.69 1.80%
Hypothetical
(5% return before expenses) $1,000 $1,016.13 $9.15 1.80%
Class I
Actual(b) $1,000 $1,143.70 $3.62 .67%
Hypothetical
(5% return before expenses) $1,000 $1,021.83 $3.41 .67%
Class R2
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,017.74 $7.53 1.48%
Class R3
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,019.00 $6.26 1.23%
Class R4
Actual(b) $1,000 $1,142.20 $4.64(d) .86%
Hypothetical
(5% return before expenses) $1,000 $1,020.87 $4.38(d) .86%
Class R5
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,021.48 $3.77 .74%
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12 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2006 JAN. 31, 2007 THE PERIOD(a) EXPENSE RATIO
Class W
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,019.46 $5.80 1.14%
(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 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Jan. 31, 2007:
+14.15% for Class A, +13.72% for Class B, +13.68% for Class C, +14.37%
for Class I and +14.22% for Class R4.
(c) The actual values and expenses paid are not presented because Class R2,
Class R3, Class R5 and Class W do not have a full six months of history.
The inception date of Class R2, Class R3 and Class R5 is Dec. 11, 2006.
The inception date of Class W is Dec. 1, 2006.
(d) In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee
structure under the transfer agent agreement from an account-based fee
to an asset-based fee, and adopting a plan administration services
agreement. In addition, the investment manager and its affiliates have
contractually agreed to waive certain fees and to absorb certain
expenses until July 31, 2007, unless sooner terminated at the discretion
of the Fund's Board, such that net expenses, (excluding fees and
expenses of acquired funds) before giving effect to any performance
incentive adjustment, will not exceed 0.84% for Class R4. Any amounts
waived will not be reimbursed by the Fund. These changes were effective
Dec. 11, 2006. If these changes had been in place for the six-month
period ended Jan. 31, 2007, actual expenses paid for Class R4 would have
been $4.54 and the hypothetical expenses paid for Class R4 would have
been $4.28.
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RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 13
INVESTMENTS IN SECURITIES
JAN. 31, 2007 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
COMMON STOCKS (99.6%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (2.8%)
Boeing 203,658 $ 18,239,610
Lockheed Martin 109,106 10,604,012
United Technologies 479,944 32,645,792
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Total 61,489,414
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AIR FREIGHT & LOGISTICS (0.3%)
FedEx 38,141 4,210,767
United Parcel Service Cl B 31,962 2,310,213
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Total 6,520,980
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AUTO COMPONENTS (0.2%)
Cooper Tire & Rubber 134,474 2,150,240
Johnson Controls 22,977 2,124,453
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Total 4,274,693
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AUTOMOBILES (1.2%)
Ford Motor 949,756 7,721,516
General Motors 375,737 12,339,203
Harley-Davidson 107,706 7,353,089
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Total 27,413,808
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BEVERAGES (1.8%)
Anheuser-Busch
Companies 96,052 4,895,770
Coca-Cola 473,330 22,663,040
Pepsi Bottling Group 39,400 1,246,222
PepsiCo 175,615 11,457,123
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Total 40,262,155
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BIOTECHNOLOGY (0.1%)
Celgene 46,253(b) 2,482,861
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CAPITAL MARKETS (3.6%)
Bear Stearns Companies 14,569 2,401,700
Lehman Brothers
Holdings 328,565 27,021,186
Merrill Lynch & Co 426,443 39,898,007
Morgan Stanley 133,031 11,013,636
T Rowe Price Group 3,814 183,034
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Total 80,517,563
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COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
CHEMICALS (0.7%)
Air Products & Chemicals 55,408 $ 4,136,761
Ashland 8,000 556,400
Dow Chemical 80,450 3,341,893
Eastman Chemical 21,200 1,241,472
Ecolab 67,323 2,955,480
PPG Inds 17,500 1,160,075
Sigma-Aldrich 59,672 2,264,552
--------------
Total 15,656,633
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COMMERCIAL BANKS (1.6%)
Comerica 80,681 4,784,383
Fifth Third Bancorp 10,200 406,980
First Horizon Natl 64,839 2,826,980
Huntington Bancshares 41,800 973,104
KeyCorp 80,436 3,070,242
Natl City 266,234(e) 10,076,957
PNC Financial Services
Group 118,696 8,756,204
US Bancorp 128,076 4,559,506
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Total 35,454,356
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COMMERCIAL SERVICES & SUPPLIES (0.3%)
Waste Management 194,515 7,387,680
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COMMUNICATIONS EQUIPMENT (0.6%)
QUALCOMM 238,880 8,996,221
Tellabs 315,628(b) 3,178,374
--------------
Total 12,174,595
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COMPUTERS & PERIPHERALS (0.6%)
Lexmark Intl Cl A 63,242(b) 3,986,143
Network Appliance 232,374(b) 8,737,263
--------------
Total 12,723,406
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CONTAINERS & PACKAGING (0.1%)
Pactiv 98,053(b) 3,180,839
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DISTRIBUTORS (0.2%)
Genuine Parts 81,078 3,852,827
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See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
14 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
DIVERSIFIED FINANCIAL SERVICES (5.0%)
CIT Group 120,412 $ 7,099,492
Citigroup 977,792 53,905,672
iShares MSCI EAFE
Index Fund 373,760 27,732,992
JPMorgan Chase & Co 429,904 21,895,011
--------------
Total 110,633,167
- ------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (7.5%)
AT&T 2,947,492 110,914,123
Qwest
Communications Intl 372,093(b) 3,032,558
Verizon
Communications 1,309,736 50,451,031
--------------
Total 164,397,712
- ------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.8%)
Allegheny Energy 60,803(b) 2,828,556
American Electric Power 112,566 4,899,998
Entergy 49,592 4,604,617
FPL Group 97,033 5,496,919
--------------
Total 17,830,090
- ------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.2%)
Cooper Inds Cl A 12,893 1,178,291
Rockwell Automation 39,943 2,444,911
--------------
Total 3,623,202
- ------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (2.8%)
CVS 99,031 3,332,393
Kroger 421,369(d) 10,787,046
Safeway 318,606 11,479,374
SYSCO 74,978 2,590,490
Wal-Mart Stores 717,641 34,224,300
--------------
Total 62,413,603
- ------------------------------------------------------------------------------
FOOD PRODUCTS (1.0%)
Archer-Daniels-Midland 159,185 5,093,920
Campbell Soup 99,344 3,822,757
ConAgra Foods 121,107 3,113,661
Kellogg 30,957 1,525,251
Sara Lee 375,839 6,445,639
Tyson Foods Cl A 138,600 2,460,150
WM Wrigley Jr 8,183 421,588
--------------
Total 22,882,966
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
GAS UTILITIES (0.2%)
Nicor 46,395 $ 2,110,973
Peoples Energy 32,000 1,393,600
--------------
Total 3,504,573
- ------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.8%)
Becton Dickinson & Co 44,419 3,417,598
Biomet 76,069 3,222,283
Medtronic 219,814 11,749,058
--------------
Total 18,388,939
- ------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (1.0%)
Cardinal Health 85,343 6,095,197
CIGNA 66,967 8,866,430
Health Management
Associates Cl A 67,300 1,308,985
Humana 40,391(b) 2,241,701
Quest Diagnostics 38,786 2,035,489
Tenet Healthcare 261,345(b) 1,845,096
--------------
Total 22,392,898
- ------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.0%)
Darden Restaurants 50,646 1,982,284
Hilton Hotels 282,803 10,008,399
Intl Game Technology 121,913 5,298,339
Marriott Intl Cl A 95,852 4,614,315
--------------
Total 21,903,337
- ------------------------------------------------------------------------------
HOUSEHOLD DURABLES (1.2%)
Centex 82,847 4,448,055
DR Horton 218,489 6,349,290
KB HOME 33,431 1,812,629
Lennar Cl A 110,123 5,988,489
Pulte Homes 188,605 6,476,696
Stanley Works 28,742 1,645,767
Whirlpool 4,808 439,595
--------------
Total 27,160,521
- ------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (0.6%)
Kimberly-Clark 190,099 13,192,871
- ------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
AES 159,230(b) 3,310,392
- ------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (1.2%)
3M 317,197 23,567,737
Textron 29,972 2,792,491
--------------
Total 26,360,228
- ------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 15
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
INSURANCE (3.9%)
Allstate 338,758 $ 20,379,681
Ambac Financial Group 60,196 5,303,268
Chubb 34,748 1,808,286
Cincinnati Financial 28,900 1,292,986
Genworth Financial Cl A 201,508 7,032,629
Lincoln Natl 86,117 5,781,895
Marsh & McLennan
Companies 194,762 5,745,479
MBIA 75,996 5,458,793
MetLife 189,716 11,785,158
Progressive 95,073 2,204,743
St. Paul Travelers
Companies 165,423 8,411,760
Torchmark 47,851 3,109,836
UnumProvident 313,431 6,895,482
--------------
Total 85,209,996
- ------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (1.5%)
Google Cl A 65,426(b) 32,798,054
- ------------------------------------------------------------------------------
IT SERVICES (1.0%)
Affiliated Computer
Services Cl A 19,858(b) 972,843
Cognizant Technology
Solutions Cl A 104,056(b) 8,874,936
Convergys 120,400(b) 3,135,216
Electronic Data Systems 49,512 1,302,661
Paychex 98,702 3,949,067
Sabre Holdings Cl A 59,444 1,920,636
Unisys 153,647(b) 1,324,437
--------------
Total 21,479,796
- ------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (0.6%)
Brunswick 50,000 1,705,500
Eastman Kodak 205,970(e) 5,326,384
Mattel 231,076 5,629,012
--------------
Total 12,660,896
- ------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.1%)
Thermo Fisher Scientific 60,622(b) 2,900,763
- ------------------------------------------------------------------------------
MACHINERY (2.6%)
Caterpillar 334,154 21,409,246
Cummins 29,804(e) 4,010,426
Deere & Co 54,363 5,451,522
Eaton 65,117 5,101,917
Illinois Tool Works 40,630 2,071,724
Ingersoll-Rand Cl A 119,294(c) 5,115,327
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
MACHINERY (CONT.)
Navistar Intl 54,900(b) $ 2,428,776
PACCAR 156,360 10,455,793
Terex 36,975(b) 2,103,508
--------------
Total 58,148,239
- ------------------------------------------------------------------------------
MEDIA (5.9%)
CBS Cl B 244,280 7,614,208
Comcast Cl A 1,025,096(b) 45,432,255
DIRECTV Group 753,537(b) 18,378,767
Gannett 131,687 7,656,282
Interpublic Group of
Companies 108,200(b) 1,423,912
New York Times Cl A 70,860(e) 1,636,157
News Corp Cl A 1,085,373 25,234,922
Time Warner 836,969 18,304,512
Tribune 83,709 2,556,473
Univision
Communications Cl A 58,092(b) 2,074,465
--------------
Total 130,311,953
- ------------------------------------------------------------------------------
METALS & MINING (1.1%)
Alcoa 107,764 3,480,777
Allegheny Technologies 12,509 1,294,556
Freeport-McMoRan
Copper & Gold Cl B 119,238 6,857,377
Nucor 46,942 3,029,637
Phelps Dodge 58,234 7,197,723
United States Steel 26,643 2,224,424
--------------
Total 24,084,494
- ------------------------------------------------------------------------------
MULTILINE RETAIL (2.1%)
Dollar General 151,012 2,558,143
Family Dollar Stores 36,123 1,170,385
Federated Department
Stores 136,059 5,645,088
JC Penney 27,940 2,269,846
Kohl's 199,521(b) 14,148,034
Sears Holdings 113,893(b) 20,119,199
--------------
Total 45,910,695
- ------------------------------------------------------------------------------
MULTI-UTILITIES (0.7%)
CenterPoint Energy 210,603 3,635,008
CMS Energy 57,088(b) 952,799
PG&E 133,580 6,235,514
Sempra Energy 35,402 2,031,367
TECO Energy 40,396 685,116
Xcel Energy 98,866 2,306,544
--------------
Total 15,846,348
- ------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
16 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
OIL, GAS & CONSUMABLE FUELS (13.9%)
Anadarko Petroleum 191,961 $ 8,398,294
Apache 132,448 9,664,731
Chevron 1,201,577 87,570,931
ConocoPhillips 850,604 56,488,612
Exxon Mobil 1,451,226 107,535,846
Hess 17,763 959,024
Marathon Oil 165,786 14,977,107
Occidental Petroleum 401,348 18,606,493
--------------
Total 304,201,038
- ------------------------------------------------------------------------------
PERSONAL PRODUCTS (0.2%)
Alberto-Culver 41,634 952,170
Avon Products 106,854 3,674,709
--------------
Total 4,626,879
- ------------------------------------------------------------------------------
PHARMACEUTICALS (11.9%)
Abbott Laboratories 551,435 29,226,055
Bristol-Myers Squibb 726,024 20,902,231
Forest Laboratories 41,862(b) 2,348,877
Johnson & Johnson 1,173,043 78,359,272
King Pharmaceuticals 212,443(b) 3,794,232
Merck & Co 1,820,542 81,469,254
Pfizer 1,568,943 41,169,064
Schering-Plough 118,547 2,963,675
--------------
Total 260,232,660
- ------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (1.7%)
Apartment Investment &
Management Cl A 47,527 2,976,616
AvalonBay Communities 38,905 5,771,946
Boston Properties 57,543 7,255,597
Equity Office Properties
Trust 219,552 12,196,114
Kimco Realty 60,365 2,994,104
Vornado Realty Trust 54,501 6,668,197
--------------
Total 37,862,574
- ------------------------------------------------------------------------------
ROAD & RAIL (0.4%)
Avis Budget Group 13,026 331,642
CSX 112,083 4,123,534
Norfolk Southern 110,087 5,465,819
--------------
Total 9,920,995
- ------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.9%)
Intel 428,480 8,980,941
Micron Technology 450,347(b) 5,831,994
NVIDIA 194,519(b) 5,962,007
--------------
Total 20,774,942
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SOFTWARE (4.5%)
Autodesk 51,339(b) $ 2,244,541
Citrix Systems 101,198(b) 3,204,941
Electronic Arts 110,928(b) 5,546,400
Intuit 171,735(b) 5,401,066
Microsoft 1,182,172 36,481,828
Oracle 2,704,980(b) 46,417,456
--------------
Total 99,296,232
- ------------------------------------------------------------------------------
SPECIALTY RETAIL (3.3%)
AutoNation 46,675(b) 1,047,854
Bed Bath & Beyond 42,853(b) 1,807,968
Best Buy 88,223 4,446,439
Gap 46,100 883,737
Home Depot 1,207,701(e) 49,201,739
Lowe's Companies 295,879 9,974,081
Office Depot 34,575(b) 1,292,759
OfficeMax 45,278 2,186,475
RadioShack 76,600 1,692,860
--------------
Total 72,533,912
- ------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (0.8%)
Coach 79,115(b) 3,628,214
Jones Apparel Group 45,056 1,539,113
Liz Claiborne 54,222 2,407,457
Nike Cl B 55,437 5,477,729
VF 69,819 5,297,168
--------------
Total 18,349,681
- ------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (4.4%)
Countrywide Financial 73,675 3,203,389
Fannie Mae 864,002 48,842,033
Freddie Mac 370,677 24,068,058
MGIC Investment 83,228(e) 5,136,832
Washington Mutual 371,876 16,581,951
--------------
Total 97,832,263
- ------------------------------------------------------------------------------
TOBACCO (0.5%)
Reynolds American 65,229 4,207,271
UST 119,069 6,839,323
--------------
Total 11,046,594
- ------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS (0.1%)
WW Grainger 26,000 2,018,900
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $1,941,225,831) $2,199,434,213
- ------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 17
MONEY MARKET FUND (1.4%)(f)
SHARES VALUE(a)
RiverSource Short-Term
Cash Fund 30,450,056(g) $ 30,450,056
- ------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $30,450,056) $ 30,450,056
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $1,971,675,887)(h) $2,229,884,269
==============================================================================
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by 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, 2007,
the value of foreign securities represented 0.2% of net assets.
(d) Partially pledged as initial margin deposit on the following open stock
index futures contracts (see Note 6 to the financial statements):
TYPE OF SECURITY CONTRACTS
------------------------------------------------------------------------
PURCHASE CONTRACTS
S&P 500 Index, March 2007 10
(e) At Jan. 31, 2007, security was partially or fully on loan. See Note 5 to
the financial statements.
(f) Cash collateral received from security lending activity is invested in
an affiliated money market fund and represents 1.1% of net assets. See
Note 5 to the financial statements. 0.3% of net assets is the Fund's
cash equivalent position.
(g) Affiliated Money Market Fund -- See Note 7 to the financial statements.
(h) At Jan. 31, 2007, the cost of securities for federal income tax purposes
was approximately $1,971,676,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $284,985,000
Unrealized depreciation (26,777,000)
-----------------------------------------------------------------------
Net unrealized appreciation $258,208,000
-----------------------------------------------------------------------
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's
Public Reference Room in Washington, DC (information on the operations
of the Public Reference Room may be obtained by calling 1-800-SEC-0330);
and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form
N-Q, can be found at riversource.com/funds.
- ------------------------------------------------------------------------------
18 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JAN. 31, 2007 (UNAUDITED)
ASSETS
Investments in securities, at value (Note 1)
Unaffiliated issuers* (identified cost $1,941,225,831) $2,199,434,213
Affiliated money market fund (identified cost $30,450,056) (Note 7) 30,450,056
- ----------------------------------------------------------------------------------------
Total investments in securities (identified cost $1,971,675,887) 2,229,884,269
Capital shares receivable 175,681
Dividends and accrued interest receivable 3,379,357
Receivable for investment securities sold 107,253,482
- ----------------------------------------------------------------------------------------
Total assets 2,340,692,789
- ----------------------------------------------------------------------------------------
LIABILITIES
Capital shares payable 43,815
Payable for investment securities purchased 107,459,099
Payable upon return of securities loaned (Note 5) 24,313,800
Accrued investment management services fee 35,112
Accrued distribution fee 12,171
Accrued transfer agency fee 10,041
Accrued administrative services fee 3,211
Accrued plan administration services fee 1,587
Other accrued expenses 98,718
- ----------------------------------------------------------------------------------------
Total liabilities 131,977,554
- ----------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $2,208,715,235
========================================================================================
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 19
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
JAN. 31, 2007 (UNAUDITED)
REPRESENTED BY
Capital stock -- $.01 par value (Note 1) $ 3,104,606
Additional paid-in capital 1,919,954,962
Undistributed net investment income 3,100,606
Accumulated net realized gain (loss) 24,298,911
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Note 6) 258,256,150
- -----------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $2,208,715,235
=================================================================================================================
Net assets applicable to outstanding shares: Class A $1,456,819,294
Class B $ 79,666,336
Class C $ 3,014,648
Class I $ 435,610,026
Class R2 $ 4,698
Class R3 $ 4,699
Class R4 $ 233,169,486
Class R5 $ 4,704
Class W $ 421,344
Net asset value per share of outstanding capital stock: Class A shares 204,992,127 $ 7.11
Class B shares 11,327,478 $ 7.03
Class C shares 429,335 $ 7.02
Class I shares 60,951,070 $ 7.15
Class R2 shares 661 $ 7.11
Class R3 shares 661 $ 7.11
Class R4 shares 32,699,399 $ 7.13
Class R5 shares 661 $ 7.12
Class W shares 59,255 $ 7.11
- -----------------------------------------------------------------------------------------------------------------
* Including securities on loan, at value (Note 5) $ 23,731,566
- -----------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
20 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JAN. 31, 2007 (UNAUDITED)
INVESTMENT INCOME
Income:
Dividends $22,945,328
Interest 248,575
Income distributions from affiliated money market fund (Note 7) 947,447
Fee income from securities lending (Note 5) 43,467
- --------------------------------------------------------------------------------------------------
Total income 24,184,817
- --------------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 6,516,344
Distribution fee
Class A 1,781,376
Class B 384,820
Class C 14,497
Class R2 3
Class R3 2
Class W 120
Transfer agency fee
Class A 813,397
Class B 52,740
Class C 1,895
Class R4 99,323
Class W 96
Service fee -- Class R4 93,450
Administrative services fees and expenses 570,309
Plan administration services fee
Class R2 2
Class R3 2
Class R4 80,433
Compensation of board members 19,966
Custodian fees 113,470
Printing and postage 65,550
Registration fees 50,315
Professional fees 17,603
Other 75,557
- --------------------------------------------------------------------------------------------------
Total expenses 10,751,270
Expenses waived/reimbursed by the Investment Manager and its affiliates (Note 2) (360,812)
- --------------------------------------------------------------------------------------------------
10,390,458
Earnings and bank fee credits on cash balances (Note 2) (75,521)
- --------------------------------------------------------------------------------------------------
Total net expenses 10,314,937
- --------------------------------------------------------------------------------------------------
Investment income (loss) -- net 13,869,880
- --------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 21
STATEMENT OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JAN. 31, 2007 (UNAUDITED)
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (Note 3) $ 56,921,359
Futures contracts 4,611,145
- -------------------------------------------------------------------------------------
Net realized gain (loss) on investments 61,532,504
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 206,899,262
- -------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 268,431,766
- -------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $282,301,646
=====================================================================================
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
22 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
JAN. 31, 2007 JULY 31, 2006
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 13,869,880 $ 8,709,265
Net realized gain (loss) on investments 61,532,504 122,200,444
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 206,899,262 (121,608,827)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 282,301,646 9,300,882
- -------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (11,771,441) (354,341)
Class B (119,375) (19,051)
Class C (7,167) (767)
Class I (4,503,510) (1,329,352)
Class R2 (53) N/A
Class R3 (53) N/A
Class R4 (2,093,616) (391)
Class R5 (54) N/A
Class W (4,357) N/A
Net realized gain
Class A (98,698,411) (1,913,998)
Class B (5,457,193) (540,285)
Class C (199,900) (14,293)
Class I (28,282,528) (5,176,835)
Class R2 (338) N/A
Class R3 (338) N/A
Class R4 (15,612,336) (1,940)
Class R5 (338) N/A
Class W (27,397) N/A
- -------------------------------------------------------------------------------------------------------------
Total distributions (166,778,405) (9,351,253)
- -------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 23
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
JAN. 31, 2007 JULY 31, 2006
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Proceeds from sales
Class A shares (Note 2) $ 41,336,710 $ 57,119,187
Class B shares 6,236,231 8,354,913
Class C shares 451,294 459,648
Class I shares 153,195,787 127,309,091
Class R2 shares 5,000 N/A
Class R3 shares 5,000 N/A
Class R4 shares 87,936,016 1,874,060
Class R5 shares 5,000 N/A
Class W shares 414,549 N/A
Fund merger (Note 9)
Class A shares N/A 1,396,617,869
Class B shares N/A 85,982,462
Class C shares N/A 2,432,014
Class I shares N/A 37,756,460
Class R4 shares N/A 274,057,962
Reinvestment of distributions at net asset value
Class A shares 101,787,974 2,250,671
Class B shares 5,504,827 553,930
Class C shares 204,516 13,921
Class I shares 32,784,090 6,505,529
Class R4 shares 17,705,952 1,577
Class W shares 31,356 N/A
Payments for redemptions
Class A shares (130,816,077) (116,576,502)
Class B shares (Note 2) (9,733,050) (29,916,465)
Class C shares (Note 2) (519,337) (373,393)
Class I shares (19,999,096) (1,598,499)
Class R4 shares (113,810,943) (51,682,981)
Class W shares (3) N/A
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 172,725,796 1,801,141,454
- ------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 288,249,037 1,801,091,083
Net assets at beginning of period 1,920,466,198 119,375,115
- ------------------------------------------------------------------------------------------------------------
Net assets at end of period $2,208,715,235 $1,920,466,198
============================================================================================================
Undistributed net investment income $ 3,100,606 $ 7,730,352
- ------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
24 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
(Unaudited as of Jan. 31, 2007)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. 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 and Class R4 shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class R4 shares have no sales charge and are offered only to qualifying
institutional investors.
In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee structure
under the transfer agent agreement from account-based to asset-based, and
adopting a plan administration services agreement. These changes were
effective Dec. 11, 2006.
The Fund offers an additional class of shares, Class I, exclusively to certain
institutional investors. Class I shares have no sales charge and are made
available through a separate prospectus supplement provided to investors
eligible to purchase the shares. At Jan. 31, 2007, Ameriprise Financial, Inc.
(Ameriprise Financial) and the affiliated funds-of-funds owned 100% of Class I
shares.
Effective Dec.11, 2006, the Fund offers additional classes of shares, Class
R2, Class R3 and Class R5, offered to certain institutional investors. These
shares are sold without a front-end sales charge or CDSC. At Jan. 31, 2007,
Ameriprise Financial owned 100% of Class R2, Class R3 and Class R5 shares.
Effective Dec. 1, 2006, the Fund offers an additional class of shares, Class
W, offered through qualifying discretionary accounts. Class W shares are sold
without a front-end sales charge or CDSC.
At Jan. 31, 2007, Ameriprise Financial and the affiliated funds-of-funds owned
approximately 20% of the total outstanding Fund shares.
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 25
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 fees) differ among classes. Income, expenses (other
than class specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from
actual results.
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Pursuant to procedures adopted by the Board of Directors of the funds,
Ameriprise Financial utilizes Fair Value Pricing (FVP). FVP determinations are
made in good faith in accordance with these procedures. If a development or
event is so significant that there is a reasonably high degree of certainty
that the effect of the development or event has actually caused the closing
price to no longer reflect the actual value, the closing prices, as determined
at the close of the applicable foreign market, may be adjusted to reflect the
fair value of the affected foreign securities as of the close of the New York
Stock Exchange. Significant events include material movements in the U.S.
securities markets prior to the opening of foreign markets on the following
trading day. FVP results in an estimated price that reasonably reflects the
current market conditions in order to value the portfolio holdings such that
shareholder transactions receive a fair net asset value. Short term securities
maturing in more than 60 days from the valuation date are valued at the market
price or approximate market value based on current interest rates; those
maturing in 60 days or less are valued at amortized cost.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options
traded on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
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.
- ------------------------------------------------------------------------------
26 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
The Fund also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund
will realize a gain or loss when the option transaction expires or closes.
When an option is exercised, the proceeds on sales for a written call option,
the purchase cost for a written put option or the cost of a security for a
purchased put or call option is adjusted by the amount of premium received or
paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy
and sell financial futures contracts traded on any U.S. or foreign exchange.
The Fund also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options
include the possibility of an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
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 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 exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 27
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of
their duties to the Fund. In addition, certain of the Fund's contracts with
its service providers contain general indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown since the amount of any
future claims that may be made against the Fund cannot be determined and the
Fund has no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes, and losses deferred due
to "wash sale" transactions. 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
On Sept. 20, 2006, the Financial Accounting Standards Board ("FASB") released
Statement of Financial Accounting Standards No. 157 "Fair Value Measurements"
("SFAS 157"). SFAS 157 establishes an authoritative definition of fair value,
sets out a framework for measuring fair value, and requires additional
disclosures about fair-value measurements. The application of SFAS 157 is
required for fiscal years beginning after Nov. 15, 2007 and interim periods
within those fiscal years. The impact of SFAS 157 on the Fund's financial
statements is being evaluated.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN
48 clarifies the accounting for uncertainty in income taxes recognized in
accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48
prescribes a two-step process to recognize and measure a tax position taken or
expected to be taken in a tax return. The first step is to determine whether a
tax position has met the more-likely-than-not recognition threshold and the
second step is to measure a tax position that meets the threshold to determine
the amount of benefit to recognize. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after Dec. 15, 2006. Tax positions of the Fund
- ------------------------------------------------------------------------------
28 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
are being evaluated to determine the impact, if any, to the Fund. The adoption
of FIN 48 is not anticipated to have a material impact on the Fund.
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. On March 7, 2006, an additional
dividend was paid before the merger to ensure that current shareholders of
RiverSource Disciplined Equity Fund would not experience a dilution in their
share of the Fund's income or capital gains.
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
Under an Investment Management Services Agreement, RiverSource Investments,
LLC (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 based on a comparison of the performance of Class A
shares of the Fund to 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 increased the fee by
$282,205 for the six months ended Jan. 31, 2007.
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.
Other expenses in the amount of $21,894 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.
Compensation of Board members includes, for the former Board Chair,
compensation as well as retirement benefits. Certain other aspects of the
former Board Chair's compensation, including health benefits and payment of
certain other expenses, are included under other expenses.
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 29
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.
Professional fees include fees paid by the Fund for legal services and
independent auditor services.
Under a Transfer Agency Agreement, RiverSource Service Corporation (the
Transfer Agent) maintains shareholder accounts and records. The Fund pays the
Transfer Agent an annual fee per shareholder account for this service as
follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as
Class R4, the fee structure under the Transfer Agency Agreement was revised
from an account-based fee for Class Y to an asset-based fee for Class R4. The
Fund will pay the Transfer Agent an annual asset-based fee at a rate of 0.05%
of the Fund's average daily net assets attributable to Class R4 shares. Prior
to Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee
of $17.50 per shareholder account.
In addition, with the introduction of Class R2, Class R3, Class R5 and Class W
shares, the Fund will pay 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 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.
Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate
per shareholder account of $1. This amount is included in the transfer agency
fee on the statement of operations. Effective Dec. 11, 2006, this fee was
eliminated.
The Transfer Agent charges an annual closed account 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.
The Fund has agreements with Ameriprise Financial Services, Inc. and
RiverSource 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 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.
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30 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was
adopted for the restructured Class R4 and the introduction of Class R2 and
Class R3. The fee is calculated at a rate of 0.25% of the Fund's average daily
net assets attributable to Class R2, Class R3 and Class R4 shares.
Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid
the Distributor a fee for service provided to shareholders by the Distributor
and other servicing agents with respect to those shares. The fee was
calculated at a rate of 0.10% of the Fund's average daily net assets
attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was
terminated.
Sales charges received by the Distributor for distributing Fund shares were
$304,595 for Class A, $24,021 for Class B and $279 for Class C for the six
months ended Jan. 31, 2007.
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.
For the six months ended Jan. 31, 2007, the Investment Manager and its
affiliates waived certain fees and expenses to 1.03% for Class A, 1.80% for
Class B, 1.80% for Class C, 0.67% for Class I, 1.48% for Class R2, 1.23% for
Class R3, 0.86% for Class R4, 0.74% for Class R5 and 1.14% for Class W. Of
these waived fees and expenses, the transfer agency fees waived for Class A,
Class B, Class C and Class R4 were $34,069, $1,147, $30,680 and $78,
respectively, and the management fees waived at the Fund level were $294,838.
In addition, the Investment Manager and its affiliates have agreed to waive
certain fees and expenses until July 31, 2007, 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 1.00% for Class A, 1.78% for Class B, 1.77% for
Class C, 0.64% for Class I, 1.46% for Class R2, 1.21% for Class R3, 0.84% for
Class R4, 0.71% for Class R5 and 1.11% for Class W of the Fund's average daily
net assets.
During the six months ended Jan. 31, 2007, the Fund's custodian and transfer
agency fees were reduced by $75,521 as a result of earnings and bank fee
credits from overnight cash balances. The Fund also pays custodian fees to
Ameriprise Trust Company, an affiliate of Ameriprise Financial.
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RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 31
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short term
obligations) aggregated $664,321,031 (including $1,617,217,195 from
RiverSource Stock Fund that was acquired in the fund merger as described in
Note 9) and $641,009,500, respectively, for the six months ended Jan. 31,
2007. Realized gains and losses are determined on an identified cost basis.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
SIX MONTHS ENDED JAN. 31, 2007
CLASS A CLASS B CLASS C CLASS I CLASS R2(a)
- ---------------------------------------------------------------------------------------------------------
Sold 5,809,083 887,590 65,121 21,862,943 661
Issued for reinvested
distributions 14,582,804 796,646 29,640 4,670,098 --
Redeemed (18,467,535) (1,396,334) (73,530) (2,807,078) --
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,924,352 287,902 21,231 23,725,963 661
- ---------------------------------------------------------------------------------------------------------
CLASS R3(a) CLASS R4(b) CLASS R5(a) CLASS W(c)
- ---------------------------------------------------------------------------------------------------------
Sold 661 12,749,298 661 54,763
Issued for reinvested
distributions -- 2,529,421 -- 4,492
Redeemed -- (15,745,979) -- --
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) 661 (467,260) 661 59,255
- ---------------------------------------------------------------------------------------------------------
YEAR ENDED JULY 31, 2006
CLASS A CLASS B CLASS C CLASS I CLASS R2
- ---------------------------------------------------------------------------------------------------------
Sold 8,536,165 1,250,216 68,880 18,763,732 N/A
Fund merger 207,275,407 12,879,602 364,574 5,576,952 N/A
Issued for reinvested
distributions 337,195 83,745 2,104 969,971 N/A
Redeemed (17,270,329) (4,576,044) (55,973) (237,632) N/A
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) 198,878,438 9,637,519 379,585 25,073,023 N/A
- ---------------------------------------------------------------------------------------------------------
CLASS R3 CLASS R4(b) CLASS R5 CLASS W
- ---------------------------------------------------------------------------------------------------------
Sold N/A 276,369 N/A N/A
Fund merger N/A 40,564,166 N/A N/A
Issued for reinvested
distributions N/A 235 N/A N/A
Redeemed N/A (7,679,229) N/A N/A
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) N/A 33,161,541 N/A N/A
- ---------------------------------------------------------------------------------------------------------
(a) Inception date is Dec. 11, 2006.
(b) Effective Dec. 11, 2006, Class Y was renamed Class R4.
(c) Inception date is Dec. 1, 2006.
- ------------------------------------------------------------------------------
32 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
5. LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend securities
representing up to one-third of the value of its total assets (which includes
collateral for securities on loan) to broker-dealers, banks, or other
institutional borrowers of securities. The Fund receives collateral in the
form of cash and U.S. government securities, equal to at least 100% of the
value of securities loaned, which is marked to the market value of the loaned
securities daily until the securities are returned, e.g., if the value of the
securities on loan increases, additional cash collateral is provided by the
borrower. The Investment Manager serves as securities lending agent for the
Fund under the investment management services agreement pursuant to which the
Fund has agreed to reimburse the Investment Manager for expenses incurred by
it in connection with the lending program, and pursuant to guidelines adopted
by and under the oversight of the Board. At Jan. 31, 2007, securities valued
at $23,731,566 were on loan to brokers. For collateral, the Fund received
$24,313,800 in cash. Cash collateral received is invested in an affiliated
money market fund and short-term securities, including U.S. government
securities or other high-grade debt obligations, which are included in the
"Investments in securities." Income from securities lending amounted to
$43,467 for the six months ended Jan. 31, 2007. The risks to the Fund of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
6. STOCK INDEX FUTURES CONTRACTS
At Jan. 31, 2007, investments in securities included securities valued at
$2,560,000 that were pledged as collateral to cover initial margin deposits on
10 open purchase contracts. The notional market value of the open purchase
contracts at Jan. 31, 2007 was $3,607,500 with a net unrealized loss of
$28,085. See "Summary of significant accounting policies" and "Notes to
investments in securities."
7. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash
Fund, a money market fund established for the exclusive use of the RiverSource
funds and other institutional clients of RiverSource Investments.
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RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 33
8. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The agreement went into effect Sept. 19, 2006. The Fund
must maintain asset coverage for borrowings of at least 300%. The agreement,
which enables the Fund to participate with other RiverSource funds, permits
borrowings up to $500 million, collectively. Interest is charged to each Fund
based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. 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. Prior to this agreement, the
Fund paid a commitment fee equal to its pro rata share of the amount of the
credit facility at a rate of 0.07% per annum. The Fund had no borrowings under
the facility outstanding during the six months ended Jan. 31, 2007.
9. FUND MERGER
At the close of business on March 10, 2006, RiverSource Disciplined Equity
Fund acquired the assets and assumed the identified liabilities of RiverSource
Stock Fund. The reorganization was completed after shareholders approved the
plan on Feb. 15, 2006.
The aggregate net assets of RiverSource Disciplined Equity Fund immediately
before the acquisition were $207,410,855 and the combined net assets
immediately after the acquisition were $2,004,257,622.
The merger was accomplished by a tax-free exchange of 87,585,087 shares of
RiverSource Stock Fund valued at $1,796,846,767.
In exchange for the RiverSource Stock Fund shares and net assets, RiverSource
Disciplined Equity Fund issued the following number of shares:
SHARES
- ------------------------------------------------------------------------------
Class A 207,275,407
Class B 12,879,602
Class C 364,574
Class I 5,576,952
Class Y 40,564,166
- ------------------------------------------------------------------------------
RiverSource Stock Fund's net assets after adjustments for any permanent
book-to-tax differences at the merger date were as follows, which include the
following amounts of capital stock, unrealized appreciation, accumulated net
realized loss and undistributed net income.
ACCUMULATED
TOTAL CAPITAL UNREALIZED NET REALIZED UNDISTRIBUTED
NET ASSETS STOCK APPRECIATION LOSS NET INCOME
- --------------------------------------------------------------------------------------------------
RiverSource
Stock Fund $1,796,846,767 $1,638,521,442 $166,822,042 $(8,526,929) $30,212
- --------------------------------------------------------------------------------------------------
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34 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
10. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs
allege that they are investors in several American Express Company mutual
funds and they purport to bring the action derivatively on behalf of those
funds under the Investment Company Act of 1940. The plaintiffs allege that
fees allegedly paid to the defendants by the funds for investment advisory and
administrative services are excessive. The plaintiffs seek remedies including
restitution and rescission of investment advisory and distribution agreements.
The plaintiffs voluntarily agreed to transfer this case to the United States
District Court for the District of Minnesota. In response to our motion to
dismiss the complaint, the Court dismissed one of plaintiffs' four claims and
granted plaintiffs limited discovery. Discovery is currently set to end in
March 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)), the parent company of RiverSource
Investments, LLC (RiverSource Investments), entered into settlement agreements
with the Securities and Exchange Commission (SEC) and Minnesota Department of
Commerce (MDOC) related to market timing activities. In connection with these
matters, the SEC and MDOC issued orders (the Orders) alleging that AEFC
violated certain provisions of the federal and Minnesota securities laws by
failing to adequately disclose market timing activities by allowing certain
identified market timers to continue to market time contrary to disclosures in
mutual fund and variable annuity product prospectuses. The Orders also alleged
that AEFC failed to implement procedures to detect and prevent market timing
in 401(k) plans for employees of AEFC and related companies and failed to
adequately disclose that there were no such procedures. Pursuant to the MDOC
Order, the MDOC also alleged that AEFC allowed inappropriate market timing to
occur by failing to have written policies and procedures and failing to
properly supervise its employees.
As a result of the Orders, 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. Pursuant to the terms of the Orders, AEFC agreed to
pay disgorgement of $10 million and civil money penalties of $7 million. AEFC
also agreed to make presentations at least annually to its board of directors
and the relevant mutual funds' board that include an overview of policies and
procedures to prevent market timing, material changes to these policies and
procedures and whether disclosures related to market timing are consistent
with the SEC order and federal securities laws. 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
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 35
http://www.sec.gov/litigation/admin/ia-2451.pdf. In addition, AEFC agreed to
complete and submit to the MDOC a compliance review of its procedures
regarding market timing within one year of the MDOC Order, including a summary
of actions taken to ensure compliance with applicable laws and regulations and
certification by a senior officer regarding compliance and supervisory
procedures.
Ameriprise Financial and its affiliates have cooperated with the SEC and the
MDOC in these legal proceedings, and have made regular reports to the
RiverSource Funds' Boards of Directors/Trustees.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings,
including routine litigation, class actions, and governmental actions,
concerning matters arising in connection with the conduct of their business
activities. Ameriprise Financial believes that the Funds are not currently the
subject of, and that neither Ameriprise Financial nor any of its affiliates
are the subject of, any pending legal, arbitration or regulatory proceedings
that are likely to have a material adverse effect on the Funds or the ability
of Ameriprise Financial or its affiliates to perform under their contracts
with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as
necessary, 8-K filings with the Securities and Exchange Commission on legal
and regulatory matters that relate to Ameriprise Financial and its affiliates.
Copies of these filings may be obtained by accessing the SEC website at
www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse
effect on the Funds or the ability of Ameriprise Financial or its affiliates
to perform under their contracts with the Funds, these proceedings are subject
to uncertainties and, as such, we are unable to estimate the possible loss or
range of loss that may result. An adverse outcome in one or more of these
proceedings could result in adverse judgments, settlements, fines, penalties
or other relief that could have a material adverse effect on the consolidated
financial condition or results of operations of Ameriprise Financial.
- ------------------------------------------------------------------------------
36 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
11. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
the Fund's results.
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(i) 2006 2005 2004 2003(b)
Net asset value, beginning of period $ 6.74 $ 6.70 $ 5.95 $ 5.44 $ 5.00
- ---------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .06 .04 .02 .01
Net gains (losses) (both realized
and unrealized) .90 .35 .90 .63 .43
- ---------------------------------------------------------------------------------------------------
Total from investment operations .94 .41 .94 .65 .44
- ---------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.06) (.03) (.02) --
Distributions from realized gains (.51) (.31) (.16) (.12) --
- ---------------------------------------------------------------------------------------------------
Total distributions (.57) (.37) (.19) (.14) --
- ---------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.11 $ 6.74 $ 6.70 $ 5.95 $ 5.44
- ---------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1,457 $1,368 $ 28 $ 13 $ 8
- ---------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d),(e) 1.03%(f) 1.02% 1.25% 1.13% 1.22%(f)
- ---------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets 1.26%(f) .95% .84% .65% .81%(f)
- ---------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31% 137% 64% 64% 17%
- ---------------------------------------------------------------------------------------------------
Total return(g) 14.15%(h) 6.25% 15.95% 11.99% 8.80%(h)
- ---------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from April 24, 2003 (when shares became publicly
available) to July 31, 2003.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class A would have been 1.06% for the six months ended Jan. 31, 2007
and 1.05%, 1.35%, 1.91% and 7.39% for the periods ended July 31, 2006,
2005, 2004 and 2003, respectively.
(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) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 37
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(i) 2006 2005 2004 2003(b)
Net asset value, beginning of period $ 6.65 $ 6.62 $ 5.90 $ 5.43 $ 5.00
- --------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 .01 .02 (.02) --
Net gains (losses) (both realized
and unrealized) .88 .34 .86 .61 .43
- --------------------------------------------------------------------------------------------------------
Total from investment operations .90 .35 .88 .59 .43
- --------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01) (.01) -- -- --
Distributions from realized gains (.51) (.31) (.16) (.12) --
- --------------------------------------------------------------------------------------------------------
Total distributions (.52) (.32) (.16) (.12) --
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.03 $ 6.65 $ 6.62 $ 5.90 $ 5.43
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 80 $ 73 $ 9 $ 3 $ 1
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d),(e) 1.80%(f) 1.82% 2.04% 1.95% 2.01%(f)
- --------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average daily net assets .48%(f) .20% .06% (.16%) (.08%)(f)
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31% 137% 64% 64% 17%
- --------------------------------------------------------------------------------------------------------
Total return(g) 13.72(h) 5.42% 15.03% 10.95% 8.60%(h)
- --------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from April 24, 2003 (when shares became publicly
available) to July 31, 2003.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class B would have been 1.83% for the six months ended Jan. 31, 2007
and 1.85%, 2.13%, 2.73% and 8.18% for the periods ended July 31, 2006,
2005, 2004 and 2003, respectively.
(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) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
38 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(i) 2006 2005 2004 2003(b)
Net asset value, beginning of period $ 6.65 $ 6.62 $ 5.90 $ 5.43 $ 5.00
- --------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02 .01 .01 (.02) --
Net gains (losses) (both realized
and unrealized) .88 .35 .87 .61 .43
- --------------------------------------------------------------------------------------------------------
Total from investment operations .90 .36 .88 .59 .43
- --------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.02) -- -- --
Distributions from realized gains (.51) (.31) (.16) (.12) --
- --------------------------------------------------------------------------------------------------------
Total distributions (.53) (.33) (.16) (.12) --
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.02 $ 6.65 $ 6.62 $ 5.90 $ 5.43
- --------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 3 $ 3 $ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d),(e) 1.80%(f) 1.81% 2.06% 1.95% 2.01%(f)
- --------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .49%(f) .20% .02% (.17%) (.05%)(f)
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31% 137% 64% 64% 17%
- --------------------------------------------------------------------------------------------------------
Total return(g) 13.68%(h) 5.51% 15.03% 10.96% 8.60%(h)
- --------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from April 24, 2003 (when shares became publicly
available) to July 31, 2003.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class C would have been 1.83% for the six months ended Jan. 31, 2007
and 1.84%, 2.13%, 2.73% and 8.20% for the periods ended July 31, 2006,
2005, 2004 and 2003, respectively.
(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) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 39
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(i) 2006 2005 2004(b)
Net asset value, beginning of period $ 6.78 $ 6.73 $ 5.96 $ 5.99
- -----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .06 .08 .04 .02
Net gains (losses) (both realized
and unrealized) .90 .36 .92 (.05)
- -----------------------------------------------------------------------------------------------------
Total from investment operations .96 .44 .96 (.03)
- -----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.08) (.03) --
Distributions from realized gains (.51) (.31) (.16) --
- -----------------------------------------------------------------------------------------------------
Total distributions (.59) (.39) (.19) --
- -----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.15 $ 6.78 $ 6.73 $ 5.96
- -----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 436 $ 252 $ 82 $ 9
- -----------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets (c),(d) .67%(e),(f) .70%(e) .91% .93%(e),(f)
- -----------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets 1.60%(f) 1.41% 1.19% 5.35%(f)
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31% 137% 64% 64%
- -----------------------------------------------------------------------------------------------------
Total return(g) 14.37%(h) 6.73% 16.29% (.50%)(h)
- -----------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Inception date is July 15, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) In addition to the fees and expenses which the Fund bears directly, the
Fund indirectly bears a pro rata share of the fees and expenses of the
acquired funds in which it invests. Such indirect expenses are not
included in the above reported expense ratios.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class I would have been 0.70% for the six months ended Jan. 31, 2007
and 0.72% and 1.27% for the periods ended July 31, 2006 and 2004,
respectively.
(f) Adjusted to an annual basis.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
40 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 7.56
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01
Net gains (losses) (both realized and unrealized) .13
- ------------------------------------------------------------------------------
Total from investment operations .14
- ------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
Distributions from realized gains (.51)
- ------------------------------------------------------------------------------
Total distributions (.59)
- ------------------------------------------------------------------------------
Net asset value, end of period $ 7.11
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- ------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d),(e) 1.48%(f)
- ------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .60%(f)
- ------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31%
- ------------------------------------------------------------------------------
Total return(g) 1.88%(h)
- ------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class R2 would have been 1.52% for the period ended Jan. 31, 2007.
(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) Total return does not reflect payment of a sales charge.
(h) Not annualized.
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 41
CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 7.56
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01
Net gains (losses) (both realized
and unrealized) .13
- ------------------------------------------------------------------------------
Total from investment operations .14
- ------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
Distributions from realized gains (.51)
- ------------------------------------------------------------------------------
Total distributions (.59)
- ------------------------------------------------------------------------------
Net asset value, end of period $ 7.11
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- ------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d),(e) 1.23%(f)
- ------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .85%(f)
- ------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31%
- ------------------------------------------------------------------------------
Total return(g) 1.89%(h)
- ------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class R3 would have been 1.27% for the period ended Jan. 31, 2007.
(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) Total return does not reflect payment of a sales charge.
(h) Not annualized.
- ------------------------------------------------------------------------------
42 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(i) 2006 2005 2004 2003(b)
Net asset value, beginning of period $ 6.76 $ 6.71 $ 5.95 $ 5.45 $ 5.00
- ------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05 .07 .05 .03 .01
Net gains (losses) (both realized and unrealized) .90 .36 .91 .61 .44
- ------------------------------------------------------------------------------------------------------------------
Total from investment operations .95 .43 .96 .64 .45
- ------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.07) (.04) (.02) --
Distributions from realized gains (.51) (.31) (.16) (.12) --
- ------------------------------------------------------------------------------------------------------------------
Total distributions (.58) (.38) (.20) (.14) --
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.13 $ 6.76 $ 6.71 $ 5.95 $ 5.45
- ------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 233 $ 224 $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d),(e) .86%(f) .84% 1.06% .98% 1.01%(f)
- ------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets 1.39%(f) 1.10% 1.03% .78% .90%(f)
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31% 137% 64% 64% 17%
- ------------------------------------------------------------------------------------------------------------------
Total return(g) 14.22%(h) 6.48% 16.25% 11.87% 9.00%(h)
- ------------------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4.
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from April 24, 2003 (when shares became publicly
available) to July 31, 2003.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class R4 would have been 0.91% for the six months ended Jan. 31,
2007 and 0.87%, 1.18%, 1.76% and 7.20% for the periods ended July 31,
2006, 2005, 2004 and 2003, respectively.
(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) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 43
CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 7.56
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01
Net gains (losses) (both realized
and unrealized) .14
- ------------------------------------------------------------------------------
Total from investment operations .15
- ------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
Distributions from realized gains (.51)
- ------------------------------------------------------------------------------
Total distributions (.59)
- ------------------------------------------------------------------------------
Net asset value, end of period $ 7.12
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- ------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d),(e) .74%(f)
- ------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets 1.33%(f)
- ------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31%
- ------------------------------------------------------------------------------
Total return(g) 2.04%(h)
- ------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class R5 would have been 0.79% for the period ended Jan. 31, 2007.
(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) Total return does not reflect payment of a sales charge.
(h) Not annualized.
- ------------------------------------------------------------------------------
44 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 7.46
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01
Net gains (losses) (both realized
and unrealized) .23
- ------------------------------------------------------------------------------
Total from investment operations .24
- ------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
Distributions from realized gains (.51)
- ------------------------------------------------------------------------------
Total distributions (.59)
- ------------------------------------------------------------------------------
Net asset value, end of period $ 7.11
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- ------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d),(e) 1.14%(f)
- ------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .86%(f)
- ------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 31%
- ------------------------------------------------------------------------------
Total return(g) 3.41%(h)
- ------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 1, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(d) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class W would have been 1.21% for the period ended Jan. 31, 2007.
(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) Total return does not reflect payment of a sales charge.
(h) Not annualized.
- ------------------------------------------------------------------------------
RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT 45
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are 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 during
the 12-month period ended June 30, 2006 is available without charge by
visiting riversource.com/funds; or searching the website of the SEC at
www.sec.gov.
- ------------------------------------------------------------------------------
46 RIVERSOURCE DISCIPLINED EQUITY FUND - 2007 SEMIANNUAL REPORT
RIVERSOURCE(R) DISCIPLINED EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
riversource.com/funds
RIVERSOURCE [LOGO](R) This report must be accompanied or preceded by the
INVESTMENTS Fund's current prospectus. RiverSource(R) mutual funds
are distributed by RiverSource Distributors, Inc. and
Ameriprise Financial Services, Inc., Members NASD, and
managed by RiverSource Investments, LLC. These
companies are part of Ameriprise Financial, Inc.
S-6274 E (3/07)
Semiannual Report
RIVERSOURCE [LOGO] (R)
INVESTMENTS
RIVERSOURCE(R)
GROWTH FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
JAN. 31, 2007
> RIVERSOURCE GROWTH FUND
SEEKS TO PROVIDE SHAREHOLDERS
WITH LONG-TERM CAPITAL GROWTH.
TABLE OF CONTENTS
Fund Snapshot ........................................................... 3
Performance Summary ..................................................... 5
Questions & Answers
with Portfolio Management .............................................. 8
Fund Expenses Example ................................................... 11
Investments in Securities ............................................... 14
Financial Statements .................................................... 18
Notes to Financial Statements ........................................... 24
Proxy Voting ............................................................ 46
[LOGO]
DALBAR RATED
2006
FOR COMMUNICATION
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.
- ------------------------------------------------------------------------------
2 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
FUND SNAPSHOT AT JAN. 31, 2007
FUND OVERVIEW
RiverSource Growth Fund invests primarily in common stocks and securities
convertible into common stocks that appear to offer growth opportunities.
These growth opportunities could result from new management, market
developments or technological superiority. The result is a portfolio composed
of large-company stocks with what are believed to be growth rates at or above
market levels and reasonable valuations.
SECTOR BREAKDOWN*
Percentage of portfolio assets
Information Technology 21.7%
Health Care 21.1%
Consumer Discretionary 15.4%
Telecommunication Services 14.5% [PIE CHART]
Consumer Staples 10.2%
Financials 5.1%
Other(1) 12.0%
* Sectors can be comprised of several industries. Please refer to the
section entitled "Investments in Securities" for a complete listing. No
single industry exceeds 25% of portfolio assets.
(1) Includes Industrials 4.2%, Energy 3.4%, Materials 1.2% and Cash & Cash
Equivalents(2) 3.2%.
(2) Of the 3.2%, 0.6% is due to security lending activity and 2.6% is the
Fund's cash equivalent position.
TOP TEN HOLDINGS
Percentage of portfolio assets
NTL 8.5%
Google Cl A 3.7%
Vodafone Group 3.6%
Cisco Systems 3.1%
Genentech 2.7%
Microsoft 2.6%
ALLTEL 2.6%
Exxon Mobil 2.4%
eBay 2.3%
Altria Group 2.2%
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
The Global Industry Classification Standard (GICS) 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.
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 GROWTH FUND - 2007 SEMIANNUAL REPORT 3
FUND SNAPSHOT AT JAN. 31, 2007
STYLE MATRIX
[chart] Shading within the style matrix indicates areas in which the Fund
generally invests.
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
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 serves as a guideline for helping
you build a portfolio.
Investment products, including shares of mutual funds, involve investment
risks including possible loss of principal and fluctuation in value.
PORTFOLIO MANAGER
YEARS IN INDUSTRY
Nick Thakore 13
FUND FACTS
TICKER SYMBOL INCEPTION DATE
Class A INIDX 3/1/72
Class B IGRBX 3/20/95
Class C AXGCX 6/26/00
Class I AGWIX 3/4/04
Class R2 -- 12/11/06
Class R3 -- 12/11/06
Class R4(1) IGRYX 3/20/95
Class R5 -- 12/11/06
Class W -- 12/1/06
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4.
Total net assets $3.607 billion
Number of holdings 112
- ------------------------------------------------------------------------------
4 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
PERFORMANCE SUMMARY
- ------------------------------------------------------------------------------
PERFORMANCE COMPARISON
For the six-month period ended Jan. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
RiverSource Growth Fund Class A (excluding sales charge) +14.75%
Russell 1000(R) Growth Index(1) (unmanaged) +15.12%
Lipper Large-Cap Growth Funds Index(2) +13.57%
(1) The Russell 1000(R) Growth Index, an unmanaged index, measures the
performance of those stocks in the Russell 1000 Index with higher
price-to-book ratios and higher forecasted growth values. The index
reflects reinvestment of all distributions and changes in market prices,
but excludes brokerage commissions or other fees.
(2) The Lipper Large-Cap Growth Funds Index includes the 30 largest
large-cap growth funds tracked by Lipper Inc. The index's returns
include net reinvested dividends. The Fund's performance is currently
measured against this index for purposes of determining the performance
incentive adjustment.
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 bar chart. If reflected, returns would be lower than those
shown. The performance of other classes may vary from that shown because of
differences in expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
CLASS A CLASS B CLASS C CLASS I
Total 1.14% 1.91% 1.91% 0.68%
Net Expenses(a) 1.14% 1.91% 1.91% 0.68%
CLASS R2(b) CLASS R3(b) CLASS R4(b) CLASS R5(b) CLASS W(b)
Total 1.48% 1.23% 0.98% 0.73% 1.13%
Net Expenses(a) 1.48% 1.23% 0.98% 0.73% 1.13%
(a) The investment manager and its affiliates have contractually agreed to
waive certain fees and to absorb certain expenses until July 31, 2007,
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 expenses, before giving effect to any performance incentive
adjustment, will not exceed 0.97% for Class R4.
(b) Effective Dec. 11, 2006, Class Y was renamed Class R4. Inception date
for Class R2, Class R3 and Class R5 is Dec. 11, 2006. Inception date for
Class W is Dec. 1, 2006. For Class R2, Class R3, Class R5 and Class W,
expenses are based on estimated amounts for the current fiscal year.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 5
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS
AT JAN. 31, 2007
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
Class A (inception 3/1/72) +14.75% +11.74% +10.11% +4.45% +2.75% +11.98%
Class B (inception 3/20/95) +14.31% +10.87% +9.26% +3.64% +1.96% +6.45%
Class C (inception 6/26/00) +14.31% +10.91% +9.27% +3.65% N/A -7.40%
Class I (inception 3/4/04) +15.01% +12.26% N/A N/A N/A +9.94%
Class R2 (inception 12/11/06) N/A N/A N/A N/A N/A +3.71%*
Class R3 (inception 12/11/06) N/A N/A N/A N/A N/A +3.74%*
Class R4** (inception 3/20/95) +14.84% +11.92% +10.30% +4.64% +2.90% +7.44%
Class R5 (inception 12/11/06) N/A N/A N/A N/A N/A +3.82%*
Class W (inception 12/1/06) N/A N/A N/A N/A N/A +4.87%*
With sales charge
Class A (inception 3/1/72) +8.15% +5.31% +7.96% +3.22% +2.14% +11.79%
Class B (inception 3/20/95) +9.31% +5.87% +8.13% +3.29% +1.96% +6.45%
Class C (inception 6/26/00) +13.31% +9.91% +9.27% +3.65% N/A -7.40%
- ------------------------------------------------------------------------------
6 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS
AT DEC. 31, 2006
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION
Class A (inception 3/1/72) +12.11% +10.91% +9.27% +3.64% +3.22% +11.92%
Class B (inception 3/20/95) +11.70% +10.09% +8.44% +2.84% +2.43% +6.26%
Class C (inception 6/26/00) +11.70% +10.09% +8.44% +2.84% N/A -7.87%
Class I (inception 3/4/04) +12.41% +11.45% N/A N/A N/A +9.20%
Class R2 (inception 12/11/06) N/A N/A N/A N/A N/A +0.98%*
Class R3 (inception 12/11/06) N/A N/A N/A N/A N/A +0.98%*
Class R4** (inception 3/20/95) +12.22% +11.11% +9.47% +3.82% +3.37% +7.24%
Class R5 (inception 12/11/06) N/A N/A N/A N/A N/A +1.02%*
Class W (inception 12/1/06) N/A N/A N/A N/A N/A +2.08%*
With sales charge
Class A (inception 3/1/72) +5.67% +4.53% +7.13% +2.42% +2.61% +11.73%
Class B (inception 3/20/95) +6.70% +5.09% +7.29% +2.48% +2.43% +6.26%
Class C (inception 6/26/00) +10.70% +9.09% +8.44% +2.84% N/A -7.87%
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 shares are
available to institutional investors only. Class W shares are offered through
qualifying discretionary accounts.
* Not annualized.
** Effective Dec. 11, 2006, Class Y was renamed Class R4.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 7
QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT
Below, Portfolio Manager Nick Thakore discusses the Fund's positioning and
results for the semiannual period ended Jan. 31, 2007.
Q: How did RiverSource Growth Fund perform for the six months ended Jan.
31, 2007?
A: RiverSource Growth Fund's Class A shares rose 14.75%, excluding sales
charge, for the six months ended Jan. 31, 2007. The Fund underperformed
its benchmark, the Russell 1000(R) Growth Index (Russell Index), which
advanced 15.12%, and outperformed its peer group as represented by the
Lipper Large-Cap Growth Funds Index, which advanced 13.57% for the same
period.
Q: What factors influenced performance during the period?
A: The stock market advanced sharply during the six months as economic
growth continued and the Federal Reserve Board held interest rates
steady after 17 consecutive increases in the federal funds rate.
Notably, growth stocks outperformed value stocks in the large-cap
universe and the Fund capitalized on the opportunities presented by a
growth-led market.
Stock selection was the main contributor to performance relative to the
Russell Index. The information technology, energy and consumer staples
sectors contributed positively to performance while positioning in the
financials and materials sectors detracted from performance.
Within the information technology sector, stock selection was
beneficial, while an underweight position relative to the Russell Index
was a slight disadvantage. Among the Fund's information technology
holdings, an emphasis on larger-cap stocks proved effective during the
period. The Fund benefited from positive stock selection in
semiconductors, Internet-related companies, telecommunication equipment
firms, networking providers and cell phone
AMONG THE FUND'S INFORMATION TECHNOLOGY HOLDINGS, AN EMPHASIS ON
LARGER-CAP STOCKS PROVED EFFECTIVE DURING THE PERIOD.
- ------------------------------------------------------------------------------
8 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
QUESTIONS & ANSWERS
handset makers. The single largest contributor was semiconductor firm
Freescale, which was bought out in a private equity transaction during
the period and performed well. The Fund's holdings of Internet-related
stocks also performed well, specifically search engine Google and
Internet auction company eBay. A secular shift toward increased Internet
advertising continued to support Internet-related firms. We had added
significantly to eBay during the period when we felt the stock price
reflected the company's missteps. Subsequently, the Fund benefited when
eBay's stock advanced during the period.
Stock selection in the energy sector positively impacted performance as
did the Fund's smaller-than-Russell Index position in the energy sector.
Specifically, the Fund's position in integrated oil company Exxon Mobil
was a key contributor, as the company showed strong production growth
and demonstrated solid free cash flow trends.
In the consumer staples sector, stock selection contributed positively
to the Fund's performance. An emphasis on larger-cap stocks within the
sector, as well as positioning in the household products, grocery and
tobacco groups was beneficial. Spectrum Brands, a maker of batteries,
fertilizer and other household products, was the leading contributor
within consumer staples, followed by the Safeway grocery store chain.
Spectrum Brands advanced as the stock's valuation became more attractive
following a period of underperformance that was driven by the pressure
of rising raw material prices and unfulfilled expectations for
merger-related synergies. Safeway, a turnaround story in the grocery
segment, advanced on same store sales trends that were better than
anticipated.
In the financials sector, stock selection was the primary detractor,
although a smaller-than-Russell Index weighting was also
disadvantageous. In particular, the portfolio had less exposure to
brokerage firms and investment management companies than the Russell
Index and these stocks advanced sharply as a number of firms displayed
resilient earnings growth that continued to surpass the market.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 9
QUESTIONS & ANSWERS
Q: What changes did you make to the Fund's portfolio during the six-month
period?
A: We continued to see a promising combination of attractive valuations and
high growth rates for telecommunication stocks. During the semiannual
period, we adjusted the Fund's telecommunication positioning, reducing
the Fund's Sprint Nextel position given concerns about near term
fundamentals.
We increased the portfolio's information technology position as we
identified selected stocks that had previously underperformed and, in
our view, had reasonable valuations relative to their growth rates.
Q: How are you positioning the Fund going forward?
A: We think corporate earnings growth is likely to decelerate, given that
profit margins are at record levels and leading indicators point to
potential for margin erosion. In addition, consumer spending could
decline as higher borrowing costs and a weaker housing market may affect
consumer confidence.
Given our current outlook, we have emphasized stable growth companies
over cyclical growth companies, preferring to own companies with strong
growth potential less dependent on the economy. We continue to find
opportunities among large-cap companies that still appear inexpensive
relative to mid- and small-cap stocks based on the historical
relationships between these groups and improving relative fundamentals.
In general, we believe the Fund holds stocks that, as a group, are
likely to grow earnings faster than the market and are at attractive
valuation levels. We see opportunities among fast growth companies that
have underperformed, which has made valuations more attractive
particularly in the biotechnology and technology industries.
Any specific securities mentioned are for illustrative purposes only and are
not a complete list of securities that have increased or decreased in value.
The views expressed in this statement reflect those of the portfolio
manager(s) only through the end of the period of the report as stated on the
cover and do not necessarily represent the views of RiverSource Investments,
LLC (RiverSource) or any subadviser to the Fund or any other person in the
RiverSource or subadviser organizations. Any such views are subject to change
at any time based upon market or other conditions and RiverSource disclaims
any responsibility to update such views. These views may not be relied on as
investment advice and, because investment decisions for a RiverSource Fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any RiverSource Fund.
- ------------------------------------------------------------------------------
10 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
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 acquired funds expense ratio as of the
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, 2007.
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.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 11
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2006 JAN. 31, 2007 THE PERIOD(a) EXPENSE RATIO
Class A
Actual(b) $1,000 $1,147.50 $ 6.55 1.21%
Hypothetical
(5% return before expenses) $1,000 $1,019.11 $ 6.16 1.21%
Class B
Actual(b) $1,000 $1,143.10 $10.75 1.99%
Hypothetical
(5% return before expenses) $1,000 $1,015.17 $10.11 1.99%
Class C
Actual(b) $1,000 $1,143.10 $10.70 1.98%
Hypothetical
(5% return before expenses) $1,000 $1,015.22 $10.06 1.98%
Class I
Actual(b) $1,000 $1,150.10 $ 4.12 .76%
Hypothetical
(5% return before expenses) $1,000 $1,021.37 $ 3.87 .76%
Class R2
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,017.59 $ 7.68 1.51%
Class R3
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,018.95 $ 6.31 1.24%
Class R4
Actual(b) $1,000 $1,148.40 $ 5.63(d) 1.04%
Hypothetical
(5% return before expenses) $1,000 $1,019.96 $ 5.30(d) 1.04%
- ------------------------------------------------------------------------------
12 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2006 JAN. 31, 2007 THE PERIOD(a) EXPENSE RATIO
Class R5
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,021.27 $3.97 .78%
Class W
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,019.21 $6.06 1.19%
(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 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Jan. 31, 2007:
+14.75% for Class A, +14.31% for Class B, +14.31% for Class C, +15.01%
for Class I and +14.84% for Class R4.
(c) The actual values and expenses paid are not presented because Class R2,
Class R3, Class R5 and Class W do not have a full six months of history.
The inception date of Class R2, Class R3 and Class R5 is Dec. 11, 2006.
The inception date of Class W is Dec. 1, 2006.
(d) In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee
structure under the transfer agent agreement from an account-based fee
to an asset-based fee, and adopting a plan administration services
agreement. In addition, the investment manager and its affiliates have
contractually agreed to waive certain fees and to absorb certain
expenses until July 31, 2007, unless sooner terminated at the discretion
of the Fund's Board, such that net expenses (excluding fees and expenses
of acquired funds), before giving effect to any performance incentive
adjustment, will not exceed 0.97% for Class R4. Any amounts waived will
not be reimbursed by the Fund. These changes were effective Dec. 11,
2006. If these changes had been in place for the six-month period ended
Jan. 31, 2007, actual expenses paid for Class R4 would have been $5.74
and the hypothetical expenses paid for Class R4 would have been $5.40.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 13
INVESTMENTS IN SECURITIES
JAN. 31, 2007 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
COMMON STOCKS (95.8%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (2.1%)
Boeing 517,321 $ 46,331,269
Honeywell Intl 433,383 19,801,269
Lockheed Martin 89,507 8,699,185
--------------
Total 74,831,723
- ------------------------------------------------------------------------------------------
BEVERAGES (2.2%)
Anheuser-Busch
Companies 258,902 13,196,235
Coca-Cola 347,444 16,635,619
PepsiCo 764,415 49,870,434
--------------
Total 79,702,288
- ------------------------------------------------------------------------------------------
BIOTECHNOLOGY (5.1%)
Amgen 855,676(b) 60,213,920
Biogen Idec 517,786(b) 25,029,775
Genentech 1,117,841(b,d) 97,665,769
--------------
Total 182,909,464
- ------------------------------------------------------------------------------------------
CAPITAL MARKETS (1.0%)
KKR Private Equity
Investors LP Unit 1,552,305(f) 36,246,322
- ------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (8.1%)
ADTRAN 120,679 2,674,247
Alcatel-Lucent ADR 1,471,361(c) 19,127,693
Cisco Systems 4,133,175(b) 109,901,123
JDS Uniphase 530,536(b) 9,432,930
Motorola 388,884 7,719,347
Nokia ADR 3,260,498(c) 72,057,006
QUALCOMM 1,483,956 55,885,783
Tellabs 1,541,233(b) 15,520,216
--------------
Total 292,318,345
- ------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (1.6%)
Apple 289,293(b) 24,801,089
Dell 136,603(b,d) 3,312,623
Hewlett-Packard 704,171 30,476,521
--------------
Total 58,590,233
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
DIVERSIFIED TELECOMMUNICATION SERVICES (5.5%)
AT&T 2,090,787 $ 78,676,316
Chunghwa Telecom ADR 72,740(c) 1,506,445
COLT Telecom Group 1,117,719(b,c) 3,530,219
Embarq 539,146 29,927,994
France Telecom 561,307(c) 15,601,104
Qwest Communications
Intl 6,793,065(b) 55,363,480
Verizon Communications 41,308 1,591,184
Windstream 741,635 11,035,529
--------------
Total 197,232,271
- ------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (0.6%)
Safeway 426,283 15,358,976
Wal-Mart Stores 169,308 8,074,299
--------------
Total 23,433,275
- ------------------------------------------------------------------------------------------
FOOD PRODUCTS (0.8%)
General Mills 134,676 7,708,854
Kellogg 425,177 20,948,471
--------------
Total 28,657,325
- ------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (3.0%)
Boston Scientific 3,186,458(b) 58,790,151
Medtronic 612,221 32,723,212
Stryker 134,798 8,349,388
Zimmer Holdings 97,343(b) 8,198,227
--------------
Total 108,060,978
- ------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (4.5%)
Cardinal Health 759,322 54,230,776
Caremark Rx 359,295 22,010,412
Humana 320,215(b) 17,771,933
McKesson 558,918 31,159,679
UnitedHealth Group 723,828 37,827,251
--------------
Total 163,000,051
- ------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (0.8%)
Harrah's Entertainment 217,121 18,342,382
Pinnacle Entertainment 323,117(b) 11,157,230
--------------
Total 29,499,612
- ------------------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
14 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HOUSEHOLD PRODUCTS (3.9%)
Colgate-Palmolive 708,252 $ 48,373,612
Procter & Gamble 1,198,085 77,719,773
Spectrum Brands 1,300,006(b) 15,730,073
--------------
Total 141,823,458
- ------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (1.9%)
General Electric 1,885,572 67,974,871
- ------------------------------------------------------------------------------------------
INSURANCE (3.0%)
ACE 360,351(c) 20,821,081
AFLAC 77,624 3,695,679
American Intl Group 951,708 65,144,412
Hartford Financial
Services Group 40,168 3,812,345
Prudential Financial 180,240 16,064,791
--------------
Total 109,538,308
- ------------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES (6.1%)
eBay 2,601,865(b,g) 84,274,407
Google Cl A 266,845(b,d) 133,769,399
VeriSign 74,116(b) 1,771,372
--------------
Total 219,815,178
- ------------------------------------------------------------------------------------------
IT SERVICES (1.7%)
Electronic Data Systems 860,211 22,632,151
First Data 1,587,721 39,470,744
--------------
Total 62,102,895
- ------------------------------------------------------------------------------------------
MACHINERY (0.3%)
Flowserve 190,918(b) 10,132,018
- ------------------------------------------------------------------------------------------
MEDIA (14.2%)
Charter Communications
Cl A 2,717,734(b) 9,512,069
Comcast Cl A 738,056(b,d) 32,710,642
Idearc 18,849(b) 611,085
Liberty Global Cl A 1,328,669(b) 39,939,790
Liberty Global Series C 591,197(b) 16,689,491
News Corp Cl A 1,311,636 30,495,537
NTL 11,232,714(g) 306,091,458
RH Donnelley 160,314 10,673,706
Vivendi 632,519(c) 26,096,928
WorldSpace Cl A 419,274(b,d) 1,563,892
XM Satellite Radio
Holdings Cl A 2,549,599(b) 36,229,802
--------------
Total 510,614,400
- ------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
METALS & MINING (1.2%)
Coeur d'Alene Mines 4,180,885(b) $ 18,312,276
Newmont Mining 526,886(d) 23,762,559
--------------
Total 42,074,835
- ------------------------------------------------------------------------------------------
MULTILINE RETAIL (0.1%)
Federated Department
Stores 91,396 3,792,020
- ------------------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (3.4%)
Chevron 144,847 10,556,449
Exxon Mobil 1,144,967 84,842,054
Kinder Morgan
Management LLC --(b) 16
Total 267,595(c) 18,185,330
Valero Energy 137,781 7,478,753
--------------
Total 121,062,602
- ------------------------------------------------------------------------------------------
PHARMACEUTICALS (8.5%)
AstraZeneca 1,158,953(c) 64,887,673
Bristol-Myers Squibb 989,916 28,499,682
Eli Lilly & Co 355,432 19,235,980
Johnson & Johnson 695,513 46,460,268
Merck & Co 1,676,939 75,043,020
Pfizer 2,152,041 56,469,556
Schering-Plough 651,418 16,285,450
--------------
Total 306,881,629
- ------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.6%)
Agere Systems 162,403(b) 3,270,796
Atmel 1,172,310(b) 7,010,414
LSI Logic 362,823(b) 3,410,536
Spansion Cl A 595,975(b) 7,646,360
United Microelectronics
ADR 232,402(c) 825,027
--------------
Total 22,163,133
- ------------------------------------------------------------------------------------------
SOFTWARE (3.5%)
Electronic Arts 102,429(b) 5,121,450
Hyperion Solutions 21,052(b) 888,815
Microsoft 3,088,749 95,318,794
Nuance
Communications 145,828(b) 1,679,939
Symantec 1,310,045(b,d) 23,200,897
--------------
Total 126,209,895
- ------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (0.4%)
Countrywide Financial 350,680 15,247,566
- ------------------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 15
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
TOBACCO (2.6%)
Altria Group 920,247 $ 80,420,385
Imperial Tobacco
Group ADR 179,423(c) 14,608,621
--------------
Total 95,029,006
- ------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (9.0%)
ALLTEL 1,544,825 94,682,324
Hutchison
Telecommunications
Intl 10,840,402(b,c) 26,101,712
Orascom Telecom
Holding GDR 397,225(c) 27,408,525
Sprint Nextel 1,806,745 32,214,263
Vodafone Group 44,891,064(c) 131,363,857
Vodafone Group ADR 443,565(c) 13,036,375
--------------
Total 324,807,056
- ------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $3,004,064,492) $3,453,750,757
- ------------------------------------------------------------------------------------------
OPTIONS PURCHASED (0.9%)
ISSUER CONTRACTS EXERCISE EXPIRATION VALUE(a)
PRICE DATE
CALLS
ALLTEL 4,455 $65.00 April 2007 $ 634,838
eBay 2,338 30.00 Feb. 2007 596,190
NTL 33,290 27.50 June 2007 7,407,025
NTL 11,090 27.50 Jan. 2008 3,936,950
- ------------------------------------------------------------------------------------------
OPTIONS PURCHASED (CONTINUED)
ISSUER CONTRACTS EXERCISE EXPIRATION VALUE(a)
PRICE DATE
PUTS
Mini Nasdaq
100
Index 12,467 $ 177.50 June 2007 $ 6,794,515
Nasdaq
100 Trust
Series 1 85,220 44.00 June 2007 13,209,100
S&P 500
Index 1,765 1,350.00 March 2007 485,375
- ------------------------------------------------------------------------------------------
TOTAL OPTIONS PURCHASED
(Cost: $36,603,270) $33,063,993
- ------------------------------------------------------------------------------------------
MONEY MARKET FUND (3.2%)(e)
SHARES VALUE(a)
RiverSource Short-Term
Cash Fund 114,284,957(h) $ 114,284,957
- ------------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $114,284,957) $ 114,284,957
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $3,154,952,719)(i) $3,601,099,707
==========================================================================================
See accompanying notes to investments in securities.
- --------------------------------------------------------------------------------
16 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by 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, 2007,
the value of foreign securities represented 12.6% of net assets.
(d) At Jan. 31, 2007, security was partially or fully on loan. See Note 6 to
the financial statements.
(e) Cash collateral received from security lending activity is invested in
an affiliated money market fund and represents 0.6% of net assets. See
Note 6 to the financial statements. 2.6% of net assets is the Fund's
cash equivalent position.
(f) Identifies issues considered to be illiquid as to their marketability
(see Note 1 to the financial statements). These securities may be valued
at fair value according to methods selected in good faith by the Fund's
Board of Directors. Information concerning such security holdings at
Jan. 31, 2007, is as follows:
SECURITY ACQUISITION COST
DATES
---------------------------------------------------------------------------------
KKR Private Equity Investors LP Unit 05-01-06 thru 12-14-06 $34,712,336
(g) At Jan. 31, 2007, securities valued at $138,976,731 were held to cover
open call options written as follows (see Note 7 to the financial
statements):
ISSUER CONTRACTS EXERCISE EXPIRATION VALUE(a)
PRICE DATE
---------------------------------------------------------------------------------
eBay 5,570 $32.50 Feb. 2007 $ 389,900
NTL 33,290 30.00 June 2007 3,994,800
NTL 11,090 30.00 Jan. 2008 2,550,700
---------------------------------------------------------------------------------
Total value $6,935,400
---------------------------------------------------------------------------------
(h) Affiliated Money Market Fund - See Note 8 to the financial statements.
(i) At Jan. 31, 2007, the cost of securities for federal income tax purposes
was approximately $3,154,953,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $471,421,000
Unrealized depreciation (25,274,000)
---------------------------------------------------------------------------------
Net unrealized appreciation $446,147,000
---------------------------------------------------------------------------------
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's
Public Reference Room in Washington, DC (information on the operations
of the Public Reference Room may be obtained by calling 1-800-SEC-0330);
and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form
N-Q, can be found at riversource.com/funds.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 17
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JAN. 31, 2007 (UNAUDITED)
ASSETS
Investments in securities, at value (Note 1)
Unaffiliated issuers* (identified cost $3,040,667,762) $3,486,814,750
Affiliated money market fund (identified cost $114,284,957) (Note 8) 114,284,957
- -------------------------------------------------------------------------------------------------
Total investments in securities (identified cost $3,154,952,719) 3,601,099,707
Foreign currency holdings (identified cost $20,274) (Note 1) 19,943
Capital shares receivable 297,755
Dividends and accrued interest receivable 4,777,081
Receivable for investment securities sold 58,109,249
- -------------------------------------------------------------------------------------------------
Total assets 3,664,303,735
- -------------------------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash on demand deposit 658,999
Capital shares payable 304,477
Payable for investment securities purchased 28,204,834
Payable upon return of securities loaned (Note 6) 20,514,175
Unrealized depreciation on foreign currency contracts held, at value (Note 5) 762
Accrued investment management services fee 55,781
Accrued distribution fee 30,674
Accrued transfer agency fee 777
Accrued administrative services fee 4,964
Accrued plan administration services fee 1,591
Other accrued expenses 555,461
Options contracts written, at value (premiums received $4,170,057) (Note 7) 6,935,400
- -------------------------------------------------------------------------------------------------
Total liabilities 57,267,895
- -------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $3,607,035,840
=================================================================================================
- ------------------------------------------------------------------------------
18 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
JAN. 31, 2007 (UNAUDITED)
REPRESENTED BY
Capital stock -- $.01 par value (Note 1) $ 1,117,061
Additional paid-in capital 3,734,283,266
Undistributed net investment income 563,088
Accumulated net realized gain (loss) (Note 10) (572,321,762)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Note 5) 443,394,187
- -------------------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $3,607,035,840
=========================================================================================================================
Net assets applicable to outstanding shares: Class A $2,489,849,877
Class B $ 481,239,597
Class C $ 20,790,979
Class I $ 383,087,665
Class R2 $ 5,125
Class R3 $ 5,126
Class R4 $ 232,047,149
Class R5 $ 5,129
Class W $ 5,193
Net asset value per share of outstanding capital stock: Class A shares 76,368,707 $ 32.60
Class B shares 16,154,009 $ 29.79
Class C shares 698,485 $ 29.77
Class I shares 11,491,239 $ 33.34
Class R2 shares 155 $ 33.06
Class R3 shares 155 $ 33.07
Class R4 shares 6,992,996 $ 33.18
Class R5 shares 155 $ 33.09
Class W shares 157 $ 33.08
- -------------------------------------------------------------------------------------------------------------------------
*Including securities on loan, at value (Note 6) $ 19,759,321
- -------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 19
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JAN. 31, 2007 (UNAUDITED)
INVESTMENT INCOME
Income:
Dividends $20,167,906
Interest 818,376
Income distributions from affiliated money market fund (Note 8) 3,246,014
Fee income from securities lending (Note 6) 59,140
Less foreign taxes withheld (223,850)
- ------------------------------------------------------------------------------------
Total income 24,067,586
- ------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 11,695,879
Distribution fee
Class A 3,035,481
Class B 2,369,935
Class C 98,572
Class R2 3
Class R3 2
Class W 2
Transfer agency fee
Class A 2,430,085
Class B 529,688
Class C 21,238
Class R4 175,762
Class W 2
Service fee -- Class R4 93,050
Administrative services fees and expenses 888,949
Plan administration services fee
Class R2 2
Class R3 2
Class R4 83,083
Compensation of board members 34,587
Custodian fees 143,750
Printing and postage 388,500
Registration fees 87,500
Professional fees 25,446
Other 91,315
- ------------------------------------------------------------------------------------
Total expenses 22,192,833
Earnings and bank fee credits on cash balances (Note 2) (135,166)
- ------------------------------------------------------------------------------------
Total net expenses 22,057,667
- ------------------------------------------------------------------------------------
Investment income (loss) -- net 2,009,919
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
20 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JAN. 31, 2007 (UNAUDITED)
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (Note 3) $ (7,969,401)
Foreign currency transactions 92,962
Options contracts written (Note 7) (4,838,738)
- --------------------------------------------------------------------------------------
Net realized gain (loss) on investments (12,715,177)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 486,935,015
- --------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 474,219,838
- --------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $476,229,757
======================================================================================
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 21
STATEMENTS OF CHANGES IN NET ASSETS
JAN. 31, 2007
SIX MONTHS ENDED JULY 31, 2006
(UNAUDITED) YEAR ENDED
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 2,009,919 $ 21,536,361
Net realized gain (loss) on investments (12,715,177) 378,492,867
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 486,935,015 (369,575,760)
- ------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 476,229,757 30,453,468
- ------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (17,085,736) (766,414)
Class C (21,069) --
Class I (3,983,286) (240,149)
Class R2 (55) N/A
Class R3 (55) N/A
Class R4 (1,999,289) (164,443)
Class R5 (56) N/A
Class W (55) N/A
- ------------------------------------------------------------------------------------------------------------
Total distributions (23,089,601) (1,171,006)
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
22 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
JAN. 31, 2007
SIX MONTHS ENDED JULY 31, 2006
(UNAUDITED) YEAR ENDED
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Proceeds from sales
Class A shares (Note 2) $ 106,125,554 $ 723,627,727
Class B shares 21,420,948 155,729,842
Class C shares 2,068,751 8,410,448
Class I shares 83,689,229 109,795,697
Class R2 shares 5,000 N/A
Class R3 shares 5,000 N/A
Class R4 shares 12,250,611 54,128,249
Class R5 shares 5,000 N/A
Class W shares 5,000 N/A
Reinvestment of distributions at net asset value
Class A shares 16,668,461 748,320
Class C shares 20,543 --
Class I shares 3,983,218 240,142
Class R4 shares 1,999,289 164,443
Payments for redemptions
Class A shares (297,956,346) (500,308,297)
Class B shares (Note 2) (65,259,054) (269,341,808)
Class C shares (Note 2) (2,619,041) (4,706,122)
Class I shares (1,393,093) (3,449,675)
Class R4 shares (80,155,500) (96,349,570)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (199,136,430) 178,689,396
- --------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 254,003,726 207,971,858
Net assets at beginning of period 3,353,032,114 3,145,060,256
- --------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 3,607,035,840 $ 3,353,032,114
==============================================================================================================
Undistributed net investment income $ 563,088 $ 21,642,770
- --------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 23
NOTES TO FINANCIAL STATEMENTS
(Unaudited as to Jan. 31, 2007)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. The Fund invests primarily in
common stocks of U.S. and foreign companies that appear to offer growth
opportunities.
The Fund offers Class A, Class B, Class C and Class R4 shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class R4 shares have no sales charge and are offered only to qualifying
institutional investors.
In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee structure
under the transfer agent agreement from account-based to asset-based, and
adopting a plan administration services agreement. These changes were
effective Dec. 11, 2006.
The Fund offers an additional class of shares, Class I, exclusively to certain
institutional investors. Class I shares have no sales charge and are made
available through a separate prospectus supplement provided to investors
eligible to purchase the shares. At Jan. 31, 2007, Ameriprise Financial, Inc.
(Ameriprise Financial) and the affiliated funds-of-funds owned 100% of Class I
shares.
Effective Dec. 11, 2006, the Fund offers additional classes of shares, Class
R2, Class R3 and Class R5, offered to certain institutional investors. These
shares are sold without a front-end sales charge or CDSC. At Jan. 31, 2007,
Ameriprise Financial owned 100% of Class R2, Class R3 and Class R5 shares.
Effective Dec. 1, 2006, the Fund offers an additional class of shares, Class
W, offered through qualifying discretionary accounts. Class W shares are sold
without a front-end sales charge or CDSC. At Jan. 31, 2007, Ameriprise
Financial owned 100% of Class W shares.
At Jan. 31, 2007, Ameriprise Financial and the affiliated funds-of-funds owned
approximately 10% of the total outstanding Fund Shares.
- ------------------------------------------------------------------------------
24 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
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 fees) differ among classes. Income, expenses (other
than class specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative net
assets.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from
actual results.
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Pursuant to procedures adopted by the Board of Directors of the funds,
Ameriprise Financial utilizes Fair Value Pricing (FVP). FVP determinations are
made in good faith in accordance with these procedures. If a development or
event is so significant that there is a reasonably high degree of certainty
that the effect of the development or event has actually caused the closing
price to no longer reflect the actual value, the closing prices, as determined
at the close of the applicable foreign market, may be adjusted to reflect the
fair value of the affected foreign securities as of the close of the New York
Stock Exchange. Significant events include material movements in the U.S.
securities markets prior to the opening of foreign markets on the following
trading day. FVP results in an estimated price that reasonably reflects the
current market conditions in order to value the portfolio holdings such that
shareholder transactions receive a fair net asset value. 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.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 25
ILLIQUID SECURITIES
At Jan. 31, 2007, investments in securities included issues that are illiquid
which the Fund currently limits to 10% of net assets, at market value, at the
time of purchase. The aggregate value of such securities as of Jan. 31, 2007
was $36,246,322 representing 1.00% of net assets. These securities are valued
at fair value according to methods selected in good faith by the Board.
According to board guidelines, certain unregistered securities are determined
to be liquid and are not included within the 10% limitation specified above.
Assets are liquid if they can be sold or disposed of in the ordinary course of
business within seven days at approximately the value which the asset is
valued by the Fund.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains and facilitate buying and
selling of securities for investments, the Fund may buy and write options
traded on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
The Fund also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a
put option is that the Fund may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option
is that the Fund pays a premium whether or not the option is exercised. The
Fund also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund
will realize a gain or loss when the option transaction expires or closes.
When an option is exercised, the proceeds on sales for a written call option,
the purchase cost for a written put option or the cost of a security for a
purchased put or call option is adjusted by the amount of premium received or
paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy
and sell financial futures contracts traded on any U.S. or foreign exchange.
The Fund also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options
include the possibility of an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
- ------------------------------------------------------------------------------
26 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
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 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. At Jan. 31, 2007,
foreign currency holdings were entirely comprised of European monetary units.
The Fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of
their duties to the Fund. In addition, certain of the Fund's contracts with
its service providers contain general indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown since the amount of any
future claims that may be made against the Fund cannot be determined and the
Fund has no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to the shareholders. No provision for income or
excise taxes is thus required.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 27
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts and losses deferred due to "wash sale" transactions.
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
On Sept. 20, 2006, the Financial Accounting Standards Board ("FASB") released
Statement of Financial Accounting Standards No. 157 "Fair Value Measurements"
("SFAS 157"). SFAS 157 establishes an authoritative definition of fair value,
sets out a framework for measuring fair value, and requires additional
disclosures about fair-value measurements. The application of SFAS 157 is
required for fiscal years beginning after Nov. 15, 2007 and interim periods
within those fiscal years. The impact of SFAS 157 on the Fund's financial
statements is being evaluated.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN
48 clarifies the accounting for uncertainty in income taxes recognized in
accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48
prescribes a two-step process to recognize and measure a tax position taken or
expected to be taken in a tax return. The first step is to determine whether a
tax position has met the more-likely-than-not recognition threshold and the
second step is to measure a tax position that meets the threshold to determine
the amount of benefit to recognize. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated
to determine the impact, if any, to the Fund. The adoption of FIN 48 is not
anticipated to have a material impact on the Fund.
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.
- ------------------------------------------------------------------------------
28 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
OTHER
Security transactions are accounted for on the date securities are purchased
or sold. 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
Under an Investment Management Services Agreement, RiverSource Investments,
LLC (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 based on a comparison of the performance of Class A
shares of the Fund to the Lipper Large-Cap Growth Funds Index. In certain
circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year.
If the performance difference is less than 0.50%, the adjustment will be zero.
The adjustment increased the fee by $1,753,422 for the six months ended Jan.
31, 2007.
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.
Other expenses in the amount of $33,499 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.
Compensation of Board members includes, for the former Board Chair,
compensation as well as retirement benefits. Certain other aspects of the
former Board Chair's compensation, including health benefits and payment of
certain other expenses, are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members
may defer receipt of their compensation. Deferred amounts are treated as
though equivalent dollar amounts had been invested in shares of the Fund or
other RiverSource funds. The Fund's liability for these amounts is adjusted
for market value changes and remains in the Fund until distributed in
accordance with the Plan.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 29
Professional fees include fees paid by the Fund for legal services and
independent auditor services.
Under a Transfer Agency Agreement, RiverSource Service Corporation (the
Transfer Agent) maintains shareholder accounts and records. The Fund pays the
Transfer Agent an annual fee per shareholder account for this service as
follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as
Class R4, the fee structure under the Transfer Agency Agreement was revised
from an account-based fee for Class Y to an asset-based fee for Class R4. The
Fund will pay the Transfer Agent an annual asset-based fee of 0.05% of the
Fund's average daily net asset attributable to Class R4 shares. Prior to Dec.
11, 2006, the Fund paid the Transfer Agent an annual account-based fee of
$17.50 per shareholder account.
In addition, with the introduction of Class R2, Class R3, Class R5 and Class W
shares, the Fund will pay 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 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.
Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate
per shareholder account of $1. This amount is included in the transfer agency
fee on the statement of operations. Effective Dec. 11, 2006, this fee was
eliminated.
The Transfer Agent charges an annual closed account 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.
The Fund has agreements with Ameriprise Financial Services, Inc. and
RiverSource 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.
- ------------------------------------------------------------------------------
30 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was
adopted for the restructured Class R4 and the introduction of Class R2 and
Class R3. The fee is calculated at a rate of 0.25% of the Fund's average daily
net assets attributable to Class R2, Class R3 and Class R4 shares.
Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid
the Distributor a fee for service provided to shareholders by the Distributor
and other servicing agents with respect to those shares. The fee was
calculated at a rate of 0.10% of the Fund's average daily net assets
attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was
terminated.
Sales charges received by the Distributor for distributing Fund shares were
$1,298,997 for Class A, $229,341 for Class B and $1,641 for Class C for the
six months ended Jan. 31, 2007.
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.
Effective Dec. 11, 2006, with the renaming of Class Y as Class R4, the
Investment Manager and its affiliates have agreed to waive certain fees and
expenses until July 31, 2007, 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 0.97% for Class R4.
During the six months ended Jan. 31, 2007, the Fund's custodian and transfer
agency fees were reduced by $135,166 as a result of earnings and bank fee
credits from overnight cash balances. The Fund also pays custodian fees to
Ameriprise Trust Company, an affiliate of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $1,550,820,368 and $1,876,771,037, respectively, for
the six months ended Jan. 31, 2007. Realized gains and losses are determined
on an identified cost basis.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 31
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
SIX MONTHS ENDED JAN. 31, 2007
CLASS A CLASS B CLASS C CLASS I CLASS R2(a)
- ---------------------------------------------------------------------------------------------------------------
Sold 3,450,254 766,422 73,619 2,681,442 155
Issued for reinvested
distributions 525,985 -- 710 123,015 --
Redeemed (9,774,396) (2,349,527) (94,324) (43,733) --
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) (5,798,157) (1,583,105) (19,995) 2,760,724 155
- ---------------------------------------------------------------------------------------------------------------
CLASS R3(a) CLASS R4(b) CLASS R5(a) CLASS W(c)
- ---------------------------------------------------------------------------------------------------------------
Sold 155 390,032 155 157
Issued for reinvested
distributions -- 62,013 -- --
Redeemed -- (2,562,418) -- --
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) 155 (2,110,373) 155 157
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED JULY 31, 2006
CLASS A CLASS B CLASS C CLASS I CLASS R2
- ---------------------------------------------------------------------------------------------------------------
Sold 25,321,178 5,918,299 320,095 3,763,917 N/A
Issued for reinvested
distributions 25,727 -- -- 8,083 N/A
Redeemed (17,311,509) (10,403,829) (178,061) (113,992) N/A
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) 8,035,396 (4,485,530) 142,034 3,658,008 N/A
- ---------------------------------------------------------------------------------------------------------------
CLASS R3 CLASS R4(b) CLASS R5 CLASS W
- ---------------------------------------------------------------------------------------------------------------
Sold N/A 1,827,502 N/A N/A
Issued for reinvested
distributions N/A 5,559 N/A N/A
Redeemed N/A (3,287,393) N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) N/A (1,454,332) N/A N/A
- ---------------------------------------------------------------------------------------------------------------
(a) Inception date is Dec. 11, 2006.
(b) Effective Dec. 11, 2006, Class Y was renamed Class R4.
(c) Inception date is Dec. 1, 2006.
- --------------------------------------------------------------------------------
32 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
5. FORWARD FOREIGN CURRENCY CONTRACTS
At Jan. 31, 2007, the Fund has a forward foreign currency exchange contract
that obligates it to deliver currency at a specified future date. The
unrealized depreciation on this contract is included in the accompanying
financial statements. See "Summary of significant accounting policies." The
terms of the open contract are as follows:
EXCHANGE DATE CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- --------------------------------------------------------------------------------------------------------------
Feb. 5, 2007 1,527,814 3,001,084 $-- $762
British Pound U.S. Dollar
6. LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend securities
representing up to one-third of the value of its total assets (which includes
collateral for securities on loan) to broker-dealers, banks, or other
institutional borrowers of securities. The Fund receives collateral in the
form of cash and U.S. government securities, equal to at least 100% of the
value of securities loaned, which is marked to the market value of the loaned
securities daily until the securities are returned, e.g., if the value of the
securities on loan increases, additional cash collateral is provided by the
borrower. The Investment Manager serves as securities lending agent for the
Fund under the investment management services agreement pursuant to which the
Fund has agreed to reimburse the Investment Manager for expenses incurred by
it in connection with the lending program, and pursuant to guidelines adopted
by and under the oversight of the Board. At Jan. 31, 2007, securities valued
at $19,759,321 were on loan to brokers. For collateral, the Fund received
$20,514,175 in cash. Cash collateral received is invested in an affiliated
money market fund and short-term securities, including U.S. government
securities or other high-grade debt obligations, which are included in the
"Investments in securities." Income from securities lending amounted to
$59,140 for the six months ended Jan. 31, 2007. The risks to the Fund of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
7. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written are as
follows:
SIX MONTHS ENDED JAN. 31, 2007
CALLS
- -------------------------------------------------------------------------------------------------
CONTRACTS PREMIUMS
- -------------------------------------------------------------------------------------------------
Balance July 31, 2006 2,515 $ 5,531,700
Opened 49,950 4,170,057
Closed (2,515) (5,531,700)
- -------------------------------------------------------------------------------------------------
Balance Jan. 31, 2007 49,950 $ 4,170,057
- -------------------------------------------------------------------------------------------------
See "Summary of significant accounting policies."
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 33
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash
Fund, a money market fund established for the exclusive use of the RiverSource
funds and other institutional clients of RiverSource Investments.
9. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The agreement went into effect Sept. 19, 2006. The Fund
must maintain asset coverage for borrowings of at least 300%. The agreement,
which enables the Fund to participate with other RiverSource funds, permits
borrowings up to $500 million, collectively. Interest is charged to each Fund
based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. 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. Prior to this agreement, the
Fund paid a commitment fee equal to its pro rata share of the amount of the
credit facility at a rate of 0.07% per annum. The Fund had no borrowings under
the facility outstanding during the six months ended Jan. 31, 2007.
10. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$535,377,023 at July 31, 2006, that if not offset by capital gains will expire
as follows:
2010 2011
$166,602,696 $368,774,327
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires.
- ------------------------------------------------------------------------------
34 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
11. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs
allege that they are investors in several American Express Company mutual
funds and they purport to bring the action derivatively on behalf of those
funds under the Investment Company Act of 1940. The plaintiffs allege that
fees allegedly paid to the defendants by the funds for investment advisory and
administrative services are excessive. The plaintiffs seek remedies including
restitution and rescission of investment advisory and distribution agreements.
The plaintiffs voluntarily agreed to transfer this case to the United States
District Court for the District of Minnesota. In response to our motion to
dismiss the complaint, the Court dismissed one of plaintiffs' four claims and
granted plaintiffs limited discovery. Discovery is currently set to end in
March 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)), the parent company of RiverSource
Investments, LLC (RiverSource Investments), entered into settlement agreements
with the Securities and Exchange Commission (SEC) and Minnesota Department of
Commerce (MDOC) related to market timing activities. In connection with these
matters, the SEC and MDOC issued orders (the Orders) alleging that AEFC
violated certain provisions of the federal and Minnesota securities laws by
failing to adequately disclose market timing activities by allowing certain
identified market timers to continue to market time contrary to disclosures in
mutual fund and variable annuity product prospectuses. The Orders also alleged
that AEFC failed to implement procedures to detect and prevent market timing
in 401(k) plans for employees of AEFC and related companies and failed to
adequately disclose that there were no such procedures. Pursuant to the MDOC
Order, the MDOC also alleged that AEFC allowed inappropriate market timing to
occur by failing to have written policies and procedures and failing to
properly supervise its employees.
As a result of the Orders, 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. Pursuant to the terms of the Orders, AEFC agreed to
pay disgorgement of $10 million and civil money penalties of $7 million. AEFC
also agreed to make presentations at least annually to its board of directors
and the relevant mutual
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 35
funds' board that include an overview of policies and procedures to prevent
market timing, material changes to these policies and procedures and whether
disclosures related to market timing are consistent with the SEC order and
federal securities laws. 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. In
addition, AEFC agreed to complete and submit to the MDOC a compliance review
of its procedures regarding market timing within one year of the MDOC Order,
including a summary of actions taken to ensure compliance with applicable laws
and regulations and certification by a senior officer regarding compliance and
supervisory procedures.
Ameriprise Financial and its affiliates have cooperated with the SEC and the
MDOC in these legal proceedings, and have made regular reports to the
RiverSource Funds' Boards of Directors/Trustees.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings,
including routine litigation, class actions, and governmental actions,
concerning matters arising in connection with the conduct of their business
activities. Ameriprise Financial believes that the Funds are not currently the
subject of, and that neither Ameriprise Financial nor any of its affiliates
are the subject of, any pending legal, arbitration or regulatory proceedings
that are likely to have a material adverse effect on the Funds or the ability
of Ameriprise Financial or its affiliates to perform under their contracts
with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as
necessary, 8-K filings with the Securities and Exchange Commission on legal
and regulatory matters that relate to Ameriprise Financial and its affiliates.
Copies of these filings may be obtained by accessing the SEC website at
www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse
effect on the Funds or the ability of Ameriprise Financial or its affiliates
to perform under their contracts with the Funds, these proceedings are subject
to uncertainties and, as such, we are unable to estimate the possible loss or
range of loss that may result. An adverse outcome in one or more of these
proceedings could result in adverse judgments, settlements, fines, penalties
or other relief that could have a material adverse effect on the consolidated
financial condition or results of operations of Ameriprise Financial.
- ------------------------------------------------------------------------------
36 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
12. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
the Fund's results.
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(a) 2006 2005 2004 2003
Net asset value, beginning of period $28.61 $28.34 $23.73 $22.80 $20.88
- ------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .18 .04 .02 --
Net gains (losses) (both realized
and unrealized) 4.17 .10 4.57 .91 1.92
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 4.21 .28 4.61 .93 1.92
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.22) (.01) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $32.60 $28.61 $28.34 $23.73 $22.80
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $2,490 $2,351 $2,101 $2,117 $2,263
- ------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) 1.21%(d) 1.14% 1.19% 1.03% 1.21%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .17%(d) .72% .16% .07% --%
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47% 134% 136% 171% 205%
- ------------------------------------------------------------------------------------------------------------------------
Total return(e) 14.75%(f) .98% 19.43% 4.08% 9.20%
- ------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 37
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(g) 2006 2005 2004 2003
Net asset value, beginning of period $26.06 $26.01 $21.95 $21.25 $19.61
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.09) (.05) (.16) (.16) (.17)
Net gains (losses) (both realized
and unrealized) 3.82 .10 4.22 .86 1.81
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.73 .05 4.06 .70 1.64
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $29.79 $26.06 $26.01 $21.95 $21.25
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 481 $ 462 $ 578 $ 598 $ 775
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) 1.99%(d) 1.91% 1.97% 1.81% 1.99%
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets (.61%)(d) (.06%) (.62%) (.71%) (.77%)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47% 134% 136% 171% 205%
- -------------------------------------------------------------------------------------------------------------------------
Total return(e) 14.31%(f) .19% 18.50% 3.29% 8.36%
- -------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
38 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(g) 2006 2005 2004 2003
Net asset value, beginning of period $26.07 $26.01 $21.95 $21.25 $19.62
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.08) (.04) (.16) (.16) (.17)
Net gains (losses) (both realized
and unrealized) 3.81 .10 4.22 .86 1.80
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.73 .06 4.06 .70 1.63
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.03) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $29.77 $26.07 $26.01 $21.95 $21.25
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 21 $ 19 $ 15 $ 13 $ 12
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) 1.98%(d) 1.91% 1.97% 1.81% 2.01%
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets (.60%)(d) (.03%) (.62%) (.71%) (.81%)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47% 134% 136% 171% 205%
- -------------------------------------------------------------------------------------------------------------------------
Total return(e) 14.31%(f) .23% 18.50% 3.29% 8.31%
- -------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 39
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004(b)
Net asset value, beginning of period $29.31 $28.93 $24.10 $25.61
- ----------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .10 .32 .12 .09
Net gains (losses) (both realized
and unrealized) 4.29 .10 4.71 (1.60)
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 4.39 .42 4.83 (1.51)
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.36) (.04) -- --
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.34 $29.31 $28.93 $24.10
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 383 $ 256 $ 147 $ 18
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) .76%(e) .68% .75% .57%(e)
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .63%(e) 1.22% .55% .43%(e)
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47% 134% 136% 171%
- ----------------------------------------------------------------------------------------------------------------------
Total return(f) 15.01%(g) 1.44% 20.04% (5.90%)(g)
- ----------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Inception date is March 4, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
40 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $32.29
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.02)
Net gains (losses) (both realized
and unrealized) 1.14
- -------------------------------------------------------------------------------------
Total from investment operations 1.12
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.35)
- -------------------------------------------------------------------------------------
Net asset value, end of period $33.06
- -------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- -------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) 1.51%(e)
- -------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets (.43%)(e)
- -------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47%
- -------------------------------------------------------------------------------------
Total return(f) 3.71%(g)
- -------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 41
CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $32.29
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (.01)
Net gains (losses) (both realized
and unrealized) 1.15
- -------------------------------------------------------------------------------------
Total from investment operations 1.14
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.36)
- -------------------------------------------------------------------------------------
Net asset value, end of period $33.07
- -------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- -------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) 1.24%(e)
- -------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets (.16%)(e)
- -------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47%
- -------------------------------------------------------------------------------------
Total return(f) 3.74%(g)
- -------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- ------------------------------------------------------------------------------
42 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(g) 2006 2005 2004 2003
Net asset value, beginning of period $29.13 $28.81 $24.07 $23.09 $21.11
- ------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05 .24 .09 .07 .04
Net gains (losses) (both realized
and unrealized) 4.26 .10 4.65 .91 1.94
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 4.31 .34 4.74 .98 1.98
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.26) (.02) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.18 $29.13 $28.81 $24.07 $23.09
- ------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 232 $ 265 $ 304 $ 350 $ 398
- ------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) 1.04%(d) .95% 1.02% .86% 1.03%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .34%(d) .89% .34% .25% .18%
- ------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47% 134% 136% 171% 205%
- ------------------------------------------------------------------------------------------------------------------------
Total return(e) 14.84%(f) 1.17% 19.69% 4.24% 9.38%
- ------------------------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4.
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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.
(d) Adjusted to an annual basis.
(e) Total return does not reflect payment of a sales charge.
(f) Not annualized.
(g) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 43
CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $32.29
- --------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01
Net gains (losses) (both realized
and unrealized) 1.15
- --------------------------------------------------------------------------------------
Total from investment operations 1.16
- --------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.36)
- --------------------------------------------------------------------------------------
Net asset value, end of period $33.09
- --------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- --------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) .78%(e)
- --------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .31%(e)
- --------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47%
- --------------------------------------------------------------------------------------
Total return(f) 3.82%(g)
- --------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- ------------------------------------------------------------------------------
44 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $31.89
- --------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03
Net gains (losses) (both realized
and unrealized) 1.51
- --------------------------------------------------------------------------------------
Total from investment operations 1.54
- --------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.35)
- --------------------------------------------------------------------------------------
Net asset value, end of period $33.08
- --------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- --------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) 1.19%(e)
- --------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .58%(e)
- --------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 47%
- --------------------------------------------------------------------------------------
Total return(f) 4.87%(g)
- --------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 1, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- ------------------------------------------------------------------------------
RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT 45
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are 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 during
the 12-month period ended June 30, 2006 is available without charge by
visiting riversource.com/funds; or searching the website of the SEC at
www.sec.gov.
- ------------------------------------------------------------------------------
46 RIVERSOURCE GROWTH FUND - 2007 SEMIANNUAL REPORT
RIVERSOURCE(R) GROWTH FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
This report must be accompanied or
preceded by the Fund's current
prospectus. RiverSource(R) mutual
funds are distributed by
RiverSource Distributors, Inc. and
Ameriprise Financial Services,
Inc., Members NASD, and managed by
RiverSource Investments, LLC. These
RIVERSOURCE [LOGO](R) companies are part of Ameriprise
INVESTMENTS Financial, Inc. S-6456 X (3/07)
Semiannual Report
RIVERSOURCE [LOGO](R)
INVESTMENTS
RIVERSOURCE(R)
LARGE CAP EQUITY FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
JAN. 31, 2007
> RIVERSOURCE LARGE CAP EQUITY
FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM
GROWTH OF CAPITAL.
TABLE OF CONTENTS
Fund Snapshot .......................................................... 3
Performance Summary .................................................... 5
Questions & Answers with Portfolio Management .......................... 8
Fund Expenses Example .................................................. 11
Investments in Securities .............................................. 14
Financial Statements ................................................... 23
Notes to Financial Statements .......................................... 29
Proxy Voting ........................................................... 51
[LOGO]
DALBAR RATED
2006
FOR COMMUNICATION
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.
- ------------------------------------------------------------------------------
2 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
FUND SNAPSHOT AT JAN. 31, 2007
FUND OVERVIEW
RiverSource Large Cap Equity Fund offers a combination of growth and value
within a single portfolio. The Fund strives to deliver consistent returns
compared to the market in a variety of economic conditions. The stock
selection process is research-driven, leveraging the talents of an experienced
team of analysts. The portfolio management team then selects the securities
and determines the allocation within the growth and value styles. The Fund is
also broadly diversified.
SECTOR BREAKDOWN*
Percentage of portfolio assets
Financials 18.7%
Information Technology 15.0%
Health Care 13.4%
Consumer Discretionary 12.6% [PIE CHART]
Consumer Staples 8.2%
Telecommunication Services 8.0%
Other(1) 24.1%
* Sectors can be comprised of several industries. Please refer to the
section entitled "Investments in Securities" for a complete listing. No
single industry exceeds 25% of portfolio assets.
(1) Includes Energy 7.9%, Industrials 7.8%, Utilities 2.4%, Materials 2.3%
and Cash & Cash Equivalents(2) 3.7%.
(2) Of the 3.7%, 0.6% is due to security lending activity and 3.1% is the
Fund's cash equivalent position.
TOP TEN HOLDINGS
Percentage of portfolio assets
Exxon Mobil 3.4%
NTL 3.4%
General Electric 2.2%
AT&T 2.0%
Microsoft 1.9%
Citigroup 1.9%
Pfizer 1.9%
American Intl Group 1.9%
Bank of America 1.8%
Altria Group 1.8%
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
The Global Industry Classification Standard (GICS) 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.
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 3
FUND SNAPSHOT AT JAN. 31, 2007
STYLE MATRIX
[chart] Shading within the style matrix indicates areas in which the Fund
generally invests.
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
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 serves 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.
PORTFOLIO MANAGERS
YEARS IN INDUSTRY
Robert Ewing, CFA 18
Nick Thakore 13
FUND FACTS
TICKER SYMBOL INCEPTION DATE
Class A ALEAX 3/28/02
Class B ALEBX 3/28/02
Class C ARQCX 3/28/02
Class I ALRIX 3/4/04
Class R2 -- 12/11/06
Class R3 -- 12/11/06
Class R4(1) ALEYX 3/28/02
Class R5 -- 12/11/06
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4.
Total net assets $7.235 billion
Number of holdings 438
- ------------------------------------------------------------------------------
4 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
PERFORMANCE SUMMARY
PERFORMANCE COMPARISON
For the six-month period ended Jan. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
RiverSource Large Cap Equity Fund Class A (excluding sales charge) +14.64%
Russell 1000(R) Index(1) (unmanaged) +14.28%
S&P 500 Index(2) (unmanaged) +13.75%
Lipper Large-Cap Core Funds Index(3) +13.17%
(1) The Russell 1000 Index, an unmanaged index, measures the performance of
the 1,000 largest companies in the Russell 3000(R) Index, which
represents approximately 92% of the total market capitalization of the
Russell 3000 Index. The index reflects reinvestment of all distributions
and changes in market prices.
(2) The S&P 500 Index, an unmanaged index of common stocks, is frequently
used as a general measure of market performance. The index reflects
reinvestment of all distributions and changes in market prices.
(3) The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap
core funds tracked by Lipper Inc. The index's returns include net
reinvested dividends. The Fund's performance is currently measured
against this index for purposes of determining the performance incentive
adjustment. See "Fund Management and Compensation" for more information.
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 bar chart. If reflected, returns would be lower than those
shown. The performance of other classes may vary from that shown because of
differences in expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 5
PERFORMANCE SUMMARY
ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
CLASS A CLASS B CLASS C CLASS I
Total 1.06% 1.84% 1.84% 0.59%
Net Expenses(a) 1.06% 1.84% 1.84% 0.59%
CLASS R2(b) CLASS R3(b) CLASS R4(b) CLASS R5(b)
Total 1.38% 1.13% 0.88% 0.63%
Net Expenses(a) 1.38% 1.13% 0.85% 0.63%
(a) The investment manager and its affiliates have contractually agreed to
waive certain fees and to absorb certain expenses until July 31, 2007,
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 expenses before giving effect to any performance incentive
adjustment, will not exceed 0.90% for Class R4.
(b) Effective Dec. 11, 2006, Class Y was renamed Class R4. Inception date
for Class R2, Class R3 and Class R5 is Dec. 11, 2006. For Class R2,
Class R3, Class R5, expenses are based on estimated amounts for the
current fiscal year.
AVERAGE ANNUAL TOTAL RETURNS
AT JAN. 31, 2007
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 3/28/02) +14.64% +14.73% +9.04% +5.81%
Class B (inception 3/28/02) +14.13% +13.70% +8.21% +4.97%
Class C (inception 3/28/02) +14.02% +13.59% +8.17% +4.99%
Class I (inception 3/4/04) +14.61% +14.93% N/A +9.14%
Class R2 (inception 12/11/06) N/A N/A N/A +2.85%*
Class R3 (inception 12/11/06) N/A N/A N/A +3.03%*
Class R4** (inception 3/28/02) +14.48% +14.89% +9.27% +6.00%
Class R5 (inception 12/11/06) N/A N/A N/A +3.04%*
With sales charge
Class A (inception 3/28/02) +8.06% +8.12% +6.91% +4.53%
Class B (inception 3/28/02) +9.13% +8.70% +7.06% +4.62%
Class C (inception 3/28/02) +13.02% +12.59% +8.17% +4.99%
- ------------------------------------------------------------------------------
6 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS (CONTINUED)
AT DEC. 31, 2006
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 3/28/02) +13.38% +14.95% +8.66% +5.51%
Class B (inception 3/28/02) +12.85% +13.93% +7.82% +4.64%
Class C (inception 3/28/02) +12.93% +14.02% +7.84% +4.70%
Class I (inception 3/4/04) +13.55% +15.35% N/A +8.71%
Class R2 (inception 12/11/06) N/A N/A N/A +0.98%*
Class R3 (inception 12/11/06) N/A N/A N/A +0.98%*
Class R4** (inception 3/28/02) +13.65% +15.12% +8.90% +5.70%
Class R5 (inception 12/11/06) N/A N/A N/A +0.99%*
With sales charge
Class A (inception 3/28/02) +6.86% +8.34% +6.53% +4.20%
Class B (inception 3/28/02) +7.85% +8.93% +6.66% +4.29%
Class C (inception 3/28/02) +11.93% +13.02% +7.84% +4.70%
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied
as follows: first year 5%; second and third years 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R3, Class R4 and Class R5
shares. These share classes are available to institutional investors only.
* Not annualized.
** Effective Dec. 11, 2006, Class Y was renamed Class R4.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 7
QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT
Below, Bob Ewing and Nick Thakore, RiverSource Large Cap Equity Fund's
portfolio managers, discuss the Fund's results and positioning for the
semiannual period ended Jan. 31, 2007.
Q: How did RiverSource Large Cap Equity Fund perform for the six-month
period ended Jan. 31, 2007?
A: RiverSource Large Cap Equity Fund's Class A shares advanced 14.64%,
excluding sales charge, for the six months ended Jan. 31, 2007. The Fund
outperformed its benchmarks, the Russell 1000(R) Index (Russell Index)
and the Standard & Poor's 500 Index (S&P 500 Index), which increased
14.28% and 13.75%, respectively. The Fund's peer group, the Lipper
Large-Cap Core Funds Index, gained 13.17% during the same time frame.
Q: What factors most significantly affected performance for the period?
A: U.S. stocks advanced sharply during the past six months, supported by
continued economic growth, corporate earnings and the Federal Reserve
Board's monetary policy, which held short-term interest rates steady.
Large-cap growth stocks outperformed large-cap value stocks and because
we had positioned the portfolio with more of a growth tilt than was
typical, the Fund was rewarded during the semiannual period.
The Fund's strong performance during the past six months resulted from
positive stock selection. The information technology, consumer staples
and energy sectors were the primary contributors to performance during
the period, while positioning in the materials and financials sectors
detracted from performance.
Within the information technology sector, positive stock selection drove
the Fund's results. An emphasis on cell phone handset manufacturers,
such as Nokia, and networking companies, such as Cisco Systems,
contributed positively to results. Semiconductor firm Freescale was the
single largest individual contributor as the company was bought out by
private equity investors. Nokia and other handset makers have continued
to benefit from the strong growth trends in the telecommunication
services sector, while Cisco Systems has demonstrated that it is in the
midst of a strong product cycle.
THE FUND'S STRONG PERFORMANCE DURING THE PAST SIX MONTHS RESULTED FROM
POSITIVE STOCK SELECTION.
- ------------------------------------------------------------------------------
8 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
QUESTIONS & ANSWERS
Stock selection in the consumer staples sector benefited from
larger-than-Russell Index positions within the household products group,
where stocks such as Spectrum Brands and Procter & Gamble performed
well. Household products is traditionally a defensive industry and
earnings in the group remained stable while overall market earnings
showed signs of slowing. Within consumer staples, we also emphasized
retail grocers, another defensive segment. Safeway, a turnaround story
in this group, outperformed as same store sales were better than
expected.
The Fund had a smaller energy position than the Russell Index due to our
concern that higher prices would dampen global demand. Reduced emphasis
on energy was beneficial during this period. Within the energy sector,
stock selection was also favorable as we had relatively small exposure
to refining companies and energy services firms. These are typically the
riskier stocks within the sector and our smaller allocations were
advantageous. A larger-than-Russell Index position in integrated oil
companies helped performance.
Within the materials sector, the Fund had de-emphasized base metals, an
area that outperformed during the period. During the period, metals
stocks got a boost from expected merger and acquisition activity,
despite the overall sharp decline in many commodity prices.
In the financials sector, stock selection was the primary detractor to
performance. The portfolio had less exposure to brokerage firms and
investment management companies than the Russell Index, which ended up
negatively impacting the Fund's performance. Many of these stocks
advanced sharply on earnings growth that continued to exceed
expectations.
Q: What changes did you make to the portfolio and how is it currently
positioned?
A: We sold selected stocks in the Fund's portfolio when valuations
approached our target levels, taking some profits as a result. We added
judiciously to large-cap companies in the information technology and
health care sectors, focusing on stocks where we think valuations are
reasonable relative to our expectations for their growth rates.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 9
QUESTIONS & ANSWERS
In the telecommunication services sector, we continued to see a
promising combination of powerful trends, high free cash flow yields and
high growth rates for telecommunication stocks. We fine-tuned the Fund's
telecommunication services positioning during the six-month period,
reducing its Sprint Nextel position and adding to companies that are
executing better growth.
Q: How do you plan to manage the Fund in coming months?
A: We currently see corporate profit margins at record levels, while at the
same time, there are signs of slower global economic growth. In
addition, continued high energy prices, increased borrowing costs and a
weaker U.S. housing market could lead consumers to reduce their
spending. All of these suggest that corporate profit growth is likely to
decelerate.
Given this scenario, we are maintaining an emphasis on stable growth
companies, those whose earnings growths are less dependent on the
economy. Also, among companies whose earnings are tied to the economy,
we are looking for situations where the cyclical nature of those
earnings has already been discounted in the stock price. We continue to
emphasize larger-cap stocks that still appear inexpensive relative to
mid- and small-cap stocks based on the historical relationships between
these groups.
Any specific securities mentioned are for illustrative purposes only and are
not a complete list of securities that have increased or decreased in value.
The views expressed in this statement reflect those of the portfolio
manager(s) only through the end of the period of the report as stated on the
cover and do not necessarily represent the views of RiverSource Investments,
LLC (RiverSource) or any subadviser to the Fund or any other person in the
RiverSource or subadviser organizations. Any such views are subject to change
at any time based upon market or other conditions and RiverSource disclaims
any responsibility to update such views. These views may not be relied on as
investment advice and, because investment decisions for a RiverSource Fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any RiverSource Fund.
- ------------------------------------------------------------------------------
10 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
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 acquired funds expense ratio as of the
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, 2007.
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.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 11
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2006 JAN. 31, 2007 THE PERIOD(a) EXPENSE RATIO
Class A
Actual(b) $1,000 $1,146.40 $ 5.90 1.09%
Hypothetical
(5% return before expenses) $1,000 $1,019.71 $ 5.55 1.09%
Class B
Actual(b) $1,000 $1,141.30 $10.09 1.87%
Hypothetical
(5% return before expenses) $1,000 $1,015.78 $ 9.50 1.87%
Class C
Actual(b) $1,000 $1,140.20 $10.03 1.86%
Hypothetical
(5% return before expenses) $1,000 $1,015.83 $ 9.45 1.86%
Class I
Actual(b) $1,000 $1,146.10 $ 3.30 0.61%
Hypothetical
(5% return before expenses) $1,000 $1,022.13 $ 3.11 0.61%
Class R2
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,017.90 $ 7.37 1.45%
Class R3
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,019.31 $ 5.96 1.17%
Class R4
Actual(b) $1,000 $1,144.80 $ 4.70(d) .87%
Hypothetical
(5% return before expenses) $1,000 $1,020.82 $ 4.43(d) .87%
- ------------------------------------------------------------------------------
12 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2006 JAN. 31, 2007 THE PERIOD(a) EXPENSE RATIO
Class R5
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,021.68 $3.57 .70%
(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 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Jan. 31, 2007:
+14.64% for Class A, +14.13% for Class B, +14.02% for Class C, +14.61%
for Class I and +14.48% for Class R4.
(c) The actual values and expenses paid are not presented because Class R2,
Class R3 and Class R5 do not have a full six months of history. The
inception date of Class R2, Class R3 and Class R5 is Dec. 11, 2006.
(d) In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee
structure under the transfer agent agreement from an account-based fee
to an asset-based fee, and adopting a plan administration services
agreement. In addition, the investment manager and its affiliates have
contractually agreed to waive certain fees and to absorb certain
expenses until July 31, 2007, unless sooner terminated at the discretion
of the Fund's Board, such that net expenses (excluding fees and expenses
of acquired funds), before giving effect to any performance incentive
adjustment, will not exceed 0.90% for Class R4. Any amounts waived will
not be reimbursed by the Fund. These changes were effective Dec. 11,
2006. If these changes had been in place for the six-month period ended
Jan. 31, 2007, the actual expenses paid for Class R4 would have been
$4.87 and the hypothetical expenses paid for Class R4 would have been
$4.58.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 13
INVESTMENTS IN SECURITIES
JAN. 31, 2007 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
COMMON STOCKS (96.1%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (3.4%)
Boeing 879,536 $ 78,771,243
DRS Technologies 54,127 2,998,636
General Dynamics 98,330 7,684,490
Goodrich 375,576 18,410,736
Honeywell Intl 1,366,877 62,452,610
L-3 Communications Holdings 131,401 10,819,558
Lockheed Martin 259,968 25,266,290
Northrop Grumman 248,534 17,631,002
United Technologies 358,945 24,415,439
--------------
Total 248,450,004
- ------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS (0.1%)
United Parcel Service Cl B 58,292(h) 4,213,346
- ------------------------------------------------------------------------------
AIRLINES (--%)
UAL 54,297(b) 2,345,630
- ------------------------------------------------------------------------------
AUTO COMPONENTS (0.1%)
Goodyear Tire & Rubber 32,191(b) 794,796
Johnson Controls 35,506 3,282,885
--------------
Total 4,077,681
- ------------------------------------------------------------------------------
AUTOMOBILES (0.1%)
Ford Motor 341,503(e) 2,776,419
General Motors 102,688 3,372,274
--------------
Total 6,148,693
- ------------------------------------------------------------------------------
BEVERAGES (1.7%)
Anheuser-Busch Companies 312,676 15,937,096
Brown-Forman Cl B 14,457 948,235
Coca-Cola 754,900 36,144,612
Coca-Cola Enterprises 50,053 1,027,088
Constellation Brands Cl A 180,973(b) 4,477,272
Molson Coors Brewing Cl B 8,291 669,913
Pepsi Bottling Group 24,670 780,312
PepsiCo 957,478 62,465,864
--------------
Total 122,450,392
- ------------------------------------------------------------------------------
BIOTECHNOLOGY (2.3%)
Amgen 895,050(b) 62,984,669
Biogen Idec 503,007(b) 24,315,358
Genentech 783,203(b,e) 68,428,446
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
BIOTECHNOLOGY (CONT.)
Gilead Sciences 98,515(b) $ 6,336,485
MedImmune 55,509(b) 1,923,942
--------------
Total 163,988,900
- ------------------------------------------------------------------------------
BUILDING PRODUCTS (0.1%)
Masco 232,700(e) 7,444,073
- ------------------------------------------------------------------------------
CAPITAL MARKETS (3.1%)
Bank of New York 279,674 11,189,757
Bear Stearns Companies 21,855 3,602,797
Charles Schwab 145,880 2,760,050
Franklin Resources 181,453 21,612,867
Goldman Sachs Group 78,378 16,628,676
KKR Private Equity Investors LP Unit 1,197,234(g) 27,955,414
Lehman Brothers Holdings 452,026 37,174,618
Merrill Lynch & Co 439,236 41,094,920
Morgan Stanley 522,774 43,280,459
State Street 258,244 18,348,236
--------------
Total 223,647,794
- ------------------------------------------------------------------------------
CHEMICALS (0.9%)
Air Products & Chemicals 40,003 2,986,624
Ashland 67,342 4,683,636
Dow Chemical 555,672 23,082,614
Eastman Chemical 110,476 6,469,474
Ecolab 32,435 1,423,897
EI du Pont de Nemours & Co 285,623 14,155,475
Hercules 20,576(b) 403,495
Intl Flavors & Fragrances 14,322 694,331
Monsanto 98,548 5,429,009
PPG Inds 29,988 1,987,905
Praxair 58,525 3,690,587
Rohm & Haas 26,063 1,356,840
Sigma-Aldrich 24,289 921,768
--------------
Total 67,285,655
- ------------------------------------------------------------------------------
COMMERCIAL BANKS (2.5%)
BB&T 97,503 4,120,477
Comerica 29,450 1,746,385
Commerce Bancorp 34,149 1,153,553
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
14 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
COMMERCIAL BANKS (CONT.)
Compass Bancshares 23,492 $ 1,430,663
Fifth Third Bancorp 160,849(e) 6,417,875
First Horizon Natl 22,504 981,174
Huntington Bancshares 43,681 1,016,894
M&T Bank 14,107 1,711,320
Natl City 109,816 4,156,536
PNC Financial Services Group 207,820(e) 15,330,881
Regions Financial 132,123 4,790,780
SunTrust Banks 66,234 5,504,045
US Bancorp 852,646 30,354,198
Wachovia 808,391 45,674,092
Wells Fargo & Co 1,528,590 54,906,952
Zions Bancorporation 19,367 1,642,709
--------------
Total 180,938,534
- ------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.1%)
Allied Waste Inds 46,048(b) 588,954
Avery Dennison 34,699 2,372,024
Cintas 24,986 1,028,174
Robert Half Intl 31,102 1,265,851
Waste Management 98,129 3,726,939
--------------
Total 8,981,942
- ------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (4.2%)
ADTRAN 127,819 2,832,469
Alcatel-Lucent 44,493(c) 573,410
Alcatel-Lucent ADR 1,478,378(c) 19,218,914
Cisco Systems 4,255,887(b) 113,164,034
Corning 95,096(b) 1,981,801
JDS Uniphase 602,634(b) 10,714,833
Juniper Networks 92,046(b) 1,667,874
Motorola 542,890 10,776,367
Nokia ADR 3,154,916(c) 69,723,644
QUALCOMM 1,578,508 59,446,611
Tellabs 1,526,067(b) 15,367,495
--------------
Total 305,467,452
- ------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (2.5%)
Apple 376,800(b) 32,303,064
Dell 396,000(b) 9,603,000
EMC 429,475(b) 6,008,355
Hewlett-Packard 1,723,899 74,610,349
Intl Business Machines 604,543 59,940,438
--------------
Total 182,465,206
- ------------------------------------------------------------------------------
CONSTRUCTION MATERIALS (--%)
Vulcan Materials 17,519 $ 1,784,135
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
CONSUMER FINANCE (0.8%)
American Express 389,286 $ 22,664,231
Capital One Financial 377,293 30,334,357
SLM 74,445 3,421,492
--------------
Total 56,420,080
- ------------------------------------------------------------------------------
CONTAINERS & PACKAGING (0.1%)
Ball 18,919 876,328
Bemis 19,034 645,443
Pactiv 25,052(b) 812,687
Sealed Air 14,719 969,982
Temple-Inland 131,128 6,548,532
--------------
Total 9,852,972
- ------------------------------------------------------------------------------
DISTRIBUTORS (--%)
Genuine Parts 31,102 1,477,967
- ------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES (--%)
Apollo Group Cl A 25,605(b) 1,111,257
- ------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (5.1%)
Bank of America 2,516,006 132,291,596
Chicago Mercantile Exchange Holdings Cl A 6,458 3,637,791
CIT Group 36,100 2,128,456
Citigroup 2,495,388 137,570,741
Consumer Discretionary
Select Sector SPDR Fund 56,022(e) 2,210,628
Financial Select Sector SPDR Fund 180,829(e) 6,705,139
iShares Dow Jones
US Healthcare Sector Index Fund 1 68
JPMorgan Chase & Co 1,492,645 76,020,410
Materials Select Sector SPDR Trust 50,257 1,831,365
Moody's 42,991 3,076,436
--------------
Total 365,472,630
- ------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (4.0%)
AT&T 3,840,658 144,523,960
Chunghwa Telecom ADR 170,305(c) 3,527,017
Citizens Communications 203,228 2,979,322
COLT Telecom Group 1,482,097(b,c) 4,681,076
Embarq 460,164 25,543,704
France Telecom 375,224(c) 10,429,068
Qwest Communications Intl 4,739,086(b) 38,623,551
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 15
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
DIVERSIFIED TELECOMMUNICATION SERVICES (CONT.)
Verizon Communications 1,107,725 $ 42,669,566
Windstream 878,012 13,064,819
--------------
Total 286,042,083
- ------------------------------------------------------------------------------
ELECTRIC UTILITIES (1.5%)
Allegheny Energy 29,870(b) 1,389,552
American Electric Power 71,500 3,112,395
Duke Energy 227,399 4,477,486
Edison Intl 59,130 2,659,667
Entergy 223,984 20,796,914
Exelon 470,176 28,205,859
FirstEnergy 59,860 3,551,494
FPL Group 147,075 8,331,799
Pinnacle West Capital 18,054 880,855
PPL 243,159 8,656,460
Progress Energy 45,978 2,185,794
Southern 574,542 20,988,020
--------------
Total 105,236,295
- ------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT (0.2%)
Cooper Inds Cl A 16,124 1,473,572
Emerson Electric 301,237 13,546,629
Rockwell Automation 30,268 1,852,704
--------------
Total 16,872,905
- ------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS (--%)
Tektronix 15,241 430,863
- ------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (0.7%)
Baker Hughes 93,721 6,469,561
BJ Services 237,393 6,566,290
Cameron Intl 94,772(b) 4,975,530
Halliburton 151,636 4,479,327
Natl Oilwell Varco 74,544(b) 4,520,348
Noble 65,057 4,876,022
Pride Intl 140,314(b) 4,042,446
Transocean 33,106(b) 2,561,411
Weatherford Intl 291,692(b) 11,778,524
--------------
Total 50,269,459
- ------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (1.2%)
Costco Wholesale 149,784 8,414,865
CVS 606,878 20,421,445
Safeway 477,827 17,216,107
SYSCO 112,330 3,881,002
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
FOOD & STAPLES RETAILING (CONT.)
Wal-Mart Stores 716,076 $ 34,149,663
Whole Foods Market 25,641 1,107,435
--------------
Total 85,190,517
- ------------------------------------------------------------------------------
FOOD PRODUCTS (0.9%)
Archer-Daniels-Midland 119,085 3,810,720
Campbell Soup 167,738 6,454,558
ConAgra Foods 92,773 2,385,194
Dean Foods 24,572(b) 1,087,311
General Mills 240,391 13,759,981
Hershey 32,231 1,645,070
HJ Heinz 60,200 2,836,624
Kellogg 523,436 25,789,692
Kraft Foods Cl A 78,569(e) 2,743,629
McCormick & Co 23,943 934,735
Sara Lee 138,047 2,367,506
WM Wrigley Jr 39,818 2,051,423
--------------
Total 65,866,443
- ------------------------------------------------------------------------------
GAS UTILITIES (0.1%)
Nicor 8,082 367,731
ONEOK 165,281 7,092,208
Peoples Energy 6,982 304,066
Questar 15,554 1,262,985
--------------
Total 9,026,990
- ------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (1.6%)
Bausch & Lomb 50,886 2,833,332
Boston Scientific 3,044,991(b) 56,180,085
Cooper Companies 75,386 3,595,912
Medtronic 628,128 33,573,442
St. Jude Medical 93,678(b,h) 4,005,671
Stryker 142,427 8,821,928
Zimmer Holdings 120,840(b) 10,177,145
--------------
Total 119,187,515
- ------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (2.6%)
Aetna 331,883 13,992,187
Cardinal Health 749,915 53,558,928
Caremark Rx 315,990 19,357,547
CIGNA 59,502 7,878,065
Coventry Health Care 29,093(b) 1,499,744
Express Scripts 24,896(b) 1,730,770
Health Management Associates Cl A 43,993 855,664
Humana 243,891(b) 13,535,951
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
16 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HEALTH CARE PROVIDERS & SERVICES (CONT.)
Laboratory Corp of America Holdings 22,627(b) $ 1,661,727
Manor Care 13,314 708,837
McKesson 476,985 26,591,914
Patterson Companies 25,114(b) 944,538
Quest Diagnostics 29,597 1,553,251
Tenet Healthcare 86,292(b) 609,222
UnitedHealth Group 810,161 42,339,014
--------------
Total 186,817,359
- ------------------------------------------------------------------------------
HEALTH CARE TECHNOLOGY (--%)
IMS Health 36,418 1,051,023
- ------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.1%)
Applebee's Intl 321,495 8,114,534
Carnival Unit 102,759 5,298,254
Chipotle Mexican Grill Cl A 4,498(b) 267,271
Chipotle Mexican Grill Cl B 7,413(b) 410,235
Harrah's Entertainment 191,267 16,158,236
Intl Game Technology 29,017 1,261,079
Marriott Intl Cl A 361,890 17,421,384
McDonald's 268,853 11,923,631
Orient-Express Hotels Series A 35,378(c) 1,685,762
Pinnacle Entertainment 437,009(b) 15,089,921
Starbucks 61,764(b) 2,158,034
Yum! Brands 15,312 918,873
--------------
Total 80,707,214
- ------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.5%)
DR Horton 408,196 11,862,176
Fortune Brands 27,384 2,292,588
Harman Intl Inds 11,832 1,118,952
Hovnanian Enterprises Cl A 149,206(b) 4,967,068
Leggett & Platt 32,799 795,048
Lennar Cl A 94,325 5,129,394
Meritage Homes 40,410(b) 1,796,225
Newell Rubbermaid 50,287 1,485,478
NVR 3,440(b) 2,382,269
Snap-On 10,540 508,133
Standard-Pacific 89,637 2,459,639
Stanley Works 14,806 847,792
WCI Communities 75,894(b,e) 1,643,105
Whirlpool 14,201 1,298,397
--------------
Total 38,586,264
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
HOUSEHOLD PRODUCTS (2.4%)
Clorox 27,451 $ 1,795,844
Colgate-Palmolive 713,504 48,732,323
Kimberly-Clark 83,215 5,775,121
Procter & Gamble 1,522,801 98,784,101
Spectrum Brands 1,581,145(b,e,k) 19,131,855
--------------
Total 174,219,244
- ------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%)
AES 120,038(b) 2,495,590
Constellation Energy Group 32,605 2,365,493
Dynegy Cl A 68,036(b) 479,654
TXU 83,732 4,528,226
--------------
Total 9,868,963
- ------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (2.6%)
3M 215,058 15,978,809
General Electric 4,405,374 158,813,733
Tyco Intl 510,523(c) 16,275,473
--------------
Total 191,068,015
- ------------------------------------------------------------------------------
INSURANCE (4.7%)
ACE 729,396(c) 42,144,501
AFLAC 480,110 22,858,037
Allied World Assurance Holdings 90,079(c) 3,837,365
American Intl Group 1,996,263 136,644,203
Aon 214,399 7,688,348
Arch Capital Group 76,277(b,c) 4,926,731
Aspen Insurance Holdings 163,392(c) 4,186,103
Chubb 148,058 7,704,938
Endurance Specialty Holdings 68,698(c) 2,335,732
Hartford Financial Services Group 458,249 43,492,413
Max Re Capital 385,210(c) 9,245,040
MetLife 99,471 6,179,139
Prudential Financial 493,891 44,020,505
XL Capital Cl A 74,735(c) 5,156,715
--------------
Total 340,419,770
- ------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL (0.1%)
Amazon.com 38,500(b) 1,450,295
IAC/InterActiveCorp 31,284(b) 1,201,306
Liberty Media - Interactive Cl A 313,581(b,d) 7,641,969
--------------
Total 10,293,570
- ------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 17
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
INTERNET SOFTWARE & SERVICES (2.6%)
eBay 2,024,478(b,i) $ 65,572,842
Google Cl A 219,171(b) 109,870,422
VeriSign 214,193(b) 5,119,213
Yahoo! 172,996(b) 4,897,517
--------------
Total 185,459,994
- ------------------------------------------------------------------------------
IT SERVICES (1.4%)
Affiliated Computer Services Cl A 195,022(b) 9,554,128
Automatic Data Processing 318,868 15,216,381
Cognizant Technology Solutions Cl A 43,130(b) 3,678,558
Electronic Data Systems 1,065,140 28,023,833
Fidelity Natl Information Services 29,502 1,254,425
First Data 1,541,213 38,314,556
Ness Technologies 102,490(b,c) 1,374,391
Paychex 63,841 2,554,278
Satyam Computer Services ADR 96,700(c) 2,251,176
Unisys 63,234(b) 545,077
Western Union 41,527 927,713
--------------
Total 103,694,516
- ------------------------------------------------------------------------------
LEISURE EQUIPMENT & PRODUCTS (--%)
Eastman Kodak 52,167 1,349,039
- ------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.1%)
PerkinElmer 232,523 5,550,324
Thermo Fisher Scientific 90,852(b) 4,347,268
--------------
Total 9,897,592
- ------------------------------------------------------------------------------
MACHINERY (1.1%)
Caterpillar 379,900 24,340,194
Danaher 42,857 3,173,989
Deere & Co 148,498 14,891,380
Dover 37,267 1,848,443
Flowserve 249,648(b) 13,248,819
Illinois Tool Works 56,449 2,878,335
Ingersoll-Rand Cl A 65,214(c) 2,796,376
ITT 68,017 4,057,214
Navistar Intl 11,552(b) 511,060
Parker Hannifin 130,107 10,767,655
--------------
Total 78,513,465
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
MEDIA (8.7%)
CBS Cl B 717 $ 22,349
Charter Communications Cl A 2,386,787(b) 8,353,755
Clear Channel Communications 80,807 2,934,910
Comcast Cl A 1,139,889(b) 50,519,881
Comcast Special Cl A 302,700(b) 13,155,342
EchoStar Communications Cl A 88,348(b) 3,563,958
Idearc 12,741(b) 413,063
Liberty Global Cl A 917,773(b) 27,588,256
Liberty Global Series C 426,754(b) 12,047,265
Liberty Media - Capital Series A 35,278(b,d) 3,608,939
News Corp Cl A 3,599,927 83,698,304
NTL 8,992,649(i) 245,049,686
RH Donnelley 118,756 7,906,774
Time Warner 1,734,435 37,932,093
Viacom Cl B 687,302(b) 27,952,572
Vivendi 1,189,391(c) 49,072,758
Walt Disney 471,878 16,595,949
WorldSpace Cl A 280,278(b,e) 1,045,437
XM Satellite Radio Holdings Cl A 2,274,455(b) 32,320,006
--------------
Total 623,781,297
- ------------------------------------------------------------------------------
METALS & MINING (0.8%)
Alcan 39,418(c) 2,010,318
Alcoa 363,434 11,738,918
Allegheny Technologies 18,263 1,890,038
Coeur d'Alene Mines 2,794,850(b) 12,241,443
Freeport-McMoRan Copper & Gold Cl B 35,669 2,051,324
Newmont Mining 432,678 19,513,778
Nucor 55,976 3,612,691
Phelps Dodge 37,033 4,577,279
--------------
Total 57,635,789
- ------------------------------------------------------------------------------
MULTILINE RETAIL (0.8%)
Dollar General 36,257 614,194
Family Dollar Stores 101,102(h) 3,275,705
Federated Department Stores 279,611 11,601,060
JC Penney 118,485 9,625,721
Target 555,649 34,094,623
--------------
Total 59,211,303
- ------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
18 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
MULTI-UTILITIES (0.7%)
Ameren 37,361 $ 1,984,243
CenterPoint Energy 56,581 976,588
CMS Energy 40,214(b) 671,172
Consolidated Edison 44,728 2,159,468
Dominion Resources 291,820 24,209,387
DTE Energy 32,260 1,495,896
KeySpan 31,764 1,295,971
NiSource 49,508 1,178,290
PG&E 63,168 2,948,682
Public Service Enterprise Group 45,683 3,062,131
Sempra Energy 47,405 2,720,099
TECO Energy 37,911 642,971
Xcel Energy 330,587 7,712,595
--------------
Total 51,057,493
- ------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (7.3%)
Anadarko Petroleum 149,719 6,550,206
BP ADR 105,375(c) 6,692,366
Chesapeake Energy 208,416 6,171,198
Chevron 1,249,022 91,028,723
ConocoPhillips 1,011,521 67,175,110
CONSOL Energy 34,333 1,182,085
Devon Energy 106,762 7,482,949
El Paso 118,603 1,840,719
Exxon Mobil 3,354,199 248,546,145
Kinder Morgan 19,281 2,043,786
Occidental Petroleum 234,078 10,851,856
Peabody Energy 47,931 1,957,023
Royal Dutch Shell ADR 55,837(c) 3,810,875
Ship Finance Intl 147,475(c) 3,499,582
Spectra Energy 113,600(b) 2,967,232
Sunoco 92,881 5,863,578
Total 413,405(c) 28,094,345
Valero Energy 384,675 20,880,159
Williams Companies 105,605 2,850,279
XTO Energy 116,807 5,895,249
--------------
Total 525,383,465
- ------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.4%)
Bowater 131,423(e) 3,597,048
Intl Paper 313,686 10,571,218
MeadWestvaco 32,892 991,365
Weyerhaeuser 205,819 15,436,425
--------------
Total 30,596,056
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
PERSONAL PRODUCTS (0.1%)
Avon Products 81,302 $ 2,795,976
Estee Lauder Companies Cl A 23,462 1,114,445
--------------
Total 3,910,421
- ------------------------------------------------------------------------------
PHARMACEUTICALS (6.7%)
AstraZeneca 814,070(c) 45,578,301
Bristol-Myers Squibb 2,102,362 60,527,002
Eli Lilly & Co 787,636 42,626,860
GlaxoSmithKline ADR 82,189(c) 4,448,891
Johnson & Johnson 709,992 47,427,466
Merck & Co 2,136,629 95,614,148
Novartis ADR 79,969(c) 4,613,412
Pfizer 5,214,953 136,840,366
Roche Holding 4,990(c) 939,899
Schering-Plough 1,223,839(h) 30,595,975
Teva Pharmaceutical Inds ADR 134,147(c) 4,708,560
Watson Pharmaceuticals 247,188(b) 6,728,457
Wyeth 134,302 6,635,862
--------------
Total 487,285,199
- ------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (0.6%)
Apartment Investment & Management Cl A 104,266 6,530,180
Archstone-Smith Trust 38,897 2,458,679
Boston Properties 20,750 2,616,368
Equity Office Properties Trust 232,553(e) 12,918,318
Equity Residential 52,823 2,972,878
HomeBanc 666,464 2,205,996
Kimco Realty 39,321 1,950,322
Plum Creek Timber 32,536 1,309,574
ProLogis 44,502 2,892,630
Public Storage 22,016 2,394,460
Vornado Realty Trust 23,393 2,862,134
--------------
Total 41,111,539
- ------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT (--%)
CB Richard Ellis Group Cl A 33,295(b) 1,252,225
- ------------------------------------------------------------------------------
ROAD & RAIL (0.1%)
Avis Budget Group 5,413 137,815
CSX 96,610 3,554,282
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 19
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
ROAD & RAIL (CONT.)
Norfolk Southern 74,375 $ 3,692,719
--------------
Total 7,384,816
- ------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.2%)
Agere Systems 258,800(b) 5,212,232
Atmel 1,982,236(b) 11,853,772
Broadcom Cl A 66,807(b) 2,132,479
Cypress Semiconductor 394,845(b) 7,284,890
Intel 1,263,717 26,487,509
Linear Technology 71,941 2,226,574
LSI Logic 620,441(b) 5,832,145
Maxim Integrated Products 79,161 2,438,159
PMC-Sierra 142,983(b) 900,793
Spansion Cl A 870,694(b) 11,171,004
Texas Instruments 271,368 8,463,968
United Microelectronics ADR 465,844(c) 1,653,746
Verigy 8,665(b,c) 158,829
Xilinx 66,491 1,615,731
--------------
Total 87,431,831
- ------------------------------------------------------------------------------
SOFTWARE (3.1%)
Adobe Systems 164,294(b) 6,386,108
Business Objects ADR 66,825(b,c) 2,515,293
Cadence Design Systems 460,014(b) 8,694,265
Citrix Systems 97,459(b) 3,086,527
Compuware 627,503(b) 5,628,702
Electronic Arts 94,889(b) 4,744,450
Hyperion Solutions 14,258(b) 601,973
McAfee 205,568(b) 6,014,920
Microsoft 4,512,728 139,262,785
Nuance Communications 97,484(b) 1,123,016
Oracle 627,745(b) 10,772,103
Symantec 1,383,177(b) 24,496,064
TIBCO Software 810,720(b) 7,523,482
--------------
Total 220,849,688
- ------------------------------------------------------------------------------
SPECIALTY RETAIL (1.0%)
AutoNation 27,841(b) 625,030
AutoZone 9,577(b) 1,203,159
Bed Bath & Beyond 96,033(b) 4,051,632
Circuit City Stores 77,633 1,584,490
Home Depot 514,871 20,975,844
Limited Brands 301,435 8,422,094
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SPECIALTY RETAIL (CONT.)
Lowe's Companies 421,634 $ 14,213,281
Office Depot 51,828(b) 1,937,849
OfficeMax 13,576 655,585
RadioShack 24,639 544,522
Sherwin-Williams 20,458 1,413,648
Staples 131,897 3,392,391
Tiffany & Co 44,773 1,757,788
TJX Companies 302,038 8,931,264
--------------
Total 69,708,577
- ------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS (0.1%)
Jones Apparel Group 20,642 705,131
Liz Claiborne 18,877 838,139
Nike Cl B 34,776 3,436,216
VF 16,110 1,222,266
--------------
Total 6,201,752
- ------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (1.8%)
Countrywide Financial 1,686,008 73,307,627
Fannie Mae 496,720 28,079,582
Freddie Mac 411,276 26,704,151
Washington Mutual 91,710 4,089,349
--------------
Total 132,180,709
- ------------------------------------------------------------------------------
TOBACCO (2.0%)
Altria Group 1,473,729 128,789,177
Imperial Tobacco Group ADR 119,941(c) 9,765,596
Reynolds American 31,131 2,007,950
UST 29,207 1,677,650
--------------
Total 142,240,373
- ------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (4.1%)
ALLTEL 1,469,597 90,071,600
Hutchison Telecommunications Intl 7,246,505(b,c) 17,448,263
Orascom Telecom Holding GDR 270,606(c) 18,671,814
Sprint Nextel 2,791,935 49,780,201
Vodafone Group 33,302,002(c) 97,451,008
Vodafone Group ADR 673,572(c,e) 19,796,281
--------------
Total 293,219,167
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $6,039,521,857) $6,954,535,141
- ------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
20 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
OPTIONS PURCHASED (0.3%)
ISSUER CONTRACTS EXERCISE EXPIRATION VALUE(a)
PRICE DATE
CALLS
ALLTEL 3,510 $ 65.00 April 2007 $ 500,175
eBay 1,583 30.00 Feb. 2007 403,665
NTL 22,253 27.50 June 2007 4,951,293
NTL 7,417 27.50 Jan. 2008 2,633,035
PUTS
Mini Nasdaq 100 Index 8,364 177.50 June 2007 4,558,380
Nasdaq 100 Trust Series 1 56,972 44.00 June 2007 8,830,660
S&P 500 Index 1,195 1,350.00 March 2007 328,625
- ------------------------------------------------------------------------------
TOTAL OPTIONS PURCHASED
(Cost: $24,617,060) $22,205,833
- ------------------------------------------------------------------------------
MONEY MARKET FUND (3.7%)(f)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund 265,279,377(j) $ 265,279,377
- ------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $265,279,377) $ 265,279,377
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $6,329,418,294)(l) $7,242,020,351
==============================================================================
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by 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, 2007,
the value of foreign securities represented 7.3% of net assets.
(d) Shareholders of tracking stocks have a financial interest only in a
unit or division of the company. Unlike the common stock of the company
itself, a tracking stock usually has limited or no voting rights. In
the event of a company's liquidation, tracking stock shareholders
typically do not have a legal claim on the company's assets.
(e) At Jan. 31, 2007, security was partially or fully on loan. See Note 7
to the financial statements.
(f) Cash collateral received from security lending activity is invested in
an affiliated money market fund and represents 0.6% of net assets. See
Note 7 to the financial statements. 3.1% of net assets is the Fund's
cash equivalent position.
(g) Identifies issues considered to be illiquid as to their marketability
(see Note 1 to the financial statements). These securities may be
valued at fair value according to methods selected in good faith by the
Fund's Board of Directors. Information concerning such security
holdings at Jan. 31, 2007, is as follows:
ACQUISITION
SECURITY DATES COST
-----------------------------------------------------------------------
KKR Private Equity Investors
LP Unit 05-01-06 thru 12-14-06 $27,154,374
(h) Partially pledged as initial margin deposit on the following open stock
index futures contracts (see Note 6 to the financial statements):
TYPE OF SECURITY CONTRACTS
-----------------------------------------------------------------------
PURCHASE CONTRACTS
S&P 500 Index, March 2007 115
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 21
NOTES TO INVESTMENTS IN SECURITIES (CONTINUED)
(i) At Jan. 31, 2007, securities valued at $93,068,258 were held to cover
open call options written as follows (see Note 8 to the financial
statements):
EXERCISE EXPIRATION
ISSUER CONTRACTS PRICE DATE VALUE(a)
-----------------------------------------------------------------------
eBay 3,772 $ 32.50 Feb. 2007 $ 264,040
NTL 22,253 30.00 June 2007 2,670,360
NTL 7,417 30.00 Jan. 2008 1,705,910
-----------------------------------------------------------------------
Total value $ 4,640,310
-----------------------------------------------------------------------
(j) Affiliated Money Market Fund -- See Note 10 to the financial
statements.
(k) Investments representing 5% or more of the outstanding voting
securities of the issuer. Transactions with companies that are or were
affiliates during the six months ended Jan. 31, 2007 are as follows:
BEGINNING PURCHASE SALES ENDING DIVIDEND
ISSUER COST COST COST COST INCOME VALUE(a)
------------------------------------------------------------------------------------------------
Spectrum Brands* $48,346,165 $2,336,282 $27,888,617 $22,793,830 $ -- $19,131,855
------------------------------------------------------------------------------------------------
Total $48,346,165 $2,336,282 $27,888,617 $22,793,830 $ -- $19,131,855
------------------------------------------------------------------------------------------------
* Issuer was not an affiliate for the entire period ended Jan. 31, 2007.
(l) At Jan. 31, 2007, the cost of securities for federal income tax
purposes was approximately $6,329,418,000 and the approximate aggregate
gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 948,960,000
Unrealized depreciation (36,358,000)
-----------------------------------------------------------------------
Net unrealized appreciation $ 912,602,000
-----------------------------------------------------------------------
The Global Industry Classification Standard (GICS) was developed by and is
the exclusive property of Morgan Stanley Capital International Inc. and
Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's
Public Reference Room in Washington, DC (information on the operations
of the Public Reference Room may be obtained by calling
1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form
N-Q, can be found at riversource.com/funds.
- ------------------------------------------------------------------------------
22 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JAN. 31, 2007 (UNAUDITED)
ASSETS
Investments in securities, at value (Note 1)
Unaffiliated issuers* (identified cost $6,041,345,087) $ 6,957,609,119
Affiliated money market fund (identified cost $265,279,377) (Note 10) 265,279,377
Other affiliated issuers (identified cost $22,793,830) 19,131,855
- --------------------------------------------------------------------------------------------------------
Total investments in securities (identified cost $6,329,418,294) 7,242,020,351
Foreign currency holdings (identified cost $1,276,116) (Note 1) 1,282,328
Capital shares receivable 91,419
Dividends and accrued interest receivable 8,693,499
Receivable for investment securities sold 82,960,279
Unrealized appreciation on swap transactions, at value (Note 9) 722,314
- --------------------------------------------------------------------------------------------------------
Total assets 7,335,770,190
- --------------------------------------------------------------------------------------------------------
LIABILITIES
Disbursements in excess of cash on demand deposit 50,899
Capital shares payable 732,919
Payable for investment securities purchased 47,985,415
Payable upon return of securities loaned (Note 7) 46,412,700
Unrealized depreciation on foreign currency contracts held, at value (Note 5) 664
Accrued investment management services fee 106,792
Accrued distribution fee 69,405
Accrued transfer agency fee 35,053
Accrued administrative services fee 8,913
Accrued plan administration services fee 3,448
Other accrued expenses 423,780
Options contracts written, at value (premiums received $2,791,774) (Note 8) 4,640,310
- --------------------------------------------------------------------------------------------------------
Total liabilities 100,470,298
- --------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $ 7,235,299,892
========================================================================================================
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 23
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
JAN. 31, 2007 (CONT.)
REPRESENTED BY
Capital stock -- $.01 par value (Note 1) $ 12,112,379
Additional paid-in capital 6,521,982,876
Undistributed net investment income 691,394
Accumulated net realized gain (loss) (Note 13) (211,260,366)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (Notes 5, 6 and 9) 911,773,609
- ------------------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $ 7,235,299,892
==================================================================================================================
Net assets applicable to outstanding shares: Class A $ 5,385,112,990
Class B $ 1,165,402,665
Class C $ 35,101,120
Class I $ 117,862,913
Class R2 $ 4,960
Class R3 $ 4,963
Class R4 $ 506,731,496
Class R5 $ 25,078,785
Net asset value per share of outstanding capital stock: Class A shares 899,634,687 $ 5.99
Class B shares 198,254,250 $ 5.88
Class C shares 5,964,945 $ 5.88
Class I shares 19,595,791 $ 6.01
Class R2 shares 822 $ 6.03
Class R3 shares 822 $ 6.04
Class R4 shares 83,633,482 $ 6.06
Class R5 shares 4,153,053 $ 6.04
- ------------------------------------------------------------------------------------------------------------------
* Including securities on loan, at value (Note 7) $ 44,899,184
- ------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
24 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JAN. 31, 2007 (UNAUDITED)
INVESTMENT INCOME
Income:
Dividends $ 63,326,995
Interest 1,626,748
Income distributions from affiliated money market fund (Note 10) 6,311,274
Fee income from securities lending (Note 7) 113,312
Less foreign taxes withheld (220,038)
- -------------------------------------------------------------------------------------------------
Total income 71,158,291
- -------------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 20,462,435
Distribution fee
Class A 6,824,563
Class B 5,872,724
Class C 176,451
Class R2 3
Class R3 2
Transfer agency fee
Class A 6,304,965
Class B 1,496,639
Class C 44,505
Class R4 575,070
Class R5 1,689
Service fee -- Class R4 314,706
Administrative services fees and expenses 1,703,886
Plan administration services fee
Class R2 2
Class R3 2
Class R4 196,024
Compensation of board members 82,500
Custodian fees 421,265
Printing and postage 174,850
Registration fees 35,675
Professional fees 34,858
Other 136,545
- -------------------------------------------------------------------------------------------------
Total expenses 44,859,359
Expenses waived/reimbursed by the Investment Manager and its affiliates
(Note 2) (2,538)
- -------------------------------------------------------------------------------------------------
44,856,821
Earnings and bank fee credits on cash balances (Note 2) (477,104)
- -------------------------------------------------------------------------------------------------
Total net expenses 44,379,717
- -------------------------------------------------------------------------------------------------
Investment income (loss) -- net 26,778,574
- -------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 25
STATEMENT OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JAN. 31, 2007 (UNAUDITED) (CONT.)
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (Note 3) $ 280,210,599
Security transactions -- other affiliated issuers (Note 3) (12,437,657)
Foreign currency transactions 111,811
Futures contracts 11,723,610
Options contracts written (Note 8) (3,850,784)
Swap transactions 334,317
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 276,091,896
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 711,596,907
- -------------------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 987,688,803
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 1,014,467,377
=================================================================================================
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
26 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
JAN. 31, 2007
SIX MONTHS ENDED JULY 31, 2006
(UNAUDITED) YEAR ENDED
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 26,778,574 $ 40,904,787
Net realized gain (loss) on investments 276,091,896 275,180,804
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 711,596,907 (370,550,095)
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 1,014,467,377 (54,464,504)
- -----------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (51,282,208) (8,339,131)
Class B (2,970,060) --
Class C (121,561) --
Class I (1,522,653) (656,302)
Class R2 (65) N/A
Class R3 (66) N/A
Class R4 (5,679,767) (1,124)
Class R5 (322,641) N/A
Net realized gain
Class A (125,265,857) --
Class B (27,693,216) --
Class C (831,229) --
Class I (2,640,713) --
Class R2 (115) N/A
Class R3 (115) N/A
Class R4 (13,607,896) --
Class R5 (560,037) N/A
- -----------------------------------------------------------------------------------------------------------
Total distributions (232,498,199) (8,996,557)
- -----------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 27
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
JAN. 31, 2007
SIX MONTHS ENDED JULY 31, 2006
(UNAUDITED) YEAR ENDED
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Proceeds from sales
Class A shares (Note 2) $ 76,705,949 $ 429,909,019
Class B shares 29,931,494 50,136,037
Class C shares 1,433,624 2,589,055
Class I shares 10,395,146 27,683,397
Class R2 shares 5,000 N/A
Class R3 shares 5,000 N/A
Class R4 shares 9,916,328 19,415,795
Class R5 shares 24,344,212 N/A
Fund merger (Note 12)
Class A shares N/A 5,066,390,993
Class B shares N/A 1,262,273,829
Class C shares N/A 31,569,946
Class I shares N/A 97,113,086
Class R4 shares N/A 1,287,966,195
Reinvestment of distributions at net asset value
Class A shares 171,428,183 8,175,459
Class B shares 30,416,634 --
Class C shares 939,583 --
Class I shares 4,163,008 656,222
Class R4 shares 19,287,529 1,072
Class R5 shares 882,497 N/A
Payments for redemptions
Class A shares (879,186,549) (1,045,511,081)
Class B shares (Note 2) (186,205,018) (597,123,506)
Class C shares (Note 2) (5,858,119) (8,250,000)
Class I shares (13,171,899) (62,694,425)
Class R4 shares (681,280,235) (221,738,132)
- -------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (1,385,847,633) 6,348,562,961
- -------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (603,878,455) 6,285,101,900
Net assets at beginning of period 7,839,178,347 1,554,076,447
- -------------------------------------------------------------------------------------------------------
Net assets at end of period $ 7,235,299,892 $ 7,839,178,347
=======================================================================================================
Undistributed net investment income $ 691,394 $ 35,811,841
- -------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
28 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
(Unaudited as to Jan. 31, 2007)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. The Fund invests primarily in
equity securities of companies with a market capitalization greater than $5
billion at the time of purchase.
The Fund offers Class A, Class B, Class C and Class R4 shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class R4 shares have no sales charge and are offered only to qualifying
institutional investors.
In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee structure
under the transfer agent agreement from account-based to asset-based, and
adopting a plan administration services agreement. These changes were
effective Dec. 11, 2006.
The Fund offers an additional class of shares, Class I, exclusively to certain
institutional investors. Class I shares have no sales charge and are made
available through a separate prospectus supplement provided to investors
eligible to purchase the shares. At Jan. 31, 2007, Ameriprise Financial, Inc.
(Ameriprise Financial) and the affiliated funds-of-funds owned 100% of Class I
shares.
Effective Dec. 11, 2006, the Fund offers additional classes of shares, Class
R2, Class R3 and Class R5, offered to certain institutional investors. These
shares are sold without a front-end sales charge or CDSC. At Jan. 31, 2007,
Ameriprise Financial owned 100% of Class R2, Class R3 and Class R5 shares.
At Jan. 31, 2007, Ameriprise Financial and the affiliated funds-of-funds owned
approximately 2% of the total outstanding Fund shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration fees) differ among classes. Income, expenses (other
than class specific expenses) and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its relative net
assets.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 29
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from
actual results.
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Pursuant to procedures adopted by the Board of Directors of the funds,
Ameriprise Financial utilizes Fair Value Pricing (FVP). FVP determinations are
made in good faith in accordance with these procedures. If a development or
event is so significant that there is a reasonably high degree of certainty
that the effect of the development or event has actually caused the closing
price to no longer reflect the actual value, the closing prices, as determined
at the close of the applicable foreign market, may be adjusted to reflect the
fair value of the affected foreign securities as of the close of the New York
Stock Exchange. Significant events include material movements in the U.S.
securities markets prior to the opening of foreign markets on the following
trading day. FVP results in an estimated price that reasonably reflects the
current market conditions in order to value the portfolio holdings such that
shareholder transactions receive a fair net asset value. Short-term securities
maturing in more than 60 days from the valuation date are valued at the market
price or approximate market value based on current interest rates; those
maturing in 60 days or less are valued at amortized cost.
ILLIQUID SECURITIES
As of Jan. 31, 2007, investments in securities included issues that are
illiquid which the Fund currently limits to 10% of net assets, at market
value, at the time of purchase. The aggregate value of such securities at Jan.
31, 2007 was $27,955,414 representing 0.39% of net assets. These securities
are valued at fair value according to methods selected in good faith by the
Board. According to board guidelines, certain unregistered securities are
determined to be liquid and are not included within the 10% limitation
specified above. Assets are liquid if they can be sold or disposed of in the
ordinary course of business within seven days at approximately the value at
which the asset is valued by the Fund.
OPTION TRANSACTIONS
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options
traded on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
The Fund also may buy and sell put and call options and write covered call
options on portfolio
- ------------------------------------------------------------------------------
30 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
securities as well as write cash-secured put options. The risk in writing a
call option is that the Fund gives up the opportunity for profit if the market
price of the security increases. The risk in writing a put option is that the
Fund may incur a loss if the market price of the security decreases and the
option is exercised. The risk in buying an option is that the Fund pays a
premium whether or not the option is exercised. The Fund also has the
additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund
will realize a gain or loss when the option transaction expires or closes.
When an option is exercised, the proceeds on sales for a written call option,
the purchase cost for a written put option or the cost of a security for a
purchased put or call option is adjusted by the amount of premium received or
paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy
and sell financial futures contracts traded on any U.S. or foreign exchange.
The Fund also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options
include the possibility of an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
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 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. At Jan. 31, 2007,
foreign currency holdings consisted of multiple denominations, primarily
European monetary units.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 31
The Fund may enter into forward foreign currency exchange contracts for
operational purposes. The net U.S. dollar value of foreign currency underlying
all contractual commitments held by the Fund and the resulting unrealized
appreciation or depreciation are determined using foreign currency exchange
rates from an independent pricing service. The Fund is subject to the credit
risk that the other party will not complete its contract obligations.
TOTAL RETURN EQUITY SWAP TRANSACTIONS
The Fund may enter into swap agreements to earn the total return on a
specified security, basket of securities or security indexes during the
specified period, in return for periodic payments based on a fixed or variable
interest rate of the total return from other underlying assets. Total return
swap agreements may be used to obtain exposure to a security or market without
owning or taking physical custody of such security or market. Under the terms
of a total return equity swap agreement, payments made by the Fund or the
counterparty are based on the total return of a particular reference asset or
assets (such as an equity security, a combination of such securities, or an
index). That is, one party agrees to pay another party the return on a stock,
basket of stocks, or stock index in return for a specified interest rate.
The notional amounts of swap contracts are not recoded in the financial
statements. Swap contracts are valued daily, and the change in value is
recorded as unrealized appreciation (depreciation) until the termination of
the swap, at which time realized gain (loss) is recorded. Payments received or
made are recorded as realized gains (losses).
Swap agreements may be subject to liquidity risk, which exists when a
particular swap is difficult to purchase or sell. It may not be possible for
the Fund to initiate a transaction or liquidate a position at an advantageous
time or price, which may result in significant losses. Total return swaps are
subject to the risk associated with the investment in the underlying
securities and also the risk of the counterparty not fulfilling its
obligations under the agreement.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of
their duties to the Fund. In addition, certain of the Fund's contracts with
its service providers contain general indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown since the amount of any
future claims that may be made against the Fund cannot be determined and the
Fund has no historical basis for predicting the likelihood of any such claims.
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.
- ------------------------------------------------------------------------------
32 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. 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
On Sept. 20, 2006, the Financial Accounting Standards Board ("FASB") released
Statement of Financial Accounting Standards No. 157 "Fair Value Measurements"
("SFAS 157"). SFAS 157 establishes an authoritative definition of fair value,
sets out a framework for measuring fair value, and requires additional
disclosures about fair-value measurements. The application of SFAS 157 is
required for fiscal years beginning after Nov. 15, 2007 and interim periods
within those fiscal years. The impact of SFAS 157 on the Fund's financial
statements is being evaluated.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN
48 clarifies the accounting for uncertainty in income taxes recognized in
accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48
prescribes a two-step process to recognize and measure a tax position taken or
expected to be taken in a tax return. The first step is to determine whether a
tax position has met the more-likely-than-not recognition threshold and the
second step is to measure a tax position that meets the threshold to determine
the amount of benefit to recognize. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated
to determine the impact, if any, to the Fund. The adoption of FIN 48 is not
anticipated to have a material impact on the Fund.
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. On March 7, 2006, an additional
dividend was paid before the merger to ensure that current shareholders of
RiverSource Large Cap Equity Fund would not experience a dilution in their
share of the fund's income or capital gains.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 33
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
Under an Investment Management Services Agreement, RiverSource Investments,
LLC (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 based on a comparison of the performance of Class A
shares of the Fund to 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 increased the fee by
$22,717 for the period ended Jan. 31, 2007.
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.
Other expenses in the amount of $67,840 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.
Compensation of Board members includes, for the former Board Chair,
compensation as well as retirement benefits. Certain other aspects of the
former Board Chair's compensation, including health benefits and payment of
certain other expenses, are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members
may defer receipt of their compensation. Deferred amounts are treated as
though equivalent dollar amounts had been invested in shares of the Fund or
other RiverSource funds. The Fund's liability for these amounts is adjusted
for market value changes and remains in the Fund until distributed in
accordance with the Plan.
Professional fees include fees paid by the Fund for legal services and
independent auditor services.
- ------------------------------------------------------------------------------
34 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
Under a Transfer Agency Agreement, RiverSource Service Corporation (the
Transfer Agent) maintains shareholder accounts and records. The Fund pays the
Transfer Agent an annual fee per shareholder account for this service as
follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y to
R4, the fee structure under the Transfer Agency Agreement was revised from an
account-based fee for Class Y to an asset-based fee for Class R4. The Fund
will pay the Transfer Agent an annual asset-based fee at a rate of 0.05% of
the Fund's average daily net assets attributable to Class R4 shares. Prior to
Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee of
$17.50 per shareholder account.
In addition, with the introduction of Class R2, Class R3 and Class R5 shares,
the Fund will pay 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 and Class R5 shares.
Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate
per shareholder account of $1. This amount is included in the transfer agency
fee on the statement of operations. Effective Dec. 11, 2006, this fee was
eliminated.
The Transfer Agent charges an annual closed account 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.
The Fund has agreements with Ameriprise Financial Services, Inc. and
RiverSource 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 and
Class R3 shares, a fee at annual rate of up to 0.50% of the Fund's average
daily net assets attributable to Class R2 shares and a fee at an annual rate
of up to 1.00% of the Fund's average daily net assets attributable to Class B
and Class C shares.
Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was
adopted for the restructured Class R4 and the introduction of Class R2, Class
R3 and Class R5. The fee is calculated at a rate of 0.25% of the Fund's
average daily net assets attributable to Class R2, Class R3, Class R4 and
Class R5 shares.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 35
Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid
the Distributor a fee for service provided to shareholders by the Distributor
and other servicing agents with respect to those shares. The fee was
calculated at a rate of 0.10% of the Fund's average daily net assets
attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was
terminated.
Sales charges received by the Distributor for distributing Fund shares were
$3,865,781 for Class A, $1,329,901 for Class B and $4,452 for Class C for the
six months ended Jan. 31, 2007.
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.
For the six months ended Jan. 31, 2007, the Investment Manager and its
affiliates waived certain fees and expenses to 0.87% for Class R4. The
transfer agency fees waived for Class R4 were $2,538. Effective Dec. 11, 2006,
with the renaming of Class Y as Class R4, the Investment Manager and its
affiliates have agreed to waive certain fees and expenses until July 31, 2007,
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 0.90% for Class R4.
During the six months ended Jan. 31, 2007, the Fund's custodian and transfer
agency fees were reduced by $477,104 as a result of earnings and bank fee
credits from overnight cash balances. The Fund also pays custodian fees to
Ameriprise Trust Company, an affiliate of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $2,372,926,475 and $4,093,144,136, respectively, for
the period ended Jan. 31, 2007. Realized gains and losses are determined on an
identified cost basis.
- ------------------------------------------------------------------------------
36 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
SIX MONTHS ENDED JAN. 31, 2007
CLASS A CLASS B CLASS C CLASS I CLASS R2*
- --------------------------------------------------------------------------------------
Sold 13,239,581 5,300,646 254,201 1,800,152 822
Issued for
reinvested
distributions 29,154,454 5,262,393 162,558 705,595 --
Redeemed (153,291,494) (33,171,178) (1,041,643) (2,294,439) --
- --------------------------------------------------------------------------------------
Net increase
(decrease) (110,897,459) (22,608,139) (624,884) 211,308 822
- --------------------------------------------------------------------------------------
CLASS R3* CLASS R4** CLASS R5*
- --------------------------------------------------------------------------------------
Sold 822 1,752,427 4,003,982
Issued for reinvested distributions -- 3,241,602 149,071
Redeemed -- (116,935,533) --
- --------------------------------------------------------------------------------------
Net increase (decrease) 822 (111,941,504) 4,153,053
- --------------------------------------------------------------------------------------
YEAR ENDED JULY 31, 2006
CLASS A CLASS B CLASS C CLASS I CLASS R2
- --------------------------------------------------------------------------------------
Sold 81,619,158 9,503,444 489,203 5,125,399 N/A
Fund merger 924,673,877 234,448,180 5,852,776 17,647,385 N/A
Issued for
reinvested
distributions 1,513,462 -- -- 120,911 N/A
Redeemed (193,098,401) (114,705,720) (1,551,449) (11,535,888) N/A
- --------------------------------------------------------------------------------------
Net increase
(decrease) 814,708,096 129,245,904 4,790,530 11,357,807 N/A
- --------------------------------------------------------------------------------------
CLASS R3 CLASS R4** CLASS R5
- --------------------------------------------------------------------------------------
Sold N/A 3,501,543 N/A
Fund Merger N/A 232,656,314 N/A
Issued for reinvested distributions N/A 196 N/A
Redeemed N/A (40,622,509) N/A
- --------------------------------------------------------------------------------------
Net increase (decrease) N/A 195,535,544 N/A
- --------------------------------------------------------------------------------------
* Inception date was Dec. 11, 2006.
** Effective Dec. 11, 2006, Class Y was renamed Class R4.
5. FORWARD FOREIGN CURRENCY CONTRACTS
At Jan. 31, 2007, the Fund has a forward foreign currency exchange contract
that obligates it to deliver currency at a specified future date. The
unrealized depreciation on this contract is included in the accompanying
financial statements. See "Summary of significant accounting policies." The
terms of the open contract are as follows:
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- -------------------------------------------------------------------------------------------
Feb. 5, 2007 1,330,786 2,614,064 $-- $664
British Pound U.S. Dollar
- -------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 37
6. STOCK INDEX FUTURES CONTRACTS
At Jan. 31, 2007, investments in securities included securities valued at
$6,469,360 that were pledged as collateral to cover initial margin deposits on
115 open purchase contracts. The notional market value of the open purchase
contracts at Jan. 31, 2007 was $41,486,250 with a net unrealized gain of
$275,415. See "Summary of significant accounting policies" and "Notes to
investments in securities."
7. LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend securities
representing up to one-third of the value of its total assets (which includes
collateral for securities on loan) to broker-dealers, banks, or other
institutional borrowers of securities. The Fund receives collateral in the
form of cash and U.S. government securities, equal to at least 100% of the
value of securities loaned, which is marked to the market value of the loaned
securities daily until the securities are returned, e.g., if the value of the
securities on loan increases, additional cash collateral is provided by the
borrower. The Investment Manager serves as securities lending agent for the
Fund under the investment management services agreement pursuant to which the
Fund has agreed to reimburse the Investment Manager for expenses incurred by
it in connection with the lending program, and pursuant to guidelines adopted
by and under the oversight of the Board. At Jan. 31, 2007, securities valued
at $44,899,184 were on loan to brokers. For collateral, the Fund received
$46,412,700 in cash. Cash collateral received is invested in an affiliated
money market fund and short-term securities, including U.S. government
securities or other high-grade debt obligations, which are included in the
"Investments in securities." Income from securities lending amounted to
$113,312 for the six months ended Jan. 31, 2007. The risks to the Fund of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
8. OPTIONS CONTRACTS WRITTEN
Contracts and premiums associated with options contracts written are as
follows:
SIX MONTHS ENDED JAN. 31, 2007
CALLS
- ------------------------------------------------------------------------------
CONTRACTS PREMIUMS
- ------------------------------------------------------------------------------
Balance July 31, 2006 1,954 $ 4,297,846
Opened 34,324 2,868,653
Closed (2,836) (4,374,725)
- ------------------------------------------------------------------------------
Balance Jan. 31, 2007 33,442 $ 2,791,774
- ------------------------------------------------------------------------------
See "Summary of significant accounting policies."
- ------------------------------------------------------------------------------
38 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
9. SWAP CONTRACTS
At Jan. 31, 2007, the Fund had the following open total return equity swap
contracts:
UNREALIZED
TERMINATION NOTIONAL APPRECIATION
DATE AMOUNT (DEPRECIATION)
- ------------------------------------------------------------------------------------------------
Receive total return on a basket of large cap
industrial securities and pay a floating rate
based on 1-month LIBOR plus 0.20%.
Counterparty: Citigroup May 7, 2007 $12,310,554 $662,552
Receive total return on a basket of large cap
health care securities and pay a floating rate
based on 1-month LIBOR plus 0.20%.
Counterparty: Merrill Lynch Oct. 17, 2007 14,074,942 59,762
- ------------------------------------------------------------------------------------------------
Total $722,314
- ------------------------------------------------------------------------------------------------
10. 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.
11. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The agreement went into effect Sept.19, 2006. The Fund
must maintain asset coverage for borrowings of at least 300%. The agreement,
which enables the Fund to participate with other RiverSource funds, permits
borrowings up to $500 million, collectively. Interest is charged to each Fund
based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. 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. Prior to this agreement, the
Fund paid a commitment fee equal to its pro rata share of the amount of the
credit facility at a rate of 0.07% per annum. The Fund had no borrowings under
the facility outstanding during the six months ended Jan. 31, 2007.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 39
12. FUND MERGER
At the close of business on March 10, 2006, RiverSource Large Cap Equity Fund
acquired the assets and assumed the identified liabilities of RiverSource New
Dimensions Fund. The reorganization was completed after shareholders approved
the plan on Feb. 15, 2006.
The aggregate net assets of RiverSource Large Cap Equity Fund immediately
before the acquisition were $1,392,594,683 and the combined net assets
immediately after the acquisition were $9,137,908,732.
The merger was accomplished by a tax-free exchange of 400,881,844 shares of
RiverSource New Dimensions Fund valued at $7,745,314,049.
In exchange for the RiverSource New Dimensions Fund shares and net assets,
RiverSource Large Cap Equity Fund issued the following number of shares:
SHARES
- ------------------------------------------------------------------------------
Class A 924,673,877
Class B 234,448,180
Class C 5,852,776
Class I 17,647,385
Class Y 232,656,314
- ------------------------------------------------------------------------------
RiverSource New Dimensions Fund's net assets after adjustments for any
permanent book-to-tax differences at the merger date were as follows, which
include the following amounts of capital stock, unrealized appreciation,
accumulated net realized loss and undistributed net income.
TOTAL CAPITAL UNREALIZED ACCUMULATED NET UNDISTRIBUTED
NET ASSETS STOCK APPRECIATION REALIZED GAIN NET INCOME
- --------------------------------------------------------------------------------------------------
RiverSource
New
Dimensions
Fund $7,745,314,049 $7,385,408,991 $472,802,551 $(112,899,579) $2,086
13. CAPITAL LOSS CARRY-OVER
For federal income tax purposes, the Fund had a capital loss carry-over of
$241,864,902 at July 31, 2006, that if not offset by capital gains will expire
as follows:
2008 2009 2010 2011
$132,187,540 $76,012,213 $19,803,207 $13,861,942
- --------------------------------------------------------------------------------
40 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
RiverSource Large Cap Equity Fund acquired $33,183,702 of capital loss
carry-overs in connection with the RiverSource New Dimensions Fund merger
(Note 12). In addition to the acquired capital loss carry-overs, the Fund also
acquired unrealized capital gains as a result of the mergers. The yearly
utilization of the acquired capital losses as well as the utilization of the
acquired unrealized losses is limited by the Internal Revenue Code. It is
unlikely the Board will authorize a distribution of any net realized capital
gains until the available capital loss carry-over has been offset or expires.
14. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs
allege that they are investors in several American Express Company 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 our motion to
dismiss the complaint, the Court dismissed one of plaintiffs' four claims and
granted plaintiffs limited discovery. Discovery is currently set to end in
March 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)), the parent company of RiverSource
Investments, LLC (RiverSource Investments), entered into settlement agreements
with the Securities and Exchange Commission (SEC) and Minnesota Department of
Commerce (MDOC) related to market timing activities. In connection with these
matters, the SEC and MDOC issued orders (the Orders) alleging that AEFC
violated certain provisions of the federal and Minnesota securities laws by
failing to adequately disclose market timing activities by allowing certain
identified market timers to continue to market time contrary to disclosures in
mutual fund and variable annuity product prospectuses. The Orders also alleged
that AEFC failed to implement procedures to detect and prevent market timing
in 401(k) plans for employees of AEFC and related companies and failed to
adequately disclose that there were no such procedures. Pursuant to the MDOC
Order, the MDOC also alleged that AEFC allowed inappropriate market timing to
occur by failing to have written policies and procedures and failing to
properly supervise its employees.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 41
As a result of the Orders, 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. Pursuant to the terms of the Orders, AEFC agreed to
pay disgorgement of $10 million and civil money penalties of $7 million. AEFC
also agreed to make presentations at least annually to its board of directors
and the relevant mutual funds' board that include an overview of policies and
procedures to prevent market timing, material changes to these policies and
procedures and whether disclosures related to market timing are consistent
with the SEC order and federal securities laws. 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. In addition, AEFC agreed to
complete and submit to the MDOC a compliance review of its procedures
regarding market timing within one year of the MDOC Order, including a summary
of actions taken to ensure compliance with applicable laws and regulations and
certification by a senior officer regarding compliance and supervisory
procedures.
Ameriprise Financial and its affiliates have cooperated with the SEC and the
MDOC in these legal proceedings, and have made regular reports to the
RiverSource Funds' Boards of Directors/Trustees.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings,
including routine litigation, class actions, and governmental actions,
concerning matters arising in connection with the conduct of their business
activities. Ameriprise Financial believes that the Funds are not currently the
subject of, and that neither Ameriprise Financial nor any of its affiliates
are the subject of, any pending legal, arbitration or regulatory proceedings
that are likely to have a material adverse effect on the Funds or the ability
of Ameriprise Financial or its affiliates to perform under their contracts
with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as
necessary, 8-K filings with the Securities and Exchange Commission on legal
and regulatory matters that relate to Ameriprise Financial and its affiliates.
Copies of these filings may be obtained by accessing the SEC website at
www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse
effect on the Funds or the ability of Ameriprise Financial or its affiliates
to perform under their contracts with the Funds, these proceedings are subject
to uncertainties and, as such, we are unable to estimate the possible loss or
range of loss that may result. An adverse outcome in one or more of these
proceedings could result in adverse judgments, settlements, fines, penalties
or other relief that could have a material adverse effect on the consolidated
financial condition or results of operations of Ameriprise Financial.
- ------------------------------------------------------------------------------
42 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
15. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
the Fund's results.
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004 2003
Net asset value, beginning of period $ 5.40 $ 5.26 $ 4.64 $ 4.53 $ 4.11
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03 .06 .04 .01 .01
Net gains (losses) (both realized and unrealized) .76 .12 .61 .32 .41
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations .79 .18 .65 .33 .42
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.04) (.02) -- --
Distributions from realized gains (.14) -- (.01) (.22) --
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (.20) (.04) (.03) (.22) --
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.99 $ 5.40 $ 5.26 $ 4.64 $ 4.53
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 5,385 $ 5,461 $ 1,030 $ 1,248 $ 83
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b),(c) 1.09%(d) 1.06% 1.11%(e) 1.20%(e) 1.25%(e)
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .80%(d) 1.08% .79% .36% .24%
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 33% 116% 128% 99% 135%
- -------------------------------------------------------------------------------------------------------------------------
Total return(f) 14.64%(g) 3.51% 13.99% 7.19% 10.22%
- -------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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 expenses ratios.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class A would have been 1.16%, 1.23% and 1.84% for the years ended
July 31, 2005, 2004 and 2003, respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 43
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004 2003
Net asset value, beginning of period $ 5.29 $ 5.15 $ 4.56 $ 4.48 $ 4.10
- --------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) -- .02 -- (.01) (.01)
Net gains (losses) (both realized and unrealized) .74 .12 .60 .31 .39
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations .74 .14 .60 .30 .38
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.01) -- -- -- --
Distributions from realized gains (.14) -- (.01) (.22) --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.15) -- (.01) (.22) --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.88 $ 5.29 $ 5.15 $ 4.56 $ 4.48
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 1,165 $ 1,169 $ 472 $ 572 $ 36
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b),(c) 1.87%(d) 1.84% 1.88%(e) 1.95%(e) 2.01%(e)
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .03%(d) .28% .02% (.46%) (.52%)
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 33% 116% 128% 99% 135%
- --------------------------------------------------------------------------------------------------------------------------
Total return(f) 14.13%(g) 2.72% 13.09% 6.48% 9.27%
- --------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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 expenses ratios.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class B would have been 1.93%, 1.98% and 2.60% for the years ended
July 31, 2005, 2004 and 2003, respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
44 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004 2003
Net asset value, beginning of period $ 5.30 $ 5.16 $ 4.57 $ 4.49 $ 4.10
- --------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) -- .02 -- (.01) (.01)
Net gains (losses) (both realized and unrealized) .74 .12 .60 .31 .40
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations .74 .14 .60 .30 .39
- --------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) -- -- -- --
Distributions from realized gains (.14) -- (.01) (.22) --
- --------------------------------------------------------------------------------------------------------------------------
Total distributions (.16) -- (.01) (.22) --
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.88 $ 5.30 $ 5.16 $ 4.57 $ 4.49
- --------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 35 $ 35 $ 9 $ 11 $ 2
- --------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(b),(c) 1.86%(d) 1.84% 1.88%(e) 1.98%(e) 2.01%(e)
- --------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .03%(d) .28% .02% (.43%) (.53%)
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 33% 116% 128% 99% 135%
- --------------------------------------------------------------------------------------------------------------------------
Total return(f) 14.02%(g) 2.71% 13.06% 6.46% 9.51%
- --------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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 expenses ratios.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class C would have been 1.93%, 2.01% and 2.60% for the years ended
July 31, 2005, 2004 and 2003, respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 45
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(i) 2006 2005 2004(b)
Net asset value, beginning of period $ 5.44 $ 5.31 $ 4.67 $ 5.08
- ----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .10 .05 --
Net gains (losses) (both realized and unrealized) .75 .12 .63 (.28)
- ----------------------------------------------------------------------------------------------------------------
Total from investment operations .79 .22 .68 (.28)
- ----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.09) (.03) --
Distributions from realized gains (.14) -- (.01) (.13)
- ----------------------------------------------------------------------------------------------------------------
Total distributions (.22) (.09) (.04) (.13)
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.01 $ 5.44 $ 5.31 $ 4.67
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 118 $ 105 $ 43 $ 14
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average daily net assets(c),(d) .61%(e) .59% .65%(f) .71%(e),(f)
- ----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets 1.28%(e) 1.53% 1.24% .74%(e)
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 33% 116% 128% 99%
- ----------------------------------------------------------------------------------------------------------------
Total return(g) 14.61%(h) 4.06% 14.64% (5.65%)(h)
- ----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Inception date is March 4, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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 expenses ratios.
(e) Adjusted to an annual basis.
(f) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class I would have been 0.70% and 0.72% for the years ended July 31,
2005 and 2004, respectively.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
46 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 6.08
- -----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) --
Net gains (losses) (both realized
and unrealized) .17
- -----------------------------------------------------------------------------
Total from investment operations .17
- -----------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
Distributions from realized gains (.14)
- -----------------------------------------------------------------------------
Total distributions (.22)
- -----------------------------------------------------------------------------
Net asset value, end of period $ 6.03
- -----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- -----------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) 1.45%(e)
- -----------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .01%(e)
- -----------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 33%
- -----------------------------------------------------------------------------
Total return(f) 2.85%(g)
- -----------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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 expenses ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 47
CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 6.08
- -----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01
Net gains (losses) (both realized
and unrealized) .17
- -----------------------------------------------------------------------------
Total from investment operations .18
- -----------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
Distributions from realized gains (.14)
- -----------------------------------------------------------------------------
Total distributions (.22)
- -----------------------------------------------------------------------------
Net asset value, end of period $ 6.04
- -----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- -----------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) 1.17%(e)
- -----------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .28%(e)
- -----------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 33%
- -----------------------------------------------------------------------------
Total return(f) 3.03%(g)
- -----------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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 expenses ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- ------------------------------------------------------------------------------
48 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004 2003
Net asset value, beginning of period $ 5.47 $ 5.28 $ 4.66 $ 4.54 $ 4.11
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .09 .04 .01 .01
Net gains (losses) (both realized
and unrealized) .75 .12 .61 .34 .42
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations .79 .21 .65 .35 .43
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.06) (.02) (.02) (.01) --
Distributions from realized gains (.14) -- (.01) (.22) --
- -----------------------------------------------------------------------------------------------------------------
Total distributions (.20) (.02) (.03) (.23) --
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 6.06 $ 5.47 $ 5.28 $ 4.66 $ 4.54
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 507 $ 1,069 $ -- $ 8 $ --
- -----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) .87%(d) .81% .90%(e) 1.00%(e) 1.07%(e)
- -----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets 1.01%(d) 1.41% 1.08% .50% .45%
- -----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 33% 116% 128% 99% 135%
- -----------------------------------------------------------------------------------------------------------------
Total return(f) 14.48%(g) 4.03% 14.06% 7.44% 10.46%
- -----------------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4.
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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 expenses ratios.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class R4 would have been 0.95%, 1.03% and 1.66% for the years ended
July 31, 2005, 2004 and 2003, respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 49
CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 6.08
- -----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .02
Net gains (losses) (both realized
and unrealized) .16
- -----------------------------------------------------------------------------
Total from investment operations .18
- -----------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08)
Distributions from realized gains (.14)
- -----------------------------------------------------------------------------
Total distributions (.22)
- -----------------------------------------------------------------------------
Net asset value, end of period $ 6.04
- -----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 25
- -----------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) .70%(e)
- -----------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .77%(e)
- -----------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 33%
- -----------------------------------------------------------------------------
Total return(f) 3.04%(g)
- -----------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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 expenses ratios.
(e) Adjusted to an annual basis.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
- ------------------------------------------------------------------------------
50 RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are 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 during
the 12-month period ended June 30, 2006 is available without charge by
visiting riversource.com/funds; or searching the website of the SEC at
www.sec.gov.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP EQUITY FUND - 2007 SEMIANNUAL REPORT 51
RIVERSOURCE(R) LARGE CAP EQUITY FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
riversource.com/funds
This report must be accompanied or
preceded by the Fund's current
prospectus. RiverSource(R) mutual
funds are distributed by
RiverSource Distributors, Inc. and
Ameriprise Financial Services,
Inc., Members NASD, and managed by
RiverSource Investments, LLC.
RIVERSOURCE [LOGO](R) These companies are part of
INVESTMENTS Ameriprise Financial, Inc. S-6255 F (3/07)
Semiannual Report
RIVERSOURCE [LOGO](R)
INVESTMENTS
RIVERSOURCE(R)
LARGE CAP VALUE FUND
SEMIANNUAL REPORT FOR
THE PERIOD ENDED
JAN. 31, 2007
> RIVERSOURCE LARGE CAP VALUE
FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH LONG-TERM
GROWTH OF CAPITAL.
TABLE OF CONTENTS
Fund Snapshot ........................................................... 3
Performance Summary ..................................................... 5
Questions & Answers
with Portfolio Management .............................................. 7
Fund Expenses Example ................................................... 9
Investments in Securities ............................................... 12
Financial Statements .................................................... 17
Notes to Financial Statements ........................................... 22
Proxy Voting ............................................................ 42
[LOGO]
DALBAR RATED
2006
FOR COMMUNICATION
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.
- ------------------------------------------------------------------------------
2 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
FUND SNAPSHOT AT JAN. 31, 2007
FUND OVERVIEW
RiverSource Large Cap Value Fund seeks attractively valued large-cap stocks
with potential for strong earnings growth. Valuation is the key driver of
security selection in this fund, but growth prospects are also an important
consideration. The stock selection process is research-driven and leverages
the talents of an experienced team of analysts. Along with the efforts of a
seasoned portfolio management team, the end result is a broadly diversified
portfolio in both number of holdings and sector exposure, which helps to
mitigate risk in the Fund.
SECTOR BREAKDOWN*
Percentage of portfolio assets
Financials 30.1%
Energy 11.2%
Consumer Discretionary 10.6%
Industrials 9.2% [PIE CHART]
Information Technology 7.9%
Health Care 7.6%
Other(1) 23.4%
* Sectors can be comprised of several industries. Please refer to the
section entitled "Investments in Securities" for a complete listing. No
single industry exceeds 25% of portfolio assets.
(1) Includes Telecommunication Services 6.9%, Consumer Staples 5.7%,
Utilities 4.0%, Materials 2.9% and Cash & Cash Equivalents 3.9%.
TOP TEN HOLDINGS
Percentage of portfolio assets
Exxon Mobil 4.3%
Bank of America 3.7%
Citigroup 3.7%
AT&T 2.7%
American Intl Group 2.3%
Chevron 2.1%
Pfizer 2.1%
General Electric 1.9%
JPMorgan Chase & Co 1.8%
ConocoPhillips 1.8%
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
The Global Industry Classification Standard (GICS) 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.
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 3
FUND SNAPSHOT AT JAN. 31, 2007
STYLE MATRIX
[chart] Shading within the style matrix indicates areas in which the Fund
generally invests.
STYLE
VALUE BLEND GROWTH
X LARGE
MEDIUM SIZE
SMALL
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 serves 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.
PORTFOLIO MANAGER
YEARS IN INDUSTRY
Robert Ewing, CFA 18
FUND FACTS
TICKER SYMBOL INCEPTION DATE
Class A ALVAX 6/27/02
Class B ALVBX 6/27/02
Class C -- 6/27/02
Class I ALCIX 3/4/04
Class R2 -- 12/11/06
Class R3 -- 12/11/06
Class R4(1) -- 6/27/02
Class R5 -- 12/11/06
Total net assets $102.1 million
Number of holdings 198
(1) Effective Dec. 11, 2006, Class Y was renamed Class R4.
- ------------------------------------------------------------------------------
4 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
PERFORMANCE SUMMARY
PERFORMANCE COMPARISON
For the six-month period ended Jan. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL.]
RiverSource Large Cap Value Fund Class A (excluding sales charge) +14.07%
Russell 1000(R) Value Index(1) (unmanaged) +13.43%
Lipper Large-Cap Value Funds Index(2) +12.96%
(1) The Russell 1000 Value Index, an unmanaged index, measures the
performance of those stocks in the Russell 1000 Index with lower
price-to-book ratios and lower forecasted growth values. The index
reflects reinvestment of all distributions and changes in market prices.
(2) The Lipper Large-Cap Value Funds Index includes the 30 largest large-cap
value funds tracked by Lipper Inc. The index's returns include net
reinvested dividends. The Fund's performance is currently measured
against this index for purposes of determining the performance incentive
adjustment.
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 bar chart. If reflected, returns would be lower than those
shown. The performance of other classes may vary from that shown because of
differences in expenses.
The indices do not reflect the effects of sales charges, expenses (excluding
Lipper) and taxes.
It is not possible to invest directly in an index.
ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
CLASS A CLASS B CLASS C CLASS I
Total 1.21% 1.97% 1.98% 0.75%
CLASS R2(a) CLASS R3(a) CLASS R4(a) CLASS R5(a)
Total 1.54% 1.29% 1.04% 0.79%
(a) Effective Dec. 11, 2006, Class Y was renamed Class R4. Inception date
for Class R2, Class R3 and Class R5 is Dec. 11, 2006. For Class R2,
Class R3, Class R5, expenses are based on estimated amounts for the
current fiscal year.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 5
PERFORMANCE SUMMARY
AVERAGE ANNUAL TOTAL RETURNS
AT JAN. 31, 2007
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 6/27/02) +14.07% +17.47% +11.39% +10.97%
Class B (inception 6/27/02) +13.55% +16.35% +10.50% +10.11%
Class C (inception 6/27/02) +13.50% +16.30% +10.49% +10.11%
Class I (inception 3/4/04) +14.30% +17.89% N/A +11.25%
Class R2 (inception 12/11/06) N/A N/A N/A +2.66%*
Class R3 (inception 12/11/06) N/A N/A N/A +2.67%*
Class R4** (inception 6/27/02) +14.07% +17.46% +11.50% +11.16%
Class R5 (inception 12/11/06) N/A N/A N/A +2.68%*
With sales charge
Class A (inception 6/27/02) +7.51% +10.72% +9.21% +9.55%
Class B (inception 6/27/02) +8.69% +11.37% +9.39% +9.81%
Class C (inception 6/27/02) +12.53% +15.31% +10.49% +10.11%
AT DEC. 31, 2006
SINCE
Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION
Class A (inception 6/27/02) +14.41% +19.15% +11.42% +10.84%
Class B (inception 6/27/02) +13.90% +18.24% +10.59% +10.01%
Class C (inception 6/27/02) +14.06% +18.19% +10.58% +10.01%
Class I (inception 3/4/04) +14.64% +19.58% N/A +11.05%
Class R2 (inception 12/11/06) N/A N/A N/A +1.39%*
Class R3 (inception 12/11/06) N/A N/A N/A +1.40%*
Class R4** (inception 6/27/02) +14.62% +19.35% +11.66% +11.08%
Class R5 (inception 12/11/06) N/A N/A N/A +1.41%*
With sales charge
Class A (inception 6/27/02) +7.83% +12.30% +9.24% +9.40%
Class B (inception 6/27/02) +9.03% +13.24% +9.49% +9.69%
Class C (inception 6/27/02) +13.08% +17.19% +10.58% +10.01%
Class A share performance reflects the maximum sales charge of 5.75%. Class B
share performance reflects a contingent deferred sales charge (CDSC) applied
as follows: first year 5%; second and third years 4%; fourth year 3%; fifth
year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be
subject to a 1% CDSC if shares are sold within one year after purchase. Sales
charges do not apply to Class I, Class R2, Class R3, Class R4 and Class R5
shares. Class I, Class R2, Class R3, Class R4 and Class R5 shares are
available to institutional investors only.
* Not annualized.
** Effective Dec. 11, 2006, Class Y was renamed Class R4.
- ------------------------------------------------------------------------------
6 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT
Below, Portfolio Manager Robert Ewing discusses the Fund's results and
positioning for the six-month period.
Q: How did RiverSource Large Cap Value Fund perform for the six-month
period ended Jan. 31, 2007?
A: RiverSource Large Cap Value Fund's Class A shares advanced 14.07%,
excluding sales charge, for the six months ended Jan. 31, 2007. The
Fund's benchmark, the Russell 1000(R) Value Index (Russell Index), rose
13.43% during the period. The Fund's peer group, the Lipper Large-Cap
Value Funds Index, gained 12.96% during the same time frame.
Q: What factors most significantly affected performance for the period?
A: U.S. stocks delivered double-digit gains during the past six months,
supported by continued economic growth, corporate earnings and the
Federal Reserve Board's decision to hold interest rates steady after a
period of short-term rate increases. A notable market shift occurred
during this six-month period as large-cap growth stocks outpaced
large-cap value stocks. Both stock selection and sector allocations
added to the Fund's return relative to the Russell Index. The
information technology and consumer discretionary sectors made the
largest positive contributions to the Fund's return.
The Fund had a larger allocation to information technology than the
Russell Index and that overweight added significant value. The Fund
benefited from its emphasis on larger-cap technology companies such as
Microsoft, IBM, Cisco Systems and Hewlett-Packard, which demonstrated
very strong earnings growth and remained at historically attractive
valuations.
Stock selection in the consumer discretionary sector was favorable and
the Fund's weighting, which was larger than the Russell Index, also
added value. The Fund's emphasis on media stocks was especially
beneficial. Specifically, holdings of News Corp., Viacom and Vivendi
performed well as investors began to recognize their strong and
consistent free cash flow trends.
THE INFORMATION TECHNOLOGY AND CONSUMER DISCRETIONARY SECTORS MADE THE
LARGEST POSITIVE CONTRIBUTIONS TO THE FUND'S RETURN.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 7
QUESTIONS & ANSWERS
Within the materials sector, the Fund's smaller-than-Russell Index
position was a slight disadvantage when materials stocks outperformed
during the period. While many commodity prices fell during the period,
materials stocks continued to advance on strong merger and acquisition
activity in the industry.
Q: What changes did you make to the portfolio and how is it currently
positioned?
A: We sold selected stocks in the Fund's portfolio when valuations
approached our target levels, taking some profits as a result. We
reduced exposure to some financial stocks, such as mortgage lenders, on
concerns of credit deterioration related to the current housing
slowdown. Within the financials sector, we increased the portfolio's
exposure to the insurance industry.
Q: How do you plan to manage the Fund in the coming months?
A: In the current environment, we see corporate profit margins at record
levels, signs of slower global economic growth and a weaker U.S. housing
market that could lead consumers to reduce their spending. All of these
suggest that corporate profit growth is likely to decelerate.
Given such a backdrop, we prefer to own high quality companies that are
attractively valued. The difference between the valuations of
traditional growth stocks and traditional value stocks has become quite
small. We have focused on companies whose growth tends to be stable
regardless of economic performance and on companies whose cyclical
nature appears to be discounted in the stock price. As a result, the
Fund's positions in health care and information technology are larger
than the respective weightings within the Russell Index. We continue to
find an increasing number of opportunities among large-cap companies
which still appear inexpensive compared to their mid- and small-cap
peers.
Any specific securities mentioned are for illustrative purposes only and are
not a complete list of securities that have increased or decreased in value.
The views expressed in this statement reflect those of the portfolio
manager(s) only through the end of the period of the report as stated on the
cover and do not necessarily represent the views of RiverSource Investments,
LLC (RiverSource) or any subadviser to the Fund or any other person in the
RiverSource or subadviser organizations. Any such views are subject to change
at any time based upon market or other conditions and RiverSource disclaims
any responsibility to update such views. These views may not be relied on as
investment advice and, because investment decisions for a RiverSource Fund are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any RiverSource Fund.
- ------------------------------------------------------------------------------
8 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
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 acquired funds expense ratio as of the
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, 2007.
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.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 9
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.
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2006 JAN. 31, 2007 THE PERIOD(a) EXPENSE RATIO
Class A
Actual(b) $1,000 $1,140.70 $ 6.96 1.29%
Hypothetical
(5% return before expenses) $1,000 $1,018.70 $6.56 1.29%
Class B
Actual(b) $1,000 $1,135.50 $11.03 2.05%
Hypothetical
(5% return before expenses) $1,000 $1,014.87 $10.41 2.05%
Class C
Actual(b) $1,000 $1,135.00 $11.03 2.05%
Hypothetical
(5% return before expenses) $1,000 $1,014.87 $10.41 2.05%
Class I
Actual(b) $1,000 $1,143.00 $4.92 .91%
Hypothetical
(5% return before expenses) $1,000 $1,020.62 $4.63 .91%
Class R2
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,016.64 $8.64 1.70%
Class R3
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,017.90 $7.37 1.45%
- ------------------------------------------------------------------------------
10 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
AUG. 1, 2006 JAN. 31, 2007 THE PERIOD(a) EXPENSE RATIO
Class R4
Actual(b) $1,000 $1,140.70 $6.04(d) 1.12%
Hypothetical
(5% return before expenses) $1,000 $1,019.56 $5.70(d) 1.12%
Class R5
Actual(c) N/A N/A N/A N/A
Hypothetical
(5% return before expenses) $1,000 $1,020.37 $4.89 .96%
(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 184/365 (to reflect the one-half year period).
(b) Based on the actual return for the six months ended Jan. 31, 2007:
+14.07% for Class A, +13.55% for Class B, +13.50% for Class C, +14.30%
for Class I and +14.07% for Class R4.
(c) The actual values and expenses paid are not presented because Class R2,
Class R3 and Class R5 do not have a full six months of history. The
inception date of Class R2, Class R3 and Class R5 is Dec. 11, 2006.
(d) In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee
structure under the transfer agent agreement from an account-based fee
to an asset-based fee, and adopting a plan administration services
agreement. In addition, the investment manager and its affiliates have
contractually agreed to waive certain fees and to absorb certain
expenses until July 31, 2007, unless sooner terminated at the discretion
of the Fund's Board, such that net expenses, (excluding fees and
expenses of acquired funds) before giving effect to any performance
incentive adjustment, will not exceed 1.12% for Class R4. Any amounts
waived will not be reimbursed by the Fund. These changes were effective
Dec. 11, 2006. If these changes had been in place for the six-month
period ended Jan. 31, 2007, actual and hypothetical expenses paid for
Class R4 would have been the same as those presented in the above table.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 11
INVESTMENTS IN SECURITIES
JAN. 31, 2007 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
COMMON STOCKS (95.6%)
ISSUER SHARES VALUE(a)
AEROSPACE & DEFENSE (4.3%)
Boeing 6,322 $ 566,198
DRS Technologies 2,227 123,376
General Dynamics 4,130 322,760
Goodrich 9,427 462,112
Honeywell Intl 22,419 1,024,323
L-3 Communications
Holdings 1,840 151,506
Lockheed Martin 5,863 569,825
Northrop Grumman 10,609 752,602
United Technologies 5,475 372,410
------------
Total 4,345,112
- -------------------------------------------------------------------------------
BEVERAGES (0.9%)
Coca-Cola 6,511 311,747
Constellation Brands Cl A 6,070(b) 150,172
PepsiCo 6,277 409,511
------------
Total 871,430
- -------------------------------------------------------------------------------
BIOTECHNOLOGY (0.2%)
Amgen 1,372(b) 96,548
Biogen Idec 1,953(b) 94,408
------------
Total 190,956
- -------------------------------------------------------------------------------
BUILDING PRODUCTS (0.3%)
Masco 9,773 312,638
- -------------------------------------------------------------------------------
CAPITAL MARKETS (4.6%)
Bank of New York 11,939 477,679
Franklin Resources 2,304 274,429
KKR Private Equity
Investors LP Unit 6,910(e) 161,349
Lehman Brothers
Holdings 15,132 1,244,456
Merrill Lynch & Co 11,880 1,111,493
Morgan Stanley 14,008 1,159,722
State Street 3,477 247,041
------------
Total 4,676,169
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
CHEMICALS (1.3%)
Ashland 2,392 $ 166,364
Dow Chemical 16,285 676,478
Eastman Chemical 4,012 234,943
EI du Pont de
Nemours & Co 4,967 246,165
------------
Total 1,323,950
- -------------------------------------------------------------------------------
COMMERCIAL BANKS (3.8%)
Fifth Third Bancorp 2,535 101,147
PNC Financial
Services Group 6,589 486,071
US Bancorp 22,624 805,414
Wachovia 19,615 1,108,248
Wells Fargo & Co 39,155 1,406,447
------------
Total 3,907,327
- -------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES (0.1%)
Avery Dennison 1,476 100,899
- -------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT (1.3%)
Alcatel-Lucent 1,757(c) 22,644
Alcatel-Lucent ADR 16,398(c) 213,174
Cisco Systems 17,539(b) 466,363
Motorola 7,944 157,688
Nokia ADR 15,203(c) 335,986
Tellabs 9,474(b) 95,403
------------
Total 1,291,258
- -------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS (2.2%)
Hewlett-Packard 23,971 1,037,465
Intl Business Machines 11,772 1,167,194
------------
Total 2,204,659
- -------------------------------------------------------------------------------
CONSUMER FINANCE (1.4%)
American Express 7,202 419,300
Capital One Financial 12,933 1,039,814
------------
Total 1,459,114
- -------------------------------------------------------------------------------
CONTAINERS & PACKAGING (0.2%)
Temple-Inland 4,678 233,619
- -------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
12 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
DIVERSIFIED FINANCIAL SERVICES (9.1%)
Bank of America 72,325 $ 3,802,848
Citigroup 68,205 3,760,142
JPMorgan Chase & Co 36,692 1,868,724
------------
Total 9,431,714
- -------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES (5.0%)
AT&T 72,223 2,717,752
Chunghwa Telecom ADR 5,177(c) 107,216
Citizens Communications 8,363 122,602
Embarq 4,189 232,531
Verizon Communications 44,856 1,727,853
Windstream 16,156 240,401
------------
Total 5,148,355
- -------------------------------------------------------------------------------
ELECTRIC UTILITIES (2.7%)
Entergy 7,947 737,879
Exelon 14,884 892,891
FPL Group 3,094 175,275
PPL 7,309 260,200
Southern 18,775 685,851
------------
Total 2,752,096
- -------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES (1.3%)
Baker Hughes 1,420 98,023
BJ Services 4,731 130,859
Cameron Intl 3,980(b) 208,950
Halliburton 6,473 191,212
Natl Oilwell Varco 1,539(b) 93,325
Noble 1,423 106,654
Pride Intl 3,717(b) 107,087
Transocean 1,372(b) 106,152
Weatherford Intl 6,719(b) 271,313
------------
Total 1,313,575
- -------------------------------------------------------------------------------
FOOD & STAPLES RETAILING (1.0%)
CVS 10,480 352,652
Safeway 1,461 52,640
Wal-Mart Stores 12,650 603,278
------------
Total 1,008,570
- -------------------------------------------------------------------------------
FOOD PRODUCTS (0.9%)
Campbell Soup 5,286 203,405
General Mills 3,683 210,815
Kellogg 8,274 407,661
Kraft Foods Cl A 3,233 112,896
------------
Total 934,777
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
GAS UTILITIES (0.3%)
ONEOK 6,941 $ 297,838
- -------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES (0.5%)
Bausch & Lomb 2,094 116,594
Boston Scientific 19,891(b) 366,988
Cooper Companies 1,115 53,186
------------
Total 536,768
- -------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES (1.4%)
Aetna 9,942 419,155
Cardinal Health 7,216 515,366
CIGNA 1,749 231,568
McKesson 2,056 114,622
UnitedHealth Group 3,479 181,813
------------
Total 1,462,524
- -------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE (1.1%)
Applebee's Intl 8,964 226,251
Carnival Unit 1,240 63,934
Marriott Intl Cl A 8,414 405,050
McDonald's 6,648 294,839
Pinnacle Entertainment 4,484(b) 154,833
------------
Total 1,144,907
- -------------------------------------------------------------------------------
HOUSEHOLD DURABLES (0.7%)
DR Horton 11,743 341,252
Hovnanian Enterprises Cl A 6,366(b) 211,924
Lennar Cl A 2,030 110,391
Standard-Pacific 1,979 54,304
------------
Total 717,871
- -------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (1.2%)
Colgate-Palmolive 6,244 426,464
Procter & Gamble 6,202 402,324
Spectrum Brands 29,765(b) 360,157
------------
Total 1,188,945
- -------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES (2.8%)
3M 5,654 420,092
General Electric 53,062 1,912,886
Tyco Intl 15,297(c) 487,668
------------
Total 2,820,646
- -------------------------------------------------------------------------------
INSURANCE (6.8%)
ACE 12,993(c) 750,736
AFLAC 9,108 433,632
Allied World Assurance
Holdings 3,007(c) 128,098
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 13
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
INSURANCE (CONT.)
American Intl Group 34,859 $ 2,386,098
Aon 5,861 210,175
Arch Capital Group 1,689(b,c) 109,093
Aspen Insurance Holdings 3,993(c) 102,301
Chubb 5,653 294,182
Endurance Specialty
Holdings 2,929(c) 99,586
Hartford Financial
Services Group 12,609 1,196,720
Max Re Capital 6,205(c) 148,920
MetLife 3,295 204,685
Prudential Financial 7,513 669,634
XL Capital Cl A 3,139(c) 216,591
------------
Total 6,950,451
- -------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL (0.3%)
Liberty Media -
Interactive Cl A 13,170(b,d) 320,953
- -------------------------------------------------------------------------------
IT SERVICES (1.4%)
Affiliated Computer
Services Cl A 6,694(b) 327,939
Automatic Data
Processing 7,458 355,896
Electronic Data Systems 15,405 405,305
First Data 12,189 303,019
------------
Total 1,392,159
- -------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES (0.1%)
PerkinElmer 2,246 53,612
- -------------------------------------------------------------------------------
MACHINERY (1.7%)
Caterpillar 7,638 489,366
Deere & Co 4,193 420,474
Flowserve 3,974(b) 210,900
Illinois Tool Works 2,317 118,144
Ingersoll-Rand Cl A 2,676(c) 114,747
ITT 2,857 170,420
Parker Hannifin 2,656 219,811
------------
Total 1,743,862
- -------------------------------------------------------------------------------
MEDIA (6.7%)
Clear Channel
Communications 1,544 56,078
Comcast Cl A 16,779(b) 743,645
Comcast Special Cl A 12,884(b) 559,939
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
MEDIA (CONT.)
EchoStar
Communications Cl A 3,760(b) $ 151,678
Liberty Global Cl A 1,224(b) 36,793
Liberty Global Series C 1,318(b) 37,207
Liberty Media - Capital
Series A 1,502(b,d) 153,655
News Corp Cl A 44,379 1,031,813
NTL 44,333 1,208,075
Time Warner 45,697 999,393
Viacom Cl B 19,618(b) 797,864
Vivendi 11,682(c) 481,984
Walt Disney 15,379 540,879
------------
Total 6,799,003
- -------------------------------------------------------------------------------
METALS & MINING (0.4%)
Alcan 1,622(c) 82,722
Alcoa 8,796 284,111
------------
Total 366,833
- -------------------------------------------------------------------------------
MULTILINE RETAIL (1.1%)
Federated
Department Stores 3,686 152,932
JC Penney 2,553 207,406
Target 11,793 723,618
------------
Total 1,083,956
- -------------------------------------------------------------------------------
MULTI-UTILITIES (1.0%)
Dominion Resources 9,724 806,703
Xcel Energy 10,789 251,707
------------
Total 1,058,410
- -------------------------------------------------------------------------------
OIL, GAS & CONSUMABLE FUELS (9.7%)
Anadarko Petroleum 6,288 275,100
BP ADR 1,520(c) 96,535
Chesapeake Energy 4,852 143,668
Chevron 29,221 2,129,625
ConocoPhillips 28,131 1,868,180
Devon Energy 4,484 314,284
Exxon Mobil 58,516 4,336,035
Royal Dutch Shell ADR 2,345(c) 160,046
Sunoco 840 53,029
Total 5,045(c) 342,850
Valero Energy 3,884 210,824
XTO Energy 2,246 113,356
------------
Total 10,043,532
- -------------------------------------------------------------------------------
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
14 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
PAPER & FOREST PRODUCTS (1.0%)
Bowater 5,604 $ 153,381
Intl Paper 9,867 332,518
Weyerhaeuser 6,877 515,775
------------
Total 1,001,674
- -------------------------------------------------------------------------------
PHARMACEUTICALS (5.4%)
Bristol-Myers Squibb 34,903 1,004,857
Eli Lilly & Co 6,756 365,635
GlaxoSmithKline ADR 3,452(c) 186,857
Merck & Co 20,780 929,905
Novartis ADR 3,414(c) 196,954
Pfizer 80,201 2,104,474
Schering-Plough 17,178 429,450
Watson Pharmaceuticals 5,714(b) 155,535
Wyeth 3,432 169,575
------------
Total 5,543,242
- -------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (0.8%)
Apartment Investment &
Management Cl A 3,636 227,723
Equity Office
Properties Trust 9,927 551,445
HomeBanc 6,314 20,899
------------
Total 800,067
- -------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.0%)
Agere Systems 6,175(b) 124,365
Atmel 20,984(b) 125,484
Cypress Semiconductor 16,582(b) 305,937
Intel 9,829 206,016
Spansion Cl A 11,459(b) 147,019
Texas Instruments 1,766 55,082
United
Microelectronics ADR 6,552(c) 23,260
------------
Total 987,163
- -------------------------------------------------------------------------------
SOFTWARE (2.1%)
Cadence Design Systems 19,580(b) 370,062
Compuware 26,787(b) 240,279
McAfee 2,047(b) 59,895
Microsoft 34,142 1,053,623
Oracle 6,233(b) 106,958
Symantec 11,842(b) 209,722
TIBCO Software 10,540(b) 97,811
------------
Total 2,138,350
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SPECIALTY RETAIL (0.7%)
Home Depot 5,885 $ 239,755
Limited Brands 5,319 148,613
Lowe's Companies 6,139 206,946
TJX Companies 3,562 105,328
------------
Total 700,642
- -------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE (3.3%)
Countrywide Financial 36,614 1,591,976
Fannie Mae 13,702 774,574
Freddie Mac 12,201 792,211
Washington Mutual 3,852 171,761
------------
Total 3,330,522
- -------------------------------------------------------------------------------
TOBACCO (1.7%)
Altria Group 20,353 1,778,649
- -------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES (1.8%)
ALLTEL 9,854 603,952
Sprint Nextel 43,057 767,706
Vodafone Group ADR 16,096(c) 473,061
------------
Total 1,844,719
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $81,450,795) $ 97,613,516
- -------------------------------------------------------------------------------
MONEY MARKET FUND (3.9%)
SHARES VALUE(a)
RiverSource Short-Term
Cash Fund 4,002,462(f) $ 4,002,462
- -------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $4,002,462) $ 4,002,462
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $85,453,257)(g) $101,615,978
===============================================================================
See accompanying notes to investments in securities.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 15
NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by 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, 2007,
the value of foreign securities represented 4.8% of net assets.
(d) Shareholders of tracking stocks have a financial interest only in a unit
or division of the company. Unlike the common stock of the company
itself, a tracking stock usually has limited or no voting rights. In the
event of a company's liquidation, tracking stock shareholders typically
do not have a legal claim on the company's assets.
(e) Identifies issues considered to be illiquid as to their marketability
(see Note 1 to the financial statements). These securities may be valued
at fair value according to methods selected in good faith by the Fund's
Board of Directors. Information concerning such security holdings at
Jan. 31, 2007, is as follows:
SECURITY ACQUISITION COST
DATES
-------------------------------------------------------------------
KKR Private Equity Investors LP Unit 05-01-06 $170,228
(f) Affiliated Money Market Fund -- See Note 5 to the financial statements.
(g) At Jan. 31, 2007, the cost of securities for federal income tax purposes
was approximately $85,453,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $16,686,000
Unrealized depreciation (523,000)
---------------------------------------------------------------------
Net unrealized appreciation $16,163,000
---------------------------------------------------------------------
The Global Industry Classification Standard (GICS) was developed by and is the
exclusive property of Morgan Stanley Capital International Inc. and Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii) The Fund's Forms N-Q may be reviewed and copied at the Commission's
Public Reference Room in Washington, DC (information on the operations
of the Public Reference Room may be obtained by calling 1-800-SEC-0330);
and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form
N-Q, can be found at riversource.com/funds.
- ------------------------------------------------------------------------------
16 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JAN. 31, 2007 (UNAUDITED)
ASSETS
Investments in securities, at value (Note 1)
Unaffiliated issuers (identified cost $81,450,795) $ 97,613,516
Affiliated money market fund (identified cost $4,002,462) (Note 5) 4,002,462
- -------------------------------------------------------------------------------------------------------
Total investments in securities (identified cost $85,453,257) 101,615,978
Cash in bank on demand deposit 985
Capital shares receivable 23,717
Dividends and accrued interest receivable 114,564
Receivable for investment securities sold 532,674
- -------------------------------------------------------------------------------------------------------
Total assets 102,287,918
- -------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investment securities purchased 103,955
Accrued investment management services fee 1,669
Accrued distribution fee 1,010
Accrued transfer agency fee 105
Accrued administrative services fee 167
Other accrued expenses 72,382
- -------------------------------------------------------------------------------------------------------
Total liabilities 179,288
- -------------------------------------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $102,108,630
=======================================================================================================
REPRESENTED BY
Capital stock -- $.01 par value (Note 1) $ 179,705
Additional paid-in capital 85,278,739
Undistributed net investment income 24,294
Accumulated net realized gain (loss) 463,171
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 16,162,721
- -------------------------------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding capital stock $102,108,630
=======================================================================================================
Net assets applicable to outstanding shares: Class A $ 65,165,962
Class B $ 19,563,741
Class C $ 1,167,017
Class I $ 16,162,218
Class R2 $ 4,335
Class R3 $ 4,336
Class R4 $ 36,684
Class R5 $ 4,337
Net asset value per share of outstanding capital stock: Class A shares 11,461,584 $ 5.69
Class B shares 3,461,253 $ 5.65
Class C shares 206,926 $ 5.64
Class I shares 2,832,061 $ 5.71
Class R2 shares 763 $ 5.68
Class R3 shares 763 $ 5.68
Class R4 shares 6,424 $ 5.71
Class R5 shares 763 $ 5.68
- -------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 17
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JAN. 31, 2007 (UNAUDITED)
INVESTMENT INCOME
Income:
Dividends $ 1,018,107
Interest 19,596
Income distributions from affiliated money market fund (Note 5) 77,689
Less foreign taxes withheld (464)
- ------------------------------------------------------------------------------------------------
Total income 1,114,928
- ------------------------------------------------------------------------------------------------
Expenses (Note 2):
Investment management services fee 297,365
Distribution fee
Class A 80,511
Class B 96,493
Class C 5,764
Class R2 3
Class R3 2
Transfer agency fee
Class A 61,341
Class B 19,825
Class C 1,185
Class R4 24
Service fee -- Class R4 13
Administrative services fees and expenses 29,972
Plan administration services fee
Class R2 2
Class R3 2
Class R4 13
Compensation of board members 1,054
Custodian fees 27,200
Printing and postage 20,240
Registration fees 58,800
Professional fees 10,660
Other 5,377
- ------------------------------------------------------------------------------------------------
Total expenses 715,846
Expenses waived/reimbursed by the Investment Manager and its affiliates (Note 2) (24,640)
- ------------------------------------------------------------------------------------------------
691,206
Earnings and bank fee credits on cash balances (Note 2) (7,372)
- ------------------------------------------------------------------------------------------------
Total net expenses 683,834
- ------------------------------------------------------------------------------------------------
Investment income (loss) -- net 431,094
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
18 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS (CONTINUED)
SIX MONTHS ENDED JAN. 31, 2007 (UNAUDITED)
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (Note 3) $ 3,178,734
Foreign currency transactions (278)
- --------------------------------------------------------------------------------------
Net realized gain (loss) on investments 3,178,456
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 9,323,169
- --------------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 12,501,625
- --------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $12,932,719
======================================================================================
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 19
STATEMENTS OF CHANGES IN NET ASSETS
JAN. 31, 2007 JULY 31, 2006
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 431,094 $ 1,745,900
Net realized gain (loss) on investments 3,178,456 12,601,161
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 9,323,169 (5,201,720)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 12,932,719 9,145,341
- -------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (754,607) (878,948)
Class B (58,266) (101,985)
Class C (4,777) (5,946)
Class I (250,586) (815,837)
Class R2 (78) N/A
Class R3 (78) N/A
Class R4 (453) (1,721)
Class R5 (79) N/A
Net realized gain
Class A (9,225,989) (3,373,386)
Class B (2,795,601) (1,215,159)
Class C (166,141) (63,394)
Class I (2,248,825) (2,287,588)
Class R2 (708) N/A
Class R3 (708) N/A
Class R4 (5,334) (5,789)
Class R5 (708) N/A
- -------------------------------------------------------------------------------------------------------
Total distributions (15,512,938) (8,749,753)
- -------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
20 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
JAN. 31, 2007 JULY 31, 2006
SIX MONTHS ENDED YEAR ENDED
(UNAUDITED)
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Proceeds from sales
Class A shares (Note 2) $ 3,969,016 $ 11,203,132
Class B shares 953,842 1,923,861
Class C shares 92,822 172,850
Class I shares 1,611,120 13,890,983
Class R2 shares 5,000 N/A
Class R3 shares 5,000 N/A
Class R4 shares -- 1,022
Class R5 shares 5,000 N/A
Reinvestment of distributions at net asset value
Class A shares 9,755,373 4,161,490
Class B shares 2,826,940 1,301,183
Class C shares 162,715 67,763
Class I shares 2,498,502 3,103,080
Class R4 shares 3,775 6,764
Payments for redemptions
Class A shares (9,808,699) (27,249,234)
Class B shares (Note 2) (2,781,534) (12,824,832)
Class C shares (Note 2) (171,180) (534,833)
Class I shares (629,394) (41,255,992)
Class R4 shares -- (114,743)
- --------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions 8,498,298 (46,147,506)
- --------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 5,918,079 (45,751,918)
Net assets at beginning of period 96,190,551 141,942,469
- --------------------------------------------------------------------------------------------------------
Net assets at end of period $ 102,108,630 $ 96,190,551
========================================================================================================
Undistributed net investment income $ 24,294 $ 662,124
- --------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 21
NOTES TO FINANCIAL STATEMENTS
(Unaudited as to Jan. 31, 2007)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. The Fund invests primarily in
equity securities of companies with a market capitalization greater than $5
billion.
The Fund offers Class A, Class B, Class C and Class R4 shares.
o Class A shares are sold with a front-end sales charge.
o 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.
o Class C shares may be subject to a CDSC.
o Class R4 shares have no sales charge and are offered only to qualifying
institutional investors.
In September 2006, the Board approved renaming Class Y as Class R4,
terminating the shareholder servicing agreement, revising the fee structure
under the transfer agent agreement from account-based to asset-based, and
adopting a plan administration services agreement. These changes were
effective Dec. 11, 2006.
The Fund offers an additional class of shares, Class I, exclusively to certain
institutional investors. Class I shares have no sales charge and are made
available through a separate prospectus supplement provided to investors
eligible to purchase the shares. At Jan. 31, 2007, Ameriprise Financial, Inc.
(Ameriprise Financial) and the affiliated funds-of-funds owned 100% of Class I
shares.
Effective Dec. 11, 2006, the Fund offers additional classes of shares, Class
R2, Class R3 and Class R5, offered to certain institutional investors. These
shares are sold without a front-end sales charge or CDSC. At Jan. 31, 2007,
Ameriprise Financial owned 100% of Class R2 and Class R3 shares.
At Jan. 31, 2007, Ameriprise Financial and the affiliated funds-of-funds owned
approximately 16% of the total outstanding Fund shares.
All classes of shares have identical voting, dividend and liquidation rights.
Class specific expenses (e.g., distribution and service fees, transfer agency
fees, plan administration 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.
- ------------------------------------------------------------------------------
22 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from
actual results.
VALUATION OF SECURITIES
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Pursuant to procedures adopted by the Board of Directors of the funds,
Ameriprise Financial utilizes Fair Value Pricing (FVP). FVP determinations are
made in good faith in accordance with these procedures. If a development or
event is so significant that there is a reasonably high degree of certainty
that the effect of the development or event has actually caused the closing
price to no longer reflect the actual value, the closing prices, as determined
at the close of the applicable foreign market, may be adjusted to reflect the
fair value of the affected foreign securities as of the close of the New York
Stock Exchange. Significant events include material movements in the U.S.
securities markets prior to the opening of foreign markets on the following
trading day. FVP results in an estimated price that reasonably reflects the
current market conditions in order to value the portfolio holdings such that
shareholder transactions receive a fair net asset value. Short-term securities
maturing in more than 60 days from the valuation date are valued at the market
price or approximate market value based on current interest rates; those
maturing in 60 days or less are valued at amortized cost.
ILLIQUID SECURITIES
At Jan. 31, 2007, investments in securities included issues that are illiquid
which the Fund currently limits to 10% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at Jan. 31, 2007 was
$161,349 representing 0.16% of net assets. These securities are valued at fair
value according to methods selected in good faith by the Board. According to
board guidelines, certain unregistered securities are determined to be liquid
and are not included within the 10% limitation specified above. Assets are
liquid if they can be sold or disposed of in the ordinary course of business
within seven days at approximately the value at which the asset is valued by
the Fund.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 23
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.
The Fund also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a
put option is that the Fund may incur a loss if the market price of the
security decreases and the option is exercised. The risk in buying an option
is that the Fund pays a premium whether or not the option is exercised. The
Fund also has the additional risk of being unable to enter into a closing
transaction if a liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund
will realize a gain or loss when the option transaction expires or closes.
When an option is exercised, the proceeds on sales for a written call option,
the purchase cost for a written put option or the cost of a security for a
purchased put or call option is adjusted by the amount of premium received or
paid.
FUTURES TRANSACTIONS
To gain exposure to or protect itself from market changes, the Fund may buy
and sell financial futures contracts traded on any U.S. or foreign exchange.
The Fund also may buy and write put and call options on these futures
contracts. Risks of entering into futures contracts and related options
include the possibility of an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.
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.
- ------------------------------------------------------------------------------
24 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
FOREIGN CURRENCY TRANSLATIONS AND 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 exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of
their duties to the Fund. In addition, certain of the Fund's contracts with
its service providers contain general indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown since the amount of any
future claims that may be made against the Fund cannot be determined and the
Fund has no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income to shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. Also, due to the
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains
(losses) were recorded by the Fund.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 25
RECENT ACCOUNTING PRONOUNCEMENTS
On Sept. 20, 2006, the Financial Accounting Standards Board ("FASB") released
Statement of Financial Accounting Standards No. 157 "Fair Value Measurements"
("SFAS 157"). SFAS 157 establishes an authoritative definition of fair value,
sets out a framework for measuring fair value, and requires additional
disclosures about fair-value measurements. The application of SFAS 157 is
required for fiscal years beginning after Nov. 15, 2007 and interim periods
within those fiscal years. The impact of SFAS 157 on the Fund's financial
statements is being evaluated.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes." FIN
48 clarifies the accounting for uncertainty in income taxes recognized in
accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48
prescribes a two-step process to recognize and measure a tax position taken or
expected to be taken in a tax return. The first step is to determine whether a
tax position has met the more-likely-than-not recognition threshold and the
second step is to measure a tax position that meets the threshold to determine
the amount of benefit to recognize. FIN 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after Dec. 15, 2006. Tax positions of the Fund are being evaluated
to determine the impact, if any, to the Fund. The adoption of FIN 48 is not
anticipated to have a material impact on the Fund.
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.
- ------------------------------------------------------------------------------
26 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
2. EXPENSES AND SALES CHARGES
Under an Investment Management Services Agreement, RiverSource Investments,
LLC (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 based on a comparison of the performance of Class A
shares of the Fund to the Lipper Large-Cap Value Funds Index. In certain
circumstances, the Board may approve a change in the index. The maximum
adjustment is 0.12% per year. If the performance difference is less than
0.50%, the adjustment will be zero. The adjustment decreased the fee by $2,359
for the six months ended Jan. 31, 2007.
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.
Other expenses in the amount of $2,819 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.
Compensation of Board members includes, for the former Board Chair,
compensation as well as retirement benefits. Certain other aspects of the
former Board Chair's compensation, including health benefits and payment of
certain other expenses, are included under other expenses.
Under a Deferred Compensation Plan (the Plan), non-interested board members
may defer receipt of their compensation. Deferred amounts are treated as
though equivalent dollar amounts had been invested in shares of the Fund or
other RiverSource funds. The Fund's liability for these amounts is adjusted
for market value changes and remains in the Fund until distributed in
accordance with the Plan.
Professional fees include fees paid by the Fund for legal services and
independent auditor services.
Under a Transfer Agency Agreement, RiverSource Service Corporation (the
Transfer Agent) maintains shareholder accounts and records. The Fund pays the
Transfer Agent an annual fee per shareholder account for this service as
follows:
o Class A $19.50
o Class B $20.50
o Class C $20.00
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 27
Effective Dec. 11, 2006, as part of the Board's approval to rename Class Y as
Class R4, the fee structure under the Transfer Agency Agreement was revised
from an account-based fee for Class Y to an asset-based fee for Class R4. The
Fund will pay the Transfer Agent an annual asset-based fee at a rate of 0.05%
of the Fund's average daily net assets, attributable to Class R4 shares. Prior
to Dec. 11, 2006, the Fund paid the Transfer Agent an annual account-based fee
of $17.50 per shareholder account.
In addition, with the introduction of Class R2, Class R3 and Class R5 shares,
the Fund will pay the Transfer Agent an annual asset-based fee at a rate of
0.05% of the Funds average daily net assets attributable to Class R2, Class R3
and Class R5 shares.
Prior to Dec. 11, 2006, Class I paid a transfer agency fee at an annual rate
per shareholder account of $1. This amount is included in the transfer agency
fee on the statement of operations. Effective Dec. 11, 2006, this fee was
eliminated.
The Transfer Agent charges an annual closed account 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.
The Fund has agreements with Ameriprise Financial Services, Inc. and
RiverSource 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 and
Class R3 shares, a fee at an annual rate of up to 0.50% of the Fund's average
daily net assets attributable to Class R2 shares and a fee at an annual rate
of up to 1.00% of the Fund's average daily net assets attributable to Class B
and Class C shares.
Beginning Dec. 11, 2006, a new Plan Administration Services Agreement was
adopted for the restructured Class R4 and the introduction of Class R2 and
Class R3. The fee is calculated at a rate of 0.25% of the Fund's average daily
net assets attributable to Class R2, Class R3 and Class R4 shares.
Prior to Dec. 11, 2006, under a Shareholder Service Agreement, the Fund paid
the Distributor a fee for service provided to shareholders by the Distributor
and other servicing agents with respect to those shares. The fee was
calculated at a rate of 0.10% of the Fund's average daily net assets
attributable to Class Y shares. Effective Dec. 11, 2006, this agreement was
terminated.
Sales charges received by the Distributor for distributing Fund shares were
$35,406 for Class A, $11,478 for Class B and $26 for Class C for the six
months ended Jan. 31, 2007.
- ------------------------------------------------------------------------------
28 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
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.
For the six months ended Jan. 31, 2007, the Investment Manager and its
affiliates waived certain fees and expenses to 1.29% for Class A, 2.05% for
Class B, 2.05% for Class C, 0.91% for Class I, 1.70% for Class R2, 1.45% for
Class R3, 1.12% for Class R4, and 0.96% for Class R5. Of these waived fees and
expenses, the transfer agency fees waived for Class A, Class B, Class C, and
Class R4 were $18,213, $5,907, $320, and $10, respectively, and the management
fees waived at the Fund level were $190. In addition, the Investment Manager
and its affiliates have agreed to waive certain fees and expenses until July
31, 2007, unless sooner terminated by the Board, such that net expenses
(excluding fees and expenses of acquired funds), before giving effect to any
performance incentive adjustment, will not exceed 1.29% for Class A, 2.05% for
Class B, 2.06% for Class C, 0.94% for Class I, 1.69% for Class R2, 1.44% for
Class R3, 1.12% for Class R4, and 0.94 % for Class R5 of the Fund's average
daily net assets.
During the six months ended Jan. 31, 2007, the Fund's custodian and transfer
agency fees were reduced by $7,372 as a result of earnings and bank fee
credits from overnight cash balances. The Fund also pays custodian fees to
Ameriprise Trust Company, an affiliate of Ameriprise Financial.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $16,932,254 and $27,340,521, respectively, for the six
months ended Jan. 31, 2007. Realized gains and losses are determined on an
identified cost basis.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 29
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
SIX MONTHS ENDED JAN. 31, 2007
CLASS A CLASS B CLASS C CLASS I
- -------------------------------------------------------------------------------------------------------------------
Sold 654,275 157,106 15,644 262,489
Issued for reinvested distributions 1,738,926 506,620 29,213 443,784
Redeemed (1,623,937) (463,930) (28,446) (108,999)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 769,264 199,796 16,411 597,274
- -------------------------------------------------------------------------------------------------------------------
CLASS R2* CLASS R3* CLASS R4** CLASS R5*
- -------------------------------------------------------------------------------------------------------------------
Sold 763 763 -- 763
Issued for reinvested distributions -- -- 671 --
Redeemed -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 763 763 671 763
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED JULY 31, 2006
CLASS A CLASS B CLASS C CLASS I
- -------------------------------------------------------------------------------------------------------------------
Sold 1,942,339 336,668 30,218 2,383,522
Issued for reinvested distributions 743,124 233,606 12,166 552,149
Redeemed (4,706,798) (2,243,828) (93,245) (7,154,110)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (2,021,335) (1,673,554) (50,861) (4,218,439)
- -------------------------------------------------------------------------------------------------------------------
CLASS R2 CLASS R3 CLASS R4** CLASS R5
- -------------------------------------------------------------------------------------------------------------------
Sold N/A N/A 175 N/A
Issued for reinvested distributions N/A N/A 1,204 N/A
Redeemed N/A N/A (19,573) N/A
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) N/A N/A (18,194) N/A
- -------------------------------------------------------------------------------------------------------------------
* Inception date is Dec. 11, 2006.
** Effective Dec. 11, 2006, Class Y was renamed Class R4.
- ------------------------------------------------------------------------------
30 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
5. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash
Fund, a money market fund established for the exclusive use of the RiverSource
funds and other institutional clients of RiverSource Investments.
6. BANK BORROWINGS
The Fund has a revolving credit agreement with a syndicate of banks headed by
JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or
emergency purposes. The agreement went into effect Sept. 19, 2006. The Fund
must maintain asset coverage for borrowings of at least 300%. The agreement,
which enables the Fund to participate with other RiverSource funds, permits
borrowings up to $500 million, collectively. Interest is charged to each Fund
based on its borrowings at a rate equal to either the higher of the Federal
Funds Effective Rate plus 0.40% or the JPMCB Prime Commercial Lending Rate.
Borrowings are payable within 60 days after such loan is executed. 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. Prior to this agreement, the
Fund paid a commitment fee equal to its pro rata share of the amount of the
credit facility at a rate of 0.07% per annum. The Fund had no borrowings under
the facility outstanding during the six months ended Jan. 31, 2007.
7. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
United States District Court for the District of Arizona. The plaintiffs
allege that they are investors in several American Express Company mutual
funds and they purport to bring the action derivatively on behalf of those
funds under the Investment Company Act of 1940. The plaintiffs allege that
fees allegedly paid to the defendants by the funds for investment advisory and
administrative services are excessive. The plaintiffs seek remedies including
restitution and rescission of investment advisory and distribution agreements.
The plaintiffs voluntarily agreed to transfer this case to the United States
District Court for the District of Minnesota. In response to our motion to
dismiss the complaint, the Court dismissed one of plaintiffs' four claims and
granted plaintiffs limited discovery. Discovery is currently set to end in
March 2007.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 31
In December 2005, without admitting or denying the allegations, American
Express Financial Corporation (AEFC, which is now known as Ameriprise
Financial, Inc. (Ameriprise Financial)), the parent company of RiverSource
Investments, LLC (RiverSource Investments), entered into settlement agreements
with the Securities and Exchange Commission (SEC) and Minnesota Department of
Commerce (MDOC) related to market timing activities. In connection with these
matters, the SEC and MDOC issued orders (the Orders) alleging that AEFC
violated certain provisions of the federal and Minnesota securities laws by
failing to adequately disclose market timing activities by allowing certain
identified market timers to continue to market time contrary to disclosures in
mutual fund and variable annuity product prospectuses. The Orders also alleged
that AEFC failed to implement procedures to detect and prevent market timing
in 401(k) plans for employees of AEFC and related companies and failed to
adequately disclose that there were no such procedures. Pursuant to the MDOC
Order, the MDOC also alleged that AEFC allowed inappropriate market timing to
occur by failing to have written policies and procedures and failing to
properly supervise its employees.
As a result of the Orders, 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. Pursuant to the terms of the Orders, AEFC agreed to
pay disgorgement of $10 million and civil money penalties of $7 million. AEFC
also agreed to make presentations at least annually to its board of directors
and the relevant mutual funds' board that include an overview of policies and
procedures to prevent market timing, material changes to these policies and
procedures and whether disclosures related to market timing are consistent
with the SEC order and federal securities laws. 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. In addition, AEFC agreed to
complete and submit to the MDOC a compliance review of its procedures
regarding market timing within one year of the MDOC Order, including a summary
of actions taken to ensure compliance with applicable laws and regulations and
certification by a senior officer regarding compliance and supervisory
procedures.
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.
- ------------------------------------------------------------------------------
32 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings,
including routine litigation, class actions, and governmental actions,
concerning matters arising in connection with the conduct of their business
activities. Ameriprise Financial believes that the Funds are not currently the
subject of, and that neither Ameriprise Financial nor any of its affiliates
are the subject of, any pending legal, arbitration or regulatory proceedings
that are likely to have a material adverse effect on the Funds or the ability
of Ameriprise Financial or its affiliates to perform under their contracts
with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as
necessary, 8-K filings with the Securities and Exchange Commission on legal
and regulatory matters that relate to Ameriprise Financial and its affiliates.
Copies of these filings may be obtained by accessing the SEC website at
www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse
effect on the Funds or the ability of Ameriprise Financial or its affiliates
to perform under their contracts with the Funds, these proceedings are subject
to uncertainties and, as such, we are unable to estimate the possible loss or
range of loss that may result. An adverse outcome in one or more of these
proceedings could result in adverse judgments, settlements, fines, penalties
or other relief that could have a material adverse effect on the consolidated
financial condition or results of operations of Ameriprise Financial.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 33
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating
the Fund's results.
CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004 2003
Net asset value, beginning of period $ 5.88 $5.83 $ 5.34 $ 4.98 $ 4.52
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .03 .09 .06 .04 .03
Net gains (losses) (both realized
and unrealized) .78 .32 .70 .59 .44
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .81 .41 .76 .63 .47
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.07) (.07) (.04) (.03) (.01)
Distributions from realized gains (.93) (.29) (.23) (.24) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.00) (.36) (.27) (.27) (.01)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.69 $5.88 $ 5.83 $ 5.34 $ 4.98
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 65 $ 63 $ 74 $ 67 $ 31
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) 1.29%(d),(e) 1.21% 1.29% 1.24%(e) 1.25%(e)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .96%(d) 1.35% 1.07% .95% 1.01%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 18% 46% 57% 59% 77%
- -----------------------------------------------------------------------------------------------------------------------------------
Total return(f) 14.07%(g) 7.39% 14.52% 12.85% 10.52%
- -----------------------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class A would have been 1.34% for the six months ended Jan. 31, 2007
and 1.54% and 2.64% for the years ended July 31, 2004 and 2003,
respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
34 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004 2003
Net asset value, beginning of period $ 5.82 $5.77 $ 5.29 $ 4.95 $4.52
- ----------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) -- .04 .01 -- .01
Net gains (losses) (both realized
and unrealized) .78 .32 .70 .59 .43
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations .78 .36 .71 .59 .44
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.02) -- (.01) (.01)
Distributions from realized gains (.93) (.29) (.23) (.24) --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (.95) (.31) (.23) (.25) (.01)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.65 $5.82 $ 5.77 $ 5.29 $4.95
- ----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 20 $ 19 $ 28 $ 25 $ 13
- ----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) 2.05%(d),(e) 1.97% 2.05% 2.00%(e) 2.00%(e)
- ----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .20%(d) .59% .30% .16% .25%
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 18% 46% 57% 59% 77%
- ----------------------------------------------------------------------------------------------------------------------
Total return(f) 13.55%(g) 6.51% 13.66% 12.00% 9.66%
- ----------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class B would have been 2.11% for the six months ended Jan. 31, 2007
and 2.30% and 3.40% for the years ended July 31, 2004 and 2003,
respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 35
CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004 2003
Net asset value, beginning of period $ 5.82 $5.77 $ 5.29 $ 4.94 $4.52
- -----------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) -- .04 .01 -- .01
Net gains (losses) (both realized
and unrealized) .77 .32 .70 .60 .42
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations .77 .36 .71 .60 .43
- -----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.02) (.02) -- (.01) (.01)
Distributions from realized gains (.93) (.29) (.23) (.24) --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions (.95) (.31) (.23) (.25) (.01)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.64 $5.82 $ 5.77 $ 5.29 $4.94
- -----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 1 $ 1 $ 1 $ 1 $ 1
- -----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) 2.05%(d),(e) 1.98% 2.06% 2.00%(e) 2.00%(e)
- -----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .19%(d) .58% .30% .19% .26%
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 18% 46% 57% 59% 77%
- -----------------------------------------------------------------------------------------------------------------------
Total return(f) 13.50%(g) 6.56% 13.62% 12.19% 9.50%
- -----------------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class C would have been 2.11% for the six months ended Jan. 31, 2007
and 2.30% and 3.40% for the years ended July 31, 2004 and 2003,
respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
36 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(i) 2006 2005 2004(b)
Net asset value, beginning of period $ 5.91 $5.86 $ 5.36 $ 5.57
- ----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .05 .12 .07 .03
Net gains (losses) (both realized
and unrealized) .78 .32 .72 (.24)
- ----------------------------------------------------------------------------------------------------------------
Total from investment operations .83 .44 .79 (.21)
- ----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10) (.10) (.06) --
Distributions from realized gains (.93) (.29) (.23) --
- ----------------------------------------------------------------------------------------------------------------
Total distributions (1.03) (.39) (.29) --
- ----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.71 $5.91 $ 5.86 $ 5.36
- ----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ 16 $ 13 $ 38 $ 16
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) .91%(e) .75% .86% .93%(e),(f)
- ----------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets 1.33%(e) 1.85% 1.50% 1.33%(e)
- ----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 18% 46% 57% 59%
- ----------------------------------------------------------------------------------------------------------------
Total return(g) 14.30%(h) 7.86% 14.97% (3.77%)(h)
- ----------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Inception date is March 4, 2004.
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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 waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class I would have been 1.02% for the period ended July 31, 2004.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
(i) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 37
CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 6.55
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net gains (losses) (both realized
and unrealized) .16
- ---------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10)
Distributions from realized gains (.93)
- ---------------------------------------------------------------------
Total distributions (1.03)
- ---------------------------------------------------------------------
Net asset value, end of period $ 5.68
- ---------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- ---------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) 1.70%(e),(f)
- ---------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .09%(e)
- ---------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 18%
- ---------------------------------------------------------------------
Total return(g) 2.66%(h)
- ---------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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 waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class R2 would have been 1.79% for the period ended Jan. 31, 2007.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
- ------------------------------------------------------------------------------
38 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 6.55
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net gains (losses) (both realized
and unrealized) .16
- ---------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10)
Distributions from realized gains (.93)
- ---------------------------------------------------------------------------------------------
Total distributions (1.03)
- ---------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.68
- ---------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- ---------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) 1.45%(e),(f)
- ---------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .34%(e)
- ---------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 18%
- ---------------------------------------------------------------------------------------------
Total return(g) 2.67%(h)
- ---------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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 waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class R3 would have been 1.54% for the period ended Jan. 31, 2007.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 39
CLASS R4*
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(h) 2006 2005 2004 2003
Net asset value, beginning of period $ 5.90 $5.85 $ 5.36 $ 4.99 $ 4.52
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .10 .07 .04 .03
Net gains (losses) (both realized
and unrealized) .78 .32 .70 .61 .45
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations .82 .42 .77 .65 .48
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.08) (.08) (.05) (.04) (.01)
Distributions from realized gains (.93) (.29) (.23) (.24) --
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (1.01) (.37) (.28) (.28) (.01)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.71 $5.90 $ 5.85 $ 5.36 $ 4.99
- -------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ -- $ -- $ -- $ -- $ --
- -------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(b),(c) 1.12%(d),(e) 1.00% 1.11% 1.06%(e) .95%(e)
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets 1.12%(d) 1.69% 1.25% 1.12% 1.30%
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 18% 46% 57% 59% 77%
- -------------------------------------------------------------------------------------------------------------------------
Total return(f) 14.07%(g) 7.55% 14.67% 13.14% 10.76%
- -------------------------------------------------------------------------------------------------------------------------
* Effective Dec. 11, 2006, Class Y was renamed Class R4.
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(c) 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.
(d) Adjusted to an annual basis.
(e) The Investment Manager and its affiliates waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratios of expenses
for Class R4 would have been 1.17% for the six months ended Jan. 31,
2007 and 1.36% and 2.46% for the years ended July 31, 2004 and 2003,
respectively.
(f) Total return does not reflect payment of a sales charge.
(g) Not annualized.
(h) Six months ended Jan. 31, 2007 (Unaudited).
- ------------------------------------------------------------------------------
40 RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT
CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a)
Fiscal period ended July 31, 2007(b)
Net asset value, beginning of period $ 6.55
- --------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .01
Net gains (losses) (both realized
and unrealized) .15
- --------------------------------------------------------------------------------------------
Total from investment operations .16
- --------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.10)
Distributions from realized gains (.93)
- --------------------------------------------------------------------------------------------
Total distributions (1.03)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $ 5.68
- --------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $ --
- --------------------------------------------------------------------------------------------
Ratio of expenses to average
daily net assets(c),(d) .96%(e),(f)
- --------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average daily net assets .84%(e)
- --------------------------------------------------------------------------------------------
Portfolio turnover rate
(excluding short-term securities) 18%
- --------------------------------------------------------------------------------------------
Total return(g) 2.68%(h)
- --------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest
cent.
(b) For the period from Dec. 11, 2006 (inception date) to Jan. 31, 2007
(Unaudited).
(c) Expense ratio is based on total expenses of the Fund before reduction of
earnings and bank fee credits on cash balances. Includes the impact of a
performance incentive adjustment fee, if any.
(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 waived/reimbursed the Fund for
certain expenses. Had they not done so, the annual ratio of expenses for
Class R5 would have been 1.03% for the period ended Jan. 31, 2007.
(g) Total return does not reflect payment of a sales charge.
(h) Not annualized.
- ------------------------------------------------------------------------------
RIVERSOURCE LARGE CAP VALUE FUND - 2007 SEMIANNUAL REPORT 41
PROXY VOTING
The policy of the Board is to vote all proxies of the companies in which the
Fund holds investments. The procedures are 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 during
the 12-month period ended June 30, 2006 is available without charge by
visiting riversource.com/funds; or searching the website of the SEC at
www.sec.gov.
- ------------------------------------------------------------------------------
42 RIVERSOURCE LARGE CAP VALUE FUND -- 2007 SEMIANNUAL REPORT
RIVERSOURCE(R) LARGE CAP VALUE FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
riversource.com/funds
This report must be accompanied or
preceded by the Fund's current
prospectus. RiverSource(R) mutual
funds are distributed by RiverSource
Distributors, Inc. and Ameriprise
Financial Services, Inc., Members
NASD, and managed by RiverSource
RIVERSOURCE [LOGO](R) Investments, LLC. These companies are
INVESTMENTS part of Ameriprise Financial, Inc. S-6257 F (3/07)
Item 2. Code of Ethics. Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert. Not applicable for semi-annual
reports.
Item 4. Principal Accountant Fees and Services. Not applicable for
semi-annual reports.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing
date of this Form N-CSR, the registrant's Principal Financial
Officer and Principal Executive Officer have concluded that those
disclosure controls and procedures provide reasonable assurance
that the material information required to be disclosed by the
registrant on this report is recorded, processed, summarized and
reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over
financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable for semi-annual reports.
(a)(2) Separate certification for the Registrant's principal
executive officer and principal financial officer, as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a)
under the Investment Company Act of 1940, are attached as
EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) RiverSource Large Cap Series, Inc.
By /s/ Patrick T. Bannigan
-----------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date April 3, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
-----------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date April 3, 2007
By /s/ Jeffrey P. Fox
-----------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date April 3, 2007