-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TcBjAVkJFejpZHHwzpf6ma2palRJZcLGZRcNm48SAZ5jvI+ZeW24ozAC+Q2/bbWy 57dAy0Cq/d5vs9Gt9Gincw== 0000950137-09-002478.txt : 20090401 0000950137-09-002478.hdr.sgml : 20090401 20090401091331 ACCESSION NUMBER: 0000950137-09-002478 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20090131 FILED AS OF DATE: 20090401 DATE AS OF CHANGE: 20090401 EFFECTIVENESS DATE: 20090401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVERSOURCE LARGE CAP SERIES, INC. CENTRAL INDEX KEY: 0000049702 IRS NUMBER: 410962638 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02111 FILM NUMBER: 09721427 BUSINESS ADDRESS: STREET 1: 50606 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5228 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 BUSINESS PHONE: 6126714321 MAIL ADDRESS: STREET 1: 50606 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5228 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: AXP GROWTH SERIES INC/MN DATE OF NAME CHANGE: 20001011 FORMER COMPANY: FORMER CONFORMED NAME: AXP GROWTH FUND INC DATE OF NAME CHANGE: 20000829 FORMER COMPANY: FORMER CONFORMED NAME: IDS GROWTH FUND INC DATE OF NAME CHANGE: 19920703 0000049702 S000003287 RiverSource Disciplined Equity Fund C000008741 RiverSource Disciplined Equity Fund Class B AQEBX C000008742 RiverSource Disciplined Equity Fund Class C RDCEX C000008744 RiverSource Disciplined Equity Fund Class A AQEAX C000008745 RiverSource Disciplined Equity Fund Class I ALEIX C000042888 RiverSource Disciplined Equity Fund Class R2 C000042889 RiverSource Disciplined Equity Fund Class R3 RSDEX C000042890 RiverSource Disciplined Equity Fund Class R4 RQEYX C000042891 RiverSource Disciplined Equity Fund Class R5 RSIPX C000042892 RiverSource Disciplined Equity Fund Class W RDEWX 0000049702 S000003288 RiverSource Growth Fund C000008746 RiverSource Growth Fund Class A INIDX C000008747 RiverSource Growth Fund Class B IGRBX C000008748 RiverSource Growth Fund Class C AXGCX C000008749 RiverSource Growth Fund Class I AGWIX C000042893 RiverSource Growth Fund Class W C000042894 RiverSource Growth Fund Class R2 C000042895 RiverSource Growth Fund Class R3 RSCGX C000042896 RiverSource Growth Fund Class R4 IGRYX C000042897 RiverSource Growth Fund Class R5 RSWHX 0000049702 S000003289 RiverSource Large Cap Equity Fund C000008751 RiverSource Large Cap Equity Fund Class I ALRIX C000008752 RiverSource Large Cap Equity Fund Class A ALEAX C000008753 RiverSource Large Cap Equity Fund Class B ALEBX C000008754 RiverSource Large Cap Equity Fund Class C ARQCX C000042898 RiverSource Large Cap Equity Fund Class R2 C000042899 RiverSource Large Cap Equity Fund Class R3 C000042900 RiverSource Large Cap Equity Fund Class R4 ALEYX C000042901 RiverSource Large Cap Equity Fund Class R5 0000049702 S000003290 RiverSource Large Cap Value Fund C000008756 RiverSource Large Cap Value Fund Class C RLVCX C000008758 RiverSource Large Cap Value Fund Class A ALVAX C000008759 RiverSource Large Cap Value Fund Class B ALVBX C000008760 RiverSource Large Cap Value Fund Class I ALCIX C000042902 RiverSource Large Cap Value Fund Class R2 C000042903 RiverSource Large Cap Value Fund Class R3 C000042904 RiverSource Large Cap Value Fund Class R4 RSLVX C000042905 RiverSource Large Cap Value Fund Class R5 N-CSRS 1 c49572nvcsrs.txt N-CSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number 811-2111 RIVERSOURCE LARGE CAP SERIES, INC. (Exact name of registrant as specified in charter) 50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (Address of principal executive offices) (Zip code) Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474 (Name and address of agent for service) Registrant's telephone number, including area code: (612) 671-1947 Date of fiscal year end: 7/31 Date of reporting period: 1/31 Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE DISCIPLINED EQUITY FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED JANUARY 31, 2009 RIVERSOURCE DISCIPLINED EQUITY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. (SINGLE STRATEGY FUNDS ICON) TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 2 Fund Expenses Example.............. 8 Portfolio of Investments........... 11 Statement of Assets and Liabilities...................... 19 Statement of Operations............ 21 Statements of Changes in Net Assets........................... 23 Financial Highlights............... 25 Notes to Financial Statements...... 34 Proxy Voting....................... 49
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 1 YOUR FUND AT A GLANCE ---------------------------------------------------------- (UNAUDITED) FUND SUMMARY - -------------------------------------------------------------------------------- > RiverSource Disciplined Equity Fund (the Fund) Class A shares declined 36.05% (excluding sales charge) for the six months ended Jan. 31, 2009. > The Fund underperformed the unmanaged Standard & Poor's 500 Index (S&P 500 Index), which fell 33.95% for the same period. > The Fund also underperformed the Lipper Large-Cap Core Funds Index, representing the Fund's peer group, which declined 33.98%, for the same period. ANNUALIZED TOTAL RETURNS (for period ended Jan. 31, 2009) - --------------------------------------------------------------------------------
Since inception 6 months* 1 year 3 years 5 years 4/24/03 - --------------------------------------------------------------------------- RiverSource Disciplined Equity Fund Class A (excluding sales charge) -36.05% -41.79% -13.95% -5.24% -0.64% - --------------------------------------------------------------------------- S&P 500 Index (unmanaged)(1) -33.95% -38.63% -11.78% -4.24% +0.22% - --------------------------------------------------------------------------- Lipper Large-Cap Core Funds Index(2) -33.98% -38.34% -11.95% -4.55% -0.54% - ---------------------------------------------------------------------------
* Not annualized. The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. - -------------------------------------------------------------------------------- 2 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- (1) The Standard & Poor's 500 Index (S&P 500 Index), an unmanaged index of common stocks, is frequently used as a general measure of market performance. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap core funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS - --------------------------------------------------------------------------------
AT JAN. 31, 2009 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS INCEPTION - --------------------------------------------------------------------------- Class A (inception 4/24/03) -36.05% -41.79% -13.95% -5.24% -0.64% - --------------------------------------------------------------------------- Class B (inception 4/24/03) -36.36% -42.33% -14.63% -6.00% -1.43% - --------------------------------------------------------------------------- Class C (inception 4/24/03) -36.26% -42.26% -14.61% -6.00% -1.40% - --------------------------------------------------------------------------- Class I (inception 7/15/04) -36.07% -41.52% -13.58% N/A -4.76% - --------------------------------------------------------------------------- Class R2 (inception 12/11/06) -36.15% -41.97% N/A N/A -23.05% - --------------------------------------------------------------------------- Class R3 (inception 12/11/06) -36.03% -41.76% N/A N/A -22.84% - --------------------------------------------------------------------------- Class R4 (inception 4/24/03) -36.05% -41.77% -13.84% -5.12% -0.48% - --------------------------------------------------------------------------- Class R5 (inception 12/11/06) -35.97% -41.61% N/A N/A -22.64% - --------------------------------------------------------------------------- Class W (inception 12/1/06) -36.10% -41.94% N/A N/A -22.21% - --------------------------------------------------------------------------- With sales charge Class A (inception 4/24/03) -39.74% -45.10% -15.63% -6.37% -1.67% - --------------------------------------------------------------------------- Class B (inception 4/24/03) -39.43% -45.11% -15.59% -6.30% -1.56% - --------------------------------------------------------------------------- Class C (inception 4/24/03) -36.88% -42.81% -14.61% -6.00% -1.40% - ---------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 4 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
AT DEC. 31, 2008 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS INCEPTION - --------------------------------------------------------------------------- Class A (inception 4/24/03) -29.09% -38.74% -9.10% -2.59% +1.44% - --------------------------------------------------------------------------- Class B (inception 4/24/03) -29.24% -39.16% -9.76% -3.31% +0.68% - --------------------------------------------------------------------------- Class C (inception 4/24/03) -29.26% -39.20% -9.79% -3.31% +0.67% - --------------------------------------------------------------------------- Class I (inception 7/15/04) -28.85% -38.47% -8.78% N/A -2.30% - --------------------------------------------------------------------------- Class R2 (inception 12/11/06) -29.15% -38.77% N/A N/A -19.27% - --------------------------------------------------------------------------- Class R3 (inception 12/11/06) -28.90% -38.56% N/A N/A -19.04% - --------------------------------------------------------------------------- Class R4 (inception 4/24/03) -29.12% -38.72% -9.00% -2.43% +1.60% - --------------------------------------------------------------------------- Class R5 (inception 12/11/06) -29.00% -38.55% N/A N/A -18.91% - --------------------------------------------------------------------------- Class W (inception 12/1/06) -29.13% -38.89% N/A N/A -18.48% - --------------------------------------------------------------------------- With sales charge Class A (inception 4/24/03) -33.13% -42.25% -10.87% -3.74% +0.37% - --------------------------------------------------------------------------- Class B (inception 4/24/03) -32.65% -42.09% -10.78% -3.61% +0.54% - --------------------------------------------------------------------------- Class C (inception 4/24/03) -29.94% -39.79% -9.79% -3.31% +0.67% - ---------------------------------------------------------------------------
Class A share performance reflects the maximum sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R2, Class R3, Class R4, Class R5 and Class W shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available to institutional investors only. Class W shares are offered through qualifying discretionary accounts. *Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 5 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- STYLE MATRIX - --------------------------------------------------------------------------------
STYLE VALUE BLEND GROWTH X LARGE MEDIUM SIZE SMALL
Shading within the style matrix indicates areas in which the Fund is designed to generally invest. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and may serve as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. ANNUAL OPERATING EXPENSE RATIO (as of the current prospectus) - --------------------------------------------------------------------------------
Total Net fund fund expenses expenses(a) - ----------------------------------------- Class A 0.96% 0.96% - ----------------------------------------- Class B 1.72% 1.72% - ----------------------------------------- Class C 1.72% 1.72% - ----------------------------------------- Class I 0.61% 0.61% - ----------------------------------------- Class R2 1.41% 1.41% - ----------------------------------------- Class R3 1.15% 1.15% - ----------------------------------------- Class R4 0.91% 0.84% - ----------------------------------------- Class R5 0.66% 0.66% - ----------------------------------------- Class W 1.06% 1.06% - -----------------------------------------
(a) The Investment Manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until July 31, 2009, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment (that decreased the management fee by 0.04% for the year ended July 31, 2008), will not exceed 1.05% for Class A, 1.81% for Class B, 1.81% for Class C, 0.72% for Class I, 1.52% for Class R2, 1.27% for Class R3, 0.88% for Class R4, 0.77% for Class R5 and 1.17% for Class W. - -------------------------------------------------------------------------------- 6 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION(1) (at Jan. 31, 2009; % of portfolio assets) - ---------------------------------------------------------------------
Consumer Discretionary 10.3% - ------------------------------------------------ Consumer Staples 13.3% - ------------------------------------------------ Energy 15.6% - ------------------------------------------------ Financials 12.7% - ------------------------------------------------ Health Care 16.2% - ------------------------------------------------ Industrials 8.0% - ------------------------------------------------ Information Technology 10.6% - ------------------------------------------------ Materials 2.9% - ------------------------------------------------ Telecommunication Services 0.4% - ------------------------------------------------ Utilities 0.8% - ------------------------------------------------ Other(2) 9.2% - ------------------------------------------------
(1) Sectors can be comprised of several industries. Please refer to the section entitled "Portfolio of Investments" for a complete listing. No single industry exceeds 25% of portfolio assets. (2) Cash & Cash Equivalents. Of the 9.2%, 7.3% is due to security lending activity and 1.9% is the Fund's cash equivalent position. The sectors identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. TOP TEN HOLDINGS (at Jan. 31, 2009; % of portfolio assets) - ---------------------------------------------------------------------
Chevron 5.7% - ------------------------------------------------ Johnson & Johnson 4.7% - ------------------------------------------------ Wal-Mart Stores 4.4% - ------------------------------------------------ Pfizer 4.4% - ------------------------------------------------ Home Depot 2.4% - ------------------------------------------------ IBM 2.2% - ------------------------------------------------ Exxon Mobil 2.2% - ------------------------------------------------ Intel 1.8% - ------------------------------------------------ PepsiCo 1.7% - ------------------------------------------------ Comcast Cl A 1.5% - ------------------------------------------------
For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 7 FUND EXPENSES EXAMPLE --------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended Jan. 31, 2009. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 8 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED AUG. 1, 2008 JAN. 31, 2009 THE PERIOD(A) EXPENSE RATIO - ------------------------------------------------------------------------------------------ Class A - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 639.50 $4.03 .98% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.16 $4.96 .98% - ------------------------------------------------------------------------------------------ Class B - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 636.40 $7.14 1.74% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.34 $8.80 1.74% - ------------------------------------------------------------------------------------------ Class C - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 637.40 $7.14 1.74% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.34 $8.80 1.74% - ------------------------------------------------------------------------------------------ Class I - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 641.00 $2.43 .59% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,022.11 $2.99 .59% - ------------------------------------------------------------------------------------------ Class R2 - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 638.50 $5.63 1.37% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.20 $6.93 1.37% - ------------------------------------------------------------------------------------------ Class R3 - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 639.70 $4.69 1.14% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.35 $5.77 1.14% - ------------------------------------------------------------------------------------------ Class R4 - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 639.50 $3.33 .81% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,021.01 $4.10 .81% - ------------------------------------------------------------------------------------------ Class R5 - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 640.30 $2.51 .61% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,022.01 $3.09 .61% - ------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 9 FUND EXPENSES EXAMPLE (continued) ---------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED AUG. 1, 2008 JAN. 31, 2009 THE PERIOD(A) EXPENSE RATIO - ------------------------------------------------------------------------------------------ Class W - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 639.00 $4.27 1.04% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.85 $5.27 1.04% - ------------------------------------------------------------------------------------------
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended Jan. 31, 2009: -36.05% for Class A, -36.36% for Class B, -36.26% for Class C, -36.07% for Class I, -36.15% for Class R2, -36.03% for Class R3, -36.05% for Class R4, -35.97% for Class R5 and -36.10% for Class W. - -------------------------------------------------------------------------------- 10 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT PORTFOLIO OF INVESTMENTS ------------------------------------------------------- JAN. 31, 2009 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (98.1%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.6%) General Dynamics 144,205 $8,180,750 United Technologies 64,197 3,080,814 --------------- Total 11,261,564 - ------------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS (0.2%) CH Robinson Worldwide 92,540 4,254,989 - ------------------------------------------------------------------------------------- AIRLINES (0.1%) Southwest Airlines 273,867(e) 1,925,285 - ------------------------------------------------------------------------------------- AUTOMOBILES (0.3%) Ford Motor 1,518,855(b,e) 2,840,260 General Motors 561,121(e) 1,688,974 Harley-Davidson 144,208(e) 1,756,453 --------------- Total 6,285,687 - ------------------------------------------------------------------------------------- BEVERAGES (3.2%) Brown-Forman Cl B 42,720 1,939,915 Coca-Cola 568,927 24,304,561 PepsiCo 690,410 34,679,295 --------------- Total 60,923,771 - ------------------------------------------------------------------------------------- BIOTECHNOLOGY (2.4%) Amgen 397,145(b) 21,783,403 Cephalon 51,854(b,e) 4,002,092 Gilead Sciences 365,720(b) 18,567,604 --------------- Total 44,353,099 - ------------------------------------------------------------------------------------- BUILDING PRODUCTS (0.1%) Masco 274,495 2,146,551 - ------------------------------------------------------------------------------------- CAPITAL MARKETS (1.6%) E*TRADE Financial 256,004(b,e) 291,845 Goldman Sachs Group 74,459 6,011,075 Morgan Stanley 998,145 20,192,472 State Street 155,918(e) 3,628,212 T Rowe Price Group 28,175 777,067 --------------- Total 30,900,671 - ------------------------------------------------------------------------------------- CHEMICALS (2.0%) CF Inds Holdings 31,771 1,493,237 Dow Chemical 1,666,654 19,316,519 Ecolab 34,297 1,164,726 EI du Pont de Nemours & Co 125,659 2,885,131 PPG Inds 66,308(e) 2,491,855 Praxair 157,495(e) 9,805,639 --------------- Total 37,157,107 - ------------------------------------------------------------------------------------- COMMERCIAL BANKS (1.6%) Banco Santander ADR 83,264(c) 652,792 BB&T 289,577(e) 5,730,729 Comerica 118,453 1,973,427 Fifth Third Bancorp 601,610 1,437,848 First Horizon Natl 181,074(e) 1,723,826 Huntington Bancshares 363,386(e) 1,046,552 KeyCorp 328,985 2,395,011 Marshall & Ilsley 169,248(e) 966,406 PNC Financial Services Group 351,414 11,427,982 SunTrust Banks 164,950 2,022,287 Synovus Financial 135,983(e) 538,493 Wells Fargo & Co 56,909 1,075,580 --------------- Total 30,990,933 - ------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES (0.9%) Avery Dennison 38,795(e) 940,003 Republic Services 243,219 6,289,643 RR Donnelley & Sons 79,664 777,521 Waste Management 264,866 8,261,170 --------------- Total 16,268,337 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 11 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) COMMUNICATIONS EQUIPMENT (1.0%) Corning 734,439(e) $7,425,178 Motorola 248,544 1,101,050 QUALCOMM 297,886(e) 10,291,962 --------------- Total 18,818,190 - ------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS (3.9%) Apple 155,131(b) 13,981,957 Dell 817,705(b,e) 7,768,198 IBM 494,262 45,299,111 Lexmark Intl Cl A 180,264(b) 4,268,652 QLogic 139,178(b,e) 1,575,495 --------------- Total 72,893,413 - ------------------------------------------------------------------------------------- CONSUMER FINANCE (0.2%) American Express 68,310 1,142,826 SLM 210,091(b,e) 2,405,542 --------------- Total 3,548,368 - ------------------------------------------------------------------------------------- DISTRIBUTORS (0.2%) Genuine Parts 104,179 3,335,812 - ------------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES (0.4%) H&R Block 391,532 8,116,458 - ------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (3.7%) Bank of America 3,198,568 21,046,577 CIT Group 293,875 819,911 Citigroup 5,968,599(e) 21,188,526 JPMorgan Chase & Co 1,027,716 26,217,036 --------------- Total 69,272,050 - ------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES (0.3%) Embarq 97,099 3,468,376 Frontier Communications 173,926 1,410,540 --------------- Total 4,878,916 - ------------------------------------------------------------------------------------- ELECTRIC UTILITIES (0.6%) FirstEnergy 121,190 6,058,289 Southern 146,152 4,888,784 --------------- Total 10,947,073 - ------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT (0.3%) Emerson Electric 155,014 5,068,958 - ------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (0.2%) FLIR Systems 132,734(b) 3,314,368 Tyco Electronics 80,159(c) 1,135,051 --------------- Total 4,449,419 - ------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (1.7%) BJ Services 200,667 2,207,337 ENSCO Intl 84,641 2,315,778 Halliburton 535,561 9,238,428 Nabors Inds 236,334(b,c,e) 2,587,857 Natl Oilwell Varco 197,191(b) 5,213,730 Noble 146,159(e) 3,968,217 Smith Intl 50,852 1,154,340 Weatherford Intl 430,448(b) 4,747,841 --------------- Total 31,433,528 - ------------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (5.7%) Costco Wholesale 88,113 3,967,728 Safeway 216,984 4,649,967 SUPERVALU 79,252 1,390,080 SYSCO 103,485 2,306,681 Walgreen 155,755(e) 4,269,245 Wal-Mart Stores 1,914,179 90,196,115 --------------- Total 106,779,816 - ------------------------------------------------------------------------------------- FOOD PRODUCTS (2.3%) Archer-Daniels-Midland 133,678 3,660,104 Campbell Soup 74,438(e) 2,260,682 Dean Foods 27,032(b,e) 522,799 General Mills 388,802(e) 22,997,637 HJ Heinz 77,259 2,819,954 JM Smucker 66,166 2,987,395 Kellogg 91,146 3,982,169 Sara Lee 351,117 3,521,704 Tyson Foods Cl A 112,926(e) 999,395 --------------- Total 43,751,839 - ------------------------------------------------------------------------------------- GAS UTILITIES (0.1%) Questar 71,190(e) 2,419,036 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 12 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) HEALTH CARE EQUIPMENT & SUPPLIES (0.7%) Becton Dickinson & Co 52,477 $3,813,504 Covidien 182,195(c) 6,985,356 Varian Medical Systems 52,680(b,e) 1,956,008 --------------- Total 12,754,868 - ------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES (0.7%) Cardinal Health 71,711 2,699,919 CIGNA 399,133 6,928,948 Quest Diagnostics 59,390 2,930,897 Tenet Healthcare 456,110(b,e) 488,038 --------------- Total 13,047,802 - ------------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE (1.4%) Intl Game Technology 117,047(e) 1,240,698 McDonald's 423,142 24,550,699 Wyndham Worldwide 46,479 284,916 --------------- Total 26,076,313 - ------------------------------------------------------------------------------------- HOUSEHOLD DURABLES (0.5%) Black & Decker 29,679(e) 858,020 Centex 121,143 1,030,927 DR Horton 313,448 1,868,150 KB Home 36,839(e) 393,072 Leggett & Platt 116,545 1,455,647 Lennar Cl A 85,838 660,094 Pulte Homes 111,499 1,131,715 Snap-On 47,778 1,441,940 Stanley Works 13,005 406,536 --------------- Total 9,246,101 - ------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (2.6%) Colgate-Palmolive 212,124 13,796,545 Kimberly-Clark 79,020 4,067,159 Procter & Gamble 563,360 30,703,120 --------------- Total 48,566,824 - ------------------------------------------------------------------------------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.1%) Constellation Energy Group 94,112 2,475,145 Dynegy Cl A 200,023(b) 422,049 --------------- Total 2,897,194 - ------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES (1.4%) 3M 233,882 12,580,512 Textron 114,451 1,033,493 Tyco Intl 577,631(c) 12,141,804 --------------- Total 25,755,809 - ------------------------------------------------------------------------------------- INSURANCE (6.3%) ACE 224,162(c) 9,786,913 AFLAC 239,320 5,554,617 Allstate 913,087 19,786,594 Ambac Financial Group 288,197(e) 328,545 American Intl Group 1,536,860 1,967,181 Aon 101,123 3,746,607 Assurant 63,505 1,676,532 Chubb 186,118 7,924,904 Cincinnati Financial 28,900 633,777 Genworth Financial Cl A 656,721 1,523,593 Hartford Financial Services Group 200,394(e) 2,637,185 Lincoln Natl 120,907 1,829,323 Marsh & McLennan Companies 383,572 7,414,447 MBIA 209,475(b,e) 808,574 MetLife 374,982 10,773,233 Progressive 1,189,984(b) 14,458,306 Prudential Financial 200,346 5,158,910 Torchmark 66,836(e) 2,005,080 Travelers Companies 454,944 17,579,036 Unum Group 120,100 1,700,616 XL Capital Cl A 210,930(c) 611,697 --------------- Total 117,905,670 - ------------------------------------------------------------------------------------- IT SERVICES (1.0%) Affiliated Computer Services Cl A 57,245(b) 2,625,256 Automatic Data Processing 183,752(e) 6,675,709
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 13 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) IT SERVICES (CONT.) MasterCard Cl A 28,772(e) $3,906,662 Paychex 98,702(e) 2,397,472 Total System Services 17,806 225,424 Western Union 151,118 2,064,272 --------------- Total 17,894,795 - ------------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS (0.4%) Brunswick 100,213(e) 278,592 Eastman Kodak 232,404(e) 1,052,790 Hasbro 92,091(e) 2,222,156 Mattel 221,386 3,141,467 --------------- Total 6,695,005 - ------------------------------------------------------------------------------------- MACHINERY (1.3%) Cummins 95,151 2,281,721 Deere & Co 154,045 5,351,523 Dover 34,526 976,395 Eaton 77,917 3,429,906 Flowserve 23,515 1,253,585 Illinois Tool Works 99,790 3,259,141 Ingersoll-Rand Cl A 250,754(c) 4,064,722 Manitowoc 41,277(e) 227,024 Pall 21,838 569,317 Parker Hannifin 58,170 2,222,676 --------------- Total 23,636,010 - ------------------------------------------------------------------------------------- MEDIA (2.4%) CBS Cl B 599,908 3,431,474 Comcast Cl A 2,148,695 31,478,381 DIRECTV Group 204,716(b) 4,483,280 Gannett 498,635(e) 2,877,124 Meredith 14,134(e) 225,720 New York Times Cl A 109,515(e) 544,290 News Corp Cl A 259,074 1,655,483 --------------- Total 44,695,752 - ------------------------------------------------------------------------------------- METALS & MINING (1.1%) AK Steel Holding 105,674(e) 852,789 Alcoa 474,946 3,699,829 Freeport-McMoRan Copper & Gold 63,591(e) 1,598,678 Nucor 278,500(e) 11,360,015 United States Steel 107,701 3,234,261 --------------- Total 20,745,572 - ------------------------------------------------------------------------------------- MULTILINE RETAIL (0.4%) Big Lots 49,161(b,e) 661,215 Family Dollar Stores 137,895 3,829,345 JC Penney 50,077(e) 838,790 Kohl's 65,693(b,e) 2,411,590 Macy's 66,493 595,112 --------------- Total 8,336,052 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (15.1%) Anadarko Petroleum 227,182 8,346,667 Apache 49,069 3,680,175 Cabot Oil & Gas 61,226 1,683,103 Chesapeake Energy 304,346 4,811,710 Chevron 1,644,212 115,949,829 ConocoPhillips 561,368 26,681,821 CONSOL Energy 72,035 1,963,674 Devon Energy 48,553 2,990,865 EOG Resources 104,193 7,061,160 Exxon Mobil 586,725(d) 44,872,728 Hess 134,042(e) 7,454,076 Marathon Oil 363,777 9,905,648 Massey Energy 104,037 1,579,282 Murphy Oil 90,076 3,979,558 Occidental Petroleum 405,601 22,125,535 Peabody Energy 124,318 3,107,950 Pioneer Natural Resources 100,107 1,465,566 Southwestern Energy 203,387(b,e) 6,437,199 Spectra Energy 242,810 3,523,173 Sunoco 54,967(e) 2,546,071 Tesoro 98,048(e) 1,689,367 Valero Energy 170,934(e) 4,122,928 --------------- Total 285,978,085 - ------------------------------------------------------------------------------------- PERSONAL PRODUCTS (0.1%) Estee Lauder Companies Cl A 92,113(e) 2,417,966 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 14 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) PHARMACEUTICALS (13.7%) Bristol-Myers Squibb 373,524 $7,997,149 Eli Lilly & Co 295,088(e) 10,865,140 Forest Laboratories 200,439(b) 5,018,993 Johnson & Johnson 1,640,525 94,641,886 King Pharmaceuticals 400,546(b) 3,500,772 Merck & Co 772,283 22,048,680 Mylan 53,769(b,e) 609,203 Pfizer 6,118,008 89,200,557 Schering-Plough 908,187 15,947,764 Wyeth 235,581 10,122,916 --------------- Total 259,953,060 - ------------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS (REITS) (0.2%) Public Storage 58,068(e) 3,592,667 - ------------------------------------------------------------------------------------- ROAD & RAIL (3.6%) Burlington Northern Santa Fe 219,040 14,511,400 CSX 390,872 11,319,653 Norfolk Southern 430,857 16,527,675 Ryder System 54,245(e) 1,832,396 Union Pacific 547,180 23,961,012 --------------- Total 68,152,136 - ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.9%) Altera 284,124 4,369,827 Intel 2,783,428 35,906,221 Linear Technology 166,697(e) 3,904,044 LSI 237,133(b,e) 754,083 MEMC Electronic Materials 144,127(b) 1,960,127 Microchip Technology 138,807 2,633,169 NVIDIA 95,822(b,e) 761,785 Xilinx 255,847 4,311,022 --------------- Total 54,600,278 - ------------------------------------------------------------------------------------- SOFTWARE (2.5%) Microsoft 1,151,519 19,690,975 Oracle 1,507,562(b,e) 25,372,268 Salesforce.com 11,626(b,e) 309,368 Symantec 154,679(b) 2,371,229 --------------- Total 47,743,840 - ------------------------------------------------------------------------------------- SPECIALTY RETAIL (4.7%) Abercrombie & Fitch Cl A 133,207(e) 2,377,745 AutoNation 173,695(b,e) 1,611,890 AutoZone 28,942(b,e) 3,846,102 Bed Bath & Beyond 144,495(b,e) 3,356,619 Best Buy 144,404 4,046,200 Gap 286,082 3,227,005 Home Depot 2,249,714(d) 48,436,343 Limited Brands 114,145(e) 904,028 Lowe's Companies 752,480 13,747,810 Office Depot 149,209(b) 322,291 RadioShack 168,700(e) 1,933,302 Sherwin-Williams 53,160(e) 2,538,390 Staples 28,256 450,401 TJX Companies 76,140 1,478,639 --------------- Total 88,276,765 - ------------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS (0.5%) Coach 206,729(b) 3,018,243 Jones Apparel Group 116,009 401,391 Liz Claiborne 229,550(e) 505,010 Nike Cl B 51,608 2,335,262 VF 55,629 3,116,337 --------------- Total 9,376,243 - ------------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE (0.1%) Fannie Mae 1,336,093 809,139 Freddie Mac 794,150 472,519 MGIC Investment 154,094(e) 425,299 --------------- Total 1,706,957 - ------------------------------------------------------------------------------------- TOBACCO (0.4%) Philip Morris Intl 191,327 7,107,798 - ------------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS (0.2%) Fastenal 47,200(e) 1,613,296 WW Grainger 29,299(e) 2,137,362 --------------- Total 3,750,658 - ------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (0.2%) Sprint Nextel 1,511,110(b) 3,671,997 - ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $3,080,078,855) $1,846,763,087 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 15 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
MONEY MARKET FUND (2.0%) SHARES VALUE(a) RiverSource Short-Term Cash Fund, 0.47% 38,574,554(f) $38,574,554 - ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $38,574,554) $38,574,554 - ------------------------------------------------------------------------------------- INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (7.9%) SHARES VALUE(a) CASH COLLATERAL REINVESTMENT FUND JPMorgan Prime Money Market Fund 149,027,673 $149,027,673 - ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $149,027,673) $149,027,673 - ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $3,267,681,082)(g) $2,034,365,314 =====================================================================================
INVESTMENTS IN DERIVATIVES FUTURES CONTRACTS OUTSTANDING AT JAN. 31, 2009
NUMBER OF UNREALIZED CONTRACTS NOTIONAL EXPIRATION APPRECIATION CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION) - ----------------------------------------------------------------------------------- S&P 500 Index 184 $37,835,000 March 2009 $(2,208,635) - -----------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (a) Securities are valued by using procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At Jan. 31, 2009, the value of foreign securities represented 2.0% of net assets. (d) At Jan. 31, 2009, investments in securities included securities valued at $19,236,164 that were partially pledged as collateral to cover initial margin deposits on open stock index futures contracts. (e) At Jan. 31, 2009, security was partially or fully on loan. See Note 5 to the financial statements. (f) Affiliated Money Market Fund -- See Note 6 to the financial statements. The rate shown is the seven-day current annualized yield at Jan. 31, 2009. (g) At Jan. 31, 2009, the cost of securities for federal income tax purposes was approximately $3,267,681,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $19,778,000 Unrealized depreciation (1,253,094,000) ------------------------------------------------------------- Net unrealized depreciation $(1,233,316,000) -------------------------------------------------------------
The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. - -------------------------------------------------------------------------------- 16 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to implement more uniform reporting relating to the fair valuation of securities for financial statement purposes. Mutual funds are required to implement the requirements of this standard for fiscal years beginning after Nov. 15, 2007. While uniformity of presentation is the objective of the standard, it is likely that there may be a range of practices utilized and it may be some period of time before industry practices become more uniform. For this reason care should be exercised in interpreting this information and/or using it for comparison with other mutual funds. Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below: - Level 1 -- quoted prices in active markets for identical securities - Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.) - Level 3 -- significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) Observable inputs are those based on market data obtained from sources independent of the fund, and unobservable inputs reflect the fund's own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. The following table is a summary of the inputs used to value the Fund's investments as of Jan. 31, 2009:
FAIR VALUE AT JAN. 31, 2009 ------------------------------------------------------------ LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL - ------------------------------------------------------------------------------------ Investments in securities $2,034,365,314 $-- $-- $2,034,365,314 Other financial instruments* (2,208,635) -- -- (2,208,635) - ------------------------------------------------------------------------------------ Total $2,032,156,679 $-- $-- $2,032,156,679 - ------------------------------------------------------------------------------------
* Other financial instruments are derivative instruments, such as futures, which are valued at the unrealized appreciation/depreciation on the instrument. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at riversource.com/funds. - -------------------------------------------------------------------------------- 18 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- JAN. 31, 2009 (UNAUDITED)
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $3,080,078,855) $ 1,846,763,087 Affiliated money market fund (identified cost $38,574,554) 38,574,554 Investments of cash collateral received for securities on loan (identified cost $149,027,673) 149,027,673 - ----------------------------------------------------------------------------------------- Total investments in securities (identified cost $3,267,681,082) 2,034,365,314 Capital shares receivable 66,185,449 Dividends and accrued interest receivable 2,055,385 Receivable for investment securities sold 93,236,508 - ----------------------------------------------------------------------------------------- Total assets 2,195,842,656 - ----------------------------------------------------------------------------------------- LIABILITIES Capital shares payable 3,547,314 Payable for investment securities purchased 158,103,932 Payable upon return of securities loaned 149,027,673 Variation margin payable on futures contracts 2,517,200 Accrued investment management services fees 31,159 Accrued distribution fees 11,214 Accrued transfer agency fees 8,253 Accrued administrative services fees 2,855 Accrued plan administration services fees 546 Other accrued expenses 267,753 - ----------------------------------------------------------------------------------------- Total liabilities 313,517,899 - ----------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 1,882,324,757 - ----------------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 5,262,532 Additional paid-in capital 3,403,669,559 Undistributed net investment income 21,936,708 Accumulated net realized gain (loss) (313,048,070) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (1,235,495,972) - ----------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 1,882,324,757 - ----------------------------------------------------------------------------------------- *Including securities on loan, at value $ 140,468,510 - -----------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 19 STATEMENT OF ASSETS AND LIABILITIES (continued) -------------------------------- JAN. 31, 2009 (UNAUDITED)
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $620,051,403 173,305,774 $3.58(1) Class B $ 19,832,792 5,570,594 $3.56 Class C $ 1,814,010 512,826 $3.54 Class I $276,904,563 77,058,471 $3.59 Class R2 $ 2,365 661 $3.58 Class R3 $ 2,365 661 $3.58 Class R4 $ 77,831,387 21,684,784 $3.59 Class R5 $ 2,364 661 $3.58 Class W $885,883,508 248,118,779 $3.57 - -----------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $3.80. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 5.75%. The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 20 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT STATEMENT OF OPERATIONS -------------------------------------------------------- SIX MONTHS ENDED JAN. 31, 2009 (UNAUDITED)
INVESTMENT INCOME Income: Dividends $ 32,351,835 Income distributions from affiliated money market fund 257,424 Fee income from securities lending 353,713 - ----------------------------------------------------------------------------- Total income 32,962,972 - ----------------------------------------------------------------------------- Expenses: Investment management services fees 5,895,042 Distribution fees Class A 1,034,280 Class B 135,737 Class C 11,125 Class R2 8 Class R3 4 Class W 1,278,447 Transfer agency fees Class A 573,318 Class B 21,290 Class C 1,643 Class R2 1 Class R3 1 Class R4 25,031 Class R5 1 Class W 1,022,756 Administrative services fees 614,408 Plan administration services fees Class R2 4 Class R3 4 Class R4 125,156 Compensation of board members 37,256 Custodian fees 89,895 Printing and postage 80,050 Registration fees 64,275 Professional fees 32,297 Other 30,170 - ----------------------------------------------------------------------------- Total expenses 11,072,199 Expenses waived/reimbursed by the Investment Manager and its affiliates (43,631) Earnings and bank fee credits on cash balances (7,886) - ----------------------------------------------------------------------------- Total net expenses 11,020,682 - ----------------------------------------------------------------------------- Investment income (loss) -- net 21,942,290 - -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 21 STATEMENT OF OPERATIONS (continued) ------------------------------------------- SIX MONTHS ENDED JAN. 31, 2009 (UNAUDITED)
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions $ (289,383,497) Futures contracts (18,917,134) - ----------------------------------------------------------------------------- Net realized gain (loss) on investments (308,300,631) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (745,252,457) - ----------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (1,053,553,088) - ----------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(1,031,610,798) - -----------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 22 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2009 JULY 31, 2008 (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 21,942,290 $ 44,172,325 Net realized gain (loss) on investments (308,300,631) 103,837,007 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (745,252,457) (641,572,651) - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (1,031,610,798) (493,563,319) - ---------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (9,214,668) (11,230,396) Class C (7,117) (4,379) Class I (5,438,440) (5,698,153) Class R2 (33) (28) Class R3 (41) (40) Class R4 (1,326,570) (1,390,578) Class R5 (49) (54) Class W (10,297,303) (14,867,518) Net realized gain Class A (24,419,810) (68,772,061) Class B (803,415) (3,058,960) Class C (70,547) (169,022) Class I (10,144,769) (24,176,366) Class R2 (97) (244) Class R3 (96) (244) Class R4 (2,985,348) (7,584,972) Class R5 (96) (244) Class W (30,699,663) (74,056,615) - ---------------------------------------------------------------------------------------------- Total distributions (95,408,062) (211,009,874) - ----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 23 STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2009 JULY 31, 2008 (UNAUDITED) CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 21,635,577 $ 49,740,163 Class B shares 1,577,268 5,505,096 Class C shares 405,262 976,461 Class I shares 62,015,970 120,762,575 Class R4 shares 5,399,913 25,111,692 Class W shares 288,169,838 1,465,443,768 Reinvestment of distributions at net asset value Class A shares 31,099,175 74,058,485 Class B shares 793,672 3,022,150 Class C shares 73,505 167,943 Class I shares 15,582,928 29,873,023 Class R4 shares 4,311,918 8,975,550 Class W shares 40,996,838 88,923,836 Payments for redemptions Class A shares (97,184,696) (215,746,354) Class B shares (4,836,168) (24,117,349) Class C shares (363,398) (1,059,851) Class I shares (30,431,811) (108,422,258) Class R4 shares (9,097,585) (37,030,416) Class W shares (299,180,516) (622,614,805) - ---------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 30,967,690 863,569,709 - ---------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (1,096,051,170) 158,996,516 Net assets at beginning of period 2,978,375,927 2,819,379,411 - ---------------------------------------------------------------------------------------------- Net assets at end of period $ 1,882,324,757 $2,978,375,927 - ---------------------------------------------------------------------------------------------- Undistributed net investment income $ 21,936,708 $ 26,278,639 - ----------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 24 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT FINANCIAL HIGHLIGHTS ---------------------------------------------------------- CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005 Net asset value, beginning of period $5.88 $7.22 $6.74 $6.70 $5.95 - ------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04(b) .09(b) .08(b) .06 .04 Net gains (losses) (both realized and unrealized) (2.14) (1.00) .97 .35 .90 - ------------------------------------------------------------------------------------------------ Total from investment operations (2.10) (.91) 1.05 .41 .94 - ------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.06) (.06) (.06) (.03) Distributions from realized gains (.15) (.37) (.51) (.31) (.16) - ------------------------------------------------------------------------------------------------ Total distributions (.20) (.43) (.57) (.37) (.19) - ------------------------------------------------------------------------------------------------ Net asset value, end of period $3.58 $5.88 $7.22 $6.74 $6.70 - ------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $620 $1,067 $1,410 $1,368 $28 - ------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(c),(d) .98%(e) .96% 1.05% 1.05% 1.35% - ------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reim- bursement(d),(f),(g) .98%(e) .96% 1.03% 1.02% 1.25% - ------------------------------------------------------------------------------------------------ Net investment income (loss) 1.88%(e) 1.35% 1.13% .95% .84% - ------------------------------------------------------------------------------------------------ Portfolio turnover rate 35% 58% 62% 137% 64% - ------------------------------------------------------------------------------------------------ Total return(h) (36.05%)(i) (13.40%) 15.92% 6.25% 15.95% - ------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 25 FINANCIAL HIGHLIGHTS (continued) ---------------------------------------------- CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005 Net asset value, beginning of period $5.80 $7.12 $6.65 $6.62 $5.90 - ------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03(b) .04(b) .03(b) .01 .02 Net gains (losses) (both realized and unrealized) (2.12) (.99) .96 .34 .86 - ------------------------------------------------------------------------------------------------ Total from investment operations (2.09) (.95) .99 .35 .88 - ------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income -- -- (.01) (.01) -- Distributions from realized gains (.15) (.37) (.51) (.31) (.16) - ------------------------------------------------------------------------------------------------ Total distributions (.15) (.37) (.52) (.32) (.16) - ------------------------------------------------------------------------------------------------ Net asset value, end of period $3.56 $5.80 $7.12 $6.65 $6.62 - ------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $20 $35 $62 $73 $9 - ------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(c),(d) 1.74%(e) 1.72% 1.82% 1.85% 2.13% - ------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reim- bursement(d),(f),(g) 1.74%(e) 1.72% 1.79% 1.82% 2.04% - ------------------------------------------------------------------------------------------------ Net investment income (loss) 1.12%(e) .59% .37% .20% .06% - ------------------------------------------------------------------------------------------------ Portfolio turnover rate 35% 58% 62% 137% 64% - ------------------------------------------------------------------------------------------------ Total return(h) (36.36%)(i) (14.07%) 15.18% 5.42% 15.03% - ------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 26 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005 Net asset value, beginning of period $5.78 $7.11 $6.65 $6.62 $5.90 - ------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03(b) .04(b) .03(b) .01 .01 Net gains (losses) (both realized and unrealized) (2.11) (.99) .96 .35 .87 - ------------------------------------------------------------------------------------------------ Total from investment operations (2.08) (.95) .99 .36 .88 - ------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.01) (.01) (.02) (.02) -- Distributions from realized gains (.15) (.37) (.51) (.31) (.16) - ------------------------------------------------------------------------------------------------ Total distributions (.16) (.38) (.53) (.33) (.16) - ------------------------------------------------------------------------------------------------ Net asset value, end of period $3.54 $5.78 $7.11 $6.65 $6.62 - ------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $2 $3 $3 $3 $-- - ------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(c),(d) 1.74%(e) 1.72% 1.81% 1.84% 2.13% - ------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reim- bursement(d),(f),(g) 1.74%(e) 1.72% 1.79% 1.81% 2.06% - ------------------------------------------------------------------------------------------------ Net investment income (loss) 1.10%(e) .59% .36% .20% .02% - ------------------------------------------------------------------------------------------------ Portfolio turnover rate 35% 58% 62% 137% 64% - ------------------------------------------------------------------------------------------------ Total return(h) (36.26%)(i) (14.11%) 15.14% 5.51% 15.03% - ------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 27 FINANCIAL HIGHLIGHTS (continued) ---------------------------------------------- CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(i) 2008 2007 2006 2005 Net asset value, beginning of period $5.93 $7.27 $6.78 $6.73 $5.96 - ------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .05(b) .11(b) .11(b) .08 .04 Net gains (losses) (both realized and unrealized) (2.17) (.99) .97 .36 .92 - ------------------------------------------------------------------------------------------------ Total from investment operations (2.12) (.88) 1.08 .44 .96 - ------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.09) (.08) (.08) (.03) Distributions from realized gains (.15) (.37) (.51) (.31) (.16) - ------------------------------------------------------------------------------------------------ Total distributions (.22) (.46) (.59) (.39) (.19) - ------------------------------------------------------------------------------------------------ Net asset value, end of period $3.59 $5.93 $7.27 $6.78 $6.73 - ------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $277 $391 $441 $252 $82 - ------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(c),(d) .59%(e) .61% .70% .72% .91% - ------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reim- bursement(d),(f),(g) .59%(e) .61% .67% .70% .91% - ------------------------------------------------------------------------------------------------ Net investment income (loss) 2.26%(e) 1.69% 1.47% 1.41% 1.19% - ------------------------------------------------------------------------------------------------ Portfolio turnover rate 35% 58% 62% 137% 64% - ------------------------------------------------------------------------------------------------ Total return (36.07%)(h) (12.98%) 16.29% 6.73% 16.29% - ------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (h) Not annualized. (i) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 28 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $5.88 $7.21 $7.57 - ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .04 .08 .03 Net gains (losses) (both realized and unrealized) (2.15) (1.00) .20 - ----------------------------------------------------------------------------------------------- Total from investment operations (2.11) (.92) .23 - ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) (.04) (.08) Distributions from realized gains (.15) (.37) (.51) - ----------------------------------------------------------------------------------------------- Total distributions (.19) (.41) (.59) - ----------------------------------------------------------------------------------------------- Net asset value, end of period $3.58 $5.88 $7.21 - ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - ----------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.37%(f) 1.41% 1.49%(f) - ----------------------------------------------------------------------------------------------- Net expenses after expense waiver/reim- bursement(e),(g),(h) 1.11%(f) 1.16% 1.48%(f) - ----------------------------------------------------------------------------------------------- Net investment income (loss) 1.78%(f) 1.15% .55%(f) - ----------------------------------------------------------------------------------------------- Portfolio turnover rate 35% 58% 62% - ----------------------------------------------------------------------------------------------- Total return (36.15%)(i) (13.51%) 3.31%(i) - -----------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 29 FINANCIAL HIGHLIGHTS (continued) ---------------------------------------------- CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $5.89 $7.22 $7.57 - ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .05 .09 .04 Net gains (losses) (both realized and unrealized) (2.15) (.99) .20 - ----------------------------------------------------------------------------------------------- Total from investment operations (2.10) (.90) .24 - ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.06) (.08) Distributions from realized gains (.15) (.37) (.51) - ----------------------------------------------------------------------------------------------- Total distributions (.21) (.43) (.59) - ----------------------------------------------------------------------------------------------- Net asset value, end of period $3.58 $5.89 $7.22 - ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - ----------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.14%(f) 1.15% 1.24%(f) - ----------------------------------------------------------------------------------------------- Net expenses after expense waiver/reim- bursement(e),(g),(h) .87%(f) .90% 1.22%(f) - ----------------------------------------------------------------------------------------------- Net investment income (loss) 1.99%(f) 1.41% .81%(f) - ----------------------------------------------------------------------------------------------- Portfolio turnover rate 35% 58% 62% - ----------------------------------------------------------------------------------------------- Total return (36.03%)(i) (13.26%) 3.46%(i) - -----------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 30 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(i) 2008 2007 2006 2005 Net asset value, beginning of period $5.91 $7.25 $6.76 $6.71 $5.95 - ------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .05(b) .10(b) .09(b) .07 .05 Net gains (losses) (both realized and unrealized) (2.16) (1.00) .98 .36 .91 - ------------------------------------------------------------------------------------------------ Total from investment operations (2.11) (.90) 1.07 .43 .96 - ------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.07) (.07) (.07) (.04) Distributions from realized gains (.15) (.37) (.51) (.31) (.16) - ------------------------------------------------------------------------------------------------ Total distributions (.21) (.44) (.58) (.38) (.20) - ------------------------------------------------------------------------------------------------ Net asset value, end of period $3.59 $5.91 $7.25 $6.76 $6.71 - ------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $78 $126 $158 $224 $-- - ------------------------------------------------------------------------------------------------ Gross expenses prior to expense waiver/reimbursement(c),(d) .89%(e) .91% .95% .87% 1.18% - ------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reim- bursement(d),(f),(g) .81%(e) .84% .87% .84% 1.06% - ------------------------------------------------------------------------------------------------ Net investment income (loss) 2.05%(e) 1.47% 1.29% 1.10% 1.03% - ------------------------------------------------------------------------------------------------ Portfolio turnover rate 35% 58% 62% 137% 64% - ------------------------------------------------------------------------------------------------ Total return (36.05%)(h) (13.26%) 16.15% 6.48% 16.25% - ------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (h) Not annualized. (i) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 31 FINANCIAL HIGHLIGHTS (continued) ---------------------------------------------- CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $5.90 $7.24 $7.57 - ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .05 .11 .06 Net gains (losses) (both realized and unrealized) (2.15) (1.00) .20 - ----------------------------------------------------------------------------------------------- Total from investment operations (2.10) (.89) .26 - ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.08) (.08) Distributions from realized gains (.15) (.37) (.51) - ----------------------------------------------------------------------------------------------- Total distributions (.22) (.45) (.59) - ----------------------------------------------------------------------------------------------- Net asset value, end of period $3.58 $5.90 $7.24 - ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - ----------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) .61%(f) .66% .75%(f) - ----------------------------------------------------------------------------------------------- Net expenses after expense waiver/reim- bursement(e),(g),(h) .61%(f) .66% .74%(f) - ----------------------------------------------------------------------------------------------- Net investment income (loss) 2.25%(f) 1.66% 1.28%(f) - ----------------------------------------------------------------------------------------------- Portfolio turnover rate 35% 58% 62% - ----------------------------------------------------------------------------------------------- Total return (35.97%)(i) (13.09%) 3.76%(i) - -----------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 32 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $5.86 $7.22 $7.46 - ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .04 .08 .03 Net gains (losses) (both realized and unrealized) (2.14) (1.00) .32 - ----------------------------------------------------------------------------------------------- Total from investment operations (2.10) (.92) .35 - ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) (.07) (.08) Distributions from realized gains (.15) (.37) (.51) - ----------------------------------------------------------------------------------------------- Total distributions (.19) (.44) (.59) - ----------------------------------------------------------------------------------------------- Net asset value, end of period $3.57 $5.86 $7.22 - ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $886 $1,355 $745 - ----------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.04%(f) 1.06% 1.18%(f) - ----------------------------------------------------------------------------------------------- Net expenses after expense waiver/reim- bursement(e),(g),(h) 1.04%(f) 1.06% 1.13%(f) - ----------------------------------------------------------------------------------------------- Net investment income (loss) 1.80%(f) 1.22% .59%(f) - ----------------------------------------------------------------------------------------------- Portfolio turnover rate 35% 58% 62% - ----------------------------------------------------------------------------------------------- Total return (36.10%)(i) (13.52%) 5.01%(i) - -----------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 1, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 33 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- (UNAUDITED AS TO JAN. 31, 2009) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RiverSource Disciplined Equity Fund (the Fund) is a series of RiverSource Large Cap Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Large Cap Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board of Directors (the Board). The Fund invests primarily in equity securities of companies listed on U.S. exchanges with market capitalizations greater than $5 billion at the time of purchase. The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4, Class R5 and Class W shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a front-end sales charge or CDSC and are offered to qualifying institutional investors. - - Class W shares are sold without a front-end sales charge or CDSC and are offered through qualifying discretionary accounts. At Jan. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of Class I shares and the Investment Manager owned 100% of Class R2, Class R3 and Class R5 shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, - -------------------------------------------------------------------------------- 34 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES Effective Aug. 1, 2008, the Fund adopted Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a hierarchy for measuring fair value, and requires additional disclosures about the inputs used to develop the measurements of fair value and the effect of certain measurements reported in the Statement of Operations for a fiscal period. There was no impact to the Fund's net assets or results of operations upon adoption. The fair valuation measurements disclosure can be found following the Notes to Portfolio of Investments. All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 35 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost, which approximates fair value. OPTION TRANSACTIONS To produce incremental earnings, protect gains, and facilitate buying and selling of securities for investments, the Fund may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. Cash collateral may be collected by the Fund to secure certain over-the-counter options (OTC options) trades. Cash collateral held by the Fund for such option trades must be returned to the counterparty upon closure, exercise or expiration of the contract. The Fund also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. Option contracts, including OTC option contracts, with no readily available market value are valued using quotations obtained from independent brokers as of the close of the New York Stock Exchange. The Fund will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. At Jan. 31, 2009, and for the six months then ended, the Fund had no outstanding option contracts. FUTURES TRANSACTIONS To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of - -------------------------------------------------------------------------------- 36 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Futures and options on futures are valued daily based upon the last sale price at the close of the market on the principal exchange on which they are traded. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Fund may enter into forward foreign currency contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the counterparty will not complete its contract obligations. At Jan. 31, 2009, the Fund had no outstanding forward foreign currency contracts. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund's contracts with its service providers contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income to shareholders. No provision for income or excise taxes is thus required. Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all the tax returns filed for the last three years. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of futures contracts, re- characterization of REIT distributions and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. RECENT ACCOUNTING PRONOUNCEMENTS The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS 133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45". The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures about a fund's derivatives and guarantees. Funds are required to provide enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, (c) how derivative instruments and related hedged items affect a fund's financial position, financial performance, and cash flows and (d) the current status of the payment/performance risk of the credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require additional disclosures about the current status of the payment/performance risk of a guarantee. At Jan. 31, 2009, the Fund did not own nor was it a party to any credit derivative contracts within the scope of these amendments. - -------------------------------------------------------------------------------- 38 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133," which requires enhanced disclosures about a fund's derivative and hedging activities. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after Nov. 15, 2008. As of Jan. 31, 2009, management does not believe the adoption of SFAS 161 will impact the financial statement amounts; however, additional footnote disclosures may be required about the use of derivative instruments and hedging items. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 2. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets that declines from 0.60% to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment determined monthly by measuring the percentage difference over a rolling 12-month period between the annualized performance of one Class A share of the Fund and the annualized performance of the Lipper Large-Cap Core Funds Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The adjustment decreased the management fee by $823,118 for the six months ended Jan. 31, 2009. The management fee for the six months ended Jan. 31, 2009 was 0.51% of the Fund's average daily net assets, including the adjustment under the terms of the performance incentive arrangement. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's average daily net assets that declines from 0.06% to 0.03% annually as the Fund's assets increase. The fee for the six months ended Jan. 31, 2009 was 0.05% of the Fund's average daily net assets. OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the six months ended Jan. 31, 2009, other expenses paid to this company were $9,182. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for Class C for this service. The Fund also pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R2, Class R3, Class R4 and Class R5 shares and an annual asset-based fee at a rate of 0.20% of the Fund's average daily net assets attributable to Class W shares. The Transfer Agent charges an annual fee of $5 per inactive account, charged on a pro rata basis for 12 months from the date the account becomes inactive. These fees are included in the transfer agency fees on the Statement of Operations. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R2, Class R3 and Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. - -------------------------------------------------------------------------------- 40 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- DISTRIBUTION FEES The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A, Class R3 and Class W shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, up to 0.75% of the fee is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed ("unreimbursed expense") was approximately $794,000 and $24,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of Jan. 31, 2009, and may be recovered from future payments under the distribution plan or CDSC. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGE Sales charges received by the Distributor for distributing Fund shares were $127,507 for Class A, $9,742 for Class B and $168 for Class C for the six months ended Jan. 31, 2009. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the six months ended Jan. 31, 2009, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds*), including the adjustment under the terms of a performance incentive adjustment, were as follows: Class A............................................. 0.98% Class B............................................. 1.74 Class R2............................................ 1.11 Class R3............................................ 0.87 Class R4............................................ 0.81
The waived/reimbursed fees and expenses for the transfer agency fees at the class level were as follows: Class A........................................... $659 Class B........................................... 844 Class R4.......................................... 25,031
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- The waived/reimbursed fees and expenses for the plan administration services fees at the class level were as follows: Class R2.......................................... $4 Class R3.......................................... 4 Class R4.......................................... 17,089
The Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses until July 31, 2009, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the Fund's average daily net assets: Class A............................................. 1.05% Class B............................................. 1.81 Class C............................................. 1.81 Class I............................................. 0.72 Class R2............................................ 1.52 Class R3............................................ 1.27 Class R4............................................ 0.88 Class R5............................................ 0.77 Class W............................................. 1.17
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. EARNINGS AND BANK FEE CREDITS During the six months ended Jan. 31, 2009, the Fund's transfer agency fees were reduced by $7,886 as a result of bank fee credits from overnight cash balances. CUSTODIAN FEES Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank, N.A. Prior to Dec. 15, 2008, the Fund paid custodian fees amounting to $80,093 to Ameriprise Trust Company, a subsidiary of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $810,453,672 and $889,997,817, respectively, for the six months ended Jan. 31, 2009. Realized gains and losses are determined on an identified cost basis. - -------------------------------------------------------------------------------- 42 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED JAN. 31, 2009 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------- Class A 4,912,041 7,833,545 (20,960,397) (8,214,811) Class B 344,354 200,930 (1,077,413) (532,129) Class C 88,401 18,704 (76,413) 30,692 Class I 13,540,925 3,905,496 (6,447,275) 10,999,146 Class R4 1,188,589 1,083,396 (1,954,501) 317,484 Class W 67,432,096 10,352,737 (60,791,010) 16,993,823 - ---------------------------------------------------------------------------------- YEAR ENDED JULY 31, 2008 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------- Class A 7,609,621 10,923,080 (32,329,627) (13,796,926) Class B 826,089 449,725 (3,897,874) (2,622,060) Class C 150,658 25,066 (161,175) 14,549 Class I 17,804,029 4,380,209 (16,813,974) 5,370,264 Class R4 3,752,567 1,317,996 (5,442,436) (371,873) Class W 213,069,694 13,134,983 (98,243,751) 127,960,926 - ----------------------------------------------------------------------------------
5. LENDING OF PORTFOLIO SECURITIES Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending Agreement ("the Agreement") with JPMorgan Chase Bank, National Association ("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers on behalf of the Fund. Pursuant to the Agreement, all loaned securities are initially collateralized in an amount equivalent to 102% (for securities denominated in U.S. dollars) or 105% (for all other securities) of the value of the loaned securities, including accrued interest in the case of fixed income securities. Collateral is maintained over the life of the loan thereafter in an amount not less than 100% of the market value of loaned securities, as determined at the close of each business day, except to the extent that a collateral shortfall is due to a diminution in the market value of authorized investments in which cash collateral is invested. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Collateral is either in the form of cash or U.S. government securities. Cash collateral received is invested by the - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed on the Portfolio of Investments and the value of cash collateral received at period end is disclosed on the Statement of Assets and Liabilities along with the related obligation to return the collateral upon return of the securities loaned. At Jan. 31, 2009, securities valued at $140,468,510 were on loan secured by cash collateral of $149,027,673 invested in short-term securities or cash equivalents. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Income of $136,882 earned from securities lending from Dec. 1, 2008 through Jan. 31, 2009 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Funds or the borrower at any time, and are, therefore, not considered to be illiquid investments. Prior to Dec. 1, 2008, RiverSource Investments, LLC served as securities lending agent for the Fund under the Securities Lending Agency Agreement pursuant to which the Fund agreed to reimburse RiverSource Investments, LLC for expenses incurred by it in connection with the lending program. Expenses paid to RiverSource Investments, LLC as securities lending agent were $8,054 through Nov. 30, 2008 and are included in other expenses on the Statement of Operations. Cash collateral received on loaned securities had been invested in an affiliated money market fund. Income of $216,831 earned from securities lending from Feb. 1, 2008 through Nov. 30, 2008 is included in the Statement of Operations. 6. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. The cost of the Fund's purchases and proceeds from sales of shares of the RiverSource - -------------------------------------------------------------------------------- 44 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- Short-Term Cash Fund aggregated $312,879,084 and $303,464,571, respectively, for the six months ended Jan. 31, 2009. The income distributions received with respect to the Fund's investment in RiverSource Short-Term Cash Fund can be found on the Statement of Operations and the Fund's invested balance in RiverSource Short-Term Cash Fund at Jan. 31, 2009, can be found in the Portfolio of Investments. 7. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 16, 2008, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permits collective borrowings up to $475 million. The borrowers shall have the right, upon written notice to the Administrative Agent to request an increase of up to $175 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $650 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.75%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro rata share of 0.02% of the amount of the credit facility. The Fund had no borrowings during the six months ended Jan. 31, 2009. Under the prior credit facility which was effective until Oct. 15, 2008, the Fund had entered into a revolving credit facility with a syndicate of banks headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility agreement, which was a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permitted collective borrowings up to $500 million. Interest was charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.30%. Each borrowing under the credit facility matured no later than 60 days after the date of borrowing. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- 8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals on August 8, 2007. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the RiverSource Funds' Boards of Directors/Trustees. On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003, Seligman conducted an extensive internal review concerning mutual fund trading practices. Seligman's review, which covered the period 2001-2003, noted one arrangement that permitted frequent trading in certain open-end registered investment companies managed by Seligman (the Seligman Funds); - -------------------------------------------------------------------------------- 46 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- this arrangement was in the process of being closed down by Seligman before September 2003. Seligman identified three other arrangements that permitted frequent trading, all of which had been terminated by September 2002. In January 2004, Seligman, on a voluntary basis, publicly disclosed these four arrangements to its clients and to shareholders of the Seligman Funds. Seligman also provided information concerning mutual fund trading practices to the SEC and the Office of the Attorney General of the State of New York (NYAG). In September 2005, the New York staff of the SEC indicated that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against Seligman and the distributor of the Seligman Funds, Seligman Advisors, Inc. (which is now known as RiverSource Fund Distributors, Inc.), relating to frequent trading in the Seligman Funds. Seligman responded to the staff in October 2005 that it believed that any action would be both inappropriate and unnecessary, especially in light of the fact that Seligman had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds. In September 2006, the NYAG commenced a civil action in New York State Supreme Court against Seligman, Seligman Advisors, Inc., Seligman Data Corp. and Brian T. Zino (collectively, the Seligman Parties), alleging, in substance, that the Seligman Parties permitted various persons to engage in frequent trading and, as a result, the prospectus disclosure used by the registered investment companies then managed by Seligman is and has been misleading. The NYAG included other related claims and also claimed that the fees charged by Seligman to the Seligman Funds were excessive. On March 13, 2009, without admitting or denying any violations of law or wrongdoing, the Seligman Parties entered into a stipulation of settlement with the NYAG and settled the claims made by the NYAG. Under the terms of the settlement, Seligman will pay $11.3 million to four Seligman Funds. This settlement resolved all outstanding matters between the Seligman Parties and the NYAG. In addition to the foregoing matter, the New York staff of the SEC indicated in September 2005 that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against Seligman and Seligman Advisors, Inc. relating to frequent trading in the Seligman Funds. Seligman responded to the staff in October 2005 that it believed that any action would be both inappropriate and unnecessary, especially in light of the fact that Seligman had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds. There have been no further developments with the SEC on this matter. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. - -------------------------------------------------------------------------------- 48 RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT PROXY VOTING ------------------------------------------------------------------- The policy of the Board is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling RiverSource Funds at (888) 791-3380; contacting your financial institution; visiting riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED EQUITY FUND -- 2009 SEMIANNUAL REPORT 49 RIVERSOURCE DISCIPLINED 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 RiverSource Fund Distributors, Inc., Members FINRA, and managed by RiverSource Investments, LLC. RiverSource is part of Ameriprise Financial, Inc. (RIVERSOURCE INVESTMENTS LOGO) (C) 2009 RiverSource Investments, LLC. S-6274 G (4/09)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE GROWTH FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED JANUARY 31, 2009 RIVERSOURCE GROWTH FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. (SINGLE STRATEGY FUNDS ICON) TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 2 Fund Expenses Example.............. 8 Portfolio of Investments........... 11 Statement of Assets and Liabilities...................... 16 Statement of Operations............ 18 Statements of Changes in Net Assets........................... 20 Financial Highlights............... 22 Notes to Financial Statements...... 31 Proxy Voting....................... 49
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 1 YOUR FUND AT A GLANCE ---------------------------------------------------------- (UNAUDITED) FUND SUMMARY - -------------------------------------------------------------------------------- > RiverSource Growth Fund (the Fund) Class A shares declined 38.02% (excluding sales charge) for the semiannual period ended Jan. 31, 2009. > The Fund underperformed its benchmark, the Russell 1000(R) Growth Index, which fell 34.31%, and its peer group as represented by the Lipper Large-Cap Growth Funds Index, which declined 36.79% for the same period. ANNUALIZED TOTAL RETURNS (for period ended Jan. 31, 2009) - --------------------------------------------------------------------------------
6 months* 1 year 3 years 5 years 10 years - ------------------------------------------------------------------------ RiverSource Growth Fund Class A (excluding sales charge) -38.02% -44.47% -16.46% -6.98% -7.61% - ------------------------------------------------------------------------ Russell 1000 Growth Index (unmanaged)(1) -34.31% -36.44% -11.11% -4.76% -5.29% - ------------------------------------------------------------------------ Lipper Large-Cap Growth Funds Index(2) -36.79% -39.22% -13.32% -5.37% -5.86% - ------------------------------------------------------------------------
* Not annualized. The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. - -------------------------------------------------------------------------------- 2 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (1) The Russell 1000 Growth Index, an unmanaged index, measures the performance of those stocks in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Large-Cap Growth Funds Index includes the 30 largest large-cap growth funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS - --------------------------------------------------------------------------------
AT JAN. 31, 2009 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION** Class A (inception 3/1/72) -38.02% -44.47% -16.46% -6.98% -7.61% N/A - ------------------------------------------------------------------------------------- Class B (inception 3/20/95) -38.26% -44.91% -17.11% -7.70% -8.33% N/A - ------------------------------------------------------------------------------------- Class C (inception 6/26/00) -38.24% -44.88% -17.09% -7.68% N/A -12.75% - ------------------------------------------------------------------------------------- Class I (inception 3/4/04) -37.82% -44.15% -16.05% N/A N/A -7.15% - ------------------------------------------------------------------------------------- Class R2 (inception 12/11/06) -37.99% -44.43% N/A N/A N/A -24.98% - ------------------------------------------------------------------------------------- Class R3 (inception 12/11/06) -37.92% -44.28% N/A N/A N/A -24.80% - ------------------------------------------------------------------------------------- Class R4 (inception 3/20/95) -37.92% -44.28% -16.25% -6.77% -7.43% N/A - ------------------------------------------------------------------------------------- Class R5 (inception 12/11/06) -37.85% -44.20% N/A N/A N/A -24.61% - ------------------------------------------------------------------------------------- Class W (inception 12/1/06) -37.97% -44.43% N/A N/A N/A -24.26% - ------------------------------------------------------------------------------------- With sales charge Class A (inception 3/1/72) -41.59% -47.66% -18.09% -8.07% -8.08% N/A - ------------------------------------------------------------------------------------- Class B (inception 3/20/95) -41.23% -47.56% -18.18% -8.05% -8.33% N/A - ------------------------------------------------------------------------------------- Class C (inception 6/26/00) -38.83% -45.41% -17.09% -7.68% N/A -12.75% - -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 4 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
AT DEC. 31, 2008 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION** Class A (inception 3/1/72) -34.54% -44.59% -14.18% -5.75% -6.17% N/A - ------------------------------------------------------------------------------------- Class B (inception 3/20/95) -34.79% -45.01% -14.84% -6.48% -6.89% N/A - ------------------------------------------------------------------------------------- Class C (inception 6/26/00) -34.79% -45.01% -14.82% -6.47% N/A -12.24% - ------------------------------------------------------------------------------------- Class I (inception 3/4/04) -34.34% -44.28% -13.76% N/A N/A -6.10% - ------------------------------------------------------------------------------------- Class R2 (inception 12/11/06) -34.54% -44.57% N/A N/A N/A -23.63% - ------------------------------------------------------------------------------------- Class R3 (inception 12/11/06) -34.44% -44.44% N/A N/A N/A -23.44% - ------------------------------------------------------------------------------------- Class R4 (inception 3/20/95) -34.44% -44.42% -13.97% -5.54% -5.99% N/A - ------------------------------------------------------------------------------------- Class R5 (inception 12/11/06) -34.38% -44.35% N/A N/A N/A -23.26% - ------------------------------------------------------------------------------------- Class W (inception 12/1/06) -34.50% -44.57% N/A N/A N/A -22.89% - ------------------------------------------------------------------------------------- With sales charge Class A (inception 3/1/72) -38.30% -47.77% -15.86% -6.86% -6.65% N/A - ------------------------------------------------------------------------------------- Class B (inception 3/20/95) -37.92% -47.65% -15.94% -6.84% -6.89% N/A - ------------------------------------------------------------------------------------- Class C (inception 6/26/00) -35.41% -45.54% -14.82% -6.47% N/A -12.24% - -------------------------------------------------------------------------------------
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. **For classes with less than 10 years performance. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 5 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- STYLE MATRIX - --------------------------------------------------------------------------------
STYLE VALUE BLEND GROWTH X LARGE MEDIUM SIZE SMALL
Shading within the style matrix indicates areas in which the Fund is designed to generally invest. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and may serve as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. ANNUAL OPERATING EXPENSE RATIO (as of the current prospectus) - --------------------------------------------------------------------------------
Net fund and acquired Total fund fund fees expenses and expenses(a) - -------------------------------------------- Class A 1.00% 1.04% - -------------------------------------------- Class B 1.76% 1.80% - -------------------------------------------- Class C 1.76% 1.80% - -------------------------------------------- Class I 0.54% 0.58% - -------------------------------------------- Class R2 1.36% 1.40% - -------------------------------------------- Class R3 1.12% 1.16% - -------------------------------------------- Class R4 0.84% 0.88% - -------------------------------------------- Class R5 0.61% 0.65% - -------------------------------------------- Class W 1.00% 1.04% - --------------------------------------------
(a) In addition to the Fund's total annual operating expenses that the Fund bears directly, the Fund's shareholders indirectly bear the expenses of acquired funds in which the Fund invests. The Fund's "Acquired fund fees and expenses," based on its investment in the acquired funds, was 0.04% for the year ended July 31, 2008. - -------------------------------------------------------------------------------- 6 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION(1) (at Jan. 31, 2009; % of portfolio assets) - --------------------------------------------------------------------- Consumer Discretionary 6.3% - ------------------------------------------------ Consumer Staples 12.6% - ------------------------------------------------ Energy 7.3% - ------------------------------------------------ Financials 4.1% - ------------------------------------------------ Health Care 17.3% - ------------------------------------------------ Industrials 7.5% - ------------------------------------------------ Information Technology 26.8% - ------------------------------------------------ Materials 4.6% - ------------------------------------------------ Telecommunication Services 0.7% - ------------------------------------------------ Utilities 0.5% - ------------------------------------------------ Other(2) 12.3% - ------------------------------------------------
(1) Sectors can be comprised of several industries. Please refer to the section entitled "Portfolio of Investments" for a complete listing. No single industry exceeds 25% of portfolio assets. (2) Cash & Cash Equivalents. Of the 12.3%, 9.3% is due to security lending activity and 3.0% is the Fund's cash equivalent position. The sectors identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. TOP TEN HOLDINGS (at Jan. 31, 2009; % of portfolio assets) - --------------------------------------------------------------------- CVS Caremark 3.5% - ------------------------------------------------ IBM 3.3% - ------------------------------------------------ Hewlett-Packard 3.1% - ------------------------------------------------ Microsoft 3.0% - ------------------------------------------------ Wal-Mart Stores 2.9% - ------------------------------------------------ Abbott Laboratories 2.5% - ------------------------------------------------ Barrick Gold 2.1% - ------------------------------------------------ Boeing 2.1% - ------------------------------------------------ QUALCOMM 2.1% - ------------------------------------------------ Transocean 2.0% - ------------------------------------------------
For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 7 FUND EXPENSES EXAMPLE --------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended Jan. 31, 2009. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 8 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
DIRECT AND DIRECT INDIRECT BEGINNING ENDING EXPENSES EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING AUG. 1, 2008 JAN. 31, 2009 THE PERIOD(A) THE PERIOD(B) - ------------------------------------------------------------------------------------------ Class A - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 619.80 $4.51 $4.63 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.50 $5.62 $5.77 - ------------------------------------------------------------------------------------------ Class B - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 617.40 $7.62 $7.74 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,015.64 $9.50 $9.65 - ------------------------------------------------------------------------------------------ Class C - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 617.60 $7.58 $7.70 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,015.69 $9.45 $9.60 - ------------------------------------------------------------------------------------------ Class I - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 621.80 $2.15 $2.28 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,022.41 $2.69 $2.84 - ------------------------------------------------------------------------------------------ Class R2 - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 620.10 $5.56 $5.69 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.20 $6.93 $7.08 - ------------------------------------------------------------------------------------------ Class R3 - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 620.80 $4.55 $4.67 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.45 $5.67 $5.82 - ------------------------------------------------------------------------------------------ Class R4 - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 620.80 $3.21 $3.33 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,021.11 $4.00 $4.15 - ------------------------------------------------------------------------------------------ Class R5 - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 621.50 $2.48 $2.60 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,022.01 $3.09 $3.24 - ------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 9 FUND EXPENSES EXAMPLE (continued) ---------------------------------------------
DIRECT AND DIRECT INDIRECT BEGINNING ENDING EXPENSES EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING AUG. 1, 2008 JAN. 31, 2009 THE PERIOD(A) THE PERIOD(B) - ------------------------------------------------------------------------------------------ Class W - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 620.30 $4.14 $4.26 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.95 $5.16 $5.32 - ------------------------------------------------------------------------------------------
ANNUALIZED EXPENSE RATIOS
FUND'S ACQUIRED FUND ANNUALIZED FEES AND NET FUND EXPENSE RATIO EXPENSES EXPENSES - ----------------------------------------------------------------------------- Class A 1.11% .03% 1.14% - ----------------------------------------------------------------------------- Class B 1.88% .03% 1.91% - ----------------------------------------------------------------------------- Class C 1.87% .03% 1.90% - ----------------------------------------------------------------------------- Class I .53% .03% .56% - ----------------------------------------------------------------------------- Class R2 1.37% .03% 1.40% - ----------------------------------------------------------------------------- Class R3 1.12% .03% 1.15% - ----------------------------------------------------------------------------- Class R4 .79% .03% .82% - ----------------------------------------------------------------------------- Class R5 .61% .03% .64% - ----------------------------------------------------------------------------- Class W 1.02% .03% 1.05% - -----------------------------------------------------------------------------
(a) Expenses are equal to the Fund's annualized expense ratio for each class, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). (b) Expenses are equal to the Fund's annualized expense ratio for each class plus the acquired fund fees and expenses, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). (c) Based on the actual return for the six months ended Jan. 31, 2009: -38.02% for Class A, -38.26% for Class B, -38.24% for Class C, -37.82% for Class I, -37.99% for Class R2, -37.92% for Class R3, -37.92% for Class R4, -37.85% for Class R5 and -37.97% for Class W. - -------------------------------------------------------------------------------- 10 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT PORTFOLIO OF INVESTMENTS ------------------------------------------------------- JAN. 31, 2009 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (98.2%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (4.1%) Boeing 611,173 $25,858,730 Honeywell Intl 222,600 7,303,506 Lockheed Martin 152,000(e) 12,470,080 --------------- Total 45,632,316 - ------------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS (0.6%) United Parcel Service Cl B 145,600 6,186,544 - ------------------------------------------------------------------------------------- AIRLINES (1.2%) Delta Air Lines 1,939,900(b) 13,385,310 - ------------------------------------------------------------------------------------- BEVERAGES (2.1%) PepsiCo 474,364 23,827,304 - ------------------------------------------------------------------------------------- BIOTECHNOLOGY (6.6%) Amgen 107,360(b,e) 5,888,696 Biogen Idec 209,000(b,e) 10,167,850 Celgene 135,300(b) 7,164,135 Genentech 281,698(b) 22,885,145 Genzyme 164,792(b,e) 11,357,465 Gilead Sciences 313,965(b,e) 15,940,003 --------------- Total 73,403,294 - ------------------------------------------------------------------------------------- CAPITAL MARKETS (1.1%) BlackRock 114,600(e) 12,468,480 Lehman Brothers Holdings 372,416(g) 15,548 --------------- Total 12,484,028 - ------------------------------------------------------------------------------------- CHEMICALS (1.9%) Monsanto 154,228(e) 11,730,582 Potash Corp of Saskatchewan 126,800(c) 9,492,248 --------------- Total 21,222,830 - ------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (5.4%) Cisco Systems 1,623,172(b,e) 24,298,885 Nokia ADR 787,834(c) 9,666,723 QUALCOMM 743,189(e) 25,677,180 --------------- Total 59,642,788 - ------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS (9.1%) Apple 236,159(b) 21,285,011 Hewlett-Packard 1,098,284 38,165,369 IBM 453,900 41,599,934 --------------- Total 101,050,314 - ------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING (0.6%) Foster Wheeler 143,600(b) 2,867,692 KBR 271,297(e) 3,841,566 --------------- Total 6,709,258 - ------------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES (1.0%) Apollo Group Cl A 134,300(b) 10,940,078 - ------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (0.2%) Apollo Management LP 1,671,300(d,f) 2,506,950 - ------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES (0.8%) Qwest Communications Intl 2,894,535(e) 9,320,403 - ------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (5.0%) Schlumberger 544,335 22,214,311 Transocean 467,600(b,c) 25,540,312 Weatherford Intl 668,100(b) 7,369,143 --------------- Total 55,123,766 - ------------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (7.1%) CVS Caremark 1,599,163(e) 42,985,500 Wal-Mart Stores 774,100 36,475,592 --------------- Total 79,461,092 - ------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES (1.8%) Baxter Intl 113,372 6,649,268 Becton Dickinson & Co 78,100 5,675,527 Boston Scientific 858,891(b) 7,618,363 --------------- Total 19,943,158 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 11 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) HEALTH CARE PROVIDERS & SERVICES (3.6%) Aetna 452,900 $14,039,900 Medco Health Solutions 321,818(b,e) 14,459,283 UnitedHealth Group 423,140(e) 11,987,556 --------------- Total 40,486,739 - ------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (2.6%) Colgate-Palmolive 100,338 6,525,984 Procter & Gamble 402,324 21,926,658 --------------- Total 28,452,642 - ------------------------------------------------------------------------------------- INSURANCE (3.2%) ACE 275,300(c) 12,019,598 AFLAC 1,030,241 23,911,894 --------------- Total 35,931,492 - ------------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES (1.9%) Google Cl A 61,709(b) 20,890,348 - ------------------------------------------------------------------------------------- IT SERVICES (0.7%) MasterCard Cl A 59,864 8,128,334 - ------------------------------------------------------------------------------------- LIFE SCIENCES TOOLS & SERVICES (0.6%) Thermo Fisher Scientific 180,900(b,e) 6,499,737 - ------------------------------------------------------------------------------------- MACHINERY (0.6%) Deere & Co 187,800 6,524,172 - ------------------------------------------------------------------------------------- MEDIA (5.1%) Comcast Cl A 1,384,436 20,281,987 Time Warner Cable Cl A 867,876(b) 16,168,530 Virgin Media 4,358,337(f) 19,786,850 --------------- Total 56,237,367 - ------------------------------------------------------------------------------------- METALS & MINING (3.3%) Barrick Gold 704,800(c) 26,422,952 Lihir Gold 3,330,123(b,c) 6,604,297 Newmont Mining 88,006 3,500,879 --------------- Total 36,528,128 - ------------------------------------------------------------------------------------- MULTI-UTILITIES (0.5%) Public Service Enterprise Group 181,900 5,742,583 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (3.2%) Chesapeake Energy 546,900 8,646,489 Chevron 81,300 5,733,276 Devon Energy 22,762 1,402,139 Kinder Morgan Management LLC --(b) 19 Noble Energy 405,100 19,821,543 --------------- Total 35,603,466 - ------------------------------------------------------------------------------------- PHARMACEUTICALS (6.8%) Abbott Laboratories 572,700 31,750,487 Bristol-Myers Squibb 778,004 16,657,066 Novo Nordisk ADR 108,200(c) 5,748,666 Pfizer 453,785 6,616,185 Teva Pharmaceutical Inds ADR 207,600(c,e) 8,605,020 Wyeth 143,300 6,157,601 --------------- Total 75,535,025 - ------------------------------------------------------------------------------------- ROAD & RAIL (1.3%) CSX 114,400 3,313,024 Union Pacific 262,400(e) 11,490,496 --------------- Total 14,803,520 - ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (4.3%) Intel 1,204,159 15,533,651 Marvell Technology Group 2,834,025(b,c) 20,660,042 Microsemi 1,374,100(b) 11,542,440 Spansion Cl A 2,243,321(b) 150,303 --------------- Total 47,886,436 - ------------------------------------------------------------------------------------- SOFTWARE (8.7%) Adobe Systems 418,500(b) 8,081,235 Macrovision Solutions 1,118,500(b,e) 14,663,535 McAfee 374,800(b,e) 11,427,652 Microsoft 2,161,400 36,959,939 Oracle 1,502,320(b,e) 25,284,046 --------------- Total 96,416,407 - ------------------------------------------------------------------------------------- SPECIALTY RETAIL (1.0%) Urban Outfitters 712,800(b,e) 11,105,424 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 12 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) TOBACCO (2.2%) Philip Morris Intl 660,971 $24,555,073 - ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $1,309,882,536) $1,092,166,326 - -------------------------------------------------------------------------------------
MONEY MARKET FUND (3.4%) SHARES VALUE(a) RiverSource Short-Term Cash Fund, 0.47% 37,995,723(h) $37,995,723 - ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $37,995,723) $37,995,723 - -------------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (10.4%) SHARES VALUE(a) CASH COLLATERAL REINVESTMENT FUND JPMorgan Prime Money Market Fund 115,771,102 $115,771,102 - ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $115,771,102) $115,771,102 - ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $1,463,649,361)(i) $1,245,933,151 =====================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS (a) Securities are valued by using procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At Jan. 31, 2009, the value of foreign securities represented 11.2% of net assets. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security may be determined to be liquid under guidelines established by the Fund's Board of Directors. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Jan. 31, 2009, the value of these securities amounted to $2,506,950 or 0.2% of net assets. (e) At Jan. 31, 2009, security was partially or fully on loan. See Note 5 to the financial statements. (f) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Jan. 31, 2009, is as follows:
ACQUISITION SECURITY DATES COST ----------------------------------------------------------------------- Apollo Management LP* 08-02-07 thru 03-07-08 $37,083,962 Virgin Media 01-09-08 thru 08-06-08 58,291,567
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. (g) This position is in bankruptcy. (h) Affiliated Money Market Fund -- See Note 7 to the financial statements. The rate shown is the seven-day current annualized yield at Jan. 31, 2009. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 13 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (i) At Jan. 31, 2009, the cost of securities for federal income tax purposes was approximately $1,463,649,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $32,140,000 Unrealized depreciation (249,856,000) ------------------------------------------------------------ Net unrealized depreciation $(217,716,000) ------------------------------------------------------------
The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. - -------------------------------------------------------------------------------- 14 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT FAIR VALUE MEASUREMENTS Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to implement more uniform reporting relating to the fair valuation of securities for financial statement purposes. Mutual funds are required to implement the requirements of this standard for fiscal years beginning after Nov. 15, 2007. While uniformity of presentation is the objective of the standard, it is likely that there may be a range of practices utilized and it may be some period of time before industry practices become more uniform. For this reason care should be exercised in interpreting this information and/or using it for comparison with other mutual funds. Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below: - Level 1 -- quoted prices in active markets for identical securities - Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.) - Level 3 -- significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) Observable inputs are those based on market data obtained from sources independent of the fund, and unobservable inputs reflect the fund's own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. The following table is a summary of the inputs used to value the Fund's investments as of Jan. 31, 2009:
FAIR VALUE AT JAN. 31, 2009 ------------------------------------------------------------ LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL - ----------------------------------------------------------------------------------- Investments in securities $1,239,328,854 $6,604,297 $-- $1,245,933,151
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 -- 2009 SEMIANNUAL REPORT 15 STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- JAN. 31, 2009 (UNAUDITED)
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $1,309,882,536) $ 1,092,166,326 Affiliated money market fund (identified cost $37,995,723) 37,995,723 Investments of cash collateral received for securities on loan (identified cost $115,771,102) 115,771,102 - ---------------------------------------------------------------------------------- Total investments in securities (identified cost $1,463,649,361) 1,245,933,151 Capital shares receivable 214,374 Dividends and accrued interest receivable 1,895,416 Receivable for investment securities sold 10,018,948 - ---------------------------------------------------------------------------------- Total assets 1,258,061,889 - ---------------------------------------------------------------------------------- LIABILITIES Capital shares payable 1,425,890 Payable for investment securities purchased 28,161,550 Payable upon return of securities loaned 115,771,102 Accrued investment management services fees 18,636 Accrued distribution fees 8,534 Accrued transfer agency fees 10,933 Accrued administrative services fees 1,766 Accrued plan administration services fees 170 Other accrued expenses 348,552 Collateral and deposits payable 90,000 - ---------------------------------------------------------------------------------- Total liabilities 145,837,133 - ---------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 1,112,224,756 - ---------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 698,363 Additional paid-in capital 2,557,304,666 Excess of distributions over net investment income (55,325,800) Accumulated net realized gain (loss) (1,172,727,754) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (217,724,719) - ---------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 1,112,224,756 - ---------------------------------------------------------------------------------- *Including securities on loan, at value $ 110,196,246 - ----------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 16 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $799,574,882 49,971,753 $16.00(1) Class B $ 97,613,583 6,639,181 $14.70 Class C $ 6,420,846 438,965 $14.63 Class I $184,337,943 11,297,665 $16.32 Class R2 $ 2,514 155 $16.22 Class R3 $ 2,511 155 $16.20 Class R4 $ 24,267,421 1,488,091 $16.31 Class R5 $ 2,510 155 $16.19 Class W $ 2,546 157 $16.22 - -----------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $16.98. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 5.75%. The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 17 STATEMENT OF OPERATIONS ------------------------------------------------------- SIX MONTHS ENDED JAN. 31, 2009 (UNAUDITED)
INVESTMENT INCOME Income: Dividends $ 15,191,219 Interest 6,031 Income distributions from affiliated money market fund 480,885 Fee income from securities lending 57,785 Less foreign taxes withheld (170,302) - -------------------------------------------------------------------------------- Total income 15,565,618 - -------------------------------------------------------------------------------- Expenses: Investment management services fees 3,226,962 Distribution fees Class A 1,408,357 Class B 674,834 Class C 45,484 Class R2 8 Class R3 4 Class W 4 Transfer agency fees Class A 1,865,684 Class B 239,476 Class C 15,530 Class R2 1 Class R3 1 Class R4 8,553 Class R5 1 Class W 3 Administrative services fees 427,537 Plan administration services fees Class R2 4 Class R3 4 Class R4 42,765 Compensation of board members 24,334 Custodian fees 127,180 Printing and postage 245,664 Registration fees 31,120 Professional fees 28,625 Other 17,807 - -------------------------------------------------------------------------------- Total expenses 8,429,942 Expenses waived/reimbursed by the Investment Manager and its affiliates (6,569) Earnings and bank fee credits on cash balances (8,220) - -------------------------------------------------------------------------------- Total net expenses 8,415,153 - -------------------------------------------------------------------------------- Investment income (loss) -- net 7,150,465 - --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 18 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions $(943,397,408) Foreign currency transactions 60,217,186 Options contracts written (11,307,044) - -------------------------------------------------------------------------------- Net realized gain (loss) on investments (894,487,266) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 114,973,208 - -------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (779,514,058) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(772,363,593) - --------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 19 STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2009 JULY 31, 2008 (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 7,150,465 $ 22,991,812 Net realized gain (loss) on investments (894,487,266) 18,445,072 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 114,973,208 (492,536,692) - ----------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (772,363,593) (451,099,808) - ----------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (44,910,862) (18,613,899) Class B (4,161,278) -- Class C (290,906) (35,082) Class I (13,320,253) (3,250,974) Class R2 (146) (34) Class R3 (156) (46) Class R4 (1,366,434) (1,320,924) Class R5 (164) (63) Class W (149) (42) - ----------------------------------------------------------------------------------------------- Total distributions (64,050,348) (23,221,064) - -----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 20 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2009 JULY 31, 2008 (UNAUDITED) CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 28,146,145 $ 158,922,224 Class B shares 3,608,809 21,028,069 Class C shares 670,291 2,204,302 Class I shares 25,582,473 38,802,667 Class R4 shares 6,042,047 25,787,191 Fund merger (Note 10) Class A shares -- 18,206,825 Class B shares -- 5,395,871 Class C shares -- 739,026 Class I shares -- 161,620,525 Class R4 shares -- 39,465 Reinvestment of distributions at net asset value Class A shares 43,556,566 18,132,589 Class B shares 4,110,479 -- Class C shares 285,490 34,035 Class I shares 13,319,983 3,250,578 Class R4 shares 1,366,091 1,320,795 Payments for redemptions Class A shares (258,802,415) (642,466,071) Class B shares (27,961,260) (151,381,443) Class C shares (2,818,226) (7,113,707) Class I shares (42,132,853) (132,345,429) Class R4 shares (21,650,042) (99,292,710) - ----------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (226,676,422) (577,115,198) - ----------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (1,063,090,363) (1,051,436,070) Net assets at beginning of period 2,175,315,119 3,226,751,189 - ----------------------------------------------------------------------------------------------- Net assets at end of period $ 1,112,224,756 $ 2,175,315,119 - ----------------------------------------------------------------------------------------------- Undistributed (excess of distributions over) net investment income $ (55,325,800) $ 1,574,083 - -----------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 21 FINANCIAL HIGHLIGHTS ---------------------------------------------------------- CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007 2006 2005 Net asset value, beginning of period $27.22 $32.73 $28.61 $28.34 $23.73 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .09(b) .26(b) .23(b) .18 .04 Net gains (losses) (both realized and unrealized) (10.40) (5.50) 4.11 .10 4.57 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (10.31) (5.24) 4.34 .28 4.61 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.91) (.27) (.22) (.01) -- - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $16.00 $27.22 $32.73 $28.61 $28.34 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $800 $1,591 $2,393 $2,351 $2,101 - -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 1.11%(e) 1.00% 1.19% 1.14% 1.19% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .88%(e) .84% .71% .72% .16% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% 134% 136% - -------------------------------------------------------------------------------------------------------------- Total return(f) (38.02%)(g) (16.14%) 15.20% .98% 19.43% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (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, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 22 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007 2006 2005 Net asset value, beginning of period $24.79 $29.79 $26.06 $26.01 $21.95 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(b) .02(b) (.02)(b) (.05) (.16) Net gains (losses) (both realized and unrealized) (9.47) (5.02) 3.75 .10 4.22 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (9.46) (5.00) 3.73 .05 4.06 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.63) -- -- -- -- - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.70 $24.79 $29.79 $26.06 $26.01 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $98 $189 $369 $462 $578 - -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 1.88%(e) 1.76% 1.96% 1.91% 1.97% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .11%(e) .08% (.06%) (.06%) (.62%) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% 134% 136% - -------------------------------------------------------------------------------------------------------------- Total return(f) (38.26%)(g) (16.78%) 14.31% .19% 18.50% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (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, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 23 FINANCIAL HIGHLIGHTS (continued) ---------------------------------------------- CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007 2006 2005 Net asset value, beginning of period $24.73 $29.77 $26.07 $26.01 $21.95 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(b) .02(b) (.01)(b) (.04) (.16) Net gains (losses) (both realized and unrealized) (9.44) (5.01) 3.74 .10 4.22 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (9.43) (4.99) 3.73 .06 4.06 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.67) (.05) (.03) -- -- - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $14.63 $24.73 $29.77 $26.07 $26.01 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $6 $13 $20 $19 $15 - -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 1.87%(e) 1.76% 1.95% 1.91% 1.97% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .12%(e) .08% (.03%) (.03%) (.62%) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% 134% 136% - -------------------------------------------------------------------------------------------------------------- Total return(f) (38.24%)(g) (16.78%) 14.31% .23% 18.50% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (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, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 24 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(g) 2008 2007 2006 2005 Net asset value, beginning of period $27.90 $33.54 $29.31 $28.93 $24.10 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .16(b) .44(b) .40(b) .32 .12 Net gains (losses) (both realized and unrealized) (10.67) (5.66) 4.19 .10 4.71 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (10.51) (5.22) 4.59 .42 4.83 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (1.07) (.42) (.36) (.04) -- - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $16.32 $27.90 $33.54 $29.31 $28.93 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $184 $326 $298 $256 $147 - -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) .53%(e) .54% .74% .68% .75% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.47%(e) 1.40% 1.21% 1.22% .55% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% 134% 136% - -------------------------------------------------------------------------------------------------------------- Total return (37.82%)(f) (15.74%) 15.70% 1.44% 20.04% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (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) Not annualized. (g) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 25 FINANCIAL HIGHLIGHTS (continued) ---------------------------------------------- CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $27.61 $33.13 $32.23 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .09 .24 .13 Net gains (losses) (both realized and unrealized) (10.54) (5.54) 1.12 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (10.45) (5.30) 1.25 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.94) (.22) (.35) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $16.22 $27.61 $33.13 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.37%(f) 1.36% 1.50%(f) - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.12%(f) 1.11% 1.50%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .87%(f) .76% .63%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% - -------------------------------------------------------------------------------------------------------------- Total return (37.99%)(i) (16.11%) 3.93%(i) - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of net average assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 26 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $27.65 $33.18 $32.23 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .12 .31 .18 Net gains (losses) (both realized and unrealized) (10.56) (5.54) 1.13 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (10.44) (5.23) 1.31 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (1.01) (.30) (.36) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $16.20 $27.65 $33.18 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.12%(f) 1.12% 1.27%(f) - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) .87%(f) .86% 1.27%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.12%(f) 1.00% .87%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% - -------------------------------------------------------------------------------------------------------------- Total return (37.92%)(i) (15.91%) 4.09%(i) - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 27 FINANCIAL HIGHLIGHTS (continued) ---------------------------------------------- CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(i) 2008 2007 2006 2005 Net asset value, beginning of period $27.78 $33.34 $29.13 $28.81 $24.07 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .13(b) .35(b) .25(b) .24 .09 Net gains (losses) (both realized and unrealized) (10.62) (5.58) 4.22 .10 4.65 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (10.49) (5.23) 4.47 .34 4.74 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.98) (.33) (.26) (.02) -- - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $16.31 $27.78 $33.34 $29.13 $28.81 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $24 $56 $146 $265 $304 - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) .83%(e) .84% 1.03% .95% 1.02% - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) .79%(e) .66% 1.03% .95% 1.02% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.20%(e) 1.11% .79% .89% .34% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% 134% 136% - -------------------------------------------------------------------------------------------------------------- Total return (37.92%)(h) (15.85%) 15.39% 1.17% 19.69% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (h) Not annualized. (i) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 28 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007(b) Net asset value, beginning of period $27.68 $33.28 $32.23 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .15 .39 .29 Net gains (losses) (both realized and unrealized) (10.58) (5.59) 1.12 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (10.43) (5.20) 1.41 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (1.06) (.40) (.36) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $16.19 $27.68 $33.28 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Total expenses(d),(e) .61%(f) .61% .76%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.37%(f) 1.25% 1.38%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% - -------------------------------------------------------------------------------------------------------------- Total return (37.85%)(g) (15.80%) 4.41%(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 July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) Not annualized. (h) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 29 FINANCIAL HIGHLIGHTS (continued) ---------------------------------------------- CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007(b) Net asset value, beginning of period $27.62 $33.21 $31.89 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .10 .27 .24 Net gains (losses) (both realized and unrealized) (10.55) (5.59) 1.43 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (10.45) (5.32) 1.67 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.95) (.27) (.35) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $16.22 $27.62 $33.21 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Total expenses(d),(e) 1.02%(f) 1.00% 1.17%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .97%(f) .86% 1.09%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 90% 112% 98% - -------------------------------------------------------------------------------------------------------------- Total return (37.97%)(g) (16.15%) 5.29%(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 July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) Not annualized. (h) Six months ended Jan. 31, 2009 (Unaudited) The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 30 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- (UNAUDITED AS TO JAN. 31, 2009) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RiverSource Growth Fund (the Fund) is a series of RiverSource Large Cap Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Large Cap Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board of Directors (the Board). The Fund invests primarily in common stocks of U.S. and foreign companies that appear to offer growth opportunities. The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4, Class R5 and Class W shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a front-end sales charge or CDSC and are offered to qualifying institutional investors. - - Class W shares are sold without a front-end sales charge or CDSC and are offered through qualifying discretionary accounts. At Jan. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of Class I shares and the Investment Manager owned 100% of Class R2, Class R3, Class R5 and Class W shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 31 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- VALUATION OF SECURITIES Effective Aug. 1, 2008, the Fund adopted Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a hierarchy for measuring fair value, and requires additional disclosures about the inputs used to develop the measurements of fair value and the effect of certain measurements reported in the Statement of Operations for a fiscal period. There was no impact to the Fund's net assets or results of operations upon adoption. The fair valuation measurements disclosure can be found following the Notes to Portfolio of Investments. All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock - -------------------------------------------------------------------------------- 32 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- Exchange. Swap transactions are valued through an authorized pricing service, broker, or an internal model. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost, which approximates fair value. ILLIQUID SECURITIES At Jan. 31, 2009, investments in securities included issues that are illiquid which the Fund currently limits to 15% of net assets, at market value, at the time of purchase. The aggregate value of such securities at Jan. 31, 2009 was $22,293,800 representing 0.20% of net assets. Certain illiquid securities may be valued by management at fair value according to procedures approved, in good faith, by the Board. According to Board guidelines, certain unregistered securities are determined to be liquid and are not included within the 15% limitation specified above. Assets are liquid if they can be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the asset is valued by the Fund. OPTION TRANSACTIONS To produce incremental earnings, protect gains and facilitate buying and selling of securities for investments, the Fund may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. Cash collateral may be collected by the Fund to secure certain over-the-counter options (OTC options) trades. Cash collateral held by the Fund for such option trades must be returned to the counterparty upon closure, exercise or expiration of the contract. The Fund also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. Option contracts, including OTC option contracts, with no readily available market value are valued using quotations obtained from independent brokers as of the close of the New York Stock Exchange. The Fund will realize a gain or loss when the option - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 33 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. At Jan. 31, 2009, the Fund had no outstanding option contracts. FUTURES TRANSACTIONS To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Futures and options on futures are valued daily based upon the last sale price at the close of the market on the principal exchange on which they are traded. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. At Jan. 31, 2009, the Fund had no outstanding futures contracts. FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Fund may enter into forward foreign currency contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the counterparty will not complete its - -------------------------------------------------------------------------------- 34 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- contract obligations. At Jan. 31, 2009, the Fund had no outstanding forward foreign currency contracts. TOTAL RETURN EQUITY SWAP TRANSACTIONS The Fund may enter into swap agreements to gain exposure to the total return on a specified security, basket of securities or security indexes during the specified period, in return for periodic payments based on a fixed or variable interest rate. Total return swap agreements may be used to obtain exposure to a security or market without owning or taking physical custody of such security or market. Under the terms of a total return equity swap agreement, payments made by the Fund or the counterparty are based on the total return of a particular reference asset or assets (such as an equity security, a combination of such securities, or an index). That is, one party agrees to pay another party the return on a stock, basket of stocks, or stock index in return for a specified interest rate. The notional amounts of swap contracts are not recorded in the financial statements. Swap contracts are valued daily, and the change in value is recorded as unrealized appreciation (depreciation) until the termination of the swap, at which time realized gain (loss) is recorded. Payments received or made are recorded as realized gains (losses). Swap agreements may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. It may not be possible for the Fund to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. Total return swaps are subject to the risk associated with the investment in the underlying securities and also the risk of the counterparty not fulfilling its obligations under the agreement. At Jan. 31, 2009, the Fund had no outstanding total return equity swap contracts. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund's contracts with its service 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. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 35 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all the tax returns filed for the last three years. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of options contracts, foreign currency transactions, recognition of unrealized appreciation (depreciation) for certain derivative investments, investments in partnerships, post-October losses and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. RECENT ACCOUNTING PRONOUNCEMENTS The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS 133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45." The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures about a fund's derivatives and guarantees. Funds are required to provide enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, (c) how derivative instruments and related hedged items affect a fund's financial position, financial performance, and cash flows and (d) the current status of the payment/performance risk of the credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require additional disclosures about the current status of the payment/performance risk of a guarantee. At Jan. 31, 2009, the Fund did not own nor was it a party to any credit derivative contracts within the scope of these amendments. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133," which requires enhanced disclosures about a fund's derivative and hedging activities. SFAS 161 - -------------------------------------------------------------------------------- 36 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- is effective for financial statements issued for fiscal years and interim periods beginning after Nov. 15, 2008. As of Jan. 31, 2009, management does not believe the adoption of SFAS 161 will impact the financial statement amounts; however, additional footnote disclosures may be required about the use of derivative instruments and hedging items. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 2. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets that declines from 0.60% to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment determined monthly by measuring the percentage difference over a rolling 12-month period between the annualized performance of one Class A share of the Fund and the annualized performance of the Lipper Large-Cap Growth Funds Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The adjustment decreased the management fee by $1,379,213 for the six months ended Jan. 31, 2009. The management fee for the six months ended Jan. 31, 2009 was 0.41% of the Fund's average daily net assets, including the adjustment under the terms of the performance incentive arrangement. ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's average daily net assets that declines from 0.06% to 0.03% annually as the Fund's assets increase. The fee for the six months ended Jan. 31, 2009 was 0.06% of the Fund's average daily net assets. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the six months ended Jan. 31, 2009, other expenses paid to this company were $7,689. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for Class C for this service. The Fund also pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R2, Class R3, Class R4 and Class R5 shares and an annual asset-based fee at a rate of 0.20% of the Fund's average daily net assets attributable to Class W shares. The Transfer Agent charges an annual fee of $5 per inactive account, charged on a pro rata basis for 12 months from the date the account becomes inactive. These fees are included in the transfer agency fees on the Statement of Operations. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R2, Class R3 and Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. DISTRIBUTION FEES The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A, Class R3 and Class W shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets - -------------------------------------------------------------------------------- 38 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, up to 0.75% of the fee is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed ("unreimbursed expense") was approximately $4,680,000 and $113,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of Jan. 31, 2009, and may be recovered from future payments under the distribution plan or CDSC. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGES Sales charges received by the Distributor for distributing Fund shares were $534,874 for Class A, $74,520 for Class B and $859 for Class C for the six months ended Jan. 31, 2009. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the six months ended Jan. 31, 2009, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds*), including the adjustment under the terms of a performance incentive arrangement, were as follows: Class R2............................................ 1.12% Class R3............................................ 0.87 Class R4............................................ 0.79
The waived/reimbursed fees and expenses for the transfer agency fees at the class level were as follows: Class R4.......................................... $5,385
The waived/reimbursed fees and expenses for the plan administration services fees at the class level were as follows: Class R2........................................... $4 Class R3........................................... 4 Class R4........................................... 1,176
The Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses until July 31, 2009, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the Fund's average daily net assets: Class R4............................................ 0.97%
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. EARNINGS AND BANK FEE CREDITS During the six months ended Jan. 31, 2009, the Fund's transfer agency fees were reduced by $8,220 as a result of bank fee credits from overnight cash balances. CUSTODIAN FEES Effective Dec. 15, 2008, the fund pays custodian fees to JPMorgan Chase Bank, N.A. Prior to Dec. 15, 2008, the Fund paid custodian fees amounting to $58,493 to Ameriprise Trust Company, a subsidiary of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $1,378,875,074 and $1,515,663,027, respectively, for the six months ended Jan. 31, 2009. 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, 2009 ISSUED FOR FUND REINVESTED NET SOLD MERGER DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------------- Class A 1,419,288 N/A 2,608,177 (12,491,513) (8,464,048) Class B 196,510 N/A 267,609 (1,456,937) (992,818) Class C 36,589 N/A 18,684 (146,551) (91,278) Class I 1,198,193 N/A 782,608 (2,380,645) (399,844) Class R4 295,801 N/A 80,311 (901,291) (525,179) - ----------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 40 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
YEAR ENDED JULY 31, 2008 ISSUED FOR REINVESTED NET SOLD FUND MERGER DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------------- Class A 5,325,900 647,067 561,728 (21,198,973) (14,664,278) Class B 733,992 209,948 -- (5,712,960) (4,769,020) Class C 78,462 28,823 1,155 (261,120) (152,680) Class I 1,272,282 5,614,412 98,532 (4,180,720) 2,804,506 Class R4 815,040 1,376 40,170 (3,217,095) (2,360,509) - ----------------------------------------------------------------------------------------
5. LENDING OF PORTFOLIO SECURITIES Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending Agreement ("the Agreement") with JPMorgan Chase Bank, National Association ("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers on behalf of the Fund. Pursuant to the Agreement, all loaned securities are initially collateralized in an amount equivalent to 102% (for securities denominated in U.S. dollars) or 105% (for all other securities) of the value of the loaned securities, including accrued interest in the case of fixed income securities. Collateral is maintained over the life of the loan thereafter in an amount not less than 100% of the market value of loaned securities, as determined at the close of each business day, except to the extent that a collateral shortfall is due to a diminution in the market value of authorized investments in which cash collateral is invested. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Collateral is either in the form of cash or U.S. government securities. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed on the Portfolio of Investments and the value of cash collateral received at period end is disclosed on the Statement of Assets and Liabilities along with the related obligation to return the collateral upon return of the securities loaned. At Jan. 31, 2009, securities valued at $110,196,246 were on loan secured by cash collateral of $115,771,102 invested in short-term securities or cash equivalents. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Income of $26,532 earned from securities lending from Dec. 1, 2008 through Jan. 31, 2009 is - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Funds or the borrower at any time, and are, therefore, not considered to be illiquid investments. Prior to Dec. 1, 2008, RiverSource Investments, LLC served as securities lending agent for the Fund under the Securities Lending Agency Agreement pursuant to which the Fund agreed to reimburse RiverSource Investments, LLC for expenses incurred by it in connection with the lending program. Expenses paid to RiverSource Investments, LLC as securities lending agent were $1,771 through Nov. 30, 2008 and are included in other expenses on the Statement of Operations. Cash collateral received on loaned securities had been invested in an affiliated money market fund. Income of $31,253 earned from securities lending from Aug. 1, 2008 through Nov. 30, 2008 is included in the Statement of Operations. 6. OPTIONS CONTRACTS WRITTEN Contracts and premiums associated with options contracts written are as follows:
CALLS PUTS CONTRACTS PREMIUMS CONTRACTS PREMIUMS - -------------------------------------------------------------------------- Balance July 31, 2008 26,796 $ 2,162,573 5,537 $ 3,967,499 Opened 118,661 9,695,534 34,599 6,791,899 Closed (69,042) (8,731,415) (40,136) (10,759,398) Expired (76,415) (3,126,692) -- -- - -------------------------------------------------------------------------- Balance Jan. 31, 2009 -- $ -- -- $ -- - --------------------------------------------------------------------------
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 the RiverSource Investments. The cost of the Fund's purchases and proceeds from sales of shares of RiverSource Short-Term Cash Fund aggregated $479,431,482 and $510,263,639, respectively, for the - -------------------------------------------------------------------------------- 42 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- six months ended Jan. 31, 2009. The income distributions received with respect to the Fund's investment in RiverSource Short-Term Cash Fund can be found on the Statement of Operations and the Fund's invested balance in RiverSource Short- Term Cash Fund at Jan. 31, 2009, can be found in the Portfolio of Investments. 8. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 16, 2008, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permits collective borrowings up to $475 million. The borrowers shall have the right, upon written notice to the Administrative Agent to request an increase of up to $175 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $650 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.75%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro rata share of 0.02% of the amount of the credit facility. The Fund had no borrowings during the six months ended Jan. 31, 2009. Under the prior credit facility which was effective until Oct. 15, 2008, the Fund had entered into a revolving credit facility with a syndicate of banks headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility agreement, which was a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permitted collective borrowings up to $500 million. Interest was charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.30%. Each borrowing under the credit facility matured no later than 60 days after the date of borrowing. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- 9. CAPITAL LOSS CARRY-OVER, POST-OCTOBER LOSS AND RECOGNIZED BUILT-IN LOSSES For federal income tax purposes, the Fund had a capital loss carry-over of $178,158,939 at July 31, 2008, that if not offset by capital gains will expire in 2011. Because the measurement periods for a regulated investment company's income are different for excise tax purposes versus income tax purposes, special rules are in place to protect the amount of earnings and profits needed to support excise tax distributions. As a result, the Fund is permitted to treat net capital losses realized between Nov. 1, 2007 and its fiscal year end ("post-October loss") as occurring on the first day of the following year. At July 31, 2008, the Fund had a post-October loss of $22,735,098 that is treated for income tax purposes as occurring on Aug. 1, 2008. The Fund had recognized built-in losses of $1,133,547 at July 31, 2008, that if not offset by capital gains will expire in 2017. As a result if the fund merger (Note 10) the Fund acquired unrealized capital losses, which are limited by Internal Revenue Code section 382. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carry-over and recognized built- in losses have been offset or expires. 10. FUND MERGER At the close of business on March 14, 2008, RiverSource Growth Fund acquired the assets and assumed the identified liabilities of RiverSource Fundamental Growth Fund. The reorganization was completed after shareholders approved the plan on Jan. 29, 2008. The aggregate net assets of RiverSource Growth Fund immediately before the acquisition were $2,444,672,413 and the combined net assets immediately after the acquisition were $2,630,674,125. The merger was accomplished by a tax-free exchange of 36,872,082 shares of RiverSource Fundamental Growth Fund valued at $186,001,712. - -------------------------------------------------------------------------------- 44 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- In exchange for the RiverSource Fundamental Growth Fund shares and net assets, RiverSource Growth Fund issued the following number of shares:
SHARES - ------------------------------------------------------------ Class A.......................................... 647,067 Class B.......................................... 209,948 Class C.......................................... 28,823 Class I.......................................... 5,614,412 Class R4......................................... 1,376
The components of RiverSource Fundamental Growth Fund's net assets after adjustments for any permanent book-to-tax differences at the merger date were as follows:
EXCESS OF DISTRIBUTIONS ACCUMULATED OVER NET TOTAL CAPITAL UNREALIZED NET INVESTMENT NET ASSETS STOCK DEPRECIATION REALIZED GAIN INCOME - ---------------------------------------------------------------------------------------- RiverSource Fundamental Growth Fund $186,001,712 $209,335,799 $(24,043,308) $4,925,716 $(4,216,495)
11. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals on August 8, 2007. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the RiverSource Funds' Boards of Directors/Trustees. On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003, Seligman conducted an extensive internal review concerning mutual fund trading practices. Seligman's review, which covered the period 2001-2003, noted one arrangement that permitted frequent trading in certain open-end registered investment companies managed by Seligman (the Seligman Funds); this arrangement was in the process of being closed down by Seligman before September 2003. Seligman identified three other arrangements that permitted frequent trading, all of which had been terminated by September 2002. In January 2004, Seligman, on a voluntary basis, publicly disclosed these four arrangements to its clients and to shareholders of the Seligman Funds. Seligman also provided information concerning mutual fund trading practices to the SEC and the Office of the Attorney General of the State of New York (NYAG). In September 2005, the New York staff of the SEC indicated that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against Seligman and the distributor of the Seligman Funds, Seligman Advisors, Inc. (which is now known as RiverSource Fund Distributors, Inc.), relating to frequent trading in the Seligman Funds. Seligman responded to the staff in October 2005 that it believed that any action would be both inappropriate and unnecessary, especially in light of the fact that Seligman had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds. - -------------------------------------------------------------------------------- 46 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- In September 2006, the NYAG commenced a civil action in New York State Supreme Court against Seligman, Seligman Advisors, Inc., Seligman Data Corp. and Brian T. Zino (collectively, the Seligman Parties), alleging, in substance, that the Seligman Parties permitted various persons to engage in frequent trading and, as a result, the prospectus disclosure used by the registered investment companies then managed by Seligman is and has been misleading. The NYAG included other related claims and also claimed that the fees charged by Seligman to the Seligman Funds were excessive. On March 13, 2009, without admitting or denying any violations of law or wrongdoing, the Seligman Parties entered into a stipulation of settlement with the NYAG and settled the claims made by the NYAG. Under the terms of the settlement, Seligman will pay $11.3 million to four Seligman Funds. This settlement resolved all outstanding matters between the Seligman Parties and the NYAG. In addition to the foregoing matter, the New York staff of the SEC indicated in September 2005 that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against Seligman and Seligman Advisors, Inc. relating to frequent trading in the Seligman Funds. Seligman responded to the staff in October 2005 that it believed that any action would be both inappropriate and unnecessary, especially in light of the fact that Seligman had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds. There have been no further developments with the SEC on this matter. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine 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. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- 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. - -------------------------------------------------------------------------------- 48 RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT PROXY VOTING ------------------------------------------------------------------- The policy of the Board is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling RiverSource Funds at (888) 791-3380; contacting your financial institution; visiting riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE GROWTH FUND -- 2009 SEMIANNUAL REPORT 49 RIVERSOURCE 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 RiverSource Fund Distributors, Inc., Members FINRA, and managed by RiverSource Investments, LLC. RiverSource is part of Ameriprise Financial, Inc. (RIVERSOURCE INVESTMENTS LOGO) (C) 2009 RiverSource Investments, LLC. S-6456 Z (4/09)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE LARGE CAP EQUITY FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED JANUARY 31, 2009 RIVERSOURCE LARGE CAP EQUITY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM GROWTH OF CAPITAL. (SINGLE STRATEGY FUNDS ICON) TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 2 Fund Expenses Example.............. 8 Portfolio of Investments........... 11 Statement of Assets and Liabilities...................... 25 Statement of Operations............ 27 Statements of Changes in Net Assets........................... 29 Financial Highlights............... 31 Notes to Financial Statements...... 39 Proxy Voting....................... 56
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 1 YOUR FUND AT A GLANCE ---------------------------------------------------------- (UNAUDITED) FUND SUMMARY - -------------------------------------------------------------------------------- > RiverSource Large Cap Equity Fund (the Fund) Class A shares declined 39.47% (excluding sales charge) for the semiannual period ended Jan. 31, 2009. > The Fund underperformed its benchmarks, the Standard & Poor's 500 Index (S&P 500 Index), which declined 33.95% and the Russell 1000(R) Index (Russell Index), which declined 34.71% in the same six-month period. > The Fund's peer group, the Lipper Large-Cap Core Funds Index, fell 33.98% during the same time frame. ANNUALIZED TOTAL RETURNS (for period ended Jan. 31, 2009) - --------------------------------------------------------------------------------
Since inception 6 months* 1 year 3 years 5 years 3/28/02 - ------------------------------------------------------------------------- RiverSource Large Cap Equity Fund Class A (excluding sales charge) -39.47% -45.50% -15.96% -7.68% -5.47% - ------------------------------------------------------------------------- Russell 1000 Index (unmanaged)(1) -34.71% -39.04% -12.03% -4.05% -2.56% - ------------------------------------------------------------------------- S&P 500 Index (unmanaged)(2) -33.95% -38.63% -11.78% -4.24% -2.86% - ------------------------------------------------------------------------- Lipper Large-Cap Core Funds Index(3) -33.98% -38.34% -11.95% -4.55% -3.40% - -------------------------------------------------------------------------
* Not annualized. The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. - -------------------------------------------------------------------------------- 2 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (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 90% of the total market capitalization of the Russell 3000 Index. The index reflects reinvestment of all distributions and changes in market prices. (2) The Standard & Poor's 500 Index (S&P 500 Index), an unmanaged index of common stocks, is frequently used as a general measure of market performance. The index reflects reinvestment of all distributions and changes in market prices. (3) The Lipper Large-Cap Core Funds Index includes the 30 largest large-cap core funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS - --------------------------------------------------------------------------------
AT JAN. 31, 2009 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS INCEPTION Class A (inception 3/28/02) -39.47% -45.50% -15.96% -7.68% -5.47% - --------------------------------------------------------------------------- Class B (inception 3/28/02) -39.64% -45.89% -16.62% -8.37% -6.21% - --------------------------------------------------------------------------- Class C (inception 3/28/02) -39.39% -45.79% -16.53% -8.32% -6.14% - --------------------------------------------------------------------------- Class I (inception 3/4/04) -39.23% -45.24% -15.59% N/A -7.69% - --------------------------------------------------------------------------- Class R2 (inception 12/11/06) -39.26% -45.49% N/A N/A -25.50% - --------------------------------------------------------------------------- Class R3 (inception 12/11/06) -39.17% -45.29% N/A N/A -25.29% - --------------------------------------------------------------------------- Class R4 (inception 3/28/02) -39.24% -45.43% -15.78% -7.47% -5.28% - --------------------------------------------------------------------------- Class R5 (inception 12/11/06) -39.21% -45.27% N/A N/A -25.27% - --------------------------------------------------------------------------- With sales charge Class A (inception 3/28/02) -43.00% -48.67% -17.60% -8.75% -6.30% - --------------------------------------------------------------------------- Class B (inception 3/28/02) -42.57% -48.53% -17.56% -8.67% -6.21% - --------------------------------------------------------------------------- Class C (inception 3/28/02) -39.98% -46.31% -16.53% -8.32% -6.14% - ---------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 4 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
AT DEC. 31, 2008 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS INCEPTION Class A (inception 3/28/02) -32.82% -42.40% -12.07% -5.37% -3.92% - --------------------------------------------------------------------------- Class B (inception 3/28/02) -32.94% -42.70% -12.71% -6.05% -4.65% - --------------------------------------------------------------------------- Class C (inception 3/28/02) -33.05% -42.78% -12.72% -6.07% -4.63% - --------------------------------------------------------------------------- Class I (inception 3/4/04) -32.57% -42.03% -11.64% N/A -5.60% - --------------------------------------------------------------------------- Class R2 (inception 12/11/06) -32.81% -42.32% N/A N/A -22.21% - --------------------------------------------------------------------------- Class R3 (inception 12/11/06) -32.57% -42.11% N/A N/A -21.97% - --------------------------------------------------------------------------- Class R4 (inception 3/28/02) -32.81% -42.27% -11.93% -5.19% -3.74% - --------------------------------------------------------------------------- Class R5 (inception 12/11/06) -32.66% -42.21% N/A N/A -21.99% - --------------------------------------------------------------------------- With sales charge Class A (inception 3/28/02) -36.70% -45.76% -13.77% -6.49% -4.77% - --------------------------------------------------------------------------- Class B (inception 3/28/02) -36.20% -45.49% -13.70% -6.36% -4.65% - --------------------------------------------------------------------------- Class C (inception 3/28/02) -33.70% -43.33% -12.72% -6.07% -4.63% - ---------------------------------------------------------------------------
Class A share performance reflects the maximum sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R2, Class R3, Class R4 and Class R5 shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available to institutional investors only. *Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 5 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- STYLE MATRIX - -------------------------------------------------------------------------------- Style Matrix
STYLE VALUE BLEND GROWTH X LARGE MEDIUM SIZE SMALL
Shading within the style matrix indicates areas in which the Fund is designed to generally invest. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and may serve as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. ANNUAL OPERATING EXPENSE RATIO (as of the current prospectus) - --------------------------------------------------------------------------------
Net fund and acquired Total fund Net fund fund fees expenses expenses(a) and expenses(b) - -------------------------------------------------------- Class A 1.03% 0.96% 0.98% - -------------------------------------------------------- Class B 1.79% 1.73% 1.75% - -------------------------------------------------------- Class C 1.79% 1.72% 1.74% - -------------------------------------------------------- Class I 0.57% 0.54% 0.56% - -------------------------------------------------------- Class R2 1.39% 1.34% 1.36% - -------------------------------------------------------- Class R3 1.14% 1.09% 1.11% - -------------------------------------------------------- Class R4 0.87% 0.82% 0.84% - -------------------------------------------------------- Class R5 0.67% 0.59% 0.61% - --------------------------------------------------------
(a) The Investment Manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until July 31, 2009, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment (that decreased the management fee by 0.08% for the year ended July 31, 2008), will not exceed 1.04% for Class A, 1.81% for Class B, 1.80% for Class C, 0.62% for Class I, 1.42% for Class R2, 1.17% for Class R3, 0.90% for Class R4 and 0.67% for Class R5. (b) In addition to the Fund's total annual operating expenses that the Fund bears directly, the Fund's shareholders indirectly bear the expenses of acquired funds in which the Fund invests. The Fund's "Acquired fund fees and expenses," based on its investment in the acquired funds, was 0.02% for the year ended July 31, 2008. - -------------------------------------------------------------------------------- 6 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION(1) (at Jan. 31, 2009; % of portfolio assets) - ---------------------------------------------------------------------
Consumer Discretionary 11.4% - ------------------------------------------------ Consumer Staples 11.7% - ------------------------------------------------ Energy 14.2% - ------------------------------------------------ Financials 11.5% - ------------------------------------------------ Health Care 16.0% - ------------------------------------------------ Industrials 8.8% - ------------------------------------------------ Information Technology 10.2% - ------------------------------------------------ Materials 2.4% - ------------------------------------------------ Telecommunication Services 0.4% - ------------------------------------------------ Utilities 1.8% - ------------------------------------------------ Other(2) 11.6% - ------------------------------------------------
(1) Sectors can be comprised of several industries. Please refer to the section entitled "Portfolio of Investments" for a complete listing. No single industry exceeds 25% of portfolio assets. (2) Cash & Cash Equivalents. Of the 11.6%, 8.7% is due to security lending activity and 2.9% is the Fund's cash equivalent position. The sectors identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. TOP TEN HOLDINGS (at Jan. 31, 2009; % of portfolio assets) - ---------------------------------------------------------------------
Wal-Mart Stores 4.6% - ------------------------------------------------ Pfizer 4.4% - ------------------------------------------------ Chevron 4.2% - ------------------------------------------------ Johnson & Johnson 4.1% - ------------------------------------------------ Home Depot 2.2% - ------------------------------------------------ JPMorgan Chase & Co 2.2% - ------------------------------------------------ Exxon Mobil 2.1% - ------------------------------------------------ IBM 1.6% - ------------------------------------------------ Microsoft 1.6% - ------------------------------------------------ PepsiCo 1.4% - ------------------------------------------------
For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 7 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended Jan. 31, 2009. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 8 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
DIRECT AND DIRECT INDIRECT BEGINNING ENDING EXPENSES EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING AUG. 1, 2008 JAN. 31, 2009 THE PERIOD(A) THE PERIOD(B) - ------------------------------------------------------------------------------------------ Class A - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 605.30 $3.46 $3.50 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.76 $4.36 $4.41 - ------------------------------------------------------------------------------------------ Class B - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 603.60 $6.55 $6.59 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.90 $8.24 $8.29 - ------------------------------------------------------------------------------------------ Class C - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 606.10 $6.52 $6.56 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.95 $8.19 $8.24 - ------------------------------------------------------------------------------------------ Class I - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 607.70 $1.77 $1.81 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,022.86 $2.23 $2.28 - ------------------------------------------------------------------------------------------ Class R2 - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 607.40 $5.00 $5.04 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.85 $6.28 $6.33 - ------------------------------------------------------------------------------------------ Class R3 - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 608.30 $3.99 $4.03 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.10 $5.01 $5.06 - ------------------------------------------------------------------------------------------ Class R4 - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 607.60 $2.90 $2.94 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,021.46 $3.65 $3.70 - ------------------------------------------------------------------------------------------ Class R5 - ------------------------------------------------------------------------------------------ Actual(c) $1,000 $ 607.90 $1.81 $1.85 - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,022.81 $2.28 $2.33 - ------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 9 FUND EXPENSES EXAMPLE (continued) ---------------------------------------------- ANNUALIZED EXPENSE RATIOS
FUND'S ACQUIRED FUND ANNUALIZED FEES AND NET FUND EXPENSE RATIO EXPENSES EXPENSES - ---------------------------------------------------------------------- Class A .86% .01% .87% - ---------------------------------------------------------------------- Class B 1.63% .01% 1.64% - ---------------------------------------------------------------------- Class C 1.62% .01% 1.63% - ---------------------------------------------------------------------- Class I .44% .01% .45% - ---------------------------------------------------------------------- Class R2 1.24% .01% 1.25% - ---------------------------------------------------------------------- Class R3 .99% .01% 1.00% - ---------------------------------------------------------------------- Class R4 .72% .01% .73% - ---------------------------------------------------------------------- Class R5 .45% .01% .46% - ----------------------------------------------------------------------
(a) Expenses are equal to the Fund's annualized expense ratio for each class, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). (b) Expenses are equal to the Fund's annualized expense ratio for each class plus the acquired fund fees and expenses, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). (c) Based on the actual return for the six months ended Jan. 31, 2009: -39.47% for Class A, -39.64% for Class B, -39.39% for Class C, -39.23% for Class I, -39.26% for Class R2, -39.17% for Class R3, -39.24% for Class R4 and -39.21% for Class R5. - -------------------------------------------------------------------------------- 10 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT PORTFOLIO OF INVESTMENTS ------------------------------------------------------- JAN. 31, 2009 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (96.8%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.8%) AeroVironment 8,500(b,f) $315,010 American Science & Engineering 3,213 250,614 Ceradyne 25,331(b,f) 578,053 General Dynamics 172,255(f) 9,772,027 Rockwell Collins 33,368 1,257,306 United Technologies 99,020 4,751,970 --------------- Total 16,924,980 - ------------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS (0.2%) CH Robinson Worldwide 95,986 4,413,437 Hub Group Cl A 16,373(b) 371,667 Pacer Intl 46,242(f) 397,681 --------------- Total 5,182,785 - ------------------------------------------------------------------------------------- AIRLINES (0.4%) Alaska Air Group 31,558(b) 831,869 Allegiant Travel 8,541(b,f) 305,426 AMR 30,335(b) 180,190 Continental Airlines Cl B 14,891(b) 200,582 Delta Air Lines 59,755(b) 412,310 Hawaiian Holdings 65,225(b) 265,466 JetBlue Airways 37,430(b) 210,731 SkyWest 71,912 1,125,423 Southwest Airlines 502,569(f) 3,533,059 UAL 73,227(b) 691,263 US Airways Group 81,594(b) 462,638 --------------- Total 8,218,957 - ------------------------------------------------------------------------------------- AUTO COMPONENTS (0.1%) Cooper Tire & Rubber 56,651(f) 264,560 Exide Technologies 62,946(b) 228,494 Fuel Systems Solutions 7,302(b,f) 190,874 Goodyear Tire & Rubber 194,518(b) 1,200,176 Johnson Controls 65,605 820,719 --------------- Total 2,704,823 - ------------------------------------------------------------------------------------- AUTOMOBILES (0.1%) Ford Motor 249,800(b,f) 467,126 General Motors 62,539(f) 188,242 Harley-Davidson 164,139(f) 1,999,213 --------------- Total 2,654,581 - ------------------------------------------------------------------------------------- BEVERAGES (2.9%) Brown-Forman Cl B 56,384 2,560,397 Coca-Cola 631,980 26,998,186 PepsiCo 653,531 32,826,862 --------------- Total 62,385,445 - ------------------------------------------------------------------------------------- BIOTECHNOLOGY (2.6%) Amgen 405,762(b) 22,256,046 Cephalon 45,699(b,f) 3,527,049 CV Therapeutics 32,590(b) 510,034 Emergent BioSolutions 13,873(b,f) 304,235 Genentech 14,017(b) 1,138,741 Gilead Sciences 524,678(b) 26,637,901 Myriad Genetics 19,227(b) 1,433,757 NPS Pharmaceuticals 36,398(b) 227,124 Vertex Pharmaceuticals 8,688(b,f) 287,138 --------------- Total 56,322,025 - ------------------------------------------------------------------------------------- BUILDING PRODUCTS (0.1%) American Woodmark 16,024(f) 241,161 Insteel Inds 27,417(f) 211,111 Masco 291,531 2,279,772 Owens Corning 7,565(b) 100,917 Trex 11,677(b,f) 172,703 --------------- Total 3,005,664 - ------------------------------------------------------------------------------------- CAPITAL MARKETS (1.5%) Goldman Sachs Group 133,369 10,766,879 Knight Capital Group Cl A 24,027(b) 433,207 Morgan Stanley 1,011,014(f) 20,452,814 Stifel Financial 11,707(b,f) 410,213 SWS Group 45,991(f) 673,768 --------------- Total 32,736,881 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 11 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) CHEMICALS (1.5%) Ashland 21,801 $174,844 Balchem 10,066(f) 224,774 CF Inds Holdings 28,881 1,357,407 Dow Chemical 1,772,219 20,540,017 Ecolab 19,484 661,677 EI du Pont de Nemours & Co 108,801 2,498,071 Innophos Holdings 15,945 241,248 OM Group 16,873(b,f) 326,999 PPG Inds 77,165 2,899,861 Sigma-Aldrich 56,009 2,020,805 Solutia 48,200(b,f) 188,462 Stepan 6,925(f) 254,078 Westlake Chemical 14,332(f) 195,918 WR Grace & Co 100,680(b) 580,924 --------------- Total 32,165,085 - ------------------------------------------------------------------------------------- COMMERCIAL BANKS (1.1%) BancFirst 6,108(f) 217,567 BB&T 292,392(f) 5,786,437 Comerica 125,875 2,097,078 Community Trust Bancorp 6,575 183,903 Fifth Third Bancorp 606,788 1,450,223 First BanCorp 15,522(c,f) 110,361 First Citizens BancShares Cl A 949 132,727 First Financial 7,250(f) 240,338 First Financial Bankshares 9,490(f) 421,261 Home BancShares 8,731(f) 179,771 Intl Bancshares 20,109(f) 366,386 KeyCorp 343,879 2,503,439 MainSource Financial Group 17,647(f) 172,411 Marshall & Ilsley 204,955(f) 1,170,293 Popular 18,530(c,f) 50,772 Republic Bancorp Cl A 11,372(f) 204,696 SunTrust Banks 146,867 1,800,589 TowneBank 11,883 247,642 Trico Bancshares 9,961(f) 200,615 Trustmark 13,543 274,923 UMB Financial 10,116 391,894 Wells Fargo & Co 268,910(f) 5,082,399 Wilshire Bancorp 33,656(f) 230,880 Zions Bancorporation 9,592(f) 143,113 --------------- Total 23,659,718 - ------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES (0.9%) ABM Inds 9,515(f) 141,298 Avery Dennison 48,390(f) 1,172,490 Clean Harbors 5,723(b,f) 306,238 HNI 20,631(f) 272,536 Kimball Intl Cl B 44,536 306,853 Republic Services 248,682 6,430,916 RR Donnelley & Sons 80,980 790,365 Sykes Enterprises 13,650(b) 228,092 Tetra Tech 6,789(b) 157,708 United Stationers 7,598(b,f) 212,820 Waste Management 282,337 8,806,090 --------------- Total 18,825,406 - ------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (1.4%) 3Com 129,413(b) 301,532 Airvana 49,195(b) 250,403 ARRIS Group 40,980(b) 291,778 Cisco Systems 489,238(b) 7,323,893 Corning 747,258(f) 7,554,778 InterDigital 28,749(b,f) 929,455 Motorola 133,924 593,283 NETGEAR 21,473(b,f) 238,780 QUALCOMM 328,496 11,349,536 Tekelec 18,199(b) 226,032 --------------- Total 29,059,470 - ------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS (3.5%) Adaptec 83,576(b,f) 233,177 Apple 120,797(b) 10,887,434 Dell 831,979(b) 7,903,801 Electronics for Imaging 26,387(b,f) 234,580 Hewlett-Packard 338,952 11,778,582 IBM 414,283 37,969,036 Lexmark Intl Cl A 207,679(b) 4,917,839 NCR 18,658(b,f) 234,158 Western Digital 26,046(b) 382,355 --------------- Total 74,540,962 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 12 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) CONSTRUCTION & ENGINEERING (0.3%) EMCOR Group 21,413(b,f) $440,894 Fluor 66,753 2,596,691 Foster Wheeler 2,749(b) 54,898 Granite Construction 36,466(f) 1,284,333 Michael Baker 3,799(b) 132,813 Perini 48,557(b,f) 1,012,413 --------------- Total 5,522,042 - ------------------------------------------------------------------------------------- CONSTRUCTION MATERIALS (--%) Vulcan Materials 3,181(f) 157,332 - ------------------------------------------------------------------------------------- CONSUMER FINANCE (0.2%) Advanta Cl B 88,512(f) 69,039 American Express 60,682 1,015,210 Discover Financial Services 80,265(f) 573,895 SLM 248,814(b,f) 2,848,920 --------------- Total 4,507,064 - ------------------------------------------------------------------------------------- CONTAINERS & PACKAGING (--%) Rock-Tenn Cl A 25,329(f) 789,505 - ------------------------------------------------------------------------------------- DISTRIBUTORS (0.2%) Genuine Parts 106,374 3,406,095 - ------------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES (0.5%) Apollo Group Cl A 20,567(b) 1,675,388 Career Education 4,579(b,f) 99,822 Corinthian Colleges 37,035(b,f) 691,814 H&R Block 372,711 7,726,298 Regis 22,824 256,770 Universal Technical Institute 12,637(b,f) 221,527 --------------- Total 10,671,619 - ------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (4.8%) Apollo Management LP 1,406,500(d,e) 2,109,750 Bank of America 3,728,404 24,532,898 Citigroup 6,585,055(f) 23,376,945 JPMorgan Chase & Co 1,969,323 50,237,430 KKR Financial Holdings LLC 563,202 799,747 Life Partners Holdings 6,727(f) 255,626 Moody's 6,357(f) 136,167 --------------- Total 101,448,563 - ------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES (0.3%) CenturyTel 45,084(f) 1,223,580 Embarq 106,239 3,794,856 Frontier Communications 134,518 1,090,941 Qwest Communications Intl 87,185 280,736 Shenandoah Telecommunications 8,904(f) 217,080 --------------- Total 6,607,193 - ------------------------------------------------------------------------------------- ELECTRIC UTILITIES (1.1%) Entergy 43,933(f) 3,354,724 Exelon 142,513(f) 7,727,055 FirstEnergy 141,478(f) 7,072,485 Hawaiian Electric Inds 20,076 435,248 Pinnacle West Capital 1,445 48,364 Portland General Electric 20,589 400,456 Southern 149,523 5,001,544 --------------- Total 24,039,876 - ------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT (0.3%) American Superconductor 10,335(b,f) 167,220 Emerson Electric 138,702(f) 4,535,556 Encore Wire 14,462 238,768 Energy Conversion Devices 10,231(b,f) 257,514 GrafTech Intl 25,000(b) 200,250 --------------- Total 5,399,308 - ------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (0.3%) Anixter Intl 14,075(b) 379,744 Arrow Electronics 34,712(b,f) 661,958 Avnet 35,573(b) 705,057 Benchmark Electronics 82,459(b) 968,069 Ingram Micro Cl A 49,358(b) 605,623 Insight Enterprises 47,127(b,f) 244,118 Jabil Circuit 365,781 2,128,844 L-1 Identity Solutions 16,308(b) 118,233 Methode Electronics 32,965(f) 152,298 SYNNEX 23,322(b,f) 357,993
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 13 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (CONT.) Tyco Electronics 65,715(c,f) $930,524 --------------- Total 7,252,461 - ------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (2.0%) Baker Hughes 96,051 3,200,419 BASiC Energy Services 52,684(b) 505,766 BJ Services 228,552 2,514,072 Complete Production Services 30,311(b) 194,294 ENSCO Intl 149,498 4,090,265 GulfMark Offshore 12,678(b) 303,511 Halliburton 554,230 9,560,469 Helmerich & Payne 14,600 327,916 Lufkin Inds 8,971 313,536 Nabors Inds 270,635(b,c,f) 2,963,453 Natl Oilwell Varco 200,633(b) 5,304,737 Newpark Resources 39,801(b) 167,562 Noble 139,883(f) 3,797,823 Oil States Intl 7,333(b) 134,267 Parker Drilling 149,991(b,f) 317,981 Patterson-UTI Energy 28,165 269,257 Pioneer Drilling 40,209(b,f) 199,839 Rowan Companies 84,835 1,074,011 Smith Intl 45,574 1,034,530 Tidewater 6,622 275,541 Unit 7,740(b,f) 193,036 Weatherford Intl 586,296(b) 6,466,845 --------------- Total 43,209,130 - ------------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (5.7%) Casey's General Stores 12,446(f) 264,478 Costco Wholesale 34,790(f) 1,566,594 Ingles Markets Cl A 17,188(f) 245,101 Nash Finch 8,093 348,242 Pantry 11,709(b,f) 194,721 SUPERVALU 121,694 2,134,513 SYSCO 119,812 2,670,609 Walgreen 242,493(f) 6,646,733 Wal-Mart Stores 2,280,221 107,444,013 Winn-Dixie Stores 44,499(b,f) 611,416 --------------- Total 122,126,420 - ------------------------------------------------------------------------------------- FOOD PRODUCTS (2.3%) Bunge 5,267(f) 226,165 Cal-Maine Foods 11,403(f) 308,793 Campbell Soup 93,880(f) 2,851,136 Darling Intl 42,476(b) 194,965 Dean Foods 78,795(b) 1,523,895 Diamond Foods 7,437(f) 190,982 Flowers Foods 33,535(f) 720,667 Fresh Del Monte Produce 16,371(b,c,f) 394,541 General Mills 405,435 23,981,480 Hershey 14,498(f) 540,485 J&J Snack Foods 7,348 256,519 JM Smucker 79,073(f) 3,570,146 Kellogg 100,341 4,383,898 Lance 11,712(f) 220,537 Ralcorp Holdings 17,045(b) 1,009,405 Sanderson Farms 8,480 306,806 Sara Lee 505,990 5,075,080 TreeHouse Foods 17,104(b,f) 451,375 Tyson Foods Cl A 189,641(f) 1,678,323 --------------- Total 47,885,198 - ------------------------------------------------------------------------------------- GAS UTILITIES (0.3%) Atmos Energy 8,037 197,308 Laclede Group 9,965(f) 452,311 New Jersey Resources 25,623(f) 1,027,226 Nicor 32,666 1,117,504 Piedmont Natural Gas 25,754 667,286 Questar 73,004(f) 2,480,677 --------------- Total 5,942,312 - ------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES (0.9%) Becton Dickinson & Co 94,068 6,835,922 Covidien 200,575(c,f) 7,690,045 CryoLife 19,446(b,f) 160,235 Cyberonics 11,792(b) 181,479 Greatbatch 9,720(b,f) 226,476 Immucor 7,503(b) 207,908 St. Jude Medical 32,370(b) 1,177,297 STERIS 35,623(f) 947,572 Thoratec 29,234(b,f) 846,909 Volcano 28,992(b) 378,925 --------------- Total 18,652,768 - ------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES (1.2%) Almost Family 4,966(b,f) 153,151
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 14 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) HEALTH CARE PROVIDERS & SERVICES (CONT.) AMERIGROUP 31,195(b) $872,524 Cardinal Health 93,991(g) 3,538,761 CIGNA 460,711 7,997,943 Coventry Health Care 16,443(b) 248,783 DaVita 39,752(b) 1,868,344 Gentiva Health Services 12,919(b) 326,592 HealthSpring 60,412(b) 1,052,377 Humana 19,622(b) 744,262 Kindred Healthcare 60,238(b) 817,430 Landauer 5,797(f) 397,558 LHC Group 6,103(b) 162,401 Magellan Health Services 26,612(b) 963,887 Molina Healthcare 21,468(b) 376,549 Omnicare 9,838(f) 275,070 Quest Diagnostics 71,854 3,545,995 Tenet Healthcare 606,612(b) 649,075 UnitedHealth Group 48,487 1,373,637 Universal American Financial 25,232(b,f) 249,040 Universal Health Services Cl B 3,693 139,780 --------------- Total 25,753,159 - ------------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE (1.3%) Bob Evans Farms 6,334(f) 111,225 Darden Restaurants 28,115(f) 737,175 Intl Game Technology 86,368(f) 915,501 McDonald's 426,834 24,764,910 Panera Bread Cl A 2,788(b,f) 130,980 Starwood Hotels & Resorts Worldwide 23,901(f) 361,383 Wyndham Worldwide 168,588 1,033,444 --------------- Total 28,054,618 - ------------------------------------------------------------------------------------- HOUSEHOLD DURABLES (0.6%) Black & Decker 39,371(f) 1,138,216 Centex 133,790 1,138,553 DR Horton 201,667 1,201,935 Garmin 15,642(c,f) 274,204 Harman Intl Inds 72,907(f) 1,173,074 KB Home 54,179(f) 578,090 Leggett & Platt 102,924(f) 1,285,521 Lennar Cl A 134,250 1,032,383 Natl Presto Inds 8,400 563,976 Newell Rubbermaid 40,565 327,765 NVR 401(b) 170,862 Pulte Homes 111,267 1,129,360 Ryland Group 16,765(f) 261,534 Snap-On 32,903 993,013 Stanley Works 8,721 272,618 Toll Brothers 6,345(b) 107,992 Whirlpool 51,835(f) 1,732,843 --------------- Total 13,381,939 - ------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (1.8%) Clorox 32,837 1,646,776 Kimberly-Clark 85,492 4,400,273 Procter & Gamble 576,352 31,411,184 --------------- Total 37,458,233 - ------------------------------------------------------------------------------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (0.2%) Calpine 8,553(b) 63,378 Constellation Energy Group 104,964(f) 2,760,553 Dynegy Cl A 466,585(b) 984,494 --------------- Total 3,808,425 - ------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES (1.3%) 3M 217,362 11,691,902 Seaboard 471 473,355 Textron 93,093 840,630 Tredegar 16,209 267,449 Tyco Intl 654,427(c,g) 13,756,055 --------------- Total 27,029,391 - ------------------------------------------------------------------------------------- INSURANCE (4.5%) AFLAC 147,289 3,418,578 Allied World Assurance Holdings 6,869(c) 258,961 Allstate 1,197,191(g) 25,943,129 American Financial Group 11,304 191,942 Aon 103,317 3,827,895 Arch Capital Group 6,237(b,c,f) 375,156 Aspen Insurance Holdings 66,891(c) 1,478,291 Assurant 56,546 1,492,814
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 15 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) INSURANCE (CONT.) Axis Capital Holdings 20,174(c) $489,421 Chubb 140,797(f) 5,995,136 Cincinnati Financial 12,519 274,542 Employers Holdings 36,927 499,992 Everest Re Group 5,516(c) 347,508 Hartford Financial Services Group 158,284(f) 2,083,017 HCC Insurance Holdings 14,014 328,068 IPC Holdings 33,187(c,f) 851,578 Marsh & McLennan Companies 440,703 8,518,789 Montpelier Re Holdings 71,187(c) 1,006,584 Odyssey Re Holdings 25,577(f) 1,203,398 PartnerRe 6,873(c) 450,388 Platinum Underwriters Holdings 45,109(c,f) 1,254,481 Progressive 1,242,638(b) 15,098,052 RenaissanceRe Holdings 8,305(c) 371,150 RLI 12,392 700,024 Travelers Companies 434,027 16,770,803 Validus Holdings 48,236(c,f) 1,100,746 WR Berkley 19,445 514,904 Zenith Natl Insurance 29,120 816,525 --------------- Total 95,661,872 - ------------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL (--%) NutriSystem 41,148(f) 530,398 PetMed Express 10,222(b) 147,606 Ticketmaster Entertainment 26,034(b) 154,902 --------------- Total 832,906 - ------------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES (0.1%) Ariba 38,540(b,f) 294,446 EarthLink 70,156(b,f) 528,274 ModusLink Global Solutions 71,828(b) 167,359 RealNetworks 67,312(b) 189,820 --------------- Total 1,179,899 - ------------------------------------------------------------------------------------- IT SERVICES (1.4%) Affiliated Computer Services Cl A 103,970(b) 4,768,064 Automatic Data Processing 202,289(f) 7,349,159 Ciber 52,635(b,f) 229,489 Computer Sciences 17,530(b) 645,805 Convergys 13,435(b,f) 101,166 CSG Systems Intl 22,398(b) 324,771 Integral Systems 17,756(b) 194,073 ManTech Intl Cl A 21,514(b,f) 1,153,796 MasterCard Cl A 39,332 5,340,499 NCI Cl A 8,433(b) 252,990 Paychex 127,898 3,106,642 Perot Systems Cl A 28,231(b,f) 366,721 SAIC 36,100(b,f) 712,614 Total System Services 21,811 276,127 Western Union 345,685(f) 4,722,057 --------------- Total 29,543,973 - ------------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS (0.4%) Brunswick 79,223(f) 220,240 Eastman Kodak 257,081(f) 1,164,577 Hasbro 117,369 2,832,114 JAKKS Pacific 40,483(b,f) 742,458 Mattel 253,773 3,601,039 --------------- Total 8,560,428 - ------------------------------------------------------------------------------------- LIFE SCIENCES TOOLS & SERVICES (0.1%) Luminex 15,394(b) 313,576 PerkinElmer 125,550(f) 1,584,440 Sequenom 19,260(b,f) 426,802 --------------- Total 2,324,818 - ------------------------------------------------------------------------------------- MACHINERY (1.2%) Cummins 100,950 2,420,781 Deere & Co 92,031 3,197,157 Dover 77,239(f) 2,184,319 Eaton 74,070 3,260,561 Flowserve 30,090 1,604,098 Force Protection 68,911(b) 414,155 FreightCar America 7,315 140,082 Gardner Denver 8,822(b) 192,055 Illinois Tool Works 154,278 5,038,720 Ingersoll-Rand Cl A 183,012(c) 2,966,625 Joy Global 9,129(f) 190,157 Manitowoc 146,341 804,876 Mueller Inds 51,804 1,042,296
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 16 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) MACHINERY (CONT.) NACCO Inds Cl A 8,300(f) $265,517 Pall 49,291 1,285,016 Terex 16,330(b,f) 193,347 Wabtec 28,621(f) 856,627 --------------- Total 26,056,389 - ------------------------------------------------------------------------------------- MEDIA (3.1%) CBS Cl B 608,287 3,479,402 Comcast Cl A 1,292,482(f) 18,934,862 DIRECTV Group 209,156(b) 4,580,516 DreamWorks Animation SKG Cl A 3,854(b) 84,595 Gannett 501,357 2,892,830 Marvel Entertainment 14,171(b) 389,844 Meredith 86,571(f) 1,382,539 New York Times Cl A 266,866(f) 1,326,324 News Corp Cl A 283,178(f) 1,809,507 Sirius XM Radio 15,046,171(b) 1,805,541 Time Warner Cable Cl A 59,461(b,f) 1,107,758 Virgin Media 5,987,186(e) 27,181,825 WorldSpace Cl A 263,942(b) 3,167 --------------- Total 64,978,710 - ------------------------------------------------------------------------------------- METALS & MINING (1.0%) AK Steel Holding 137,071(f) 1,106,163 Alcoa 48,086 374,590 AM Castle & Co 26,449(f) 223,759 Cliffs Natural Resources 14,804(f) 343,009 Compass Minerals Intl 5,450 327,927 Freeport-McMoRan Copper & Gold 42,418(f) 1,066,389 Horsehead Holding 25,185(b) 99,733 Kaiser Aluminum 8,262(f) 205,228 Nucor 314,082(f) 12,811,404 Olympic Steel 15,484 245,731 Reliance Steel & Aluminum 15,731(f) 348,127 RTI Intl Metals 9,465(b) 125,979 Timminco 510,164(b,c,f) 1,441,189 United States Steel 112,157(f) 3,368,074 Worthington Inds 22,881 230,183 --------------- Total 22,317,485 - ------------------------------------------------------------------------------------- MULTILINE RETAIL (0.7%) Big Lots 80,289(b,f) 1,079,887 Dillard's Cl A 53,223(f) 231,520 Dollar Tree 8,846(b) 377,813 Family Dollar Stores 175,923(f) 4,885,382 Fred's Cl A 33,104(f) 339,647 JC Penney 51,311(f) 859,459 Kohl's 113,484(b,f) 4,165,998 Macy's 83,729 749,375 Nordstrom 82,493(f) 1,046,836 Sears Holdings 8,132(b,f) 332,761 --------------- Total 14,068,678 - ------------------------------------------------------------------------------------- MULTI-UTILITIES (0.4%) CH Energy Group 3,442 174,096 DTE Energy 2,526 87,147 MDU Resources Group 10,592 210,675 PG&E 80,109 3,097,815 TECO Energy 120,193 1,443,518 Vectren 7,668 197,758 Wisconsin Energy 51,986(f) 2,317,536 --------------- Total 7,528,545 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (13.6%) Apache 176,609 13,245,675 Cabot Oil & Gas 55,530(f) 1,526,520 Chesapeake Energy 289,099 4,570,655 Chevron 1,385,499 97,705,390 Cimarex Energy 13,126(f) 326,050 Clayton Williams Energy 5,179(b) 206,124 Comstock Resources 20,170(b,f) 769,082 ConocoPhillips 584,206 27,767,311 CONSOL Energy 85,435 2,328,958 Contango Oil & Gas 5,181(b,f) 231,073 EOG Resources 112,266(f) 7,608,267 EXCO Resources 18,093(b) 183,463 Exxon Mobil 625,884 47,867,608 Frontier Oil 14,907(f) 212,872 Frontline 4,642(c,f) 132,343 Goodrich Petroleum 7,657(b) 221,287 Gran Tierra Energy 87,228(b,c) 246,855 Hess 127,604(f) 7,096,058 James River Coal 16,847(b) 228,445 Marathon Oil 412,818 11,241,034 Massey Energy 92,601 1,405,683
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) OIL, GAS & CONSUMABLE FUELS (CONT.) McMoRan Exploration 30,874(b) $206,547 Murphy Oil 111,186 4,912,197 Newfield Exploration 7,467(b) 143,292 Noble Energy 103,023 5,040,915 Occidental Petroleum 312,463(f) 17,044,857 Peabody Energy 136,760 3,419,000 Penn Virginia 11,931(f) 245,779 Petrohawk Energy 3,969(b,f) 78,229 PetroQuest Energy 24,474(b,f) 154,920 Pioneer Natural Resources 141,145 2,066,363 Plains Exploration & Production 7,946(b,f) 167,820 Range Resources 33,648 1,205,944 Rosetta Resources 43,026(b) 261,168 Southwestern Energy 218,764(b) 6,923,881 Spectra Energy 479,403 6,956,138 St. Mary Land & Exploration 10,285(f) 199,015 Stone Energy 22,251(b) 190,914 Sunoco 42,251(f) 1,957,066 Swift Energy 45,994(b,f) 704,628 Tesoro 77,808(f) 1,340,632 USEC 77,943(b) 396,730 VAALCO Energy 46,283(b,f) 347,585 Valero Energy 204,530 4,933,264 Western Refining 23,140 269,812 Williams Companies 202,174 2,860,762 World Fuel Services 7,441(f) 251,283 --------------- Total 287,399,494 - ------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (--%) Wausau Paper 39,145(f) 372,269 - ------------------------------------------------------------------------------------- PERSONAL PRODUCTS (0.1%) Estee Lauder Companies Cl A 87,587(f) 2,299,159 - ------------------------------------------------------------------------------------- PHARMACEUTICALS (12.8%) Abbott Laboratories 122,292 6,779,868 Eli Lilly & Co 283,187 10,426,945 Forest Laboratories 430,301(b) 10,774,737 Johnson & Johnson 1,636,996 94,438,299 King Pharmaceuticals 793,580(b) 6,935,889 Merck & Co 508,625 14,521,244 Mylan 123,475(b,f) 1,398,972 Par Pharmaceutical Companies 19,731(b) 242,889 Pfizer 7,072,211 103,112,837 Schering-Plough 434,393 7,627,941 Valeant Pharmaceuticals Intl 36,414(b,f) 790,184 ViroPharma 92,903(b) 1,114,836 VIVUS 21,562(b) 105,869 Watson Pharmaceuticals 46,739(b,f) 1,275,040 Wyeth 266,933 11,470,111 --------------- Total 271,015,661 - ------------------------------------------------------------------------------------- PROFESSIONAL SERVICES (0.1%) Administaff 15,452 325,883 Heidrick & Struggles Intl 15,205 231,116 Huron Consulting Group 4,487(b) 224,260 Kelly Services Cl A 32,477 294,242 Korn/Ferry Intl 21,781(b,f) 204,741 Manpower 8,767 249,509 TrueBlue 49,670(b,f) 422,195 --------------- Total 1,951,946 - ------------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS (REITS) (0.2%) American Campus Communities 11,424(f) 244,131 BRE Properties Cl A 3,175(f) 80,613 Capstead Mtge 26,825 286,223 Digital Realty Trust 3,469(f) 110,661 Equity Residential 144,231 3,451,449 Health Care REIT 5,787(f) 218,806 Investors Real Estate Trust 22,612 224,989 Liberty Property Trust 7,850 157,000 UDR 9,138(f) 107,190 --------------- Total 4,881,062 - ------------------------------------------------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT (--%) Avatar Holdings 8,745(b) 226,933 St. Joe 6,506(b,f) 156,469 --------------- Total 383,402 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 18 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) ROAD & RAIL (3.8%) Arkansas Best 33,461 $782,653 Burlington Northern Santa Fe 314,011 20,803,229 Con-way 3,857 84,970 CSX 417,739(f) 12,097,721 Genesee & Wyoming Cl A 10,684(b,f) 290,284 Kansas City Southern 6,630(b,f) 120,401 Norfolk Southern 452,461 17,356,404 Old Dominion Freight Line 10,109(b,f) 253,534 Ryder System 84,319 2,848,296 Saia 26,543(b) 283,745 Union Pacific 566,518 24,807,822 Werner Enterprises 18,060 270,900 --------------- Total 79,999,959 - ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (2.0%) Altera 281,189 4,324,687 Amkor Technology 141,788(b,f) 328,948 Atmel 32,711(b,f) 109,255 Infineon Technologies 806,777(b,c,f) 718,921 Infineon Technologies ADR 614,065(b,c) 528,096 Intel 1,283,714 16,559,910 Lam Research 26,944(b,f) 544,538 Linear Technology 203,498(f) 4,765,923 LSI 406,802(b,f) 1,293,630 MEMC Electronic Materials 152,983(b) 2,080,569 Microchip Technology 121,743 2,309,465 MKS Instruments 29,302(b,f) 411,693 Natl Semiconductor 114,937(f) 1,165,461 NVIDIA 21,718(b,f) 172,658 OmniVision Technologies 40,728(b) 272,470 Sigma Designs 26,295(b,f) 268,735 Silicon Image 79,753(b,f) 292,694 Spansion Cl A 1,738,038(b) 116,449 Teradyne 33,804(b) 162,597 Xilinx 290,253(f) 4,890,763 Zoran 33,505(b) 199,020 --------------- Total 41,516,482 - ------------------------------------------------------------------------------------- SOFTWARE (2.5%) BMC Software 41,845(b,f) 1,059,934 Compuware 240,368(b) 1,562,392 Intuit 47,822(b) 1,083,168 Microsoft 2,175,020 37,192,842 Oracle 659,566(b,f) 11,100,496 Quality Systems 8,208(f) 305,994 Red Hat 6,267(b,f) 91,812 Salesforce.com 47,195(b,f) 1,255,859 Take-Two Interactive Software 20,438 143,475 TeleCommunication Systems Cl A 31,053(b) 222,339 --------------- Total 54,018,311 - ------------------------------------------------------------------------------------- SPECIALTY RETAIL (4.8%) Aaron Rents 24,988(f) 546,238 Abercrombie & Fitch Cl A 121,228 2,163,920 Advance Auto Parts 4,756 155,664 Aeropostale 18,721(b,f) 395,200 American Eagle Outfitters 12,985 116,995 Asbury Automotive Group 38,005(f) 136,058 AutoNation 212,973(b,f) 1,976,389 AutoZone 23,871(b,f) 3,172,217 Barnes & Noble 14,133(f) 232,064 Bed Bath & Beyond 193,604(b,f) 4,497,421 Best Buy 125,015 3,502,920 Blockbuster Cl A 261,540(b,f) 333,464 Brown Shoe 35,184(f) 165,013 Cato Cl A 27,254(f) 360,570 Chico's FAS 96,855(b) 383,546 Children's Place Retail Stores 22,270(b,f) 418,899 Collective Brands 48,547(b) 517,996 Dress Barn 37,279(b,f) 321,345 Finish Line Cl A 51,549 244,858 Foot Locker 60,996(f) 448,931 Gap 290,846 3,280,743 Group 1 Automotive 34,272(f) 341,692 Home Depot 2,397,534 51,618,906 Hot Topic 49,620(b,f) 423,755 Jo-Ann Stores 18,977(b,f) 242,336
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 19 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) SPECIALTY RETAIL (CONT.) Jos A Bank Clothiers 19,777(b,f) $543,076 Limited Brands 133,601 1,058,120 Lowe's Companies 749,982(g) 13,702,170 Men's Wearhouse 37,223(f) 433,648 Monro Muffler Brake 6,976 169,308 Office Depot 499,362(b) 1,078,622 PetSmart 9,435(f) 177,095 RadioShack 165,444(f) 1,895,988 Rent-A-Center 43,584(b) 647,222 Ross Stores 9,891(f) 290,993 Sherwin-Williams 45,446 2,170,047 Stage Stores 34,037 243,365 Staples 100,397 1,600,328 Tiffany & Co 51,022(f) 1,058,707 Urban Outfitters 3,466(b,f) 54,000 Wet Seal Cl A 86,206(b,f) 224,998 --------------- Total 101,344,827 - ------------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS (0.7%) Carter's 26,542(b,f) 450,949 Coach 320,745(b,f) 4,682,876 Jones Apparel Group 143,519 496,576 Liz Claiborne 253,530(f) 557,766 Nike Cl B 79,319 3,589,185 Polo Ralph Lauren 27,092(f) 1,111,585 Skechers USA Cl A 24,247(b,f) 241,500 Steven Madden 16,880(b) 293,374 VF 65,686(f) 3,679,730 --------------- Total 15,103,541 - ------------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE (0.2%) Capitol Federal Financial 2,312 95,717 First Niagara Financial Group 42,786 558,785 Freddie Mac 112,515 66,946 Hudson City Bancorp 224,552 2,604,804 NewAlliance Bancshares 12,085(f) 132,814 Ocwen Financial 34,121(b) 303,677 People's United Financial 22,442 367,151 Trustco Bank NY 23,917 160,244 United Financial Bancorp 17,441 239,116 --------------- Total 4,529,254 - ------------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS (0.3%) Beacon Roofing Supply 27,278(b) 347,249 Fastenal 74,300(f) 2,539,574 GATX 3,343(f) 80,566 Rush Enterprises Cl A 27,585(b,f) 251,024 Watsco 12,534 414,249 WESCO Intl 16,458(b) 303,156 WW Grainger 37,197(f) 2,713,521 --------------- Total 6,649,339 - ------------------------------------------------------------------------------------- WATER UTILITIES (--%) Aqua America 5,838 121,080 California Water Service Group 4,243 184,571 --------------- Total 305,651 - ------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (0.2%) Sprint Nextel 1,283,585(b) 3,119,112 USA Mobility 37,213(b) 393,341 --------------- Total 3,512,453 - ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $2,692,173,898) $2,059,825,946 - ------------------------------------------------------------------------------------- MONEY MARKET FUND (3.1%) SHARES VALUE(a) RiverSource Short-Term Cash Fund, 0.47% 65,890,575(h) $65,890,575 - ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $65,890,575) $65,890,575 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 20 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (9.6%) SHARES VALUE(a) CASH COLLATERAL REINVESTMENT FUND JPMorgan Prime Money Market Fund 203,391,339 $203,391,339 - ----------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $203,391,339) $203,391,339 - ----------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $2,961,455,812)(i) $2,329,107,860 =================================================================
INVESTMENTS IN DERIVATIVES FUTURES CONTRACTS OUTSTANDING AT JAN. 31, 2009
NUMBER OF UNREALIZED CONTRACTS NOTIONAL EXPIRATION APPRECIATION CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION) - ------------------------------------------------------------------------------------ Russell 2000 Mini Index 234 $10,356,840 March 2009 $(124,593) S&P 500 Index 285 58,603,125 March 2009 (7,248,513) - ------------------------------------------------------------------------------------ Total $(7,373,106) - ------------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (a) Securities are valued by using procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At Jan. 31, 2009, the value of foreign securities represented 1.9% of net assets. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security may be determined to be liquid under guidelines established by the Fund's Board of Directors. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Jan. 31, 2009, the value of these securities amounted to $2,109,750 or 0.1% of net assets. (e) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Jan. 31, 2008, is as follows:
ACQUISITION SECURITY DATES COST ---------------------------------------------------------------------------- Apollo Management LP* 08-02-07 thru 09-30-08 $30,730,942 Virgin Media 07-26-07 thru 08-06-08 101,975,398
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 21 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (f) At Jan. 31, 2009, security was partially or fully on loan. See Note 5 to the financial statements. (g) At Jan. 31, 2009, investments in securities included securities valued at $11,992,828 that were partially pledged as collateral to cover initial margin deposits on open stock index futures contracts. (h) Affiliated Money Market Fund -- See Note 7 to the financial statements. The rate shown is the seven-day current annualized yield at Jan. 31, 2009. (i) At Jan. 31, 2009, the cost of securities for federal income tax purposes was approximately $2,961,456,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $44,376,000 Unrealized depreciation (676,724,000) ------------------------------------------------------------ Net unrealized depreciation $(632,348,000) ------------------------------------------------------------
The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. - -------------------------------------------------------------------------------- 22 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) FAIR VALUE MEASUREMENTS Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to implement more uniform reporting relating to the fair valuation of securities for financial statement purposes. Mutual funds are required to implement the requirements of this standard for fiscal years beginning after Nov. 15, 2007. While uniformity of presentation is the objective of the standard, it is likely that there may be a range of practices utilized and it may be some period of time before industry practices become more uniform. For this reason care should be exercised in interpreting this information and/or using it for comparison with other mutual funds. Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below: - Level 1 -- quoted prices in active markets for identical securities - Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.) - Level 3 -- significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) Observable inputs are those based on market data obtained from sources independent of the fund, and unobservable inputs reflect the fund's own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. The following table is a summary of the inputs used to value the Fund's investments as of Jan. 31, 2009:
FAIR VALUE AT JAN. 31, 2009 ----------------------------------------------------------- LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL - ------------------------------------------------------------------------------------ Investments in securities $2,329,107,860 $-- $-- $2,329,107,860 Other financial instruments* (7,373,106) -- -- (7,373,106) - ------------------------------------------------------------------------------------ Total $2,321,734,754 $-- $-- $2,321,734,754 - ------------------------------------------------------------------------------------
* Other financial instruments are derivative instruments, such as futures, which are valued at the unrealized appreciation/depreciation on the instrument. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 23 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at riversource.com/funds. - -------------------------------------------------------------------------------- 24 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES ------------------------------------------- JAN. 31, 2009 (UNAUDITED)
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $2,692,173,898) $ 2,059,825,946 Affiliated money market fund (identified cost $65,890,575) 65,890,575 Investments of cash collateral received for securities on loan (identified cost $203,391,339) 203,391,339 - ---------------------------------------------------------------------------------- Total investments in securities (identified cost $2,961,455,812) 2,329,107,860 Cash 22,382 Foreign currency holdings (identified cost $652) 637 Capital shares receivable 437,979 Dividends receivable 3,595,532 Receivable for investment securities sold 130,663,058 - ---------------------------------------------------------------------------------- Total assets 2,463,827,448 - ---------------------------------------------------------------------------------- LIABILITIES Capital shares payable 2,380,003 Payable for investment securities purchased 128,505,375 Payable upon return of securities loaned 203,391,339 Variation margin payable on futures contracts 1,729,515 Accrued investment management services fees 34,994 Accrued distribution fees 19,269 Accrued transfer agency fees 23,709 Accrued administrative services fees 3,200 Accrued plan administration services fees 495 Other accrued expenses 656,515 - ---------------------------------------------------------------------------------- Total liabilities 336,744,414 - ---------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 2,127,083,034 - ---------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 8,112,130 Additional paid-in capital 4,419,558,829 Excess of distributions over net investment income (11,741,239) Accumulated net realized gain (loss) (1,649,118,429) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (639,728,257) - ---------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 2,127,083,034 - ---------------------------------------------------------------------------------- *Including securities on loan, at value $ 190,109,786 - ----------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 25 STATEMENT OF ASSETS AND LIABILITIES (continued) ------------------------------- JAN. 31, 2009 (UNAUDITED)
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $1,767,428,770 673,576,511 $2.62(1) Class B $ 231,221,979 89,152,064 $2.59 Class C $ 11,202,974 4,332,812 $2.59 Class I $ 28,634,991 10,885,950 $2.63 Class R2 $ 2,177 822 $2.65 Class R3 $ 2,175 822 $2.65 Class R4 $ 70,551,113 26,500,389 $2.66 Class R5 $ 18,038,855 6,763,671 $2.67 - -------------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $2.78. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 5.75%. The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 26 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT STATEMENT OF OPERATIONS ------------------------------------------------------- JAN. 31, 2009 (UNAUDITED)
INVESTMENT INCOME Income: Dividends $ 38,823,381 Income distributions from affiliated money market fund 736,103 Fee income from securities lending 180,077 Less foreign taxes withheld (17,909) - ---------------------------------------------------------------------------------- Total income 39,721,652 - ---------------------------------------------------------------------------------- Expenses: Investment management services fees 5,880,940 Distribution fees Class A 3,118,876 Class B 1,601,985 Class C 77,364 Class R2 7 Class R3 4 Transfer agency fees Class A 3,943,510 Class B 546,009 Class C 25,521 Class R2 1 Class R3 1 Class R4 32,997 Class R5 737 Administrative services fees 771,189 Plan administration services fees Class R2 4 Class R3 4 Class R4 164,984 Compensation of board members 47,231 Custodian fees 199,560 Printing and postage 580,700 Registration fees 17,240 Professional fees 42,299 Other 30,173 - ---------------------------------------------------------------------------------- Total expenses 17,081,336 Expenses waived/reimbursed by the Investment Manager and its affiliates (3,023,996) Earnings and bank fee credits on cash balances (27,696) - ---------------------------------------------------------------------------------- Total net expenses 14,029,644 - ---------------------------------------------------------------------------------- Investment income (loss) -- net 25,692,008 - ----------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 27 STATEMENT OF OPERATIONS (continued) ------------------------------------------- JAN. 31, 2009 (UNAUDITED)
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions $(1,237,189,207) Foreign currency transactions 38,078,697 Futures contracts (24,847,973) Options contracts written (4,792,289) - ---------------------------------------------------------------------------------- Net realized gain (loss) on investments (1,228,750,772) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (298,686,651) - ---------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (1,527,437,423) - ---------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(1,501,745,415) - ----------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 28 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2009 JULY 31, 2008 OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 25,692,008 $ 65,487,946 Net realized gain (loss) on investments (1,228,750,772) (20,362,259) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (298,686,651) (865,038,637) - ---------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (1,501,745,415) (819,912,950) - ---------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (73,410,953) (36,389,921) Class B (5,489,205) -- Class C (317,848) -- Class I (1,247,239) (866,696) Class R2 (88) (32) Class R3 (97) (44) Class R4 (4,396,983) (2,588,075) Class R5 (105) -- Net realized gain Class A (11,674,647) (503,800,045) Class B (1,552,503) (85,854,373) Class C (75,828) (3,230,993) Class I (166,927) (7,554,314) Class R2 (14) (539) Class R3 (14) (539) Class R4 (654,100) (31,125,821) Class R5 (14) (539) - ---------------------------------------------------------------------------------------------------- Total distributions (98,986,565) (671,411,931) - ----------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 29 STATEMENTS OF CHANGES IN NET ASSETS (continued) -------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2009 JULY 31, 2008 CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 38,712,056 $ 211,484,181 Class B shares 8,833,689 33,647,160 Class C shares 1,029,455 2,226,679 Class I shares 6,815,859 10,561,864 Class R4 shares 11,759,682 34,516,064 Class R5 shares 20,568,962 -- Reinvestment of distributions at net asset value Class A shares 82,326,997 523,659,899 Class B shares 6,986,555 85,230,086 Class C shares 385,379 3,174,765 Class I shares 1,413,924 8,419,823 Class R4 shares 5,050,991 33,713,417 Payments for redemptions Class A shares (407,989,877) (1,190,365,828) Class B shares (48,792,757) (315,875,480) Class C shares (2,783,016) (8,714,618) Class I shares (848,883) (30,081,251) Class R4 shares (55,775,946) (150,506,498) Class R5 shares (360,970) (26,533,250) - ---------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (332,667,900) (775,442,987) - ---------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (1,933,399,880) (2,266,767,868) Net assets at beginning of period 4,060,482,914 6,327,250,782 - ---------------------------------------------------------------------------------------------------- Net assets at end of period $ 2,127,083,034 $ 4,060,482,914 - ---------------------------------------------------------------------------------------------------- Undistributed (excess of distributions over) net investment income $ (11,741,239) $ 47,429,271 - ----------------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 30 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT FINANCIAL HIGHLIGHTS ----------------------------------------------------------- CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005 Net asset value, beginning of period $4.52 $6.05 $5.40 $5.26 $4.64 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03(b) .07(b) .06(b) .06 .04 Net gains (losses) (both realized and unrealized) (1.80) (.90) .79 .12 .61 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.77) (.83) .85 .18 .65 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.11) (.05) (.06) (.04) (.02) Distributions from realized gains (.02) (.65) (.14) -- (.01) - -------------------------------------------------------------------------------------------------------------- Total distributions (.13) (.70) (.20) (.04) (.03) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.62 $4.52 $6.05 $5.40 $5.26 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1,767 $3,389 $5,039 $5,461 $1,030 - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.07%(e) 1.03% 1.09% 1.06% 1.16% - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) .86%(e) .97% 1.09% 1.06% 1.11% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.78%(e) 1.31% .99% 1.08% .79% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 80% 68% 66% 116% 128% - -------------------------------------------------------------------------------------------------------------- Total return(h) (39.47%)(i) (15.40%) 15.79% 3.51% 13.99% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Jan. 31, 2009 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 0.96% for the year ended July 31, 2008. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 31 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------- CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005 Net asset value, beginning of period $4.41 $5.91 $5.29 $5.15 $4.56 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02(b) .03(b) .01(b) .02 -- Net gains (losses) (both realized and unrealized) (1.76) (.88) .76 .12 .60 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.74) (.85) .77 .14 .60 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) -- (.01) -- -- Distributions from realized gains (.02) (.65) (.14) -- (.01) - -------------------------------------------------------------------------------------------------------------- Total distributions (.08) (.65) (.15) -- (.01) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.59 $4.41 $5.91 $5.29 $5.15 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $231 $433 $833 $1,169 $472 - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.84%(e) 1.79% 1.86% 1.84% 1.93% - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) 1.63%(e) 1.73% 1.86% 1.84% 1.88% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.01%(e) .56% .23% .28% .02% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 80% 68% 66% 116% 128% - -------------------------------------------------------------------------------------------------------------- Total return(h) (39.64%)(i) (15.97%) 14.71% 2.72% 13.09% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Jan. 31, 2009 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 1.72% for the year ended July 31, 2008. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 32 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007 2006 2005 Net asset value, beginning of period $4.41 $5.92 $5.30 $5.16 $4.57 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02(b) .03(b) .01(b) .02 -- Net gains (losses) (both realized and unrealized) (1.75) (.89) .77 .12 .60 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.73) (.86) .78 .14 .60 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) -- (.02) -- -- Distributions from realized gains (.02) (.65) (.14) -- (.01) - -------------------------------------------------------------------------------------------------------------- Total distributions (.09) (.65) (.16) -- (.01) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.59 $4.41 $5.92 $5.30 $5.16 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $11 $21 $32 $35 $9 - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.83%(e) 1.79% 1.86% 1.84% 1.93% - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) 1.62%(e) 1.73% 1.86% 1.84% 1.88% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.03%(e) .55% .23% .28% .02% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 80% 68% 66% 116% 128% - -------------------------------------------------------------------------------------------------------------- Total return(h) (39.39%)(i) (16.11%) 14.80% 2.71% 13.06% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Jan. 31, 2009 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 1.72% for the year ended July 31, 2008. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 33 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------- CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(i) 2008 2007 2006 2005 Net asset value, beginning of period $4.55 $6.09 $5.44 $5.31 $4.67 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04(b) .09(b) .09(b) .10 .05 Net gains (losses) (both realized and unrealized) (1.81) (.90) .78 .12 .63 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.77) (.81) .87 .22 .68 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.13) (.08) (.08) (.09) (.03) Distributions from realized gains (.02) (.65) (.14) -- (.01) - -------------------------------------------------------------------------------------------------------------- Total distributions (.15) (.73) (.22) (.09) (.04) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.63 $4.55 $6.09 $5.44 $5.31 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $29 $39 $68 $105 $43 - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) .51%(e) .57% .63% .59% .70% - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) .44%(e) .57% .63% .59% .65% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.21%(e) 1.74% 1.44% 1.53% 1.24% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 80% 68% 66% 116% 128% - -------------------------------------------------------------------------------------------------------------- Total return (39.23%)(h) (15.02%) 16.13% 4.06% 14.64% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Jan. 31, 2009 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 0.56% for the year ended July 31, 2008. (h) Not annualized. (i) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 34 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $4.55 $6.08 $6.08 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .03 .06 .03 Net gains (losses) (both realized and unrealized) (1.81) (.90) .19 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.78) (.84) .22 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.10) (.04) (.08) Distributions from realized gains (.02) (.65) (.14) - -------------------------------------------------------------------------------------------------------------- Total distributions (.12) (.69) (.22) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.65 $4.55 $6.08 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.28%(f) 1.39% 1.44%(f) - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) .98%(f) 1.14% 1.44%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.70%(f) 1.15% .67%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 80% 68% 66% - -------------------------------------------------------------------------------------------------------------- Total return (39.26%)(i) (15.45%) 3.71%(i) - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 0.96% for the six months ended Jan. 31, 2009. Earnings and bank fee credits for the year ended July 31, 2008 were less than 0.01% of average net assets. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 35 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------- CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $4.56 $6.09 $6.08 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .03 .08 .04 Net gains (losses) (both realized and unrealized) (1.80) (.90) .19 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.77) (.82) .23 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.12) (.06) (.08) Distributions from realized gains (.02) (.65) (.14) - -------------------------------------------------------------------------------------------------------------- Total distributions (.14) (.71) (.22) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.65 $4.56 $6.09 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.05%(f) 1.14% 1.19%(f) - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) .73%(f) .89% 1.19%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.94%(f) 1.40% .92%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 80% 68% 66% - -------------------------------------------------------------------------------------------------------------- Total return (39.17%)(i) (15.19%) 3.88%(i) - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 0.71% for the six months ended Jan. 31, 2009. Earnings and bank fee credits for the year ended July 31, 2008 were less than 0.01% of average net assets. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 36 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(i) 2008 2007 2006 2005 Net asset value, beginning of period $4.58 $6.13 $5.47 $5.28 $4.66 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04(b) .08(b) .07(b) .09 .04 Net gains (losses) (both realized and unrealized) (1.82) (.92) .79 .12 .61 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.78) (.84) .86 .21 .65 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.12) (.06) (.06) (.02) (.02) Distributions from realized gains (.02) (.65) (.14) -- (.01) - -------------------------------------------------------------------------------------------------------------- Total distributions (.14) (.71) (.20) (.02) (.03) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.66 $4.58 $6.13 $5.47 $5.28 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $71 $179 $330 $1,069 $-- - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) .80%(e) .87% .90% .81% .95% - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) .72%(e) .82% .89% .81% .90% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.97%(e) 1.46% 1.14% 1.41% 1.08% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 80% 68% 66% 116% 128% - -------------------------------------------------------------------------------------------------------------- Total return (39.24%)(h) (15.40%) 15.80% 4.03% 14.06% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Jan. 31, 2009 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 0.81% for the year ended July 31, 2008. (h) Not annualized. (i) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 37 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------- CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $4.61 $6.11 $6.08 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .01 .08 .06 Net gains (losses) (both realized and unrealized) (1.80) (.93) .19 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.79) (.85) .25 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.13) -- (.08) Distributions from realized gains (.02) (.65) (.14) - -------------------------------------------------------------------------------------------------------------- Total distributions (.15) (.65) (.22) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.67 $4.61 $6.11 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $18 $-- $25 - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) .58%(f) .67% .70%(f) - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) .45%(f) .67% .70%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.09%(f) 1.21% 1.44%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 80% 68% 66% - -------------------------------------------------------------------------------------------------------------- Total return (39.21%)(i) (15.38%) 4.24%(i) - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits for the six months ended Jan. 31, 2009 were less than 0.01% of average net assets. The ratio of net expenses after expense waiver/reimbursement and after reduction for earnings and bank fee credits was 0.66% for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 38 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- (UNAUDITED AS TO JAN. 31, 2009) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RiverSource Large Cap Equity Fund (the Fund) is a series of RiverSource Large Cap Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Large Cap Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board of Directors (the Board). The Fund invests primarily in equity securities of companies with a market capitalization greater than $5 billion at the time of purchase. The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4 and Class R5 shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a front-end sales charge or CDSC and are offered to qualifying institutional investors. At Jan. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the Investment Manager) and the RiverSource affiliated funds-of-funds, owned 100% of Class I shares and the Investment Manager owned 100% of Class R2 and Class R3 shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- VALUATION OF SECURITIES Effective Aug. 1, 2008, the Fund adopted Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a hierarchy for measuring fair value, and requires additional disclosures about the inputs used to develop the measurements of fair value and the effect of certain measurements reported in the Statement of Operations for a fiscal period. There was no impact to the Fund's net assets or results of operations upon adoption. The fair valuation measurements disclosure can be found following the Notes to Portfolio of Investments. All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock - -------------------------------------------------------------------------------- 40 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- Exchange. Swap transactions are valued through an authorized pricing service, broker, or an internal model. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost, which approximates fair value. ILLIQUID SECURITIES At Jan. 31, 2009, investments in securities included issues that are illiquid which the Fund currently limits to 15% of net assets, at market value, at the time of purchase. The aggregate value of such securities at Jan. 31, 2009 was $29,291,575 representing 1.38% of net assets. Certain illiquid securities may be valued by management at fair value according to procedures approved, in good faith, by the Board. According to Board guidelines, certain unregistered securities are determined to be liquid and are not included within the 15% limitation specified above. Assets are liquid if they can be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the asset is valued by the Fund. OPTION TRANSACTIONS To produce incremental earnings, protect gains, and facilitate buying and selling of securities for investments, the Fund may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. Cash collateral may be collected by the Fund to secure certain over-the-counter options (OTC options) trades. Cash collateral held by the Fund for such option trades must be returned to the counterparty upon closure, exercise or expiration of the contract. The Fund also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. Option contracts, including OTC option contracts, with no readily available market value are valued using quotations obtained from independent brokers as of the close of the New York Stock Exchange. The Fund will realize a gain or loss when the option - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. At Jan. 31, 2009, the Fund had no outstanding option contracts. FUTURES TRANSACTIONS To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Futures and options on futures are valued daily based upon the last sale price at the close of the market on the principal exchange on which they are traded. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At Jan. 31, 2009, foreign currency holdings were entirely comprised of European monetary units. The Fund may enter into forward foreign currency contracts for operational purposes. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the - -------------------------------------------------------------------------------- 42 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- counterparty will not complete its contract obligations. At Jan. 31, 2009, the Fund had no outstanding forward foreign currency contracts. TOTAL RETURN EQUITY SWAP TRANSACTIONS The Fund may enter into swap agreements to gain exposure to the total return on a specified security, basket of securities or security indexes during the specified period, in return for periodic payments based on a fixed or variable interest rate. Total return swap agreements may be used to obtain exposure to a security or market without owning or taking physical custody of such security or market. Under the terms of a total return equity swap agreement, payments made by the Fund or the counterparty are based on the total return of a particular reference asset or assets (such as an equity security, a combination of such securities, or an index). That is, one party agrees to pay another party the return on a stock, basket of stocks, or stock index in return for a specified interest rate. The notional amounts of swap contracts are not recorded in the financial statements. Swap contracts are valued daily, and the change in value is recorded as unrealized appreciation (depreciation) until the termination of the swap, at which time realized gain (loss) is recorded. Payments received or made are recorded as realized gains (losses). Swap agreements may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. It may not be possible for the Fund to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. Total return swaps are subject to the risk associated with the investment in the underlying securities and also the risk of the counterparty not fulfilling its obligations under the agreement. At Jan. 31, 2009, the Fund had no outstanding total return equity swap contracts. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund's contracts with its service 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. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all the tax returns filed for the last three years. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of futures and options contracts, foreign currency transactions, recognition of unrealized appreciation (depreciation) for certain derivative investments, re-characterization of REIT distributions, investments in partnerships, post-October losses and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. RECENT ACCOUNTING PRONOUNCEMENTS The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS 133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45". The amendments to FSP FAS 133-1 and FIN 45-4 require enhanced disclosures about a fund's derivatives and guarantees. Funds are required to provide enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, (c) how derivative instruments and related hedged items affect a fund's financial position, financial performance, and cash flows and (d) the current status of the payment/performance risk of the credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require additional disclosures about the current status of the payment/performance risk of a guarantee. At Jan. 31, 2009, the Fund did not own nor was it a party to any credit derivative contracts within the scope of these amendments. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133," which requires enhanced disclosures about a fund's derivative and hedging activities. SFAS 161 - -------------------------------------------------------------------------------- 44 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- is effective for financial statements issued for fiscal years and interim periods beginning after Nov. 15, 2008. As of Jan. 31, 2009, management does not believe the adoption of SFAS 161 will impact the financial statement amounts; however, additional footnote disclosures may be required about the use of derivative instruments and hedging items. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. SECURITY LITIGATION SETTLEMENTS Litigation proceeds from Enron Corp. related to portfolio securities no longer included in the portfolio are recorded as realized gains. Proceeds received during the six months ended Jan. 31, 2009 were $589,084. 2. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets that declines from 0.60% to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment determined monthly by measuring the percentage difference over a rolling 12-month period between the annualized performance of one Class A share of the Fund and the annualized performance of the Lipper Large-Cap Core Funds Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The adjustment decreased the management fee by $2,700,703 for the six months ended Jan. 31, 2009. The management fee for the six months ended Jan. 31, 2009 was 0.39% of the Fund's average daily net assets, including the adjustment under the terms of the performance incentive arrangement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's average daily net assets that declines from 0.06% to 0.03% annually as the Fund's assets increase. The fee for the six months ended Jan. 31, 2009 was 0.05% of the Fund's average daily net assets. OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the six months ended Jan. 31, 2009, other expenses paid to this company were $14,607. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for Class C for this service. The Fund also pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R2, Class R3, Class R4 and Class R5 shares. The Transfer Agent charges an annual fee of $5 per inactive account, charged on a pro rata basis for 12 months from the date the account becomes inactive. These fees are included in the transfer agency fees on the Statement of Operations. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R2, Class R3 and Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. - -------------------------------------------------------------------------------- 46 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- DISTRIBUTION FEES The Fund has an agreement with RiverSource Distributors, Inc. and RiverSource Fund Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class R3 shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, up to 0.75% of the fee is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed ("unreimbursed expense") was approximately $11,663,000 and $169,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of Jan. 31, 2009, and may be recovered from future payments under the distribution plan or CDSC. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGES Sales charges received by the Distributor for distributing Fund shares were $970,964 for Class A, $188,560 for Class B and $799 for Class C for the six months ended Jan. 31, 2009. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the six months ended Jan. 31, 2009, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds*), including the adjustment under the terms of a performance incentive arrangement, were as follows: Class A............................................. 0.86% Class B............................................. 1.63 Class C............................................. 1.62 Class I............................................. 0.44 Class R2............................................ 0.98 Class R3............................................ 0.73 Class R4............................................ 0.72 Class R5............................................ 0.45
- -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- The waived/reimbursed fees and expenses for the transfer agency fees at the class level were as follows: Class A......................................... $1,810,132 Class B......................................... 237,081 Class C......................................... 11,378 Class R4........................................ 12,742
The waived/reimbursed fees and expenses for the plan administration services fees at the class level were as follows: Class R2........................................... $ 4 Class R3........................................... 4 Class R4........................................... 917
The management fees waived/reimbursed at the Fund level were $951,738. The Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses until July 31, 2009, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the Fund's average daily net assets: Class A............................................. 1.04% Class B............................................. 1.81 Class C............................................. 1.80 Class I............................................. 0.62 Class R2............................................ 1.42 Class R3............................................ 1.17 Class R4............................................ 0.90 Class R5............................................ 0.67
* 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. BANK FEE CREDITS During the six months ended Jan. 31, 2009, the Fund's transfer agency fees were reduced by $27,696 as a result of bank fee credits from overnight cash balances. CUSTODIAN FEES Effective Dec. 15, 2008, the fund pays custodian fees to JPMorgan Chase Bank, N.A. Prior to Dec. 15, 2008, the Fund paid custodian fees amounting to $160,746 to Ameriprise Trust Company, a subsidiary of Ameriprise Financial. - -------------------------------------------------------------------------------- 48 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $2,374,454,240 and $2,722,612,153, respectively, for the six months ended Jan. 31, 2009. 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, 2009 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------- Class A 11,615,736 28,486,839 (117,055,540) (76,952,965) Class B 2,675,934 2,442,851 (14,086,006) (8,967,221) Class C 304,494 135,221 (808,411) (368,696) Class I 2,085,809 489,247 (252,037) 2,323,019 Class R4 3,446,396 1,723,888 (17,774,327) (12,604,043) Class R5 6,886,248 -- (123,399) 6,762,849 - ---------------------------------------------------------------------------------- YEAR ENDED JULY 31, 2008 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------- Class A 43,972,212 98,990,509 (225,955,886) (82,993,165) Class B 6,351,542 16,421,985 (65,543,343) (42,769,816) Class C 430,927 611,708 (1,682,294) (639,659) Class I 2,016,152 1,585,654 (6,198,548) (2,596,742) Class R4 6,389,837 6,289,817 (27,462,232) (14,782,578) Class R5 -- -- (4,152,231) (4,152,231) - ----------------------------------------------------------------------------------
5. LENDING OF PORTFOLIO SECURITIES Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending Agreement ("the Agreement") with JPMorgan Chase Bank, National Association ("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers on behalf of the Fund. Pursuant to the Agreement, all loaned securities are initially collateralized in an amount equivalent to 102% (for securities denominated in U.S. dollars) or 105% (for all other securities) of the value of the loaned securities, including accrued interest in the case of fixed income securities. Collateral is maintained over the life of the loan thereafter in an amount not less than 100% of the market value of loaned - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 49 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- securities, as determined at the close of each business day, except to the extent that a collateral shortfall is due to a diminution in the market value of authorized investments in which cash collateral is invested. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Collateral is either in the form of cash or U.S. government securities. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed on the Portfolio of Investments and the value of cash collateral received at period end is disclosed on the Statement of Assets and Liabilities along with the related obligation to return the collateral upon return of the securities loaned. At Jan. 31, 2009, securities valued at $190,109,786 were on loan secured by cash collateral of $203,391,339 invested in short-term securities or cash equivalents. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Income of $98,787 earned from securities lending from Dec. 1, 2008 through Jan. 31, 2009 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Funds or the borrower at any time, and are, therefore, not considered to be illiquid investments. Prior to Dec. 1, 2008, RiverSource Investments, LLC served as securities lending agent for the Fund under the Securities Lending Agency Agreement pursuant to which the Fund agreed to reimburse RiverSource Investments, LLC for expenses incurred by it in connection with the lending program. Expenses paid to RiverSource Investments, LLC as securities lending agent were $8,577 through Nov. 30, 2008 and are included in other expenses on the Statement of Operations. Cash collateral received on loaned securities had been invested in an affiliated money market fund. Income of $81,290 earned from securities lending from Aug. 1, 2008 through Nov. 30, 2008 is included in the Statement of Operations. - -------------------------------------------------------------------------------- 50 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- 6. OPTIONS CONTRACTS WRITTEN Contracts and premiums associated with options contracts written during the six months ended Jan. 31, 2009, are as follows:
PUTS CALLS CONTRACTS PREMIUMS CONTRACTS PREMIUMS - --------------------------------------------------------------------------- Balance July 31, 2008 3,427 $ 2,454,994 16,411 $ 1,328,757 Opened 21,362 4,207,566 75,902 6,191,236 Closed (24,789) (6,662,560) (44,412) (5,545,057) Expired -- -- (47,901) (1,974,936) - --------------------------------------------------------------------------- Balance Jan. 31, 2009 -- $ -- -- $ -- - ---------------------------------------------------------------------------
7. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. The cost of the Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term Cash fund aggregated $869,988,866 and $928,435,784, respectively, for the six months ended Jan. 31, 2009. The income distributions received with respect to the Fund's investment in RiverSource Short-Term Cash Fund can be found in the Statement of Operations and the Fund's invested balance in RiverSource Short- Term Cash Fund at Jan. 31, 2009, can be found in the Portfolio of Investments. 8. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 16, 2008, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permits collective borrowings up to $475 million. The borrowers shall have the right, upon written notice to the Administrative Agent to request an increase of up to $175 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $650 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.75%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 51 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro rata share of 0.02% of the amount of the credit facility. The Fund had no borrowings during the six months ended Jan. 31, 2009. Under the prior credit facility which was effective until Oct. 15, 2008, the Fund had entered into a revolving credit facility with a syndicate of banks headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility agreement, which was a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permitted collective borrowings up to $500 million. Interest was charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.30%. Each borrowing under the credit facility matured no later than 60 days after the date of borrowing. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. 9. CAPITAL LOSS CARRY-OVER AND POST-OCTOBER LOSS For federal income tax purposes, the Fund had a capital loss carry-over of $91,172,850 at July 31, 2008, that if not offset by capital gains will expire as follows:
2009 2010 2011 $60,717,128 $20,982,455 $9,473,267
Because the measurement periods for a regulated investment company's income are different for excise tax purposes versus income tax purposes, special rules are in place to protect the amount of earnings and profits needed to support excise tax distributions. As a result, the Fund is permitted to treat net capital losses realized between Nov. 1, 2007 and its fiscal year end ("post-October loss") as occurring on the first day of the following tax year. At July 31, 2008, the Fund had a post-October loss of $143,836,621 that is treated for income tax purposes as occurring on Aug. 1, 2008. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. - -------------------------------------------------------------------------------- 52 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 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 defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals on August 8, 2007. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the RiverSource Funds' Boards of Directors/Trustees. On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003, Seligman conducted an extensive internal review concerning mutual fund trading practices. Seligman's review, which covered the period 2001-2003, noted one arrangement that permitted frequent trading in certain open-end registered investment companies managed by Seligman (the Seligman Funds); - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT 53 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- this arrangement was in the process of being closed down by Seligman before September 2003. Seligman identified three other arrangements that permitted frequent trading, all of which had been terminated by September 2002. In January 2004, Seligman, on a voluntary basis, publicly disclosed these four arrangements to its clients and to shareholders of the Seligman Funds. Seligman also provided information concerning mutual fund trading practices to the SEC and the Office of the Attorney General of the State of New York (NYAG). In September 2005, the New York staff of the SEC indicated that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against Seligman and the distributor of the Seligman Funds, Seligman Advisors, Inc. (which is now know as RiverSource Fund Distributors, Inc.), relating to frequent trading in the Seligman Funds. Seligman responded to the staff in October 2005 that it believed that any action would be both inappropriate and unnecessary, especially in light of the fact that Seligman had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds. In September 2006, the NYAG commenced a civil action in New York State Supreme Court against Seligman, Seligman Advisors, Inc., Seligman Data Corp. and Brian T. Zino (collectively, the Seligman Parties), alleging, in substance, that the Seligman Parties permitted various persons to engage in frequent trading and, as a result, the prospectus disclosure used by the registered investment companies then managed by Seligman is and has been misleading. The NYAG included other related claims and also claimed that the fees charged by Seligman to the Seligman Funds were excessive. On March 13, 2009, without admitting or denying any violations of law or wrongdoing, the Seligman Parties entered into a stipulation of settlement with the NYAG and settled the claims made by the NYAG. Under the terms of the settlement, Seligman will pay $11.3 million to four Seligman Funds. This settlement resolved all outstanding matters between the Seligman Parties and the NYAG. In addition to the foregoing matter, the New York staff of the SEC indicated in September 2005 that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against Seligman and Seligman Advisors, Inc. relating to frequent trading in the Seligman Funds. Seligman responded to the staff in October 2005 that it believed that any action would be both inappropriate and unnecessary, especially in light of the fact that Seligman had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds. There have been no further developments with the SEC on this matter. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine - -------------------------------------------------------------------------------- 54 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- 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 EQUITY FUND -- 2009 SEMIANNUAL REPORT 55 PROXY VOTING ------------------------------------------------------------------- The policy of the Board is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling RiverSource Funds at (888) 791-3380; contacting your financial institution; visiting riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- 56 RIVERSOURCE LARGE CAP EQUITY FUND -- 2009 SEMIANNUAL REPORT RIVERSOURCE 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 RiverSource Fund Distributors, Inc., Members FINRA, and managed by RiverSource Investments, LLC. RiverSource is part of Ameriprise Financial, Inc. (RIVERSOURCE INVESTMENTS LOGO) (C) 2009 RiverSource Investments, LLC. S-6255 H (4/09)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE LARGE CAP VALUE FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED JANUARY 31, 2009 RIVERSOURCE LARGE CAP VALUE FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM GROWTH OF CAPITAL. (SINGLE STRATEGY FUNDS ICON) TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 2 Fund Expenses Example.............. 8 Portfolio of Investments........... 10 Statement of Assets and Liabilities...................... 16 Statement of Operations............ 17 Statements of Changes in Net Assets........................... 19 Financial Highlights............... 21 Notes to Financial Statements...... 29 Proxy Voting....................... 44
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 1 YOUR FUND AT A GLANCE ---------------------------------------------------------- (UNAUDITED) FUND SUMMARY - -------------------------------------------------------------------------------- > RiverSource Large Cap Value Fund (the Fund) Class A shares declined 36.97% (excluding sales charge) for the semiannual period ended Jan. 31, 2009. > The Fund underperformed its benchmark, the Russell 1000(R) Value Index, which fell 35.10% during the same time frame. > The Fund's peer group, the Lipper Large-Cap Value Funds Index, declined 33.41% during the same six-month period. ANNUALIZED TOTAL RETURNS (for period ended Jan. 31, 2009) - --------------------------------------------------------------------------------
Since inception 6 months* 1 year 3 years 5 years 6/27/02 - ----------------------------------------------------------------------------- RiverSource Large Cap Value Fund Class A (excluding sales charge) -36.97% -44.77% -15.45% -6.59% -2.78% - ----------------------------------------------------------------------------- Russell 1000 Value Index (unmanaged)(1) -35.10% -41.78% -13.09% -3.52% -0.17% - ----------------------------------------------------------------------------- Lipper Large-Cap Value Funds Index(2) -33.41% -39.54% -12.24% -4.00% -0.89% - -----------------------------------------------------------------------------
* Not annualized. The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. - -------------------------------------------------------------------------------- 2 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- (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. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS - --------------------------------------------------------------------------------
AT JAN. 31, 2009 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS INCEPTION Class A (inception 6/27/02) -36.97% -44.77% -15.45% -6.59% -2.78% - --------------------------------------------------------------------------- Class B (inception 6/27/02) -37.17% -45.22% -16.10% -7.29% -3.50% - --------------------------------------------------------------------------- Class C (inception 6/27/02) -37.30% -45.37% -16.18% -7.34% -3.54% - --------------------------------------------------------------------------- Class I (inception 3/4/04) -36.71% -44.51% -15.05% N/A -6.75% - --------------------------------------------------------------------------- Class R2 (inception 12/11/06) -37.02% -44.81% N/A N/A -25.79% - --------------------------------------------------------------------------- Class R3 (inception 12/11/06) -36.82% -44.64% N/A N/A -25.59% - --------------------------------------------------------------------------- Class R4 (inception 6/27/02) -36.78% -44.42% -15.09% -6.30% -2.48% - --------------------------------------------------------------------------- Class R5 (inception 12/11/06) -36.70% -44.51% N/A N/A -25.41% - --------------------------------------------------------------------------- With sales charge Class A (inception 6/27/02) -40.66% -47.93% -17.11% -7.69% -3.65% - --------------------------------------------------------------------------- Class B (inception 6/27/02) -40.28% -47.93% -16.97% -7.55% -3.50% - --------------------------------------------------------------------------- Class C (inception 6/27/02) -37.91% -45.90% -16.18% -7.34% -3.54% - ---------------------------------------------------------------------------
- -------------------------------------------------------------------------------- 4 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
AT DEC. 31, 2008 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS 5 YEARS INCEPTION Class A (inception 6/27/02) -30.61% -41.39% -11.44% -4.22% -1.15% - --------------------------------------------------------------------------- Class B (inception 6/27/02) -30.63% -41.70% -12.03% -4.88% -1.85% - --------------------------------------------------------------------------- Class C (inception 6/27/02) -30.68% -41.68% -12.08% -4.91% -1.87% - --------------------------------------------------------------------------- Class I (inception 3/4/04) -30.32% -41.10% -11.03% N/A -4.71% - --------------------------------------------------------------------------- Class R2 (inception 12/11/06) -30.47% -41.30% N/A N/A -22.64% - --------------------------------------------------------------------------- Class R3 (inception 12/11/06) -30.42% -41.11% N/A N/A -22.42% - --------------------------------------------------------------------------- Class R4 (inception 6/27/02) -30.23% -40.89% -11.07% -3.88% -0.84% - --------------------------------------------------------------------------- Class R5 (inception 12/11/06) -30.40% -41.16% N/A N/A -22.30% - --------------------------------------------------------------------------- With sales charge Class A (inception 6/27/02) -34.62% -44.80% -13.18% -5.36% -2.05% - --------------------------------------------------------------------------- Class B (inception 6/27/02) -34.06% -44.59% -12.94% -5.15% -1.85% - --------------------------------------------------------------------------- Class C (inception 6/27/02) -31.36% -42.25% -12.08% -4.91% -1.87% - ---------------------------------------------------------------------------
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 and Class R5 shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available to institutional investors only. *Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 5 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- STYLE MATRIX - --------------------------------------------------------------------------------
STYLE VALUE BLEND GROWTH X LARGE MEDIUM SIZE SMALL
Shading within the style matrix indicates areas in which the Fund is designed to generally invest. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and may serve as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. ANNUAL OPERATING EXPENSE RATIO (as of the current prospectus) - --------------------------------------------------------------------------------
Total Net fund fund expenses expenses - -------------------------------------- Class A 1.31% 1.31% - -------------------------------------- Class B 2.07% 2.07% - -------------------------------------- Class C 2.08% 2.08% - -------------------------------------- Class I 0.86% 0.86% - -------------------------------------- Class R2 1.65% 1.65% - -------------------------------------- Class R3 1.39% 1.39% - -------------------------------------- Class R4 1.15% 1.06%(a) - -------------------------------------- Class R5 0.92% 0.92% - --------------------------------------
(a) The Investment Manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until July 31, 2009, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment (that decreased the management fee by 0.07% for the year ended July 31, 2008), will not exceed 1.13% for Class R4. - -------------------------------------------------------------------------------- 6 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- SECTOR DIVERSIFICATION(1) (at Jan. 31, 2009; % of portfolio assets) - ---------------------------------------------------------------------
Consumer Discretionary 4.7% - ------------------------------------------------ Consumer Staples 6.7% - ------------------------------------------------ Energy 17.8% - ------------------------------------------------ Financials 12.6% - ------------------------------------------------ Health Care 9.2% - ------------------------------------------------ Industrials 12.2% - ------------------------------------------------ Information Technology 10.7% - ------------------------------------------------ Materials 2.5% - ------------------------------------------------ Telecommunication Services 7.1% - ------------------------------------------------ Utilities 2.6% - ------------------------------------------------ Other(2) 13.9% - ------------------------------------------------
(1) Sectors can be comprised of several industries. Please refer to the section entitled "Portfolio of Investments" for a complete listing. No single industry exceeds 25% of portfolio assets. (2) Cash & Cash Equivalents. Of the 13.9%, 11.7% is due to security lending activity and 2.2% is the Fund's cash equivalent position. The sectors identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. TOP TEN HOLDINGS (at Jan. 31, 2009; % of portfolio assets) - ---------------------------------------------------------------------
Chevron 3.6% - ------------------------------------------------ Verizon Communications 3.2% - ------------------------------------------------ AT&T 3.1% - ------------------------------------------------ Intel 2.8% - ------------------------------------------------ ConocoPhillips 2.6% - ------------------------------------------------ Exxon Mobil 2.5% - ------------------------------------------------ Lorillard 2.1% - ------------------------------------------------ Wal-Mart Stores 2.0% - ------------------------------------------------ Caterpillar 1.9% - ------------------------------------------------ Transocean 1.8% - ------------------------------------------------
For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 7 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended Jan. 31, 2009. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 8 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED AUG. 1, 2008 JAN. 31, 2009 THE PERIOD(A) EXPENSE RATIO - ------------------------------------------------------------------------------------------ Class A - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 630.30 $ 6.05 1.48% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,017.65 $ 7.49 1.48% - ------------------------------------------------------------------------------------------ Class B - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 628.30 $ 9.18 2.25% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,013.79 $11.36 2.25% - ------------------------------------------------------------------------------------------ Class C - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 627.00 $ 9.14 2.24% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,013.84 $11.31 2.24% - ------------------------------------------------------------------------------------------ Class I - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 632.90 $ 3.68 .90% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.56 $ 4.56 .90% - ------------------------------------------------------------------------------------------ Class R2 - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 629.80 $ 6.74 1.65% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.80 $ 8.34 1.65% - ------------------------------------------------------------------------------------------ Class R3 - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 631.80 $ 5.85 1.43% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,017.90 $ 7.23 1.43% - ------------------------------------------------------------------------------------------ Class R4 - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 632.20 $ 3.97 .97% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.21 $ 4.91 .97% - ------------------------------------------------------------------------------------------ Class R5 - ------------------------------------------------------------------------------------------ Actual(b) $1,000 $ 633.00 $ 3.77 .92% - ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.46 $ 4.66 .92% - ------------------------------------------------------------------------------------------
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended Jan. 31, 2009: -36.97% for Class A, -37.17% for Class B, -37.30% for Class C, -36.71% for Class I, -37.02% for Class R2, -36.82% for Class R3, -36.78% for Class R4 and -36.70% for Class R5. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 9 PORTFOLIO OF INVESTMENTS ------------------------------------------------------- JAN. 31, 2009 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (95.9%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (5.0%) Boeing 9,121 $385,910 General Dynamics 2,080(f) 117,998 Goodrich 4,131 159,704 Honeywell Intl 13,608 446,479 L-3 Communications Holdings 1,452 114,737 Lockheed Martin 3,207 263,102 United Technologies 5,998(f) 287,844 --------------- Total 1,775,774 - ------------------------------------------------------------------------------------- AIRLINES (0.4%) Delta Air Lines 20,226(b) 139,559 - ------------------------------------------------------------------------------------- BEVERAGES (0.5%) Coca-Cola 4,428 189,164 - ------------------------------------------------------------------------------------- BIOTECHNOLOGY (0.9%) Amgen 3,485(b) 191,152 Genzyme 1,729(b,f) 119,163 --------------- Total 310,315 - ------------------------------------------------------------------------------------- CAPITAL MARKETS (0.6%) Bank of New York Mellon 6,833 175,881 Blackstone Group LP 5,468 24,661 State Street 1,007(f) 23,433 --------------- Total 223,975 - ------------------------------------------------------------------------------------- CHEMICALS (2.0%) Dow Chemical 17,693 205,062 Eastman Chemical 1,606(f) 41,676 EI du Pont de Nemours & Co 17,002(f) 390,366 Rohm & Haas 1,295 71,471 --------------- Total 708,575 - ------------------------------------------------------------------------------------- COMMERCIAL BANKS (0.8%) SunTrust Banks 2,854(f) 34,990 Wells Fargo & Co 13,293(f) 251,238 --------------- Total 286,228 - ------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (2.0%) Cisco Systems 21,917(b,f) 328,097 Motorola 15,155(f) 67,137 Nokia ADR 11,988(c) 147,093 QUALCOMM 4,816(f) 166,393 --------------- Total 708,720 - ------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS (2.8%) Hewlett-Packard 15,194 527,991 IBM 5,038(f) 461,733 --------------- Total 989,724 - ------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING (0.6%) Fluor 2,017(f) 78,461 KBR 10,095(f) 142,946 --------------- Total 221,407 - ------------------------------------------------------------------------------------- CONSUMER FINANCE (0.2%) American Express 4,591 76,807 - ------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (2.5%) Apollo Management LP 10,900(d,e) 16,350 Bank of America 33,567 220,871 JPMorgan Chase & Co 25,930 661,474 --------------- Total 898,695 - ------------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES (7.5%) AT&T 49,315 1,214,135 Deutsche Telekom 9,148(c) 111,076 Verizon Communications 42,857 1,280,139 --------------- Total 2,605,350 - ------------------------------------------------------------------------------------- ELECTRIC UTILITIES (1.6%) Entergy 1,999(f) 152,644 Exelon 3,163(f) 171,497 FPL Group 1,963(f) 101,193 Southern 4,611 154,238 --------------- Total 579,572 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 10 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) ELECTRICAL EQUIPMENT (1.0%) ABB ADR 18,399(c) $240,107 Emerson Electric 3,887 127,105 --------------- Total 367,212 - ------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (0.2%) Tyco Electronics 4,188(c,f) 59,302 - ------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (5.7%) Baker Hughes 9,864(f) 328,668 Halliburton 24,350 420,038 Schlumberger 7,208 294,158 Transocean 13,160(b) 718,799 Weatherford Intl 23,825(b) 262,790 --------------- Total 2,024,453 - ------------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (2.9%) CVS Caremark 9,026 242,619 Wal-Mart Stores 16,491 777,056 --------------- Total 1,019,675 - ------------------------------------------------------------------------------------- GAS UTILITIES (0.3%) ONEOK 3,799 111,007 - ------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES (0.5%) Boston Scientific 19,746(b) 175,147 - ------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES (2.3%) Aetna 5,318(f) 164,858 Cardinal Health 3,570 134,411 CIGNA 3,623 62,895 Humana 2,612(b) 99,073 McKesson 1,684 74,433 UnitedHealth Group 9,846 278,937 --------------- Total 814,607 - ------------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE (0.9%) Carnival Unit 18,033 328,020 - ------------------------------------------------------------------------------------- HOUSEHOLD DURABLES (2.0%) Centex 21,881 186,208 DR Horton 20,964 124,945 KB Home 15,170(f) 161,864 Lennar Cl A 15,105 116,157 Whirlpool 3,334(f) 111,456 --------------- Total 700,630 - ------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES (0.5%) 3M 1,438 77,350 Tyco Intl 5,563(c) 116,934 --------------- Total 194,284 - ------------------------------------------------------------------------------------- INSURANCE (9.9%) ACE 15,951(c) 696,420 AFLAC 9,475 219,915 Allstate 8,006 173,490 Arch Capital Group 1,432(b,c) 86,135 Chubb 4,404(f) 187,522 Endurance Specialty Holdings 2,399(c,f) 65,397 Everest Re Group 10,622(c) 669,186 Marsh & McLennan Companies 18,757 362,573 Prudential Financial 9,691(f) 249,543 RenaissanceRe Holdings 2,284(c) 102,072 Travelers Companies 12,462 481,532 XL Capital Cl A 63,256(c) 183,442 --------------- Total 3,477,227 - ------------------------------------------------------------------------------------- MACHINERY (5.9%) Caterpillar 24,904 768,288 Deere & Co 5,228(f) 181,621 Eaton 7,452 328,037 Flowserve 1,566 83,483 Illinois Tool Works 15,719 513,383 Ingersoll-Rand Cl A 1,962(c) 31,804 Parker Hannifin 4,594 175,537 --------------- Total 2,082,153 - ------------------------------------------------------------------------------------- MEDIA (0.2%) Sirius XM Radio 100,832(b) 12,100 Virgin Media 9,080(e) 41,223 --------------- Total 53,323 - ------------------------------------------------------------------------------------- METALS & MINING (0.2%) Alcoa 9,637 75,072 - ------------------------------------------------------------------------------------- MULTILINE RETAIL (1.0%) JC Penney 5,344(f) 89,512 Kohl's 3,025(b,f) 111,048 Macy's 6,310 56,475 Target 3,127(f) 97,562 --------------- Total 354,597 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 11 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) MULTI-UTILITIES (1.0%) Dominion Resources 4,654 $163,728 Xcel Energy 10,071 185,910 --------------- Total 349,638 - ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (14.2%) Anadarko Petroleum 9,681 355,680 Apache 4,949 371,175 BP ADR 5,528(c,f) 234,774 Chevron 20,286 1,430,569 ConocoPhillips 21,226 1,008,872 Devon Energy 4,654 286,686 Exxon Mobil 13,068 999,441 Marathon Oil 3,402 92,636 Petroleo Brasileiro ADR 3,559(c) 93,246 Royal Dutch Shell ADR 2,687(c) 132,281 --------------- Total 5,005,360 - ------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (0.5%) Intl Paper 9,667 88,163 Weyerhaeuser 3,828(f) 104,658 --------------- Total 192,821 - ------------------------------------------------------------------------------------- PHARMACEUTICALS (6.5%) Bristol-Myers Squibb 22,703 486,071 Johnson & Johnson 5,916 341,294 Merck & Co 17,614 502,880 Pfizer 23,449 341,886 Schering-Plough 17,328(f) 304,280 Wyeth 7,934 340,924 --------------- Total 2,317,335 - ------------------------------------------------------------------------------------- ROAD & RAIL (0.1%) Hertz Global Holdings 6,300(b,f) 31,878 - ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (5.2%) Atmel 26,921(b) 89,916 Fairchild Semiconductor Intl 11,070(b) 50,369 Infineon Technologies 6,717(b,c,f) 5,986 Infineon Technologies ADR 11,529(b,c) 9,915 Intel 84,589 1,091,197 Micron Technology 36,831(b,f) 137,011 ON Semiconductor 5,917(b) 24,674 Spansion Cl A 13,060(b) 875 STMicroelectronics 28,452(c) 147,097 Taiwan Semiconductor Mfg ADR 25,479(c) 192,112 Teradyne 18,028(b) 86,715 --------------- Total 1,835,867 - ------------------------------------------------------------------------------------- SOFTWARE (1.7%) Microsoft 22,878 391,213 Oracle 13,550(b) 228,047 --------------- Total 619,260 - ------------------------------------------------------------------------------------- SPECIALTY RETAIL (1.1%) Home Depot 11,945 257,176 Lowe's Companies 8,016(f) 146,452 --------------- Total 403,628 - ------------------------------------------------------------------------------------- TOBACCO (4.1%) Lorillard 13,841 822,986 Philip Morris Intl 16,843 625,717 --------------- Total 1,448,703 - ------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (0.6%) Vodafone Group ADR 10,960(c,f) 203,746 - ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $45,491,369) $33,958,810 - ------------------------------------------------------------------------------------- MONEY MARKET FUND (2.5%) SHARES VALUE(a) RiverSource Short-Term Cash Fund, 0.47% 869,154(g) $869,154 - ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $869,154) $869,154 - -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. - -------------------------------------------------------------------------------- 12 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - --------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (13.0%) SHARES VALUE(a) CASH COLLATERAL REINVESTMENT FUND JPMorgan Prime Money Market Fund 4,592,388 $4,592,388 - ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $4,592,388) $4,592,388 - ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $50,952,911)(h) $39,420,352 =====================================================================================
NOTES TO PORTFOLIO OF INVESTMENTS (a) Securities are valued by using procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At Jan. 31, 2009, the value of foreign securities represented 10.0% of net assets. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security may be determined to be liquid under guidelines established by the Fund's Board of Directors. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Jan. 31, 2009, the value of these securities amounted to $16,350 or 0.05% of net assets. (e) Identifies issues considered to be illiquid as to their marketability (see Note 1 to the financial statements). Information concerning such security holdings at Jan. 31, 2009, is as follows:
ACQUISITION SECURITY DATES COST ------------------------------------------------------------------------- Apollo Management LP* 08-02-07 thru 01-16-08 $240,576 Virgin Media 03-14-08 thru 04-10-08 122,462
* Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. (f) At Jan. 31, 2009, security was partially or fully on loan. See Note 5 to the financial statements. (g) Affiliated Money Market Fund -- See Note 6 to the financial statements. The rate shown is the seven-day current annualized yield at Jan. 31, 2009. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 13 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (h) At Jan. 31, 2009, the cost of securities for federal income tax purposes was approximately $50,953,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $505,000 Unrealized depreciation (12,038,000) ----------------------------------------------------------- Net unrealized depreciation $(11,533,000) -----------------------------------------------------------
The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. - -------------------------------------------------------------------------------- 14 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS Statement of Financial Accounting Standards No. 157 (SFAS 157) seeks to implement more uniform reporting relating to the fair valuation of securities for financial statement purposes. Mutual funds are required to implement the requirements of this standard for fiscal years beginning after Nov. 15, 2007. While uniformity of presentation is the objective of the standard, it is likely that there may be a range of practices utilized and it may be some period of time before industry practices become more uniform. For this reason care should be exercised in interpreting this information and/or using it for comparison with other mutual funds. Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels listed below: - Level 1 -- quoted prices in active markets for identical securities - Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.) - Level 3 -- significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments) Observable inputs are those based on market data obtained from sources independent of the fund, and unobservable inputs reflect the fund's own assumptions based on the best information available. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. The following table is a summary of the inputs used to value the Fund's investments as of Jan. 31, 2009:
FAIR VALUE AT JAN. 31, 2009 -------------------------------------------------------- LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL - ----------------------------------------------------------------------------------- Investments in securities $39,303,291 $117,061 $-- $39,420,352
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at riversource.com/funds. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 15 STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- JAN. 31, 2009 (UNAUDITED)
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $45,491,369) $ 33,958,810 Affiliated money market fund (identified cost $869,154) 869,154 Investments of cash collateral received for securities on loan (identified cost $4,592,388) 4,592,388 - ------------------------------------------------------------------------------- Total investments in securities (identified cost $50,952,911) 39,420,352 Capital shares receivable 9,805 Dividends and accrued interest receivable 96,545 Receivable for investment securities sold 618,127 - ------------------------------------------------------------------------------- Total assets 40,144,829 - ------------------------------------------------------------------------------- LIABILITIES Capital shares payable 53,545 Payable upon return of securities loaned 4,592,388 Accrued investment management services fees 596 Accrued distribution fees 259 Accrued transfer agency fees 278 Accrued administrative services fees 60 Other accrued expenses 99,848 - ------------------------------------------------------------------------------- Total liabilities 4,746,974 - ------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 35,397,855 - ------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 137,783 Additional paid-in capital 60,739,768 Undistributed net investment income 234,117 Accumulated net realized gain (loss) (14,181,130) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (11,532,683) - ------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 35,397,855 - ------------------------------------------------------------------------------- *Including securities on loan, at value $ 4,335,396 - -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $18,489,196 7,199,253 $2.57(1) Class B $ 4,168,470 1,617,161 $2.58 Class C $ 424,860 166,354 $2.55 Class I $12,295,611 4,787,853 $2.57 Class R2 $ 2,320 906 $2.56 Class R3 $ 1,954 763 $2.56 Class R4 $ 13,454 5,233 $2.57 Class R5 $ 1,990 763 $2.61 - ----------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $2.73. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 5.75%. The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 16 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT STATEMENT OF OPERATIONS -------------------------------------------------------- SIX MONTHS ENDED JAN. 31, 2009 (UNAUDITED)
INVESTMENT INCOME Income: Dividends $ 641,446 Interest 135 Income distributions from affiliated money market fund 6,316 Fee income from securities lending 782 - ------------------------------------------------------------------------------- Total income 648,679 - ------------------------------------------------------------------------------- Expenses: Investment management services fees 93,755 Distribution fees Class A 31,958 Class B 27,897 Class C 2,647 Class R2 7 Class R3 3 Transfer agency fees Class A 42,506 Class B 9,900 Class C 921 Class R4 4 Administrative services fees 12,669 Plan administration services fees Class R2 3 Class R3 3 Class R4 22 Compensation of board members 686 Custodian fees 15,100 Printing and postage 19,335 Registration fees 31,825 Professional fees 14,529 Other 1,988 - ------------------------------------------------------------------------------- Total expenses 305,758 Expenses waived/reimbursed by the Investment Manager and its affiliates (32) Earnings and bank fee credits on cash balances (29) - ------------------------------------------------------------------------------- Total net expenses 305,697 - ------------------------------------------------------------------------------- Investment income (loss) -- net 342,982 - -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 17 STATEMENT OF OPERATIONS (continued) -------------------------------------------- SIX MONTHS ENDED JAN. 31, 2009 (UNAUDITED)
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions $(12,770,451) Foreign currency transactions (319) - ------------------------------------------------------------------------------- Net realized gain (loss) on investments (12,770,770) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (6,826,944) - ------------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (19,597,714) - ------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(19,254,732) - -------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 18 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2009 JULY 31, 2008 (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 342,982 $ 1,045,750 Net realized gain (loss) on investments (12,770,770) 927,507 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (6,826,944) (16,296,453) - -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (19,254,732) (14,323,196) - -------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (355,895) (682,628) Class B (13,356) (32,633) Class C (3,634) (4,493) Class I (226,632) (311,395) Class R2 (51) (49) Class R3 (51) (60) Class R4 (437) (623) Class R5 (56) -- Net realized gain Class A (159,185) (4,625,594) Class B (35,901) (1,148,253) Class C (3,687) (84,730) Class I (66,705) (1,493,181) Class R2 (19) (369) Class R3 (17) (369) Class R4 (112) (3,183) Class R5 (17) (369) - -------------------------------------------------------------------------------------------------- Total distributions (865,755) (8,387,929) - --------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 19 STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2009 JULY 31, 2008 (UNAUDITED) CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 2,846,794 $ 4,629,689 Class B shares 477,414 701,838 Class C shares 90,238 135,278 Class I shares 6,040,859 2,612,695 Class R2 shares 424 -- Class R4 shares -- 1,000 Reinvestment of distributions at net asset value Class A shares 501,092 5,196,120 Class B shares 48,538 1,166,160 Class C shares 7,274 87,581 Class I shares 293,251 1,804,061 Class R2 shares 9 -- Class R4 shares 335 2,650 Payments for redemptions Class A shares (7,743,560) (22,746,329) Class B shares (1,041,821) (6,130,946) Class C shares (81,094) (340,594) Class I shares (255,576) (5,559,082) Class R4 shares -- (10,330) - -------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 1,184,177 (18,450,209) - -------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (18,936,310) (41,161,334) Net assets at beginning of period 54,334,165 95,495,499 - -------------------------------------------------------------------------------------------------- Net assets at end of period $ 35,397,855 $ 54,334,165 - -------------------------------------------------------------------------------------------------- Undistributed net investment income $ 234,117 $ 491,247 - --------------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 20 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT FINANCIAL HIGHLIGHTS ----------------------------------------------------------- CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007 2006 2005 Net asset value, beginning of period $4.18 $5.71 $5.88 $5.83 $5.34 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03(b) .07(b) .06(b) .09 .06 Net gains (losses) (both realized and unrealized) (1.57) (1.05) .77 .32 .70 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.54) (.98) .83 .41 .76 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.07) (.07) (.07) (.04) Distributions from realized gains (.02) (.48) (.93) (.29) (.23) - -------------------------------------------------------------------------------------------------------------- Total distributions (.07) (.55) (1.00) (.36) (.27) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.57 $4.18 $5.71 $5.88 $5.83 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $18 $35 $62 $63 $74 - -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 1.48%(e) 1.31% 1.28% 1.21% 1.29% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.59%(e) 1.41% .99% 1.35% 1.07% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 43% 24% 35% 46% 57% - -------------------------------------------------------------------------------------------------------------- Total return(f) (36.97%)(g) (18.65%) 14.47% 7.39% 14.52% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (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, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 21 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------- CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007 2006 2005 Net asset value, beginning of period $4.15 $5.66 $5.82 $5.77 $5.29 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(b) .03(b) .01(b) .04 .01 Net gains (losses) (both realized and unrealized) (1.55) (1.04) .78 .32 .70 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.54) (1.01) .79 .36 .71 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.01) (.02) (.02) (.02) -- Distributions from realized gains (.02) (.48) (.93) (.29) (.23) - -------------------------------------------------------------------------------------------------------------- Total distributions (.03) (.50) (.95) (.31) (.23) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.58 $4.15 $5.66 $5.82 $5.77 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $4 $7 $15 $19 $28 - -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 2.25%(e) 2.07% 2.05% 1.97% 2.05% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .83%(e) .65% .23% .59% .30% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 43% 24% 35% 46% 57% - -------------------------------------------------------------------------------------------------------------- Total return(f) (37.17%)(g) (19.35%) 13.75% 6.51% 13.66% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (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, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 22 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007 2006 2005 Net asset value, beginning of period $4.13 $5.64 $5.82 $5.77 $5.29 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(b) .03(b) .01(b) .04 .01 Net gains (losses) (both realized and unrealized) (1.55) (1.03) .76 .32 .70 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.54) (1.00) .77 .36 .71 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) (.03) (.02) (.02) -- Distributions from realized gains (.02) (.48) (.93) (.29) (.23) - -------------------------------------------------------------------------------------------------------------- Total distributions (.04) (.51) (.95) (.31) (.23) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.55 $4.13 $5.64 $5.82 $5.77 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $1 $1 $1 $1 - -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) 2.24%(e) 2.08% 2.04% 1.98% 2.06% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) .82%(e) .65% .23% .58% .30% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 43% 24% 35% 46% 57% - -------------------------------------------------------------------------------------------------------------- Total return(f) (37.30%)(g) (19.25%) 13.50% 6.56% 13.62% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (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, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 23 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------- CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(g) 2008 2007 2006 2005 Net asset value, beginning of period $4.20 $5.75 $5.91 $5.86 $5.36 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04(b) .10(b) .08(b) .12 .07 Net gains (losses) (both realized and unrealized) (1.57) (1.07) .79 .32 .72 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.53) (.97) .87 .44 .79 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) (.10) (.10) (.10) (.06) Distributions from realized gains (.02) (.48) (.93) (.29) (.23) - -------------------------------------------------------------------------------------------------------------- Total distributions (.10) (.58) (1.03) (.39) (.29) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.57 $4.20 $5.75 $5.91 $5.86 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $12 $11 $17 $13 $38 - -------------------------------------------------------------------------------------------------------------- Total expenses(c),(d) .90%(e) .86% .85% .75% .86% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.16%(e) 1.87% 1.41% 1.85% 1.50% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 43% 24% 35% 46% 57% - -------------------------------------------------------------------------------------------------------------- Total return (36.71%)(f) (18.41%) 15.10% 7.86% 14.97% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (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) Not annualized. (g) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 24 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $4.18 $5.69 $6.55 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .03 .07 .02 Net gains (losses) (both realized and unrealized) (1.57) (1.03) .15 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.54) (.96) .17 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) (.07) (.10) Distributions from realized gains (.02) (.48) (.93) - -------------------------------------------------------------------------------------------------------------- Total distributions (.08) (.55) (1.03) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.56 $4.18 $5.69 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.65%(f) 1.65% 1.63%(f) - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.39%(f) 1.41% 1.63%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.66%(f) 1.32% .55%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 43% 24% 35% - -------------------------------------------------------------------------------------------------------------- Total return (37.02%)(i) (18.44%) 2.84%(i) - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 25 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------- CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(j) 2008 2007(b) Net asset value, beginning of period $4.18 $5.70 $6.55 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .03 .08 .03 Net gains (losses) (both realized and unrealized) (1.56) (1.04) .15 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.53) (.96) .18 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.08) (.10) Distributions from realized gains (.02) (.48) (.93) - -------------------------------------------------------------------------------------------------------------- Total distributions (.09) (.56) (1.03) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.56 $4.18 $5.70 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.43%(f) 1.39% 1.38%(f) - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.18%(f) 1.15% 1.38%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.87%(f) 1.58% .80%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 43% 24% 35% - -------------------------------------------------------------------------------------------------------------- Total return (36.82%)(i) (18.38%) 3.03%(i) - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (i) Not annualized. (j) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 26 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(i) 2008 2007 2006 2005 Net asset value, beginning of period $4.22 $5.74 $5.90 $5.85 $5.36 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04(b) .10(b) .07(b) .10 .07 Net gains (losses) (both realized and unrealized) (1.58) (1.04) .78 .32 .70 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.54) (.94) .85 .42 .77 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.09) (.10) (.08) (.08) (.05) Distributions from realized gains (.02) (.48) (.93) (.29) (.23) - -------------------------------------------------------------------------------------------------------------- Total distributions (.11) (.58) (1.01) (.37) (.28) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.57 $4.22 $5.74 $5.90 $5.85 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(c),(d) 1.20%(e) 1.15% 1.13% 1.00% 1.11% - -------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(f),(g) .90%(e) .81% 1.12% 1.00% 1.11% - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.17%(e) 1.90% 1.14% 1.69% 1.25% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 43% 24% 35% 46% 57% - -------------------------------------------------------------------------------------------------------------- Total return (36.78%)(h) (17.99%) 14.67% 7.55% 14.67% - --------------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) Per share amounts have been calculated using the average shares outstanding method. (c) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. (d) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (e) Adjusted to an annual basis. (f) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees of acquired funds), before giving effect to any performance incentive adjustment. (g) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (h) Not annualized. (i) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 27 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------- CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a) Fiscal period ended July 31, 2009(h) 2008 2007(b) Net asset value, beginning of period $4.26 $5.72 $6.55 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .04 .09 .05 Net gains (losses) (both realized and unrealized) (1.59) (1.07) .15 - -------------------------------------------------------------------------------------------------------------- Total from investment operations (1.55) (.98) .20 - -------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) -- (.10) Distributions from realized gains (.02) (.48) (.93) - -------------------------------------------------------------------------------------------------------------- Total distributions (.10) (.48) (1.03) - -------------------------------------------------------------------------------------------------------------- Net asset value, end of period $2.61 $4.26 $5.72 - -------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - -------------------------------------------------------------------------------------------------------------- Total expenses(d),(e) .92%(f) .92% .83%(f) - -------------------------------------------------------------------------------------------------------------- Net investment income (loss) 2.13%(f) 1.81% 1.45%(f) - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 43% 24% 35% - -------------------------------------------------------------------------------------------------------------- Total return (36.70%)(g) (18.41%) 3.40%(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 July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment, if any. Expense ratio is before reduction for earnings and bank fee credits on cash balances. Earnings and bank fee credits were less than 0.01% of average net assets for the six months ended Jan. 31, 2009 and for the year ended July 31, 2008. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) Not annualized. (h) Six months ended Jan. 31, 2009 (Unaudited). The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 28 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- (UNAUDITED AS TO JAN. 31, 2009) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RiverSource Large Cap Value Fund (the Fund) is a series of RiverSource Large Cap Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Large Cap Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board of Directors (the Board). The Fund invests primarily in equity securities of companies with a market capitalization greater than $5 billion. The Fund offers Class A, Class B, Class C, Class I, Class R2, Class R3, Class R4 and Class R5 shares. - - Class A shares are sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a front-end sales charge or CDSC and are offered to qualifying institutional investors. At Jan. 31, 2009, RiverSource Investments, LLC (RiverSource Investments or the Investment Manager) and the RiverSource affiliated funds-of-funds owned 100% of Class I shares and the Investment Manager owned 100% of Class R3 and Class R5 shares. At Jan. 31, 2009, the Investment Manager and the RiverSource affiliated funds-of-funds owned approximately 35% of the total outstanding Fund shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 29 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- VALUATION OF SECURITIES Effective Aug. 1, 2008, the Fund adopted Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a hierarchy for measuring fair value, and requires additional disclosures about the inputs used to develop the measurements of fair value and the effect of certain measurements reported in the Statement of Operations for a fiscal period. There was no impact to the Fund's net assets or results of operations upon adoption. The fair valuation measurements disclosure can be found following the Notes to Portfolio of Investments. All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably - -------------------------------------------------------------------------------- 30 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost, which approximates fair value. ILLIQUID SECURITIES At Jan. 31, 2009, investments in securities included issues that are illiquid which the Fund currently limits to 15% of net assets, at market value, at the time of purchase. The aggregate value of such securities at Jan. 31, 2009 was $57,573 representing 0.16% of net assets. Certain illiquid securities may be valued by management at fair value according to procedures approved, in good faith, by the Board. According to Board guidelines, certain unregistered securities are determined to be liquid and are not included within the 15% limitation specified above. Assets are liquid if they can be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the asset is valued by the Fund. OPTION TRANSACTIONS To produce incremental earnings, protect gains, and facilitate buying and selling of securities for investments, the Fund may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. Cash collateral may be collected by the Fund to secure certain over-the-counter options (OTC options) trades. Cash collateral held by the Fund for such option trades must be returned to the counterparty upon closure, exercise or expiration of the contract. The Fund also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. Option contracts, including OTC option contracts, with no readily available market value are valued using quotations obtained from independent brokers as of the close of the New York Stock Exchange. The Fund will realize a gain or loss when the option - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 31 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. At Jan. 31, 2009, and for the six months then ended, the Fund had no outstanding option contracts. FUTURES TRANSACTIONS To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Futures and options on futures are valued daily based upon the last sale price at the close of the market on the principal exchange on which they are traded. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. At Jan. 31, 2009, the Fund had no outstanding futures contracts. FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Fund may enter into forward foreign currency contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the counterparty will not complete its - -------------------------------------------------------------------------------- 32 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- contract obligations. At Jan. 31, 2009, the Fund had no outstanding forward foreign currency contracts. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund's contracts with its service providers contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income to shareholders. No provision for income or excise taxes is thus required. Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all the tax returns filed for the last three years. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of futures contracts, re- characterization of REIT distributions, investments in partnerships and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. RECENT ACCOUNTING PRONOUNCEMENTS The Fund has adopted FASB Staff Position No. 133-1 and FIN No. 45-4 (FSP FAS 133-1 and FIN 45-4), "Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45". The amendments to FSP FAS 133-1 and FIN 45-4 require - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 33 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- enhanced disclosures about a fund's derivatives and guarantees. Funds are required to provide enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, (c) how derivative instruments and related hedged items affect a fund's financial position, financial performance, and cash flows and (d) the current status of the payment/performance risk of the credit derivative. The amendments to FSP FAS 133-1 and FIN 45-4 also require additional disclosures about the current status of the payment/performance risk of a guarantee. At Jan. 31, 2009, the Fund did not own nor was it a party to any credit derivative contracts within the scope of these amendments. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133," which requires enhanced disclosures about a fund's derivative and hedging activities. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after Nov. 15, 2008. As of Jan. 31, 2009, management does not believe the adoption of SFAS 161 will impact the financial statement amounts; however, additional footnote disclosures may be required about the use of derivative instruments and hedging items. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 2. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets that declines from 0.60% to 0.375% annually as the Fund's assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment determined monthly by measuring the percentage difference over a rolling 12-month period between the - -------------------------------------------------------------------------------- 34 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- annualized performance of one Class A share of the Fund and the annualized performance of the Lipper Large-Cap Value Funds Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The adjustment decreased the management fee by $32,938 for the six months ended Jan. 31, 2009. The management fee for the six months ended Jan. 31, 2009 was 0.44% of the Fund's average daily net assets, including the adjustment under the terms of the performance incentive arrangement. ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's average daily net assets that declines from 0.06% to 0.03% annually as the Fund's assets increase. The fee for the six months ended Jan. 31, 2009 was 0.06% of the Fund's average daily net assets. OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the six months ended Jan. 31, 2009, other expenses paid to this company were $143. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual account-based fee at a rate equal to $19.50 for Class A, $20.50 for Class B and $20.00 for Class C for this service. The Fund also pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R2, Class R3, Class R4 and Class R5 shares. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 35 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- The Transfer Agent charges an annual fee of $5 per inactive account, charged on a pro rata basis for 12 months from the date the account becomes inactive. These fees are included in the transfer agency fees on the Statement of Operations. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R2, Class R3 and Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. DISTRIBUTION FEES The Fund has agreements with RiverSource Distributors, Inc. and RiverSource Fund Distributors, Inc. (collectively, the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class R3 shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R2 shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, up to 0.75% of the fee is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed ("unreimbursed expense") was approximately $204,000 and $5,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of Jan. 31, 2009, and may be recovered from future payments under the distribution plan or CDSC. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGES Sales charges received by the Distributor for distributing Fund shares were $14,025 for Class A, $1,739 for Class B and $14 for Class C for the six months ended Jan. 31, 2009. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the six months ended Jan. 31, 2009, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds*), including the adjustment under the terms of a performance incentive arrangement, were as follows: Class R2............................................ 1.39% Class R3............................................ 1.18 Class R4............................................ 0.90
- -------------------------------------------------------------------------------- 36 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- The waived/reimbursed fees and expenses for the transfer agency fees at the class level were as follows: Class R4............................................. $4
The waived/reimbursed fees and expenses for the plan administration services fees at the class level were as follows: Class R2............................................. $3 Class R3............................................. 3 Class R4............................................. 22
The Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses until July 31, 2009, unless sooner terminated at the discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the Fund's average daily net assets: Class R4............................................ 1.13%
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. EARNINGS AND BANK FEE CREDITS During the six months ended Jan. 31, 2009, the Fund's transfer agency fees were reduced by $29 as a result of bank fee credits from overnight cash balances. CUSTODIAN FEES Effective Dec. 15, 2008, the Fund pays custodian fees to JPMorgan Chase Bank, N.A. Prior to Dec. 15, 2008, the Fund paid custodian fees amounting to $11,773 to Ameriprise Trust Company, a subsidiary of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $18,213,016 and $18,141,271, respectively, for the six months ended Jan. 31, 2009. Realized gains and losses are determined on an identified cost basis. - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED JAN. 31, 2009 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------- Class A 953,615 177,065 (2,328,848) (1,198,168) Class B 156,605 17,091 (322,381) (148,685) Class C 30,003 2,589 (25,800) 6,792 Class I 2,093,468 103,990 (81,445) 2,116,013 Class R2 140 3 -- 143 Class R4 -- 118 -- 118 - ---------------------------------------------------------------------------------- YEAR ENDED JULY 31, 2008 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------- Class A 972,781 1,043,398 (4,547,178) (2,530,999) Class B 144,597 234,640 (1,285,647) (906,410) Class C 26,989 17,693 (69,667) (24,985) Class I 513,889 361,535 (1,138,246) (262,822) Class R4 213 530 (2,217) (1,474) - ----------------------------------------------------------------------------------
5. LENDING OF PORTFOLIO SECURITIES Effective Dec. 1, 2008, the Fund has entered into a Master Securities Lending Agreement ("the Agreement") with JPMorgan Chase Bank, National Association ("JPMorgan"). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers on behalf of the Fund. Pursuant to the Agreement, all loaned securities are initially collateralized in an amount equivalent to 102% (for securities denominated in U.S. dollars) or 105% (for all other securities) of the value of the loaned securities, including accrued interest in the case of fixed income securities. Collateral is maintained over the life of the loan thereafter in an amount not less than 100% of the market value of loaned securities, as determined at the close of each business day, except to the extent that a collateral shortfall is due to a diminution in the market value of authorized investments in which cash collateral is invested. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Collateral is either in the form of cash or U.S. government securities. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash - -------------------------------------------------------------------------------- 38 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- collateral are listed on the Portfolio of Investments and the value of cash collateral received at period end is disclosed on the Statement of Assets and Liabilities along with the related obligation to return the collateral upon return of the securities loaned. At Jan. 31, 2009, securities valued at $4,335,396 were on loan secured by cash collateral of $4,592,388 invested in short-term or cash equivalents. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Income of $782 earned from securities lending from Dec. 1, 2008 through Jan. 31, 2009 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Funds or the borrower at any time, and are, therefore, not considered to be illiquid investments. Prior to Dec. 1, 2008, RiverSource Investments, LLC served as securities lending agent for the Fund under the Securities Lending Agency Agreement. For the period from Aug. 1, 2008 to Nov. 30, 2008, the Fund had no securities on loan. 6. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. The cost of the Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term Cash Fund aggregated $12,375,731 and $12,186,062, respectively, for the six months ended Jan. 31, 2009. The income distributions received with respect to the Fund's investment in RiverSource Short-Term Cash Fund can be found on the Statement of Operations and the Fund's invested balance in RiverSource Short- Term Cash Fund at Jan. 31, 2009, can be found in the Portfolio of Investments. 7. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 16, 2008, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permits collective borrowings up to $475 million. The borrowers shall have the right, upon written notice to the Administrative Agent to request an increase of up to $175 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $650 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.75%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum, in addition to an upfront fee equal to its pro rata share of 0.02% of the amount of the credit facility. The Fund had no borrowings during the six months ended Jan. 31, 2009. Under the prior credit facility which was effective until Oct. 15, 2008, the Fund had entered into a revolving credit facility with a syndicate of banks headed by JPMorgan Chase Bank, N.A., whereby the Fund was permitted to borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility agreement, which was a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permitted collective borrowings up to $500 million. Interest was charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.30%. Each borrowing under the credit facility matured no later than 60 days after the date of borrowing. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. 8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed - -------------------------------------------------------------------------------- 40 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals on August 8, 2007. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the RiverSource Funds' Boards of Directors/Trustees. On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise Financial, Inc., acquired J. & W. Seligman & Co., Inc. (Seligman). In late 2003, Seligman conducted an extensive internal review concerning mutual fund trading practices. Seligman's review, which covered the period 2001-2003, noted one arrangement that permitted frequent trading in certain open-end registered investment companies managed by Seligman (the Seligman Funds); this arrangement was in the process of being closed down by Seligman before September 2003. Seligman identified three other arrangements that permitted frequent trading, all of which had been terminated by September 2002. In January 2004, Seligman, on a voluntary basis, publicly disclosed these four arrangements to its clients and to shareholders of the Seligman Funds. Seligman also provided information concerning mutual fund trading practices to the SEC and the Office of the Attorney General of the State of New York (NYAG). In September 2005, the New York staff of the SEC indicated that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against Seligman and the distributor of the Seligman Funds, Seligman Advisors, Inc. (which is now known as RiverSource Fund Distributors, Inc.), relating to frequent trading in the Seligman Funds. Seligman responded to the staff in October 2005 that it believed that any action would be both inappropriate - -------------------------------------------------------------------------------- RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- and unnecessary, especially in light of the fact that Seligman had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds. In September 2006, the NYAG commenced a civil action in New York State Supreme Court against Seligman, Seligman Advisors, Inc., Seligman Data Corp. and Brian T. Zino (collectively, the Seligman Parties), alleging, in substance, that the Seligman Parties permitted various persons to engage in frequent trading and, as a result, the prospectus disclosure used by the registered investment companies then managed by Seligman is and has been misleading. The NYAG included other related claims and also claimed that the fees charged by Seligman to the Seligman Funds were excessive. On March 13, 2009, without admitting or denying any violations of law or wrongdoing, the Seligman Parties entered into a stipulation of settlement with the NYAG and settled the claims made by the NYAG. Under the terms of the settlement, Seligman will pay $11.3 million to four Seligman Funds. This settlement resolved all outstanding matters between the Seligman Parties and the NYAG. In addition to the foregoing matter, the New York staff of the SEC indicated in September 2005 that it was considering recommending to the Commissioners of the SEC the instituting of a formal action against Seligman and Seligman Advisors, Inc. relating to frequent trading in the Seligman Funds. Seligman responded to the staff in October 2005 that it believed that any action would be both inappropriate and unnecessary, especially in light of the fact that Seligman had previously resolved the underlying issue with the Independent Directors of the Seligman Funds and made recompense to the affected Seligman Funds. There have been no further developments with the SEC on this matter. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine 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. - -------------------------------------------------------------------------------- 42 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT - -------------------------------------------------------------------------------- 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 -- 2009 SEMIANNUAL REPORT 43 PROXY VOTING ------------------------------------------------------------------- The policy of the Board is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling RiverSource Funds at (888) 791-3380; contacting your financial institution; visiting riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- 44 RIVERSOURCE LARGE CAP VALUE FUND -- 2009 SEMIANNUAL REPORT RIVERSOURCE 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 RiverSource Fund Distributors, Inc., Members FINRA, and managed by RiverSource Investments, LLC. RiverSource is part of Ameriprise Financial, Inc. (RIVERSOURCE INVESTMENTS LOGO) (C) 2009 RiverSource Investments, LLC. S-6257 H (4/09)
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 1, 2009 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 1, 2009 By /s/ Jeffrey P. Fox ----------------------------------------- Jeffrey P. Fox Treasurer and Principal Financial Officer Date April 1, 2009 EX-99.CERT 2 c49572exv99wcert.txt EX-99.CERT Certification Pursuant to 270.30a-2 of the Investment Company Act of 1940 I, Patrick T. Bannigan, certify that: 1. I have reviewed this report on Form N-CSR of RiverSource Large Cap Series, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 24, 2009 /s/ Patrick T. Bannigan - ------------------------------------------------ Name: Patrick T. Bannigan Title: President and Principal Executive Officer Certification Pursuant to 270.30a-2 of the Investment Company Act of 1940 I, Jeffrey P. Fox, certify that: 1. I have reviewed this report on Form N-CSR of RiverSource Large Cap Series, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 24, 2009 /s/ Jeffrey P. Fox - ------------------------------------------------ Name: Jeffrey P. Fox Title: Treasurer and Principal Financial Officer EX-99.906CERT 3 c49572exv99w906cert.txt EX-99.906CERT CERTIFICATION RIVERSOURCE LARGE CAP SERIES, INC. (the Registrant) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Each of the undersigned below certifies that 1. This report on Form N-CSR of the Registrant (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: March 24, 2009 /s/ Patrick T. Bannigan ----------------------------------------- Patrick T. Bannigan President and Principal Executive Officer Date: March 24, 2009 /s/ Jeffrey P. Fox ----------------------------------------- Jeffrey P. Fox Treasurer and Principal Financial Officer A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR filed with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----