N-CSRS 1 c56476nvcsrs.txt NCSRS 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 811-1629 RIVERSOURCE DIMENSIONS 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 SMALL AND MID CAP EQUITY FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED JANUARY 31, 2010 RIVERSOURCE DISCIPLINED SMALL AND MID CAP 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.............. 7 Portfolio of Investments........... 10 Statement of Assets and Liabilities...................... 22 Statement of Operations............ 23 Statements of Changes in Net Assets........................... 24 Financial Highlights............... 26 Notes to Financial Statements...... 32 Proxy Voting....................... 47
-------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 1 YOUR FUND AT A GLANCE ---------------------------------------------------------- (UNAUDITED) FUND SUMMARY -------------------------------------------------------------------------------- > RiverSource Disciplined Small and Mid Cap Equity Fund (the Fund) Class A shares gained 10.20% (excluding sales charge) for the six months ended Jan. 31, 2010. > The Fund underperformed its benchmark, the Russell 2500(TM) Index, which rose 11.84% during the six-month period. > The Fund also underperformed the Lipper Mid-Cap Core Funds Index, representing the Fund's peer group, which increased 13.34%, for the same period. ANNUALIZED TOTAL RETURNS (for period ended Jan. 31, 2010) --------------------------------------------------------------------------------
SINCE INCEPTION 6 MONTHS* 1 YEAR 3 YEARS 5/18/06 ---------------------------------------------------------------------- RiverSource Disciplined Small and Mid Cap Equity Fund Class A (excluding sales charge) +10.20% +33.79% -12.27% -8.14% ---------------------------------------------------------------------- Russell 2500 Index(1) (unmanaged) +11.84% +42.74% -6.76% -2.39% ---------------------------------------------------------------------- Lipper Mid-Cap Core Funds Index(2) +13.34% +44.07% -4.92% -1.05% ----------------------------------------------------------------------
* 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 intermediary, visiting riversource.com/funds or calling 1(800) 221-2450. 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 fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. 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 SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- (1) The Russell 2500 Index, an unmanaged index, measures the performance of the 2,500 smallest companies in the Russell 3000 Index, which represents approximately 16% of the total market capitalization of the Russell 3000 Index. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Mid-Cap Core Funds Index includes the 30 largest mid-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 SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT JAN. 31, 2010 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION Class A (inception 5/18/06) +10.20% +33.79% -12.27% -8.14% ----------------------------------------------------------------------- Class B (inception 5/18/06) +9.66% +32.67% -12.96% -8.85% ----------------------------------------------------------------------- Class C (inception 5/18/06) +9.66% +32.67% -12.96% -8.86% ----------------------------------------------------------------------- Class I (inception 5/18/06) +10.30% +34.29% -11.93% -7.79% ----------------------------------------------------------------------- Class R4 (inception 5/18/06) +10.23% +34.03% -12.00% -7.89% ----------------------------------------------------------------------- Class W (inception 12/1/06) +10.13% +33.83% -12.30% -10.40% ----------------------------------------------------------------------- With sales charge Class A (inception 5/18/06) +3.86% +26.08% -13.99% -9.60% ----------------------------------------------------------------------- Class B (inception 5/18/06) +4.66% +27.67% -13.84% -9.59% ----------------------------------------------------------------------- Class C (inception 5/18/06) +8.66% +31.67% -12.96% -8.86% -----------------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 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 R4 and Class W shares. Class I and Class R4 are available to qualifying institutional investors only. Class W shares are offered through qualifying discretionary accounts. * Not annualized. -------------------------------------------------------------------------------- 4 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- STYLE MATRIX --------------------------------------------------------------------------------
STYLE VALUE BLEND GROWTH LARGE X MEDIUM SIZE X SMALL
Shading within the style matrix approximates 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. Investments in small- and mid-capitalization companies often involve greater risks and potential volatility than investments in larger, more established companies. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 5 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- SECTOR BREAKDOWN(1) (at Jan. 31, 2010) --------------------------------------------------------------------- Consumer Discretionary 18.6% ------------------------------------------------ Consumer Staples 4.6% ------------------------------------------------ Energy 10.8% ------------------------------------------------ Financials 15.3% ------------------------------------------------ Health Care 9.0% ------------------------------------------------ Industrials 13.2% ------------------------------------------------ Information Technology 15.3% ------------------------------------------------ Materials 8.8% ------------------------------------------------ Telecommunication Services 2.1% ------------------------------------------------ Utilities 2.0% ------------------------------------------------ Other(2) 0.3% ------------------------------------------------
(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. Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund's composition is subject to change. (2) Cash & Cash Equivalents. The sectors identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. TOP TEN HOLDINGS(1) (at Jan. 31, 2010) --------------------------------------------------------------------- Murphy Oil 0.9% ------------------------------------------------ Humana 0.9% ------------------------------------------------ CIGNA 0.9% ------------------------------------------------ 3Com 0.9% ------------------------------------------------ Hartford Financial Services Group 0.9% ------------------------------------------------ Platinum Underwriters Holdings 0.9% ------------------------------------------------ CenturyTel 0.8% ------------------------------------------------ Western Digital 0.8% ------------------------------------------------ Seagate Technology 0.8% ------------------------------------------------ Computer Sciences 0.8% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. -------------------------------------------------------------------------------- 6 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund 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 ongoing expenses charged by 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 Jan. 31, 2010. 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 "Direct expenses paid during the period" to estimate the expenses you paid on your account during this period. You can also estimate the direct and indirect expenses you paid over the period by using the number in the first line under the heading "Direct and indirect expenses paid during the period." HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 7 FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
DIRECT AND DIRECT INDIRECT BEGINNING ENDING EXPENSES EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING AUG. 1, 2009 JAN. 31, 2010 THE PERIOD(a) THE PERIOD(b) ------------------------------------------------------------------------------------------ Class A ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,102.00 $ 6.55 $ 6.60 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.70 $ 6.29 $ 6.34 ------------------------------------------------------------------------------------------ Class B ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,096.60 $10.51 $10.56 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.91 $10.10 $10.15 ------------------------------------------------------------------------------------------ Class C ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,096.60 $10.45 $10.51 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.96 $10.05 $10.10 ------------------------------------------------------------------------------------------ Class I ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,103.00 $ 3.78 $ 3.83 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,021.34 $ 3.63 $ 3.68 ------------------------------------------------------------------------------------------ Class R4 ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,102.30 $ 5.29 $ 5.35 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.90 $ 5.09 $ 5.14 ------------------------------------------------------------------------------------------ Class W ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,101.30 $ 6.13 $ 6.18 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.10 $ 5.89 $ 5.94 ------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 8 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- ANNUALIZED EXPENSE RATIOS
FUND'S ACQUIRED FUND ANNUALIZED FEES AND NET FUND EXPENSE RATIO EXPENSES EXPENSES ---------------------------------------------------------------------- Class A 1.25% .01% 1.26% ---------------------------------------------------------------------- Class B 2.01% .01% 2.02% ---------------------------------------------------------------------- Class C 2.00% .01% 2.01% ---------------------------------------------------------------------- Class I .72% .01% .73% ---------------------------------------------------------------------- Class R4 1.01% .01% 1.02% ---------------------------------------------------------------------- Class W 1.17% .01% 1.18% ----------------------------------------------------------------------
(a) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). (b) Expenses are equal to the annualized expense ratio for each class plus the acquired fund fees and expenses, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). (c) Based on the actual return for the six months ended Jan. 31, 2010: +10.20% for Class A, +9.66% for Class B, +9.66% for Class C, +10.30% for Class I, +10.23% for Class R4 and +10.13% for Class W. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 9 PORTFOLIO OF INVESTMENTS ------------------------------------------------------- JAN. 31, 2010 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (98.5%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (0.6%) BE Aerospace 5,341(b) $119,799 Ceradyne 12,801(b) 250,131 Spirit AeroSystems Holdings Cl A 10,979(b,d) 235,499 Triumph Group 1,990 101,351 --------------- Total 706,780 ------------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS (0.3%) Air Transport Services Group 35,833(b) 82,774 Atlas Air Worldwide Holdings 6,988(b) 256,250 --------------- Total 339,024 ------------------------------------------------------------------------------------- AIRLINES (1.2%) Alaska Air Group 7,744(b) 242,697 Allegiant Travel 4,661(b,d) 238,643 Continental Airlines Cl B 14,261(b,d) 262,260 Hawaiian Holdings 36,341(b) 215,866 SkyWest 32,278 472,227 --------------- Total 1,431,693 ------------------------------------------------------------------------------------- AUTO COMPONENTS (2.2%) ArvinMeritor 18,188(b) 176,242 Autoliv 13,331(c) 570,699 Cooper Tire & Rubber 16,254 276,806 Dana Holding 39,919(b) 411,565 Exide Technologies 23,722(b) 183,371 Goodyear Tire & Rubber 22,962(b) 306,313 Spartan Motors 29,436 176,616 Tenneco 17,173(b) 303,619 TRW Automotive Holdings 8,193(b) 188,685 WABCO Holdings 4,416 114,154 --------------- Total 2,708,070 ------------------------------------------------------------------------------------- AUTOMOBILES (0.2%) Harley-Davidson 9,417 214,143 ------------------------------------------------------------------------------------- BEVERAGES (0.2%) Coca-Cola Enterprises 12,269 247,711 ------------------------------------------------------------------------------------- BIOTECHNOLOGY (0.2%) Cubist Pharmaceuticals 6,921(b) 141,811 PDL BioPharma 22,740(d) 145,536 --------------- Total 287,347 ------------------------------------------------------------------------------------- BUILDING PRODUCTS (0.3%) Apogee Enterprises 14,460(d) 198,969 Insteel Inds 9,167(d) 90,570 Quanex Building Products 7,470 120,118 --------------- Total 409,657 ------------------------------------------------------------------------------------- CAPITAL MARKETS (1.4%) Apollo Investment 24,445 251,783 BGC Partners Cl A 29,180(d) 118,763 Broadpoint Gleacher Securities 21,101(b) 85,459 GFI Group 22,904 111,542 Intl Assets Holding 8,562(b) 127,488 Knight Capital Group Cl A 14,467(b) 226,264 MF Global Holdings 23,932(b) 156,755 MVC Capital 7,749 90,663 Oppenheimer Holdings Cl A 4,537(d) 123,905 optionsXpress Holdings 7,299 104,741 Penson Worldwide 12,635(b,d) 106,387 SWS Group 13,292(d) 159,504 --------------- Total 1,663,254 ------------------------------------------------------------------------------------- CHEMICALS (4.1%) Ashland 8,671 350,395 Celanese Series A 4,900 142,590 CF Inds Holdings 6,307 585,668 Cytec Inds 3,515 131,145 Eastman Chemical 3,128(d) 176,826 Huntsman 26,456 322,499 Innophos Holdings 9,079 177,585
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 10 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) CHEMICALS (CONT.) Lubrizol 2,390 $176,119 NewMarket 2,788 251,533 Olin 26,012(d) 429,198 OM Group 17,264(b) 563,152 Solutia 15,392(b) 211,640 Stepan 2,718 158,949 Terra Inds 13,370 422,492 WR Grace & Co 40,215(b) 960,333 --------------- Total 5,060,124 ------------------------------------------------------------------------------------- COMMERCIAL BANKS (1.4%) BancFirst 4,720 190,216 Fifth Third Bancorp 48,980 609,312 SVB Financial Group 8,016(b,d) 347,814 TowneBank 14,586(d) 155,924 Trico Bancshares 10,072 173,843 Wintrust Financial 2,784 96,716 Zions Bancorporation 9,533(d) 180,841 --------------- Total 1,754,666 ------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES (1.7%) Brink's 12,603 294,658 Herman Miller 10,765(d) 181,821 HNI 9,412 235,488 Kimball Intl Cl B 24,290 191,405 RR Donnelley & Sons 26,040 516,114 Steelcase Cl A 29,467(d) 208,626 United Stationers 5,008(b,d) 273,236 Viad 8,534(d) 168,376 --------------- Total 2,069,724 ------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (1.6%) 3Com 143,751(b) 1,070,945 Blue Coat Systems 5,661(b) 139,544 JDS Uniphase 13,742(b) 108,012 NETGEAR 9,591(b) 197,958 Plantronics 7,321 193,421 Tellabs 47,291(b) 304,081 --------------- Total 2,013,961 ------------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS (2.4%) Lexmark Intl Cl A 15,751(b) 406,218 NCR 26,010(b) 311,340 Novatel Wireless 17,158(b) 128,342 SanDisk 2,552(b) 64,872 Seagate Technology 59,200(c) 990,416 Western Digital 26,188(b) 994,882 --------------- Total 2,896,070 ------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING (2.6%) Comfort Systems USA 12,316(d) 144,467 EMCOR Group 27,598(b) 664,008 Fluor 15,097 684,498 Granite Construction 10,147(d) 313,339 KBR 27,118 507,920 Layne Christensen 5,102(b) 129,234 Michael Baker 5,342(b,d) 208,391 Shaw Group 6,111(b) 197,324 Tutor Perini 15,945(b) 303,912 --------------- Total 3,153,093 ------------------------------------------------------------------------------------- CONSUMER FINANCE (0.8%) Advance America Cash Advance Centers 28,231 136,356 Cash America Intl 3,005 112,958 Discover Financial Services 44,722 611,797 EZCORP Cl A 5,371(b) 97,537 --------------- Total 958,648 ------------------------------------------------------------------------------------- CONTAINERS & PACKAGING (0.1%) Temple-Inland 7,446 129,337 ------------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES (0.3%) Corinthian Colleges 14,138(b,d) 197,932 Regis 9,104 145,027 --------------- Total 342,959 ------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (0.1%) IntercontinentalExchange 819(b) 78,198 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 11 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) DIVERSIFIED TELECOMMUNICATION SERVICES (1.5%) CenturyTel 29,423 $1,000,677 Neutral Tandem 10,164(b) 157,135 Qwest Communications Intl 175,188 737,541 --------------- Total 1,895,353 ------------------------------------------------------------------------------------- ELECTRIC UTILITIES (0.5%) Edison Intl 19,960 665,067 ------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT (0.7%) EnerSys 12,131(b) 236,433 General Cable 8,078(b) 235,070 GrafTech Intl 32,855(b) 412,659 --------------- Total 884,162 ------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (2.9%) Agilent Technologies 7,908(b) 221,661 Anixter Intl 13,027(b,d) 542,966 Arrow Electronics 11,100(b) 291,597 Avnet 9,011(b) 238,251 Benchmark Electronics 14,414(b) 262,623 Ingram Micro Cl A 17,533(b) 296,308 Insight Enterprises 18,381(b) 211,565 Jabil Circuit 15,372 222,587 Littelfuse 4,368(b) 131,302 Methode Electronics 19,678 216,261 Plexus 7,141(b,d) 242,865 SYNNEX 9,983(b,d) 264,250 Tech Data 6,843(b) 278,852 Vishay Intertechnology 16,826(b) 126,868 --------------- Total 3,547,956 ------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (5.6%) Atwood Oceanics 7,276(b) 243,892 BJ Services 15,288 316,003 Bristow Group 3,455(b) 123,344 Cal Dive Intl 12,100(b) 85,184 CARBO Ceramics 2,894 190,772 Complete Production Services 17,022(b) 213,286 Diamond Offshore Drilling 5,617(d) 514,124 Dril-Quip 5,541(b) 290,847 GulfMark Offshore 7,779(b) 190,974 Helmerich & Payne 10,370 433,777 Key Energy Services 48,202(b,d) 466,354 Lufkin Inds 6,165 390,738 Nabors Inds 13,204(b,c) 294,449 Oil States Intl 5,908(b) 217,651 Parker Drilling 54,091(b,d) 260,178 Patterson-UTI Energy 17,797 273,362 Pride Intl 19,032(b,d) 563,347 Rowan Companies 20,868(b) 448,245 SEACOR Holdings 1,884(b) 132,351 Superior Energy Services 8,946(b) 205,490 TETRA Technologies 23,066(b,d) 241,270 Tidewater 7,954 372,406 Unit 4,876(b,d) 222,053 Willbros Group 13,829(b) 211,445 --------------- Total 6,901,542 ------------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (2.1%) Andersons 3,961 106,868 BJ's Wholesale Club 3,864(b) 130,565 Ingles Markets Cl A 10,711 151,668 Pantry 8,606(b) 115,923 Ruddick 10,053(d) 285,003 Safeway 37,160 834,241 SUPERVALU 32,758 481,870 Whole Foods Market 10,191(b) 277,399 Winn-Dixie Stores 21,954(b,d) 222,394 --------------- Total 2,605,931 ------------------------------------------------------------------------------------- FOOD PRODUCTS (1.6%) American Italian Pasta Cl A 3,649(b) 125,015 Bunge 6,917 406,649 Cal-Maine Foods 8,223(d) 268,481 Chiquita Brands Intl 6,377(b) 93,551 Darling Intl 20,958(b) 163,263 Dean Foods 15,141(b) 266,936 Fresh Del Monte Produce 19,703(b,c) 400,562 Green Mountain Coffee Roasters 2,435(b) 206,537 --------------- Total 1,930,994 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 12 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) GAS UTILITIES (0.4%) Laclede Group 5,366 $173,107 Questar 6,310 261,739 --------------- Total 434,846 ------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES (1.0%) Abaxis 4,671(b) 112,478 ev3 18,536(b,d) 270,255 Intuitive Surgical 1,714(b) 562,295 Orthofix Intl 3,602(b,c,d) 108,528 Sirona Dental Systems 4,208(b) 135,371 --------------- Total 1,188,927 ------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES (6.0%) AMERIGROUP 18,284(b,d) 465,328 Centene 12,454(b) 239,740 CIGNA 32,445 1,095,668 Coventry Health Care 27,609(b) 631,694 Health Management Associates Cl A 17,524(b) 116,359 Health Net 15,514(b) 376,370 HealthSpring 27,447(b) 477,303 HMS Holdings 5,391(b,d) 243,080 Humana 22,599(b) 1,098,764 Kindred Healthcare 27,824(b) 470,504 Magellan Health Services 22,468(b) 887,037 Molina Healthcare 11,081(b,d) 246,552 RehabCare Group 6,256(b) 181,799 Sun Healthcare Group 11,234(b) 98,185 Triple-S Management Cl B 14,760(b,c,d) 244,868 Universal American Financial 18,692(b) 249,725 WellCare Health Plans 13,446(b) 419,246 --------------- Total 7,542,222 ------------------------------------------------------------------------------------- HEALTH CARE TECHNOLOGY (0.2%) Eclipsys 7,843(b) 130,821 IMS Health 7,862 170,134 --------------- Total 300,955 ------------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE (0.8%) Bally Technologies 7,604(b,d) 301,651 California Pizza Kitchen 11,637(b,d) 160,591 Las Vegas Sands 20,107(b) 311,658 Wyndham Worldwide 12,590 264,264 --------------- Total 1,038,164 ------------------------------------------------------------------------------------- HOUSEHOLD DURABLES (2.4%) American Greetings Cl A 13,283 245,470 Garmin 18,692(c,d) 603,939 Harman Intl Inds 7,325 260,404 NVR 343(b) 234,660 Tupperware Brands 18,544 787,378 Whirlpool 10,230(e) 769,091 --------------- Total 2,900,942 ------------------------------------------------------------------------------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS (1.1%) AES 16,168(b) 204,202 Constellation Energy Group 18,161 586,237 Mirant 14,274(b) 200,835 NRG Energy 14,138(b) 340,867 --------------- Total 1,332,141 ------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES (0.6%) McDermott Intl 21,156(b) 499,705 Seaboard 222 273,060 --------------- Total 772,765 ------------------------------------------------------------------------------------- INSURANCE (9.2%) Allied World Assurance Holdings 3,977(c) 178,011 American Financial Group 13,050 323,771 American Physicians Capital 5,376 149,238 Amerisafe 11,109(b,d) 192,186 AmTrust Financial Services 8,859 106,042 Arch Capital Group 3,096(b,c) 221,488 Argo Group Intl Holdings 5,930(b,c) 158,568 Assurant 14,458 454,415 CNA Surety 8,227(b) 115,178
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 13 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) INSURANCE (CONT.) Conseco 57,967(b) $275,923 eHealth 6,815(b) 124,033 Employers Holdings 23,501 310,918 Endurance Specialty Holdings 5,432(c) 195,661 FBL Financial Group Cl A 3,582 64,261 Flagstone Reinsurance Holdings 6,794(c) 71,133 FPIC Insurance Group 2,276(b) 86,374 Genworth Financial Cl A 66,881(b) 925,633 Hartford Financial Services Group 43,540 1,044,524 HCC Insurance Holdings 8,070 218,697 Horace Mann Educators 23,121 277,221 Lincoln Natl 20,510 504,136 Max Capital Group 9,339(c) 210,314 Meadowbrook Insurance Group 17,729 119,671 Montpelier Re Holdings 15,112(c) 255,242 Natl Financial Partners 22,382(b) 189,128 PartnerRe 5,123(c) 382,125 Platinum Underwriters Holdings 28,618(c) 1,037,689 Principal Financial Group 36,826 848,839 ProAssurance 9,523(b,d) 483,387 Protective Life 10,872 183,193 RenaissanceRe Holdings 3,653(c) 197,920 Safety Insurance Group 7,026 245,910 SeaBright Insurance Holdings 15,885(b) 161,709 Validus Holdings 4,262(c) 112,943 XL Capital Cl A 41,032(c) 688,107 Zenith Natl Insurance 10,259(d) 286,226 --------------- Total 11,399,814 ------------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL (0.6%) Expedia 11,802(b) 252,681 Liberty Media -- Interactive Cl A 34,254(b,g) 355,556 NutriSystem 8,782(d) 178,802 --------------- Total 787,039 ------------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES (0.9%) EarthLink 65,986(d) 535,146 ModusLink Global Solutions 16,987(b) 172,418 ValueClick 12,142(b) 112,314 Vistaprint 5,143(b,c,d) 288,059 --------------- Total 1,107,937 ------------------------------------------------------------------------------------- IT SERVICES (2.2%) Ciber 33,810(b,d) 109,206 Computer Sciences 19,087(b) 979,164 CSG Systems Intl 11,159(b) 216,596 Euronet Worldwide 9,815(b) 200,422 Heartland Payment Systems 8,578 122,408 Ness Technologies 12,754(b,c) 70,657 SAIC 20,334(b) 372,722 TeleTech Holdings 9,087(b) 173,016 Unisys 3,692(b) 106,662 Wright Express 10,527(b,d) 309,073 --------------- Total 2,659,926 ------------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS (0.4%) Brunswick 9,676(d) 103,823 JAKKS Pacific 19,935(b,d) 219,286 Polaris Inds 4,548 201,067 --------------- Total 524,176 ------------------------------------------------------------------------------------- MACHINERY (3.2%) AGCO 11,567(b) 357,536 Bucyrus Intl 4,758 249,224 Chart Inds 13,584(b,d) 219,110 Cummins 8,777 396,369 EnPro Inds 5,393(b,d) 131,320 Force Protection 35,930(b) 182,884 FreightCar America 6,680 130,260 Joy Global 5,012 229,249 Manitowoc 10,735 117,012 Mueller Inds 11,774 289,523
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 14 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) MACHINERY (CONT.) NACCO Inds Cl A 1,292 $69,535 Navistar Intl 3,143(b) 116,260 Nordson 8,338(d) 471,430 Oshkosh 14,100 508,586 Terex 13,561(b) 265,118 Timken 11,030 247,182 --------------- Total 3,980,598 ------------------------------------------------------------------------------------- MEDIA (1.4%) CBS Cl B 22,925 296,420 DISH Network Cl A 23,386 427,028 Gannett 10,602 171,222 Interpublic Group of Companies 38,533(b,d) 248,923 Liberty Media -- Capital Series A 5,612(b,g) 145,295 Natl CineMedia 11,601 173,783 Virgin Media 17,851 253,306 --------------- Total 1,715,977 ------------------------------------------------------------------------------------- METALS & MINING (3.3%) AK Steel Holding 9,681 196,912 Allegheny Technologies 9,454 386,196 AM Castle & Co 7,999(d) 77,590 Brush Engineered Materials 5,807(b) 104,352 Carpenter Technology 4,492 120,386 Century Aluminum 14,864(b) 168,260 Cliffs Natural Resources 10,985 438,851 Commercial Metals 17,661 242,662 Horsehead Holding 20,299(b,d) 198,930 Kaiser Aluminum 4,120 144,818 Olympic Steel 4,291(d) 119,032 Reliance Steel & Aluminum 9,132 372,038 RTI Intl Metals 9,210(b,d) 227,948 United States Steel 15,577(d) 692,086 Walter Energy 5,448 353,684 Worthington Inds 12,909 186,793 --------------- Total 4,030,538 ------------------------------------------------------------------------------------- MULTILINE RETAIL (1.5%) Big Lots 4,249(b) 120,714 Dillard's Cl A 15,544(d) 257,409 Family Dollar Stores 8,655 267,266 JC Penney 20,587(e) 511,176 Macy's 13,908 221,554 Nordstrom 11,517(d) 397,797 Sears Holdings 1,421(b,d) 132,551 --------------- Total 1,908,467 ------------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (5.1%) ATP Oil & Gas 13,672(b) 197,834 Bill Barrett 8,171(b) 253,301 Cimarex Energy 3,889 191,378 CVR Energy 8,223(b) 65,948 Frontier Oil 20,108 250,546 Frontline 7,726(c,d) 232,244 Gran Tierra Energy 31,218(b,c) 152,656 Knightsbridge Tankers 10,267(c) 147,947 Massey Energy 3,978 153,233 McMoRan Exploration 21,618(b,d) 328,810 Murphy Oil 21,591 1,102,868 Newfield Exploration 4,443(b) 217,440 Patriot Coal 16,874(b,d) 261,378 Penn Virginia 6,496 157,658 Petroleum Development 6,350(b) 133,096 Rosetta Resources 9,754(b) 200,542 St. Mary Land & Exploration 9,404 301,304 Stone Energy 10,998(b) 175,308 Sunoco 12,303 308,682 Swift Energy 8,629(b,d) 216,243 Tesoro 18,449(d) 230,613 USEC 40,179(b) 160,716 Western Refining 24,057(b,d) 109,940 Whiting Petroleum 3,162(b) 210,463 World Fuel Services 21,962(d) 527,747 --------------- Total 6,287,895 ------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (1.2%) Clearwater Paper 3,565(b) 174,435 Intl Paper 28,346 649,407 MeadWestvaco 11,528 277,479 Schweitzer-Mauduit Intl 5,292 398,170 --------------- Total 1,499,491 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 15 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) PERSONAL PRODUCTS (0.2%) Nu Skin Enterprises Cl A 12,353 $287,084 ------------------------------------------------------------------------------------- PHARMACEUTICALS (1.4%) Endo Pharmaceuticals Holdings 14,166(b) 284,878 Forest Laboratories 28,973(b) 858,760 Par Pharmaceutical Companies 11,210(b) 295,047 Questcor Pharmaceuticals 16,483(b) 74,668 ViroPharma 15,989(b) 157,971 --------------- Total 1,671,324 ------------------------------------------------------------------------------------- PROFESSIONAL SERVICES (0.9%) Administaff 12,253 279,858 Heidrick & Struggles Intl 5,020(d) 127,659 ICF Intl 4,621(b) 108,178 Kelly Services Cl A 7,693(b,d) 100,932 Korn/Ferry Intl 7,132(b) 105,554 Manpower 3,139 162,568 Spherion 23,273(b) 131,260 TrueBlue 8,205(b,d) 119,054 --------------- Total 1,135,063 ------------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS (REITS) (1.7%) American Capital Agency 3,287 87,730 Anworth Mtge Asset 31,416 216,770 Capstead Mtge 41,049 545,131 Entertainment Properties Trust 6,304 220,073 Hospitality Properties Trust 12,368 273,580 Medical Properties Trust 12,025 120,370 MFA Financial 42,426 312,255 NorthStar Realty Finance 22,213 100,847 SL Green Realty 4,320 196,517 --------------- Total 2,073,273 ------------------------------------------------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT (0.4%) CB Richard Ellis Group Cl A 16,611(b,d) 204,315 Jones Lang LaSalle 4,305(d) 245,428 --------------- Total 449,743 ------------------------------------------------------------------------------------- ROAD & RAIL (0.4%) Arkansas Best 10,699 241,155 Hertz Global Holdings 18,921(b,d) 196,022 Saia 7,629(b,d) 91,548 --------------- Total 528,725 ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (3.2%) Amkor Technology 35,189(b,d) 200,225 Atheros Communications 15,865(b) 508,791 Cavium Networks 5,479(b) 118,401 Cree 3,463(b) 193,616 Marvell Technology Group 22,888(b,c) 398,938 Micron Technology 64,112(b) 559,056 Monolithic Power Systems 12,491(b) 257,564 NetLogic Microsystems 4,369(b) 178,954 NVIDIA 12,474(b) 191,975 OmniVision Technologies 21,473(b) 277,002 Power Integrations 5,911 184,482 Sigma Designs 13,255(b,d) 147,263 Silicon Image 33,604(b,d) 80,986 Skyworks Solutions 25,127(b) 318,862 Teradyne 12,884(b) 120,337 Volterra Semiconductor 5,620(b) 109,534 Zoran 5,974(b) 65,535 --------------- Total 3,911,521 ------------------------------------------------------------------------------------- SOFTWARE (2.0%) ArcSight 4,582(b) 108,823 Blackbaud 6,624 147,715 Informatica 12,808(b,d) 303,421 MicroStrategy Cl A 2,097(b) 196,531 Pegasystems 5,729(d) 190,489 Rovi 8,394(b) 242,335 Sourcefire 5,513(b) 114,946 SuccessFactors 6,934(b) 113,024
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 16 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) SOFTWARE (CONT.) Take-Two Interactive Software 21,028(b,d) $195,140 Taleo Cl A 8,657(b) 175,824 TIBCO Software 35,261(b) 315,938 TiVo 21,205(b) 191,269 Ultimate Software Group 4,951(b) 148,035 --------------- Total 2,443,490 ------------------------------------------------------------------------------------- SPECIALTY RETAIL (6.9%) Abercrombie & Fitch Cl A 6,301(d) 198,734 American Eagle Outfitters 16,203 257,466 AnnTaylor Stores 17,022(b) 213,796 Asbury Automotive Group 10,450(b) 115,682 AutoNation 14,491(b,d) 260,838 Barnes & Noble 10,336(d) 180,673 Big 5 Sporting Goods 8,107 118,443 Brown Shoe 14,962(d) 183,285 Cabela's 7,407(b) 119,401 CarMax 10,222(b) 210,880 Cato Cl A 10,990(d) 224,746 Chico's FAS 20,610(b,d) 263,190 Children's Place Retail Stores 8,374(b,d) 266,293 Collective Brands 10,930(b) 215,102 Dress Barn 17,911(b) 421,625 Foot Locker 19,168 216,407 GameStop Cl A 10,481(b) 207,209 Genesco 11,899(b) 280,578 Group 1 Automotive 12,400(b,d) 359,600 GUESS? 4,486 178,139 Gymboree 3,680(b,d) 143,557 Hot Topic 29,515(b,d) 169,711 Jo-Ann Stores 10,690(b,d) 374,364 Jos A Bank Clothiers 2,918(b,d) 122,293 Men's Wearhouse 22,598(d) 455,350 Office Depot 41,980(b) 238,446 OfficeMax 22,563(b) 292,642 Pacific Sunwear of California 34,329(b,d) 120,838 PetSmart 10,279 264,684 RadioShack 25,829 504,182 Rent-A-Center 17,486(b) 349,720 Signet Jewelers 11,339(b,c) 310,235 Sonic Automotive Cl A 12,410(b) 118,516 Stage Stores 11,163(d) 144,226 Wet Seal Cl A 56,235(b,d) 188,387 Williams-Sonoma 14,891 282,631 --------------- Total 8,571,869 ------------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS (1.6%) Crocs 31,391(b) 230,724 Deckers Outdoor 2,031(b) 199,383 Fossil 12,501(b) 408,158 Iconix Brand Group 15,208(b) 191,925 Jones Apparel Group 15,451 223,112 Skechers USA Cl A 7,880(b) 221,113 Warnaco Group 11,402(b) 441,485 --------------- Total 1,915,900 ------------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE (0.2%) Ocwen Financial 21,552(b,d) 197,416 ------------------------------------------------------------------------------------- TOBACCO (0.4%) Alliance One Intl 30,949(b,d) 157,530 Universal 7,196(d) 326,627 --------------- Total 484,157 ------------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS (0.5%) H&E Equipment Services 20,609(b,d) 218,661 United Rentals 14,496(b) 116,113 WESCO Intl 10,524(b,d) 291,726 --------------- Total 626,500 ------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (0.6%) NII Holdings 7,474(b) 244,699 Syniverse Holdings 15,887(b) 267,061 Telephone & Data Systems 3,304 104,241 USA Mobility 10,152 105,479 --------------- Total 721,480 ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $101,388,570) $121,325,829 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
MONEY MARKET FUND (0.3%) SHARES VALUE(a) RiverSource Short-Term Cash Fund, 0.16% 336,878(f) $336,878 ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $336,878) $336,878 ------------------------------------------------------------------------------------- INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (11.2%) SHARES VALUE(a) CASH COLLATERAL REINVESTMENT FUND JPMorgan Prime Money Market Fund 13,845,107 $13,845,107 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $13,845,107) $13,845,107 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $115,570,555)(h) $135,507,814 =====================================================================================
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. INVESTMENTS IN DERIVATIVES FUTURES CONTRACTS OUTSTANDING AT JAN. 31, 2010
NUMBER OF UNREALIZED CONTRACTS NOTIONAL EXPIRATION APPRECIATION CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION) ------------------------------------------------------------------------------------ E-Mini S&P MidCap 400 Index 17 $1,192,210 March 2010 $(12,625) Russell 2000 Mini Index 15 901,500 March 2010 (9,301) ------------------------------------------------------------------------------------ Total $(21,926) ------------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At Jan. 31, 2010, the value of foreign securities, excluding short-term securities, represented 6.92% of net assets. (d) At Jan. 31, 2010, security was partially or fully on loan. See Note 7 to the financial statements. (e) At Jan. 31, 2010, investments in securities included securities valued at $424,125 that were partially pledged as collateral to cover initial margin deposits on open stock index futures contracts. (f) Affiliated Money Market Fund -- See Note 8 to the financial statements. The rate shown is the seven-day current annualized yield at Jan. 31, 2010. -------------------------------------------------------------------------------- 18 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (g) Shareholders of tracking stocks have a financial interest only in a unit or division of the company. Unlike the common stock of the company itself, a tracking stock usually has limited or no voting rights. In the event of a company's liquidation, tracking stock shareholders typically do not have a legal claim on the company's assets. (h) At Jan. 31, 2010, the cost of securities for federal income tax purposes was approximately $115,571,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $24,425,000 Unrealized depreciation (4,488,000) ----------------------------------------------------------- Net unrealized appreciation $19,937,000 -----------------------------------------------------------
-------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 19 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require disclosure regarding the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. The Fund categorizes its fair value measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund's assumptions about the information market participants would use in pricing an investment. An investment's level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset or liability's fair value measurement. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. Fair value inputs are summarized in the three broad levels listed below: - Level 1 -- Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. - Level 2 -- Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). - Level 3 -- Valuations based on significant unobservable inputs (including the Fund's own assumptions and judgment in determining the fair value of investments). Inputs that are used in determining fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Fund Administrator, along with any other relevant factors in the calculation of an investment's fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy. Non-U.S. equity securities actively traded in foreign markets may be reflected in Level 2 despite the availability of closing prices, because the Fund evaluates and determines whether those closing prices reflect fair value at the close of the New York Stock Exchange (NYSE) or require adjustment, as described in Note 2 to the financial statements -- Valuation of securities. Investments falling into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as -------------------------------------------------------------------------------- 20 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) Level 3 investments due to lack of market transparency and corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in a valuation model may include, but are not limited to, financial statement analysis, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of Jan. 31, 2010:
FAIR VALUE AT JAN. 31, 2010 --------------------------------------------------------------- LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL --------------------------------------------------------------------------------------------- Equity Securities Common Stocks(a) $121,325,829 $-- $-- $121,325,829 --------------------------------------------------------------------------------------------- Total Equity Securities 121,325,829 -- -- 121,325,829 --------------------------------------------------------------------------------------------- Other Affiliated Money Market Fund(b) 336,878 -- -- 336,878 Investments of Cash Collateral Received for Securities on Loan(c) 13,845,107 -- -- 13,845,107 --------------------------------------------------------------------------------------------- Total Other 14,181,985 -- -- 14,181,985 --------------------------------------------------------------------------------------------- Investments in Securities 135,507,814 -- -- 135,507,814 Other Financial Instruments(d) (21,926) -- -- (21,926) --------------------------------------------------------------------------------------------- Total $135,485,888 $-- $-- $135,485,888 ---------------------------------------------------------------------------------------------
(a) Industry classifications are identified in the Portfolio of Investments. (b) Money market fund that is a sweep investment for cash balances in the Fund at Jan. 31, 2010. (c) Asset categories for Investments of Cash Collateral are identified in the Portfolio of Investments. (d) Other Financial Instruments are derivative instruments, which are valued at the unrealized appreciation (depreciation) on the instrument. Derivative descriptions are located in the Investments in Derivatives section of the Portfolio of Investments. HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY 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 filed on Form N-Q, can be obtained without charge, upon request, by calling the RiverSource Family of Funds at 1(800) 221-2450. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 21 STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- JAN. 31, 2010 (UNAUDITED)
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $101,388,570) $121,325,829 Affiliated money market fund (identified cost $336,878) 336,878 Investments of cash collateral received for securities on loan (identified cost $13,845,107) 13,845,107 ------------------------------------------------------------------------------- Total investments in securities (identified cost $115,570,555) 135,507,814 Capital shares receivable 276,968 Dividends and accrued interest receivable 46,028 Receivable for investment securities sold 8,160,651 ------------------------------------------------------------------------------- Total assets 143,991,461 ------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash 11 Capital shares payable 723,284 Payable for investment securities purchased 6,163,406 Payable upon return of securities loaned 13,845,107 Variation margin payable on futures contracts 23,582 Accrued investment management services fees 2,401 Accrued distribution fees 742 Accrued transfer agency fees 596 Accrued administrative services fees 206 Other accrued expenses 39,822 ------------------------------------------------------------------------------- Total liabilities 20,799,157 ------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $123,192,304 ------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 180,212 Additional paid-in capital 125,302,582 Excess of distributions over net investment income (32,707) Accumulated net realized gain (loss) (22,173,116) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 19,915,333 ------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $123,192,304 ------------------------------------------------------------------------------- *Value of securities on loan $ 13,359,452 -------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $ 9,920,350 1,446,919 $6.86(1) Class B $ 902,638 134,802 $6.70 Class C $ 254,358 37,966 $6.70 Class I $20,166,740 2,935,992 $6.87 Class R4 $ 8,273 1,206 $6.86 Class W $91,939,945 13,464,271 $6.83 ----------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $7.28. 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. -------------------------------------------------------------------------------- 22 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT STATEMENT OF OPERATIONS -------------------------------------------------------- SIX MONTHS ENDED JAN. 31, 2010 (UNAUDITED)
INVESTMENT INCOME Income: Dividends $ 959,566 Income distributions from affiliated money market fund 2,216 Income from securities lending -- net 61,974 ------------------------------------------------------------------------------ Total income 1,023,756 ------------------------------------------------------------------------------ Expenses: Investment management services fees 385,948 Distribution fees Class A 12,984 Class B 4,834 Class C 1,473 Class W 129,818 Transfer agency fees Class A 13,992 Class B 1,379 Class C 407 Class R4 2 Class W 103,854 Administrative services fees 40,549 Plan administration services fees -- Class R4 10 Compensation of board members 2,010 Custodian fees 5,227 Printing and postage 36,625 Registration fees 7,457 Professional fees 6,746 Other 4,553 ------------------------------------------------------------------------------ Total expenses 757,868 ------------------------------------------------------------------------------ Investment income (loss) -- net 265,888 ------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions 16,633,582 Futures contracts 404,990 ------------------------------------------------------------------------------ Net realized gain (loss) on investments 17,038,572 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (3,026,836) ------------------------------------------------------------------------------ Net gain (loss) on investments and foreign currencies 14,011,736 ------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $14,277,624 ------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 23 STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2010 JULY 31, 2009 (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 265,888 $ 434,794 Net realized gain (loss) on investments 17,038,572 (21,892,627) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (3,026,836) 26,269,090 -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 14,277,624 4,811,257 -------------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (25,228) -- Class I (135,774) (76,661) Class R4 (37) (28) Class W (129,029) (331,470) Tax return of capital Class I -- (14,347) Class R4 -- (4) Class W -- (77,411) -------------------------------------------------------------------------------------------------- Total distributions (290,068) (499,921) --------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 24 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2010 JULY 31, 2009 (UNAUDITED) CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 1,060,879 $ 6,309,131 Class B shares 54,339 674,807 Class C shares 13,622 208,691 Class I shares 2,910,600 30,487,874 Class W shares 5,901,731 167,849,227 Reinvestment of distributions at net asset value Class A shares 24,217 -- Class I shares 135,727 90,986 Class R4 shares 6 6 Class W shares 129,025 408,872 Conversions from Class B to Class A Class A shares -- 246,654 Class B shares -- (246,654) Payments for redemptions Class A shares (2,255,654) (8,114,777) Class B shares (171,750) (285,979) Class C shares (74,850) (63,129) Class I shares (5,406,201) (21,030,480) Class W shares (53,163,113) (60,828,360) -------------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (50,841,422) 115,706,869 -------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (36,853,866) 120,018,205 Net assets at beginning of period 160,046,170 40,027,965 -------------------------------------------------------------------------------------------------- Net assets at end of period $123,192,304 $160,046,170 -------------------------------------------------------------------------------------------------- Excess of distributions over net investment income $ (32,707) $ (8,527) --------------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 25 FINANCIAL HIGHLIGHTS ----------------------------------------------------------- The following tables are intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. For periods ended 2007 and after, per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS A JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.24 $8.39 $9.55 $8.95 $9.48 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 .01 .00(b) .05 -- Net gains (losses) (both realized and unrealized) .63 (2.16)(c) (1.14) .59 (.53) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .64 (2.15) (1.14) .64 (.53) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) -- (.02) (.04) -- Tax return of capital -- -- (.00)(b) -- -- --------------------------------------------------------------------------------------------------------------------- Total distributions (.02) -- (.02) (.04) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.86 $6.24 $8.39 $9.55 $8.95 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 10.20% (25.63%) (11.94%) 7.12% (5.59%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement 1.25%(e) 1.40% 1.32% 1.67% 5.83%(e) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(f) 1.25%(e) 1.29%(g) 1.20%(g) 1.29% 1.26%(e) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .27%(e) .18% .05% .52% .01%(e) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $10 $10 $17 $18 $9 --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 104% 56% 84% 14% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 26 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS B JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.11 $8.27 $9.47 $8.93 $9.48 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.02) (.03) (.06) (.04) (.01) Net gains (losses) (both realized and unrealized) .61 (2.13)(c) (1.14) .62 (.54) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .59 (2.16) (1.20) .58 (.55) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- (.04) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.70 $6.11 $8.27 $9.47 $8.93 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 9.66% (26.12%) (12.67%) 6.43% (5.80%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement 2.01%(e) 2.17% 2.09% 2.12% 6.64%(e) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(f) 2.01%(e) 2.08%(g) 1.97%(g) 2.06% 2.07%(e) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.50%)(e) (.60%) (.71%) (.41%) (.37%)(e) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 $1 $1 $-- --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 104% 56% 84% 14% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 27 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS C JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.11 $8.27 $9.47 $8.93 $9.48 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.02) (.03) (.06) (.04) (.01) Net gains (losses) (both realized and unrealized) .61 (2.13)(c) (1.14) .61 (.54) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .59 (2.16) (1.20) .57 (.55) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- (.03) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.70 $6.11 $8.27 $9.47 $8.93 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 9.66% (26.12%) (12.67%) 6.37% (5.80%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement 2.00%(e) 2.16% 2.08% 2.16% 6.61%(e) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(f) 2.00%(e) 2.07%(g) 1.96%(g) 2.06% 2.04%(e) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.48%)(e) (.56%) (.72%) (.40%) (.78%)(e) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- $-- --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 104% 56% 84% 14% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 28 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS I JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.27 $8.41 $9.57 $8.95 $9.48 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .04 .05 .08 -- Net gains (losses) (both realized and unrealized) .62 (2.16)(c) (1.16) .59 (.53) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .65 (2.12) (1.11) .67 (.53) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.02) (.04) (.05) -- Tax return of capital -- (.00)(b) (.01) -- -- --------------------------------------------------------------------------------------------------------------------- Total distributions (.05) (.02) (.05) (.05) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.87 $6.27 $8.41 $9.57 $8.95 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 10.30% (25.15%) (11.63%) 7.48% (5.59%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement .72%(e) .85% .91% .95% 5.58%(e) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(f) .72%(e) .85%(g) .84%(g) .95% 1.01%(e) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .79%(e) .68% .50% .80% .19%(e) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $20 $21 $15 $39 $-- --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 104% 56% 84% 14% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 29 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS R4 JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.25 $8.42 $9.56 $8.95 $9.48 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02 .03 .04 .07 -- Net gains (losses) (both realized and unrealized) .62 (2.17)(c) (1.14) .58 (.53) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .64 (2.14) (1.10) .65 (.53) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.03) (.03) (.03) (.04) -- Tax return of capital -- (.00)(b) (.01) -- -- --------------------------------------------------------------------------------------------------------------------- Total distributions (.03) (.03) (.04) (.04) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.86 $6.25 $8.42 $9.56 $8.95 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 10.23% (25.41%) (11.48%) 7.30% (5.59%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement 1.01%(e) 1.17% 1.23% 1.68% 5.69%(e) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(f) 1.01%(e) 1.01%(g) .84%(g) 1.15% 1.12%(e) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .51%(e) .47% .42% .71% .21%(e) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- $-- --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 104% 56% 84% 14% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 30 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS W JAN. 31, 2010 --------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007(h) Net asset value, beginning of period $6.21 $8.36 $9.54 $9.79 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 .01 .01 -- Net gains (losses) (both realized and unrealized) .62 (2.14)(c) (1.17) (.20) ---------------------------------------------------------------------------------------------------------- Total from investment operations .63 (2.13) (1.16) (.20) ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.01) (.02) (.01) (.05) Tax return of capital -- (.00)(b) (.01) -- ---------------------------------------------------------------------------------------------------------- Total distributions (.01) (.02) (.02) (.05) ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.83 $6.21 $8.36 $9.54 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 10.13% (25.47%) (12.13%) (2.06%) ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement 1.17%(e) 1.29% 1.34% 1.60%(e) ---------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(f) 1.17%(e) 1.29%(g) 1.31%(g) 1.32%(e) ---------------------------------------------------------------------------------------------------------- Net investment income (loss) .34%(e) .28% .08% .03%(e) ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $92 $128 $7 $57 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 41% 104% 56% 84% ----------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For the period from May 18, 2006 (when shares became publicly available) to July 31, 2006. (b) Rounds to zero. (c) Calculation of the net loss per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gains presented in the Statement of Operations due to the timing of sales and repurchases of Fund shares in relation to fluctuations in the market value of the portfolio. (d) Expense ratios include the impact of a performance incentive adjustment, if any. 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 underlying funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (e) Annualized. (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) 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 years ended July 31, 2009 and 2008. (h) For the period from Dec. 1, 2006 (when shares became publicly available) to July 31, 2007. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 31 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- (UNAUDITED AS OF JAN. 31, 2010) 1. ORGANIZATION RiverSource Disciplined Small and Mid Cap Equity Fund (the Fund) is a series of RiverSource Dimensions Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act) as a diversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board). The Fund invests primarily in equity securities of companies with market capitalizations of up to $5 billion or that fall within the range of companies that comprise the Russell 2500(TM )Index at the time of investment. The Fund offers Class A, Class B, Class C, Class I, Class R4 and Class W shares. - Class A shares are offered with a front-end sales charge, which may be waived under certain circumstances. - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, 2009. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. - Class C shares may be subject to a CDSC. - Class I and Class R4 shares are offered without a front-end sales charge or CDSC to qualifying institutional investors. - Class W shares are offered without a front-end sales charge or CDSC and are offered through qualifying discretionary accounts. At Jan. 31, 2010, RiverSource Investments, LLC (RiverSource Investments or the Investment Manager) and affiliated funds-of-funds in the RiverSource Family of Funds owned 100% of Class I 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. -------------------------------------------------------------------------------- 32 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ADOPTION OF NEW ACCOUNTING STANDARD In June 2009, the Financial Accounting Standards Board (FASB) established the FASB Accounting Standards Codification(TM )(Codification) as the single source of authoritative accounting principles recognized by the FASB in the preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP). The Codification supersedes existing non-grandfathered, non- SEC accounting and reporting standards. The Codification did not change GAAP but, rather, organized it into a hierarchy where all guidance within the Codification carries an equal level of authority. The Codification became effective for financial statements issued for interim and annual periods ending after Sept. 15, 2009. The Codification did not have an effect on the Fund's financial statements. USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. 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 NYSE and therefore the closing prices for securities in such markets or on -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 33 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- such exchanges may not fully reflect events that occur after such close but before the close of the NYSE, 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 NYSE. 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. Typically, those maturing in 60 days or less that originally had maturities of more than 60 days at acquisition date are valued at amortized cost using the market value on the 61st day before maturity. Short-term securities maturing in 60 days or less at acquisition date are valued at amortized cost. Amortized cost is an approximation of market value. Investments in money market funds are valued at net asset value. FOREIGN CURRENCY TRANSLATIONS 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. 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. -------------------------------------------------------------------------------- 34 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- 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 (which includes net short-term capital gains) to shareholders. No provision for income or excise taxes is thus required. 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 tax returns filed for the last three years. RECENT ACCOUNTING PRONOUNCEMENT On Jan. 21, 2010, the FASB issued an Accounting Standards Update (the amendment), Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements, which provides guidance on how investment assets and liabilities are to be valued and disclosed. Specifically, the amendment requires reporting entities to disclose the input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 or Level 3 positions. The amendment also requires that transfers between all levels (including Level 1 and Level 2) be disclosed on a gross basis (i.e., transfers out must be disclosed separately from transfers in), and the reason(s) for the transfer. Additionally purchases, sales, issuances and settlements must be disclosed on a gross basis in the Level 3 rollforward. The effective date of the amendment is for interim and annual periods beginning after Dec. 15, 2009, however, the requirement to provide the Level 3 activity for purchases, sales, issuances and settlements on a gross basis will be effective for interim and annual periods beginning after Dec. 15, 2010. At this time the Fund is evaluating the implications of the amendment and the impact to the financial statements. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 35 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 3. INVESTMENTS IN DERIVATIVES The Fund may invest in certain derivative instruments, which are transactions whose values depend on or are derived from (in whole or in part) the value of one or more other assets, such as securities, currencies, commodities or indices. Such derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, to facilitate trading, to reduce transaction costs, and to pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk, and credit risk. Investments in derivative instruments may expose the Fund to certain additional risks, including those detailed below. FUTURES TRANSACTIONS The Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange to produce incremental earnings, hedge existing positions or protect against market changes in the value of equities, interest rates or foreign currencies. The Fund may also buy and write put and call options on these futures contracts. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date. 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. Upon entering into futures contracts, the Fund bears the risk of interest rates, exchange rates or securities prices moving unexpectedly, in which case, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional risks include counterparty credit risk, 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. EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS The following tables are intended to provide additional information about the effect of derivatives on the financial statements of the Fund including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; the impact of derivative transactions on the Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of -------------------------------------------------------------------------------- 36 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. FAIR VALUES OF DERIVATIVE INSTRUMENTS AT JAN. 31, 2010
ASSET DERIVATIVES LIABILITY DERIVATIVES -------------------------------- -------------------------------- STATEMENT OF ASSETS STATEMENT OF ASSETS RISK EXPOSURE AND LIABILITIES AND LIABILITIES CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE ---------------------------------------------------------------------------------------------- Equity contracts Net assets -- unrealized depreciation on N/A N/A investments $21,926* ---------------------------------------------------------------------------------------------- Total N/A $21,926 ----------------------------------------------------------------------------------------------
* Includes cumulative appreciation (depreciation) of futures contracts as reported in the Futures Contracts Outstanding table following the Portfolio of Investments. Only the current day's variation margin is reported in receivables or payables in the Statement of Assets and Liabilities. EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JAN. 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME ----------------------------------------------------------------- RISK EXPOSURE CATEGORY FUTURES ----------------------------------------------------------------- Equity contracts $404,990 ----------------------------------------------------------------- Total $404,990 -----------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME ----------------------------------------------------------------- RISK EXPOSURE CATEGORY FUTURES ----------------------------------------------------------------- Equity contracts $(33,017) ----------------------------------------------------------------- Total $(33,017) -----------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FUTURES The gross national amount of long contracts outstanding was $2.1 million at Jan. 31, 2010. The monthly average gross national amount for long contracts was $1.6 million for the six months ended Jan. 31, 2010. The fair value of such contracts on Jan. 31, 2010 is set forth in the above table. 4. 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 an annual fee that is equal to a percentage of the Fund's average daily net -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- assets that declines from 0.70% to 0.475% as the Fund's net 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 Mid-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 $87,128 for the six months ended Jan. 31, 2010. The management fee for the six months ended Jan. 31, 2010 was 0.57% 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 an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.06% to 0.03% as the Fund's net assets increase. The fee for the six months ended Jan. 31, 2010 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, 2010, other expenses paid to this company were $377. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund under the 1940 Act 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 funds in the RiverSource Family of Funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the funds until distributed in accordance with the Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains Fund shareholder accounts and records and provides Fund shareholder services. 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 Transfer Agent also charges an annual fee of $3 per account serviced directly by the Fund or its designated agent for Class A, -------------------------------------------------------------------------------- 38 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- Class B and Class C shares. 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 R4 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 the 12 month period from the date the account becomes inactive. These fees are included in the transfer agency fees in 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 R4 shares for the provision of various administrative, recordkeeping, communication and educational services. DISTRIBUTION FEES The Fund has an agreement with RiverSource Fund Distributors, Inc. (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 W 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, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $53,000 and $4,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of Oct. 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, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $13,605 for Class A and $210 for Class B for the six months ended Jan. 31, 2010. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES The Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses until Sept. 30, 2010, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- adjustment, will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.40% Class B.............................................. 2.17 Class C.............................................. 2.16 Class I.............................................. 0.95 Class R4............................................. 1.25 Class W.............................................. 1.40
* 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. 5. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $55,526,387 and $107,369,286, respectively, for the six months ended Jan. 31, 2010. Realized gains and losses are determined on an identified cost basis. 6. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2010 JULY 31, 2009 ---------------------------------------------------------------------- CLASS A Sold 152,701 1,123,483 Converted from Class B* -- 39,528 Reinvested distributions 3,392 -- Redeemed (328,377) (1,539,579) ---------------------------------------------------------------------- Net increase (decrease) (172,284) (376,568) ---------------------------------------------------------------------- CLASS B Sold 8,132 121,575 Converted to Class A* -- (40,369) Redeemed (25,619) (50,038) ---------------------------------------------------------------------- Net increase (decrease) (17,487) 31,168 ---------------------------------------------------------------------- CLASS C Sold 2,030 38,661 Redeemed (10,905) (11,505) ---------------------------------------------------------------------- Net increase (decrease) (8,875) 27,156 ----------------------------------------------------------------------
-------------------------------------------------------------------------------- 40 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2010 JULY 31, 2009 ---------------------------------------------------------------------- CLASS I Sold 425,004 5,323,223 Reinvested distributions 18,983 16,573 Redeemed (823,670) (3,840,456) ---------------------------------------------------------------------- Net increase (decrease) (379,683) 1,499,340 ---------------------------------------------------------------------- CLASS R4 Reinvested distributions 1 1 ---------------------------------------------------------------------- Net increase (decrease) 1 1 ---------------------------------------------------------------------- CLASS W Sold 877,833 31,029,459 Reinvested distributions 18,147 74,885 Redeemed (8,031,109) (11,322,377) ---------------------------------------------------------------------- Net increase (decrease) (7,135,129) 19,781,967 ----------------------------------------------------------------------
* Automatic conversion of Class B shares to Class A shares based on the original purchase date. 7. LENDING OF PORTFOLIO SECURITIES 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 in order to generate additional income on behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured by cash or U.S. government securities equal to at least 100% of the market value of the loaned securities. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. 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 in the Portfolio of Investments. The values of such investments and any uninvested cash collateral balance are disclosed in the Statement of Assets and Liabilities along with the related obligation to return the collateral upon the return of the securities loaned. At Jan. 31, 2010, securities valued at $13,359,452 were on loan, secured by cash collateral of $13,845,107 invested in short-term securities or in cash equivalents. 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 -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. 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. Net income of $61,974 earned from securities lending for the six months ended Jan. 31, 2010 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. 8. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the funds in the RiverSource Family of Funds and other institutional clients of RiverSource Investments. The cost of the Fund's purchases and proceeds from sales of shares of RiverSource Short-Term Cash Fund aggregated $25,329,391 and $24,992,513, respectively, for the six months ended Jan. 31, 2010. 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, 2010, can be found in the Portfolio of Investments. 9. 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. 15, 2009, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds in the RiverSource Family of Funds, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent to request an increase of up to $200 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 $500 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 sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount -------------------------------------------------------------------------------- 42 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- of such excess. 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 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit facility agreement, which was a collective agreement between the Fund and certain other funds in the RiverSource Family of Funds, severally and not jointly, permitted collective borrowings up to $475 million. Interest was charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.75%. 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, 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, 2010. 10. FEDERAL TAX INFORMATION Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of futures contracts, passive foreign investment company (PFIC) holdings, re-characterization of real estate investment trust (REIT) distributions, 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. For federal income tax purposes, the Fund had a capital loss carry-over of $21,435,234 at July 31, 2009, that if not offset by capital gains will expire as follows:
2014 2015 2016 2017 $93,125 $21,904 $2,186,828 $19,133,377
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, 2008 and its fiscal year end (post-October loss) as occurring on the first day of the following tax year. At July 31, 2009, the Fund had a post-October loss of $15,728,006 that is treated for income tax purposes as occurring on Aug. 1, 2009. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 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. There is no assurance that the Fund will be able to utilize all of its capital loss carry-over before it expires. 11. SUBSEQUENT EVENTS Management has evaluated Fund related events and transactions that occurred during the period from the date of the Statement of Assets and Liabilities through the date of issuance of the Fund's financial statements. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund's financial statements. 12. 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 (now known as RiverSource) 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 (the District Court). In response to defendants' motion to dismiss the complaint, the District 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 (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court, asking the U.S. Supreme Court to stay the District Court proceedings while the U.S. Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise -------------------------------------------------------------------------------- 44 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- 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. Incorporated (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 2006, the NYAG commenced a civil action in New York State Supreme Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund Distributors, 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 was and had 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 paid $11.3 million to four -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 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. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. -------------------------------------------------------------------------------- 46 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2010 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 the RiverSource Family of Funds at 1(800) 221-2450; contacting your financial intermediary; 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 SMALL AND MID CAP EQUITY FUND -- 2010 SEMIANNUAL REPORT 47 RIVERSOURCE DISCIPLINED SMALL AND MID 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 Fund Distributors, Inc., Member FINRA, and managed by RiverSource Investments, LLC. RiverSource is part of Ameriprise Financial, Inc. (RIVERSOURCE INVESTMENTS LOGO) (C)2010 RiverSource Investments, LLC. S-6516 E (4/10)
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED JANUARY 31, 2010 RIVERSOURCE DISCIPLINED SMALL CAP VALUE 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.............. 7 Portfolio of Investments........... 10 Statement of Assets and Liabilities...................... 20 Statement of Operations............ 21 Statements of Changes in Net Assets........................... 22 Financial Highlights............... 23 Notes to Financial Statements...... 31 Proxy Voting....................... 47
-------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 1 YOUR FUND AT A GLANCE ---------------------------------------------------------- (UNAUDITED) FUND SUMMARY -------------------------------------------------------------------------------- > RiverSource Disciplined Small Cap Value Fund (the Fund) Class A shares gained 8.43% (excluding sales charge) for the six months ended Jan. 31, 2010. > The Fund underperformed its benchmark, the unmanaged Russell 2000(R) Value Index, which rose 10.63% for the six-month period. > The Fund also underperformed the Lipper Small-Cap Value Funds Index, representing the Fund's peer group, which increased 11.79%, for the same period. ANNUALIZED TOTAL RETURNS (for period ended Jan. 31, 2010) --------------------------------------------------------------------------------
SINCE INCEPTION 6 MONTHS* 1 YEAR 3 YEAR 2/16/06 ---------------------------------------------------------------------- RiverSource Disciplined Small Cap Value Fund Class A (excluding sales charge) +8.43% +34.24% -11.87% -7.01% ---------------------------------------------------------------------- Russell 2000 Value Index(1) (unmanaged) +10.63% +36.55% -9.57% -3.89% ---------------------------------------------------------------------- Lipper Small-Cap Value Funds Index(2) +11.79% +45.30% -6.65% -2.44% ----------------------------------------------------------------------
* 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 intermediary, visiting riversource.com/funds or calling 1(800) 221-2450. 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 fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. -------------------------------------------------------------------------------- 2 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- 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 2000 Value Index, an unmanaged index, measures the performance of those Russell 2000 companies 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 Small-Cap Value Funds Index includes the 30 largest small-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 DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT JAN. 31, 2010 SINCE Without sales charge 6 MONTHS* 1 YEAR 3 YEARS INCEPTION Class A (inception 2/16/06) +8.43% +34.24% -11.87% -7.01% ----------------------------------------------------------------------- Class B (inception 2/16/06) +8.03% +33.27% -12.54% -7.74% ----------------------------------------------------------------------- Class C (inception 2/16/06) +8.09% +33.35% -12.51% -7.72% ----------------------------------------------------------------------- Class I (inception 2/16/06) +8.44% +34.65% -11.60% -6.73% ----------------------------------------------------------------------- Class R2 (inception 12/11/06) +8.07% +33.54% -12.11% -11.05% ----------------------------------------------------------------------- Class R3 (inception 12/11/06) +8.18% +33.92% -11.93% -10.85% ----------------------------------------------------------------------- Class R4 (inception 2/16/06) +8.34% +34.32% -11.66% -6.82% ----------------------------------------------------------------------- Class R5 (inception 12/11/06) +8.58% +34.62% -11.60% -10.53% ----------------------------------------------------------------------- With sales charge Class A (inception 2/16/06) +2.20% +26.51% -13.59% -8.40% ----------------------------------------------------------------------- Class B (inception 2/16/06) +3.03% +28.27% -13.40% -8.41% ----------------------------------------------------------------------- Class C (inception 2/16/06) +7.09% +32.35% -12.51% -7.72% -----------------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 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 qualifying institutional investors only. * Not annualized. -------------------------------------------------------------------------------- 4 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- STYLE MATRIX --------------------------------------------------------------------------------
STYLE VALUE BLEND GROWTH LARGE MEDIUM SIZE X SMALL
Shading within the style matrix approximates 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. Investments in small-capitalization companies often involve greater risks and potential volatility than investments in larger, more established companies. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 5 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- SECTOR BREAKDOWN(1) (at Jan. 31, 2010)) ---------------------------------------------------------------------
Consumer Discretionary 12.1% ------------------------------------------------ Consumer Staples 5.0% ------------------------------------------------ Energy 8.8% ------------------------------------------------ Financials 28.7% ------------------------------------------------ Health Care 8.4% ------------------------------------------------ Industrials 14.6% ------------------------------------------------ Information Technology 9.5% ------------------------------------------------ Materials 8.9% ------------------------------------------------ Telecommunication Services 0.6% ------------------------------------------------ Utilities 1.0% ------------------------------------------------ Other(2) 2.4% ------------------------------------------------
(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. Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund's composition is subject to change. (2) Cash & Cash Equivalents. The sectors identified above are based on the Global Industry Classification Standard (GICS), which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. TOP TEN HOLDINGS(1) (at Jan. 31, 2010) ---------------------------------------------------------------------
Platinum Underwriters Holdings 1.9% --------------------------------------------------- Magellan Health Services 1.8% --------------------------------------------------- WR Grace & Co 1.7% --------------------------------------------------- Capstead Mtge 1.5% --------------------------------------------------- MFA Financial 1.4% --------------------------------------------------- 3Com 1.2% --------------------------------------------------- SkyWest 1.2% --------------------------------------------------- ProAssurance 1.1% --------------------------------------------------- OM Group 1.1% --------------------------------------------------- HealthSpring 1.0% ---------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. -------------------------------------------------------------------------------- 6 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund 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 ongoing expenses charged by 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 Jan. 31, 2010. 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 "Direct expenses paid during the period" to estimate the expenses you paid on your account during this period. You can also estimate the direct and indirect expenses you paid over the period by using the number in the first line under the heading "Direct and indirect expenses paid during the period." HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 7 FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
DIRECT AND DIRECT INDIRECT BEGINNING ENDING EXPENSES EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING PAID DURING AUG. 1, 2009 JAN. 31, 2010 THE PERIOD(a) THE PERIOD(b) ------------------------------------------------------------------------------------------ Class A ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,084.30 $ 6.60 $ 6.91 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.60 $ 6.39 $ 6.69 ------------------------------------------------------------------------------------------ Class B ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,080.30 $10.53 $10.84 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.81 $10.20 $10.50 ------------------------------------------------------------------------------------------ Class C ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,080.90 $10.48 $10.79 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.86 $10.15 $10.45 ------------------------------------------------------------------------------------------ Class I ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,084.40 $ 4.78 $ 5.09 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.34 $ 4.63 $ 4.94 ------------------------------------------------------------------------------------------ Class R2 ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,080.70 $ 8.77 $ 9.08 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.50 $ 8.50 $ 8.80 ------------------------------------------------------------------------------------------ Class R3 ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,081.80 $ 7.68 $ 7.99 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,017.55 $ 7.44 $ 7.75 ------------------------------------------------------------------------------------------ Class R4 ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,083.40 $ 6.39 $ 6.70 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.80 $ 6.19 $ 6.49 ------------------------------------------------------------------------------------------ Class R5 ------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,085.80 $ 4.94 $ 5.25 ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.19 $ 4.78 $ 5.09 ------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 8 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- ANNUALIZED EXPENSE RATIOS
FUND'S ACQUIRED FUND ANNUALIZED FEES AND NET FUND EXPENSE RATIO EXPENSES EXPENSES ---------------------------------------------------------------------- Class A 1.27% .06% 1.33% ---------------------------------------------------------------------- Class B 2.03% .06% 2.09% ---------------------------------------------------------------------- Class C 2.02% .06% 2.08% ---------------------------------------------------------------------- Class I .92% .06% .98% ---------------------------------------------------------------------- Class R2 1.69% .06% 1.75% ---------------------------------------------------------------------- Class R3 1.48% .06% 1.54% ---------------------------------------------------------------------- Class R4 1.23% .06% 1.29% ---------------------------------------------------------------------- Class R5 .95% .06% 1.01% ----------------------------------------------------------------------
(a) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). (b) Expenses are equal to the annualized expense ratio for each class plus the acquired fund fees and expenses, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). (c) Based on the actual return for the six months ended Jan. 31, 2010: +8.43% for Class A, +8.03% for Class B, +8.09% for Class C, +8.44% for Class I, +8.07% for Class R2, +8.18% for Class R3, +8.34% for Class R4 and +8.58% for Class R5. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 9 PORTFOLIO OF INVESTMENTS ------------------------------------------------------- JAN. 31, 2010 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (97.6%) ISSUER SHARES VALUE(a) AEROSPACE & DEFENSE (1.2%) Ceradyne 10,168(b) $198,683 Esterline Technologies 2,773(b) 104,708 GeoEye 1,183(b) 30,368 Triumph Group 3,595 183,093 --------------- Total 516,852 ------------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS (0.8%) Atlas Air Worldwide Holdings 8,797(b) 322,586 Pacer Intl 15,103(b) 45,309 --------------- Total 367,895 ------------------------------------------------------------------------------------- AIRLINES (1.5%) Alaska Air Group 4,529(b) 141,939 SkyWest 34,505 504,808 --------------- Total 646,747 ------------------------------------------------------------------------------------- AUTO COMPONENTS (2.3%) ArvinMeritor 16,242(b) 157,385 Dana Holding 31,397(b) 323,703 Exide Technologies 21,735(b,d) 168,012 Spartan Motors 17,782 106,692 Superior Inds Intl 3,392 49,896 Tenneco 12,140(b) 214,635 --------------- Total 1,020,323 ------------------------------------------------------------------------------------- BUILDING PRODUCTS (0.9%) Apogee Enterprises 12,190 167,734 Insteel Inds 4,823(d) 47,651 Quanex Building Products 5,563 89,453 Universal Forest Products 2,907 98,664 --------------- Total 403,502 ------------------------------------------------------------------------------------- CAPITAL MARKETS (4.6%) Apollo Investment 16,548 170,444 Ares Capital 16,191 199,149 BGC Partners Cl A 28,776 117,118 Cohen & Steers 1,821(d) 37,039 Evercore Partners Cl A 2,504(d) 74,794 GAMCO Investors Cl A 842 34,581 Hercules Technology Growth Capital 3,785 38,077 Intl Assets Holding 4,813(b) 71,666 JMP Group 2,455 19,075 Knight Capital Group Cl A 23,281(b) 364,115 MF Global Holdings 15,758(b) 103,215 MVC Capital 7,424 86,861 Oppenheimer Holdings Cl A 3,153(d) 86,108 PennantPark Investment 7,088 64,146 Penson Worldwide 11,425(b,d) 96,199 Prospect Capital 10,736(d) 122,498 Stifel Financial 2,092(b) 109,412 SWS Group 10,848(d) 130,176 U.S. Global Investors Cl A 1,778 17,087 Westwood Holdings Group 2,887(d) 104,365 --------------- Total 2,046,125 ------------------------------------------------------------------------------------- CHEMICALS (4.7%) Innophos Holdings 8,100 158,436 Innospec 6,984(c,d) 68,094 Olin 26,995(d) 445,418 OM Group 14,011(b) 457,039 Solutia 14,312(b) 196,790 WR Grace & Co 31,239(b) 745,987 --------------- Total 2,071,764 ------------------------------------------------------------------------------------- COMMERCIAL BANKS (5.7%) Arrow Financial 3,240(d) 84,175 BancFirst 3,023 121,827 Bancorp 6,947(b) 50,783 Bank of Kentucky Financial 1,074 19,601 Bridge Bancorp 824 19,430 Camden Natl 3,298(d) 95,708
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 10 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) COMMERCIAL BANKS (CONT.) Community Trust Bancorp 4,027 $102,004 First Financial 3,837 105,901 First Financial Bankshares 2,081(d) 110,397 First of Long Island 2,118(d) 51,319 German American Bancorp 3,296(d) 48,979 Great Southern Bancorp 1,185 26,627 Heritage Financial 2,188(d) 30,763 MainSource Financial Group 12,728(d) 70,131 Natl Bankshares 2,590(d) 65,268 NBT Bancorp 5,565(d) 116,086 Northrim BanCorp 5,577 89,399 Peoples Bancorp 1,278 16,588 Republic Bancorp Cl A 4,228(d) 70,227 S.Y. Bancorp 4,644 98,406 Southside Bancshares 1,555 30,945 SVB Financial Group 6,007(b) 260,644 Tompkins Financial 2,106(d) 82,555 TowneBank 8,264(d) 88,342 Trico Bancshares 3,366(d) 58,097 Trustmark 8,569(d) 195,373 UMB Financial 4,313 170,407 Wilshire Bancorp 16,066(d) 147,968 Wintrust Financial 3,020(d) 104,915 --------------- Total 2,532,865 ------------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES (1.0%) Consolidated Graphics 3,018(b,d) 101,858 Kimball Intl Cl B 15,437 121,644 United Stationers 2,067(b,d) 112,776 Viad 6,228(d) 122,877 --------------- Total 459,155 ------------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (2.1%) 3Com 70,226(b) 523,184 EMS Technologies 3,472(b) 44,511 Harmonic 9,730(b,d) 59,061 NETGEAR 3,442(b) 71,043 Plantronics 5,216 137,807 Polycom 4,447(b) 99,746 --------------- Total 935,352 ------------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING (3.0%) Comfort Systems USA 16,092(d) 188,759 EMCOR Group 18,601(b) 447,540 Granite Construction 7,591(d) 234,410 Layne Christensen 4,385(b) 111,072 Tutor Perini 18,612(b,d) 354,745 --------------- Total 1,336,526 ------------------------------------------------------------------------------------- CONSUMER FINANCE (0.4%) Advance America Cash Advance Centers 11,858(d) 57,274 Cash America Intl 1,501 56,423 World Acceptance 1,190(b) 48,064 --------------- Total 161,761 ------------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES (0.3%) Regis 9,327 148,579 ------------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (0.5%) Life Partners Holdings 5,379(d) 106,935 PHH 5,782(b,d) 100,838 --------------- Total 207,773 ------------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT (1.3%) EnerSys 11,134(b) 217,002 GrafTech Intl 27,190(b) 341,506 --------------- Total 558,508 ------------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS (3.0%) Anixter Intl 8,200(b,d) 341,776 Benchmark Electronics 8,619(b) 157,038 CTS 6,872 52,296 Insight Enterprises 14,538(b) 167,332 Littelfuse 3,209(b) 96,463 Methode Electronics 7,792 85,634 Plexus 2,456(b) 83,529 SMART Modular Technologies WWH 5,920(b) 35,994 SYNNEX 9,422(b,d) 249,400 TTM Technologies 5,846(b) 60,506 --------------- Total 1,329,968 ------------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (3.6%) Bristow Group 3,600(b) 128,520 Bronco Drilling 6,146(b,d) 30,853
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 11 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) ENERGY EQUIPMENT & SERVICES (CONT.) Cal Dive Intl 11,558(b) $81,368 CARBO Ceramics 1,919 126,500 Complete Production Services 7,909(b) 99,100 Dawson Geophysical 3,031(b,d) 65,742 GulfMark Offshore 4,134(b,d) 101,490 Key Energy Services 43,237(b,d) 418,319 Lufkin Inds 2,115 134,049 Matrix Service 5,662(b) 57,130 Parker Drilling 47,845(b) 230,134 Pioneer Drilling 3,912(b) 31,100 TETRA Technologies 8,787(b) 91,912 --------------- Total 1,596,217 ------------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (2.3%) Andersons 5,545 149,604 Casey's General Stores 3,481 106,797 Ingles Markets Cl A 2,606 36,901 Nash Finch 3,471 119,750 Pantry 7,276(b) 98,008 Ruddick 7,833 222,066 Spartan Stores 4,762 64,477 Winn-Dixie Stores 22,601(b,d) 228,948 --------------- Total 1,026,551 ------------------------------------------------------------------------------------- FOOD PRODUCTS (1.7%) American Italian Pasta Cl A 3,126(b) 107,097 Chiquita Brands Intl 20,789(b,d) 304,975 Diamond Foods 835 29,993 Fresh Del Monte Produce 15,736(b,c) 319,912 --------------- Total 761,977 ------------------------------------------------------------------------------------- GAS UTILITIES (0.6%) Chesapeake Utilities 1,331(d) 39,451 Laclede Group 3,480 112,265 New Jersey Resources 1,820(d) 66,412 Northwest Natural Gas 1,333 57,812 --------------- Total 275,940 ------------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES (0.6%) ev3 18,690(b,d) 272,500 ------------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES (7.1%) Centene 11,438(b) 220,182 Gentiva Health Services 4,608(b) 117,688 HealthSpring 25,981(b) 451,810 Kindred Healthcare 23,596(b) 399,008 Magellan Health Services 20,056(b) 791,810 Molina Healthcare 10,769(b,d) 239,610 RehabCare Group 2,691(b) 78,200 Sun Healthcare Group 10,923(b) 95,467 Triple-S Management Cl B 12,776(b,c,d) 211,954 Universal American Financial 13,174(b) 176,005 WellCare Health Plans 11,991(b) 373,879 --------------- Total 3,155,613 ------------------------------------------------------------------------------------- HOUSEHOLD DURABLES (0.3%) American Greetings Cl A 6,521 120,508 Blyth 1,104(d) 31,011 --------------- Total 151,519 ------------------------------------------------------------------------------------- HOUSEHOLD PRODUCTS (--%) Central Garden & Pet Cl A 922(b) 8,104 ------------------------------------------------------------------------------------- INDUSTRIAL CONGLOMERATES (0.5%) Seaboard 163 200,490 ------------------------------------------------------------------------------------- INSURANCE (10.2%) American Equity Investment Life Holding 4,105 30,131 American Physicians Capital 3,042 84,446 American Physicians Service Group 4,299(d) 98,490 American Safety Insurance Holdings 2,130(b,c) 29,288 Amerisafe 9,829(b) 170,042 AmTrust Financial Services 8,774 105,025 Argo Group Intl Holdings 4,639(b,c) 124,047 CNA Surety 9,095(b) 127,330 Conseco 74,116(b) 352,791 Employers Holdings 27,323 361,482
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 12 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) INSURANCE (CONT.) Flagstone Reinsurance Holdings 5,163(c) $54,057 FPIC Insurance Group 2,454(b,d) 93,129 Greenlight Capital Re Series A 1,932(b,c) 46,658 Horace Mann Educators 25,702 308,167 Maiden Holdings 8,665(c) 58,835 Max Capital Group 5,826(c) 131,202 Meadowbrook Insurance Group 18,820 127,035 Montpelier Re Holdings 8,775(c) 148,210 Natl Financial Partners 20,622(b) 174,256 Phoenix Companies 12,436(b) 29,225 Platinum Underwriters Holdings 22,784(c) 826,147 PMA Capital Cl A 5,839(b) 35,151 ProAssurance 9,760(b) 495,417 Safety Insurance Group 5,353 187,355 SeaBright Insurance Holdings 9,679(b) 98,532 Tower Group 6,145 135,805 Zenith Natl Insurance 4,606 128,507 --------------- Total 4,560,760 ------------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES (1.2%) EarthLink 48,305(d) 391,754 ModusLink Global Solutions 10,108(b) 102,596 United Online 4,873 30,797 --------------- Total 525,147 ------------------------------------------------------------------------------------- IT SERVICES (1.4%) Ciber 24,334(b,d) 78,599 CSG Systems Intl 6,619(b) 128,475 Euronet Worldwide 7,630(b) 155,804 Global Cash Access Holdings 11,308(b) 91,595 ManTech Intl Cl A 1,145(b) 54,857 Ness Technologies 17,209(b,c) 95,338 --------------- Total 604,668 ------------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS (0.6%) Brunswick 5,209 55,893 JAKKS Pacific 18,193(b,d) 200,123 --------------- Total 256,016 ------------------------------------------------------------------------------------- MACHINERY (2.7%) EnPro Inds 4,721(b,d) 114,956 FreightCar America 4,993 97,364 Hurco Companies 2,252(b,d) 37,744 John Bean Technologies 5,114 84,330 LB Foster Cl A 4,033(b,d) 108,810 Mueller Inds 10,011 246,170 NACCO Inds Cl A 936 50,376 Nordson 6,719 379,892 Robbins & Myers 3,168(d) 70,393 --------------- Total 1,190,035 ------------------------------------------------------------------------------------- MARINE (0.2%) Genco Shipping & Trading 4,188(b) 80,242 ------------------------------------------------------------------------------------- MEDIA (0.2%) Natl CineMedia 6,486 97,160 ------------------------------------------------------------------------------------- METALS & MINING (2.6%) AM Castle & Co 5,975(d) 57,958 Brush Engineered Materials 4,166(b) 74,863 Century Aluminum 12,558(b) 142,157 Coeur d'Alene Mines 24,318(b,d) 340,937 Haynes Intl 2,705 79,229 Horsehead Holding 11,651(b,d) 114,180 Kaiser Aluminum 3,086 108,473 Olympic Steel 3,611(d) 100,169 RTI Intl Metals 5,734(b,d) 141,917 --------------- Total 1,159,883 ------------------------------------------------------------------------------------- MULTILINE RETAIL (0.5%) Dillard's Cl A 7,268 120,358 Retail Ventures 11,349(b) 93,970 --------------- Total 214,328 ------------------------------------------------------------------------------------- MULTI-UTILITIES (0.4%) CH Energy Group 3,064 121,182 NorthWestern 2,141(d) 52,347 --------------- Total 173,529 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 13 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) OIL, GAS & CONSUMABLE FUELS (5.2%) Atlas Energy 9,975 $301,743 ATP Oil & Gas 10,181(b) 147,319 Berry Petroleum Cl A 5,488 148,615 Bill Barrett 8,218(b) 254,758 CVR Energy 13,087(b) 104,958 Gran Tierra Energy 51,153(b,c) 250,138 Knightsbridge Tankers 8,155(c) 117,514 Nordic American Tanker Shipping 1,502(c,d) 44,564 Penn Virginia 7,346 178,287 Petroleum Development 8,411(b) 176,295 Rosetta Resources 9,092(b) 186,932 Stone Energy 7,555(b) 120,427 Swift Energy 6,769(b,d) 169,631 USEC 10,752(b,d) 43,008 Western Refining 13,394(b,d) 61,211 --------------- Total 2,305,400 ------------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (1.6%) Clearwater Paper 3,389(b) 165,824 Glatfelter 5,946 82,055 Kapstone Paper and Packaging 8,774(b) 81,072 Schweitzer-Mauduit Intl 5,339 401,706 --------------- Total 730,657 ------------------------------------------------------------------------------------- PERSONAL PRODUCTS (0.2%) Chattem 1,035(b) 96,731 ------------------------------------------------------------------------------------- PHARMACEUTICALS (0.7%) Par Pharmaceutical Companies 8,333(b) 219,324 ViroPharma 8,377(b) 82,765 --------------- Total 302,089 ------------------------------------------------------------------------------------- PROFESSIONAL SERVICES (0.8%) CDI 3,259 42,009 Heidrick & Struggles Intl 2,727(d) 69,347 Kelly Services Cl A 3,566(b) 46,786 Korn/Ferry Intl 2,193(b) 32,456 Spherion 10,470(b) 59,051 TrueBlue 4,594(b,d) 66,659 Volt Information Sciences 2,352(b) 21,850 --------------- Total 338,158 ------------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS (REITS) (6.7%) American Campus Communities 2,652 68,050 American Capital Agency 3,383 90,292 Anworth Mtge Asset 27,211 187,756 Capstead Mtge 47,610 632,261 Entertainment Properties Trust 4,182 145,994 Getty Realty 4,712 101,638 Medical Properties Trust 8,140 81,481 MFA Financial 83,691 615,966 Mid-America Apartment Communities 1,434 67,283 Natl Health Investors 3,764 128,051 Natl Retail Properties 5,397(d) 109,019 NorthStar Realty Finance 32,784(d) 148,839 Omega Healthcare Investors 12,553(d) 234,867 Realty Income 4,793(d) 133,868 Universal Health Realty Income Trust 3,998 132,734 Urstadt Biddle Properties Cl A 7,638(d) 114,494 --------------- Total 2,992,593 ------------------------------------------------------------------------------------- REAL ESTATE MANAGEMENT & DEVELOPMENT (0.1%) China Housing & Land Development 8,507(b,c,d) 31,051 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 14 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) ROAD & RAIL (0.6%) Arkansas Best 7,326 $165,128 Old Dominion Freight Line 2,957(b) 81,318 Saia 2,779(b,d) 33,348 --------------- Total 279,794 ------------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (0.7%) OmniVision Technologies 14,051(b) 181,257 Pericom Semiconductor 8,687(b) 76,446 Sigma Designs 4,864(b,d) 54,039 Trident Microsystems 7,718(b,d) 14,047 --------------- Total 325,789 ------------------------------------------------------------------------------------- SOFTWARE (1.1%) Take-Two Interactive Software 14,256(b,d) 132,296 TIBCO Software 37,561(b) 336,546 --------------- Total 468,842 ------------------------------------------------------------------------------------- SPECIALTY RETAIL (6.7%) AnnTaylor Stores 13,516(b) 169,761 Asbury Automotive Group 7,758(b) 85,881 Brown Shoe 5,981(d) 73,267 Buckle 4,075(d) 123,636 Build-A-Bear Workshop 9,576(b) 45,678 Conn's 8,722(b,d) 49,018 Dress Barn 12,911(b) 303,925 DSW Cl A 4,838(b) 116,596 Genesco 10,550(b) 248,769 Group 1 Automotive 10,635(b,d) 308,415 Gymboree 4,686(b,d) 182,801 Hot Topic 15,180(b) 87,285 Jo-Ann Stores 7,294(b,d) 255,436 Men's Wearhouse 7,776 156,686 OfficeMax 4,743(b) 61,517 Pacific Sunwear of California 21,247(b,d) 74,789 Rent-A-Center 16,699(b) 333,979 Shoe Carnival 5,418(b) 98,987 Sonic Automotive Cl A 7,176(b) 68,531 Stage Stores 9,037 116,758 --------------- Total 2,961,715 ------------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS (1.2%) Carter's 2,895(b) 74,865 Iconix Brand Group 7,252(b) 91,520 Jones Apparel Group 12,479 180,196 Skechers USA Cl A 6,327(b) 177,536 --------------- Total 524,117 ------------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE (0.5%) ESB Financial 4,204 49,271 ESSA Bancorp 3,487(d) 41,321 Ocwen Financial 13,769(b) 126,124 --------------- Total 216,716 ------------------------------------------------------------------------------------- TOBACCO (0.7%) Universal 6,763 306,973 ------------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS (0.2%) H&E Equipment Services 9,814(b,d) 104,127 ------------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES (0.6%) Syniverse Holdings 10,542(b) 177,211 USA Mobility 9,074 94,279 --------------- Total 271,490 ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $38,246,922) $43,310,616 ------------------------------------------------------------------------------------- MONEY MARKET FUND (2.4%) SHARES VALUE(a) RiverSource Short-Term Cash Fund, 0.16% 1,047,997(e) $1,047,997 ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $1,047,997) $1,047,997 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 15 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (11.5%) SHARES VALUE(a) CASH COLLATERAL REINVESTMENT FUND JPMorgan Prime Money Market Fund 5,117,441 $5,117,441 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $5,117,441) $5,117,441 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $44,412,360)(f) $49,476,054 =====================================================================================
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. INVESTMENTS IN DERIVATIVES At Jan. 31, 2010, $72,000 was held in a margin deposit account as collateral to cover initial margin requirements on open stock index futures contracts. FUTURES CONTRACTS OUTSTANDING AT JAN. 31, 2010
NUMBER OF UNREALIZED CONTRACTS NOTIONAL EXPIRATION APPRECIATION CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION) ------------------------------------------------------------------------------------ Russell 2000 Mini Index 17 $1,021,700 March 2010 $(51,912)
NOTES TO PORTFOLIO OF INVESTMENTS (a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At Jan. 31, 2010, the value of foreign securities, excluding short-term securities, represented 5.76% of net assets. (d) At Jan. 31, 2010, security was partially or fully on loan. See Note 7 to the financial statements. (e) Affiliated Money Market Fund -- See Note 8 to the financial statements. The rate shown is the seven-day current annualized yield at Jan. 31, 2010. -------------------------------------------------------------------------------- 16 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (f) At Jan. 31, 2010, the cost of securities for federal income tax purposes was approximately $44,412,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $7,815,000 Unrealized depreciation (2,751,000) ---------------------------------------------------------- Net unrealized appreciation $5,064,000 ----------------------------------------------------------
-------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require disclosure regarding the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. The Fund categorizes its fair value measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund's assumptions about the information market participants would use in pricing an investment. An investment's level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset or liability's fair value measurement. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. Fair value inputs are summarized in the three broad levels listed below: - Level 1 -- Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. - Level 2 -- Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). - Level 3 -- Valuations based on significant unobservable inputs (including the Fund's own assumptions and judgment in determining the fair value of investments). Inputs that are used in determining fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Fund Administrator, along with any other relevant factors in the calculation of an investment's fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy. Non-U.S. equity securities actively traded in foreign markets may be reflected in Level 2 despite the availability of closing prices, because the Fund evaluates and determines whether those closing prices reflect fair value at the close of the New York Stock Exchange (NYSE) or require adjustment, as described in Note 2 to the financial statements -- Valuation of securities. Investments falling into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as -------------------------------------------------------------------------------- 18 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) Level 3 investments due to lack of market transparency and corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in a valuation model may include, but are not limited to, financial statement analysis, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of Jan. 31, 2010:
FAIR VALUE AT JAN. 31, 2010 -------------------------------------------------------------- LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL -------------------------------------------------------------------------------------------- Equity Securities Common Stocks(a) $43,310,616 $-- $-- $43,310,616 -------------------------------------------------------------------------------------------- Total Equity Securities 43,310,616 -- -- 43,310,616 -------------------------------------------------------------------------------------------- Other Affiliated Money Market Fund(b) 1,047,997 -- -- 1,047,997 Investments of Cash Collateral Received for Securities on Loan(c) 5,117,441 -- -- 5,117,441 -------------------------------------------------------------------------------------------- Total Other 6,165,438 -- -- 6,165,438 -------------------------------------------------------------------------------------------- Investments in Securities 49,476,054 -- -- 49,476,054 Other Financial Instruments(d) (51,912) -- -- (51,912) -------------------------------------------------------------------------------------------- Total $49,424,142 $-- $-- $49,424,142 --------------------------------------------------------------------------------------------
(a) Industry classifications are identified in the Portfolio of Investments. (b) Money market fund that is a sweep investment for cash balances in the Fund at Jan. 31, 2010. (c) Asset categories for Investments of Cash Collateral are identified in the Portfolio of Investments. (d) Other Financial Instruments are derivative instruments, which are valued at the unrealized appreciation (depreciation) on the instrument. Derivative descriptions are located in the Investments in Derivatives section of the Portfolio of Investments. HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY 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 filed on Form N-Q, can be obtained without charge, upon request, by calling the RiverSource Family of Funds at 1(800) 221-2450. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 19 STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- JAN. 31, 2010 (UNAUDITED)
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $38,246,922) $ 43,310,616 Affiliated money market fund (identified cost $1,047,997) 1,047,997 Investments of cash collateral received for securities on loan (identified cost $5,117,441) 5,117,441 -------------------------------------------------------------------------------------- Total investments in securities (identified cost $44,412,360) 49,476,054 Dividends and accrued interest receivable 24,639 Margin deposits on futures contracts 72,000 -------------------------------------------------------------------------------------- Total assets 49,572,693 -------------------------------------------------------------------------------------- LIABILITIES Capital shares payable 49,053 Payable upon return of securities loaned 5,117,441 Variation margin payable on futures contracts 7,122 Accrued investment management services fees 1,044 Accrued distribution fees 87 Accrued transfer agency fees 28 Accrued administrative services fees 98 Other accrued expenses 30,154 -------------------------------------------------------------------------------------- Total liabilities 5,205,027 -------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 44,367,666 -------------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 61,364 Additional paid-in capital 51,510,825 Undistributed net investment income 174,074 Accumulated net realized gain (loss) (12,390,379) Unrealized appreciation (depreciation) on investments 5,011,782 -------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 44,367,666 -------------------------------------------------------------------------------------- *Value of securities on loan $ 4,954,449 --------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $11,260,076 1,557,611 $7.23(1) Class B $ 229,725 32,229 $7.13 Class C $ 87,761 12,316 $7.13 Class I $32,771,769 4,531,666 $7.23 Class R2 $ 3,290 455 $7.23 Class R3 $ 4,530 627 $7.22 Class R4 $ 7,227 1,000 $7.23 Class R5 $ 3,288 455 $7.23 ----------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $7.67. 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 SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT STATEMENT OF OPERATIONS -------------------------------------------------------- SIX MONTHS ENDED JAN. 31, 2010 (UNAUDITED)
INVESTMENT INCOME Income: Dividends $ 399,801 Income distributions from affiliated money market fund 893 Income from securities lending -- net 49,483 ------------------------------------------------------------------------ Total income 450,177 ------------------------------------------------------------------------ Expenses: Investment management services fees 175,722 Distribution fees Class A 14,278 Class B 1,278 Class C 435 Class R2 8 Class R3 5 Transfer agency fees Class A 5,079 Class B 138 Class C 42 Class R3 2 Class R4 2 Administrative services fees 19,138 Plan administration services fees Class R2 4 Class R3 5 Class R4 9 Compensation of board members 708 Custodian fees 2,418 Printing and postage 11,020 Registration fees 26,082 Professional fees 4,209 Other 2,242 ------------------------------------------------------------------------ Total expenses 262,824 Expenses waived/reimbursed by the Investment Manager and its affiliates (20,366) ------------------------------------------------------------------------ Total net expenses 242,458 ------------------------------------------------------------------------ Investment income (loss) -- net 207,719 ------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions 2,332,830 Futures contracts 219,917 ------------------------------------------------------------------------ Net realized gain (loss) on investments 2,552,747 Net change in unrealized appreciation (depreciation) on investments 1,429,719 ------------------------------------------------------------------------ Net gain (loss) on investments and foreign currencies 3,982,466 ------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $4,190,185 ------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 21 STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2010 JULY 31, 2009 (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 207,719 $ 377,135 Net realized gain (loss) on investments 2,552,747 (11,082,938) Net change in unrealized appreciation (depreciation) on investments 1,429,719 7,316,289 --------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 4,190,185 (3,389,514) --------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (74,218) (28,406) Class C (52) -- Class I (324,851) (220,730) Class R2 (10) (1) Class R3 (25) (10) Class R4 (52) (42) Class R5 (31) (17) --------------------------------------------------------------------------------------------- Total distributions (399,239) (249,206) --------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares 240,130 2,450,687 Class B shares 949 205,267 Class C shares 7,524 56,304 Class I shares 178,256 35,465,513 Class R3 shares 324 724 Reinvestment of distributions at net asset value Class A shares 26,528 11,018 Class C shares 47 -- Class I shares 324,780 220,690 Class R3 shares 7 -- Conversions from Class B to Class A Class A shares -- 79,994 Class B shares -- (79,994) Payments for redemptions Class A shares (592,928) (1,511,682) Class B shares (53,250) (115,767) Class C shares (3,122) (18,418) Class I shares (12,942,096) (15,688,017) --------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (12,812,851) 21,076,319 --------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (9,021,905) 17,437,599 Net assets at beginning of period 53,389,571 35,951,972 --------------------------------------------------------------------------------------------- Net assets at end of period $ 44,367,666 $ 53,389,571 --------------------------------------------------------------------------------------------- Undistributed net investment income $ 174,074 $ 365,594 ---------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 22 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT FINANCIAL HIGHLIGHTS ----------------------------------------------------------- The following tables are intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. For periods ended 2007 and after, per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS A JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.71 $8.76 $10.00 $9.77 $10.22 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02 .04 .04 .14 .02 Net gains (losses) (both realized and unrealized) .55 (2.07) (1.01) .29 (.47) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .57 (2.03) (.97) .43 (.45) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.02) (.05) (.01) -- Distributions from realized gains -- -- (.22) (.19) -- --------------------------------------------------------------------------------------------------------------------- Total distributions (.05) (.02) (.27) (.20) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.23 $6.71 $8.76 $10.00 $9.77 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 8.43% (23.18%) (9.67%) 4.29% (4.40%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Gross expenses prior to expense waiver/reimbursement 1.36%(c) 1.60% 1.54% 1.73% 3.27%(c) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d) 1.27%(c) 1.42% 1.24% 1.35% 1.40%(c) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .63%(c) .61% .44% 1.30% .55%(c) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $11 $11 $13 $14 $11 --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 98% 87% 127% 40% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 23 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS B JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.60 $8.65 $9.90 $9.73 $10.22 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) (.01) (.02) .05 -- Net gains (losses) (both realized and unrealized) .54 (2.04) (1.01) .31 (.49) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .53 (2.05) (1.03) .36 (.49) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Distributions from realized gains -- -- (.22) (.19) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.13 $6.60 $8.65 $9.90 $9.73 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 8.03% (23.70%) (10.47%) 3.51% (4.79%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Gross expenses prior to expense waiver/reimbursement 2.11%(c) 2.37% 2.29% 2.38% 4.05%(c) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d) 2.03%(c) 2.18% 2.00% 2.11% 2.18%(c) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.15%)(c) (.14%) (.27%) .49% (.17%)(c) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $1 $-- --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 98% 87% 127% 40% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 24 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS C JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.60 $8.65 $9.90 $9.73 $10.22 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .00(e) (.01) (.03) .05 -- Net gains (losses) (both realized and unrealized) .53 (2.04) (1.00) .31 (.49) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .53 (2.05) (1.03) .36 (.49) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.00)(e) -- (.00)(e) -- -- Distributions from realized gains -- -- (.22) (.19) -- --------------------------------------------------------------------------------------------------------------------- Total distributions (.00)(e) -- (.22) (.19) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.13 $6.60 $8.65 $9.90 $9.73 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 8.09% (23.70%) (10.43%) 3.51% (4.79%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Gross expenses prior to expense waiver/reimbursement 2.11%(c) 2.36% 2.29% 2.47% 4.05%(c) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d) 2.02%(c) 2.17% 2.00% 2.11% 2.18%(c) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) (.12%)(c) (.13%) (.29%) .43% (.22%)(c) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- $-- --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 98% 87% 127% 40% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 25 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS I JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.73 $8.78 $10.03 $9.78 $10.22 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .06 .07 .15 .03 Net gains (losses) (both realized and unrealized) .54 (2.07) (1.02) .32 (.47) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .57 (2.01) (.95) .47 (.44) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.04) (.08) (.03) -- Distributions from realized gains -- -- (.22) (.19) -- --------------------------------------------------------------------------------------------------------------------- Total distributions (.07) (.04) (.30) (.22) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.23 $6.73 $8.78 $10.03 $9.78 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 8.44% (22.83%) (9.46%) 4.69% (4.31%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Gross expenses prior to expense waiver/reimbursement 1.01%(c) 1.22% 1.22% 1.19% 3.00%(c) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d) .92%(c) 1.04% .92% 1.05% 1.13%(c) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .95%(c) .98% .79% 1.43% .91%(c) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $33 $42 $23 $25 $3 --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 98% 87% 127% 40% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 26 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS R2 JAN. 31, 2010 -------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007(f) Net asset value, beginning of period $6.71 $8.75 $9.97 $10.99 --------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 .02 .02 .06 Net gains (losses) (both realized and unrealized) .53 (2.06) (1.00) (.86) --------------------------------------------------------------------------------------------------------- Total from investment operations .54 (2.04) (.98) (.80) --------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) (.00)(e) (.02) (.03) Distributions from realized gains -- -- (.22) (.19) --------------------------------------------------------------------------------------------------------- Total distributions (.02) (.00)(e) (.24) (.22) --------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.23 $6.71 $8.75 $9.97 --------------------------------------------------------------------------------------------------------- TOTAL RETURN 8.07% (23.28%) (9.82%) (7.40%) --------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Gross expenses prior to expense waiver/reimbursement 1.75%(c) 2.04% 2.03% 1.85%(c) --------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d) 1.69%(c) 1.71% 1.46% 1.80%(c) --------------------------------------------------------------------------------------------------------- Net investment income (loss) .21%(c) .31% .23% .77%(c) --------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- --------------------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 98% 87% 127% ---------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 27 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS R3 JAN. 31, 2010 -------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007(f) Net asset value, beginning of period $6.71 $8.76 $9.99 $10.99 --------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02 .04 .04 .07 Net gains (losses) (both realized and unrealized) .53 (2.07) (1.00) (.85) --------------------------------------------------------------------------------------------------------- Total from investment operations .55 (2.03) (.96) (.78) --------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) (.02) (.05) (.03) Distributions from realized gains -- -- (.22) (.19) --------------------------------------------------------------------------------------------------------- Total distributions (.04) (.02) (.27) (.22) --------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.22 $6.71 $8.76 $9.99 --------------------------------------------------------------------------------------------------------- TOTAL RETURN 8.18% (23.11%) (9.65%) (7.21%) --------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Gross expenses prior to expense waiver/reimbursement 1.59%(c) 1.80% 1.79% 1.58%(c) --------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d) 1.48%(c) 1.46% 1.21% 1.55%(c) --------------------------------------------------------------------------------------------------------- Net investment income (loss) .43%(c) .58% .48% 1.02%(c) --------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- --------------------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 98% 87% 127% ---------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 28 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS R4 JAN. 31, 2010 -------------------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007 2006(a) Net asset value, beginning of period $6.72 $8.78 $10.00 $9.77 $10.22 --------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02 .05 .07 .17 .02 Net gains (losses) (both realized and unrealized) .54 (2.07) (1.00) .28 (.47) --------------------------------------------------------------------------------------------------------------------- Total from investment operations .56 (2.02) (.93) .45 (.45) --------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.04) (.07) (.03) -- Distributions from realized gains -- -- (.22) (.19) -- --------------------------------------------------------------------------------------------------------------------- Total distributions (.05) (.04) (.29) (.22) -- --------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.23 $6.72 $8.78 $10.00 $9.77 --------------------------------------------------------------------------------------------------------------------- TOTAL RETURN 8.34% (22.92%) (9.27%) 4.42% (4.40%) --------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Gross expenses prior to expense waiver/reimbursement 1.31%(c) 1.56% 1.52% 1.83% 3.12%(c) --------------------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d) 1.23%(c) 1.22% .97% 1.26% 1.25%(c) --------------------------------------------------------------------------------------------------------------------- Net investment income (loss) .67%(c) .80% .73% 1.60% .69%(c) --------------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- $-- --------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 98% 87% 127% 40% ---------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 29 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
SIX MONTHS ENDED YEAR ENDED JULY 31, CLASS R5 JAN. 31, 2010 -------------------------------- PER SHARE DATA (UNAUDITED) 2009 2008 2007(f) Net asset value, beginning of period $6.72 $8.77 $10.02 $10.99 --------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .06 .07 .11 Net gains (losses) (both realized and unrealized) .55 (2.07) (1.02) (.86) --------------------------------------------------------------------------------------------------------- Total from investment operations .58 (2.01) (.95) (.75) --------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.04) (.08) (.03) Distributions from realized gains -- -- (.22) (.19) --------------------------------------------------------------------------------------------------------- Total distributions (.07) (.04) (.30) (.22) --------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.23 $6.72 $8.77 $10.02 --------------------------------------------------------------------------------------------------------- TOTAL RETURN 8.58% (22.90%) (9.50%) (6.93%) --------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Gross expenses prior to expense waiver/reimbursement 1.03%(c) 1.27% 1.28% 1.09%(c) --------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d) .95%(c) 1.10% .97% 1.05%(c) --------------------------------------------------------------------------------------------------------- Net investment income (loss) .95%(c) .92% .72% 1.53%(c) --------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- --------------------------------------------------------------------------------------------------------- Portfolio turnover rate 27% 98% 87% 127% ---------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For the period from Feb. 16, 2006 (when shares became publicly available) to July 31, 2006. (b) Expense ratios include the impact of a performance incentive adjustment, if any. 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 reported expense ratios. (c) Annualized. (d) 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. (e) Rounds to zero. (f) For the period from Dec. 11, 2006 (when shares became publicly available) to July 31, 2007. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 30 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- (UNAUDITED AS OF JAN. 31, 2010) 1. ORGANIZATION RiverSource Disciplined Small Cap Value Fund (the Fund) is a series of RiverSource Dimensions Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act) as a diversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board). The Fund invests primarily in small capitalization equity securities of companies with market capitalizations that fall within the range of companies that comprise the Russell 2000 Value Index at the time of investment. 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 offered with a front-end sales charge, which may be waived under certain circumstances. - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, 2009. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to 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 offered without a front-end sales charge or CDSC to qualifying institutional investors. At Jan 31, 2010, RiverSource Investments, LLC (RiverSource Investments or the Investment Manager) and affiliated funds-of-funds in the RiverSource Family of Funds owned 100% of Class I shares, and the Investment Manager owned 100% of Class R2, Class R4 and Class R5 shares. At Jan. 31, 2010, the Investment Manager and affiliated funds-of-funds in the RiverSource Family of Funds owned approximately 90% 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 -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 31 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- investments are allocated to each class of shares based upon its relative net assets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ADOPTION OF NEW ACCOUNTING STANDARD In June 2009, the Financial Accounting Standards Board (FASB) established the FASB Accounting Standards Codification(TM) (Codification) as the single source of authoritative accounting principles recognized by the FASB in the preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP). The Codification supersedes existing non-grandfathered, non- SEC accounting and reporting standards. The Codification did not change GAAP but, rather, organized it into a hierarchy where all guidance within the Codification carries an equal level of authority. The Codification became effective for financial statements issued for interim and annual periods ending after Sept. 15, 2009. The Codification did not have an effect on the Fund's financial statements. USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. 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 -------------------------------------------------------------------------------- 32 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- 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 NYSE 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 NYSE, 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 NYSE. The fair value of a security is likely to be different from the quoted or published price, if available. 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. Typically, those maturing in 60 days or less that originally had maturities of more than 60 days at acquisition date are valued at amortized cost using the market value on the 61st day before maturity. Short-term securities maturing in 60 days or less at acquisition date are valued at amortized cost. Amortized cost is an approximation of market value. Investments in money market funds are valued at net asset value. FOREIGN CURRENCY TRANSLATIONS 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. 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 -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 33 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 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 (which includes net short-term capital gains) to shareholders. No provision for income or excise taxes is thus required. 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 tax returns filed for the last three years. RECENT ACCOUNTING PRONOUNCEMENTS On Jan. 21, 2010, the FASB issued an Accounting Standards Update (the amendment), Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements, which provides guidance on how investment assets and liabilities are to be valued and disclosed. Specifically, the amendment requires reporting entities to disclose the input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 or Level 3 positions. The amendment also requires that transfers between all levels (including Level 1 and Level 2) be disclosed on a gross basis (i.e., transfers out must be disclosed separately from transfers in), and the reason(s) for the transfer. Additionally purchases, sales, issuances and settlements must be disclosed on a gross basis in the Level 3 rollforward. The effective date of the amendment is for interim and annual periods beginning after Dec. 15, 2009, however, the requirement to provide the Level 3 activity for purchases, sales, issuances and settlements on a gross basis will be effective for interim and annual periods beginning after Dec. 15, 2010. At this time the Fund is evaluating the implications of the amendment and the impact to the financial statements. 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. -------------------------------------------------------------------------------- 34 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- 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. 3. INVESTMENTS IN DERIVATIVES The Fund may invest in certain derivative instruments, which are transactions whose values depend on or are derived from (in whole or in part) the value of one or more other assets, such as securities, currencies, commodities or indices. Such derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, to facilitate trading, to reduce transaction costs, and to pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk, and credit risk. Investments in derivative instruments may expose the Fund to certain additional risks, including those detailed below. FUTURES TRANSACTIONS The Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange to produce incremental earnings, hedge existing positions or protect against market changes in the value of equities, interest rates or foreign currencies. The Fund may also buy and write put and call options on these futures contracts. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date. 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. Upon entering into futures contracts, the Fund bears the risk of interest rates, exchange rates or securities prices moving unexpectedly, in which case, the Fund may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional risks include counterparty credit risk, 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. -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 35 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS The following tables are intended to provide additional information about the effect of derivatives on the financial statements of the Fund including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; the impact of derivative transactions on the Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. FAIR VALUES OF DERIVATIVE INSTRUMENTS AT JAN. 31, 2010
ASSET DERIVATIVES LIABILITY DERIVATIVES ------------------------------- ------------------------------- STATEMENT OF ASSETS STATEMENT OF ASSETS RISK EXPOSURE AND LIABILITIES AND LIABILITIES CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE ------------------------------------------------------------------------------------------- Equity contracts Net assets - unrealized depreciation on N/A N/A investments $51,912* ------------------------------------------------------------------------------------------- Total N/A $51,912 -------------------------------------------------------------------------------------------
* Includes cumulative appreciation (depreciation) of futures contracts as reported in the Futures Contracts Outstanding table following the Portfolio of Investments. Only the current day's variation margin is reported in receivables or payables in the Statement of Assets and Liabilities. EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JAN. 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME ----------------------------------------------------------------- RISK EXPOSURE CATEGORY FUTURES ----------------------------------------------------------------- Equity contracts $219,917 ----------------------------------------------------------------- Total $219,917 -----------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME ----------------------------------------------------------------- RISK EXPOSURE CATEGORY FUTURES ----------------------------------------------------------------- Equity contracts $(55,829) ----------------------------------------------------------------- Total $(55,829) -----------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FUTURES The gross notional amount of long contracts outstanding was $1 million at Jan. 31, 2010. The monthly average gross notional amount for these contracts -------------------------------------------------------------------------------- 36 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- was $700,000 for the six months ended Jan. 31, 2010. The fair value of such contracts on Jan. 31, 2010 is set forth in the table above. 4. 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 an annual fee that is equal to a percentage of the Fund's average daily net assets that declines from 0.85% to 0.725% as the Fund's net 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 Small-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 $27,616 for the six months ended Jan. 31, 2010. The management fee for the six months ended Jan. 31, 2010 was 0.74% 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 an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% as the Fund's net assets increase. The fee for the six months ended Jan. 31, 2010 was 0.08% 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, 2010, other expenses paid to this company were $123. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund under the 1940 Act 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 funds in the RiverSource Family -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- of Funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the funds until distributed in accordance with the Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains Fund shareholder accounts and records and provides Fund shareholder services. 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 Transfer Agent also charges an annual fee of $3 per account serviced directly by the Fund or its designated agent for Class A, Class B and Class C shares. 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 the 12 month period from the date the account becomes inactive. These fees are included in the transfer agency fees in the Statement of Operations. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R2, Class R3 and Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. DISTRIBUTION FEES The Fund has an agreement with RiverSource Fund Distributors, Inc. (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, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $16,000 and $2,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of Oct. 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. -------------------------------------------------------------------------------- 38 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- SALES CHARGES Sales charges, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $3,485 for Class A and $13 for Class B for the six months ended Jan. 31, 2010. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the six months ended Jan. 31, 2010, 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.............................................. 1.27% Class B.............................................. 2.03 Class C.............................................. 2.02 Class I.............................................. 0.92 Class R2............................................. 1.69 Class R3............................................. 1.48 Class R4............................................. 1.23 Class R5............................................. 0.95
The waived/reimbursed fees and expenses for the transfer agency fees at the class level were as follows: Class R3.............................................. $1
The management fees waived/reimbursed at the Fund level were $20,365. The Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses until Sept. 30, 2010, unless sooner terminated at the sole 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 class' average daily net assets: Class A.............................................. 1.49% Class B.............................................. 2.26 Class C.............................................. 2.25 Class I.............................................. 1.04 Class R2............................................. 1.84 Class R3............................................. 1.59 Class R4............................................. 1.34 Class R5............................................. 1.09
* 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 -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. 5. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $12,468,854 and $26,084,977, respectively, for the six months ended Jan. 31, 2010. Realized gains and losses are determined on an identified cost basis. 6. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2010 JULY 31, 2009 ---------------------------------------------------------------------- CLASS A Sold 33,105 390,536 Converted from Class B* -- 11,922 Reinvested distributions 3,537 1,852 Redeemed (81,962) (252,101) ---------------------------------------------------------------------- Net increase (decrease) (45,320) 152,209 ---------------------------------------------------------------------- CLASS B Sold 133 30,986 Converted to Class A* -- (12,120) Redeemed (7,412) (19,523) ---------------------------------------------------------------------- Net increase (decrease) (7,279) (657) ---------------------------------------------------------------------- CLASS C Sold 1,087 7,429 Reinvested distributions 6 -- Redeemed (447) (2,110) ---------------------------------------------------------------------- Net increase (decrease) 646 5,319 ---------------------------------------------------------------------- CLASS I Sold 24,478 6,190,809 Reinvested distributions 43,304 37,091 Redeemed (1,821,339) (2,542,749) ---------------------------------------------------------------------- Net increase (decrease) (1,753,557) 3,685,151 ---------------------------------------------------------------------- CLASS R3 Sold 44 127 Reinvested distributions 1 -- ---------------------------------------------------------------------- Net increase (decrease) 45 127 ----------------------------------------------------------------------
* Automatic conversion of Class B shares to Class A shares based on the original purchase date. -------------------------------------------------------------------------------- 40 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- 7. LENDING OF PORTFOLIO SECURITIES 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 in order to generate additional income on behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured by cash or U.S. government securities equal to at least 100% of the market value of the loaned securities. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. 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 in the Portfolio of Investments. The values of such investments and any uninvested cash collateral balance are disclosed in the Statement of Assets and Liabilities along with the related obligation to return the collateral upon the return of the securities loaned. At Jan. 31, 2010, securities valued at $4,954,449 were on loan, secured by cash collateral of $5,117,441 invested in short-term securities or in cash equivalents. 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 Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. 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. Net income of $49,483 earned from securities lending for the six months ended Jan. 31, 2010 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. 8. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the funds in the RiverSource Family of Funds and other institutional clients of RiverSource Investments. The cost of the Fund's purchases and proceeds from sales of shares -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- of RiverSource Short-Term Cash Fund aggregated $9,423,903 and $8,637,995, respectively, for the six months ended Jan. 31, 2010. 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, 2010, can be found in the Portfolio of Investments. 9. 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. 15, 2009, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds in the RiverSource Family of Funds, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent to request an increase of up to $200 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 $500 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 sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount of such excess. 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 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. Prior to Oct. 15, 2009, the credit facility agreement, which was a collective agreement between the Fund and certain other funds in the RiverSource Family of Funds, severally and not jointly, permitted collective borrowings up to $475 million. Interest was charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.75%. 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, 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, 2010. 10. FEDERAL TAX INFORMATION Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of futures contracts, -------------------------------------------------------------------------------- 42 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- passive foreign investment company (PFIC) holdings, re-characterization of real estate investment trust (REIT) distributions, 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. For federal income tax purposes, the Fund had a capital loss carry-over of $6,787,750 at July 31, 2009, that if not offset by capital gains will expire as follows:
2016 2017 $554,680 $6,233,070
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, 2008 and its fiscal year end (post-October loss) as occurring on the first day of the following tax year. At July 31, 2009, the Fund had a post-October loss of $7,832,894 that is treated for income tax purposes as occurring on Aug. 1, 2009. 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. There is no assurance that the Fund will be able to utilize all of its capital loss carry-over before it expires. 11. SUBSEQUENT EVENTS Management has evaluated Fund related events and transactions that occurred during the period from the date of the Statement of Assets and Liabilities through the date of issuance of the Fund's financial statements. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund's financial statements. 12. 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 -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- they are investors in several American Express Company (now known as RiverSource) 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 (the District Court). In response to defendants' motion to dismiss the complaint, the District 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 (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court, asking the U.S. Supreme Court to stay the District Court proceedings while the U.S. Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. 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. Incorporated (Seligman). In late 2003, Seligman conducted an extensive internal review concerning mutual fund trading practices. Seligman's review, which covered the -------------------------------------------------------------------------------- 44 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT -------------------------------------------------------------------------------- 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 2006, the NYAG commenced a civil action in New York State Supreme Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund Distributors, 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 was and had 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 paid $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 -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 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. -------------------------------------------------------------------------------- 46 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2010 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 the RiverSource Family of Funds at 1(800) 221-2450; contacting your financial intermediary; 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 SMALL CAP VALUE FUND -- 2010 SEMIANNUAL REPORT 47 RIVERSOURCE DISCIPLINED SMALL 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 Fund Distributors, Inc., Member FINRA, and managed by RiverSource Investments, LLC. RiverSource is part of Ameriprise Financial, Inc. (RIVERSOURCE INVESTMENTS LOGO) (C)2010 RiverSource Investments, LLC. S-6509 E (4/10)
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. Investments. (a) The complete schedule of investments is included in Item 1 of this Form N-CSR. (b) Not applicable. 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 Dimensions Series, Inc. By /s/ Patrick T. Bannigan ---------------------------------- Patrick T. Bannigan President and Principal Executive Officer Date April 6, 2010 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 6, 2010 By /s/ Jeffrey P. Fox ---------------------------------- Jeffrey P. Fox Treasurer and Principal Financial Officer Date April 6, 2010