-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DsyhyZtLcX36uRDU0w7AuPh4MMcHRkThT23AurjA+354Yu0GZtVghBfjXptxaBLx qedFRuKCpBUCIKUejyQ1Zw== 0000950137-08-005032.txt : 20080403 0000950137-08-005032.hdr.sgml : 20080403 20080403110326 ACCESSION NUMBER: 0000950137-08-005032 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080131 FILED AS OF DATE: 20080403 DATE AS OF CHANGE: 20080403 EFFECTIVENESS DATE: 20080403 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVERSOURCE DIMENSIONS SERIES INC CENTRAL INDEX KEY: 0000049717 IRS NUMBER: 410940846 STATE OF INCORPORATION: MN FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-01629 FILM NUMBER: 08736175 BUSINESS ADDRESS: STREET 1: 50606 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5228 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 BUSINESS PHONE: 6126714321 MAIL ADDRESS: STREET 1: 50606 AMERIPRISE FINANCIAL CENTER STREET 2: H27/5228 CITY: MINNEAPOLIS STATE: MN ZIP: 55474 FORMER COMPANY: FORMER CONFORMED NAME: RIVERSOURCE DIMENSIONS SERIES, INC. DATE OF NAME CHANGE: 20060504 FORMER COMPANY: FORMER CONFORMED NAME: AXP DIMENSIONS SERIES INC DATE OF NAME CHANGE: 20021118 FORMER COMPANY: FORMER CONFORMED NAME: AXP NEW DIMENSIONS FUND INC /MN/ DATE OF NAME CHANGE: 20000417 0000049717 S000003459 RiverSource Disciplined Small Cap Value Fund C000009585 RiverSource Disciplined Small Cap Value Fund Class A RDVAX C000009586 RiverSource Disciplined Small Cap Value Fund Class B C000009587 RiverSource Disciplined Small Cap Value Fund Class C RDVCX C000009588 RiverSource Disciplined Small Cap Value Fund Class I RCVIX C000042778 RiverSource Disciplined Small Cap Value Fund Class R2 C000042779 RiverSource Disciplined Small Cap Value Fund Class R3 C000042780 RiverSource Disciplined Small Cap Value Fund Class R4 RSDVX C000042781 RiverSource Disciplined Small Cap Value Fund Class R5 0000049717 S000011670 RiverSource Disciplined Small and Mid Cap Equity Fund C000032029 RiverSource Disciplined Small and Mid Cap Equity Fund Class A RDSAX C000032030 RiverSource Disciplined Small and Mid Cap Equity Fund Class B C000032031 RiverSource Disciplined Small and Mid Cap Equity Fund Class C RDSCX C000032032 RiverSource Disciplined Small and Mid Cap Equity Fund Class I RDSIX C000042782 RiverSource Disciplined Small and Mid Cap Equity Fund Class R4 C000042783 RiverSource Disciplined Small and Mid Cap Equity Fund Class W RSEWX N-CSRS 1 c24143nvcsrs.txt CERTIFIED SHAREHOLDER REPORT 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, 2008 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. (SINGLE STRATEGY FUNDS ICON) TABLE OF CONTENTS Fund Snapshot....................... 2 Performance Summary................. 4 Questions & Answers with Portfolio Management........ 6 Fund Expenses Example............... 10 Portfolio of Investments............ 12 Financial Statements................ 19 Notes to Financial Statements....... 23 Proxy Voting........................ 39
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 1 FUND SNAPSHOT AT JAN. 31, 2008 (UNAUDITED) FUND OBJECTIVE RiverSource Disciplined Small and Mid Cap Equity Fund seeks to provide shareholders with long-term capital growth. SECTOR BREAKDOWN* Percentage of portfolio assets (PIE CHART) Industrials 20.7% Consumer Discretionary 16.6% Information Technology 12.3% Financials 12.3% Materials 10.1% Energy 9.8% Other(1) 18.2%
* 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. (1) Includes Health Care 9.4%, Consumer Staples 3.4%, Utilities 1.9%, Telecommunication Services 0.3% and Cash & Cash Equivalents 3.2%. TOP TEN HOLDINGS Percentage of portfolio assets Western Digital 1.4% Axis Capital Holdings 1.3% NVR 1.3% CF Inds Holdings 1.2% Con-way 1.1% UAL 1.0% Frontier Oil 1.0% Fidelity Natl Financial Cl A 1.0% Helmerich & Payne 1.0% Intuitive Surgical 1.0%
For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. Investments in small- and mid-capitalization companies often involve greater risks and potential volatility than investments in larger, more established companies. - -------------------------------------------------------------------------------- 2 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT FUND SNAPSHOT AT JAN. 31, 2008 (UNAUDITED) STYLE MATRIX
STYLE VALUE BLEND GROWTH LARGE X MEDIUM SIZE X SMALL
Shading within the style matrix indicates areas in which the Fund generally invests. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and serves as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. PORTFOLIO MANAGERS
YEARS IN INDUSTRY Dimitris Bertsimas, 15 Ph.D. Gina Mourtzinou, Ph.D. 12 Steve Kokkotos, Ph.D. 10
FUND FACTS
TICKER SYMBOL INCEPTION DATE Class A RDSAX 05/18/06 Class B -- 05/18/06 Class C RDSCX 05/18/06 Class I RDSIX 05/18/06 Class R4 -- 05/18/06 Class W RSEWX 12/01/06 Total net assets $39.1 million Number of holdings 301
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 3 PERFORMANCE SUMMARY PERFORMANCE COMPARISON For the six-month period ended Jan. 31, 2008 (BAR CHART) RiverSource Disciplined Small and Mid Cap Equity Fund Class A (excluding sales charge)# -10.78% Russell 2500 Index (unmanaged) (1) -7.07% Lipper Mid-Cap Core Funds Index -6.48%
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (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. ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
TOTAL NET EXPENSES(A) Class A 1.67% 1.32% Class B 2.12% 2.08% Class C 2.16% 2.08% Class I 0.96% 0.92% Class R4 1.74% 1.19% Class W 1.60% 1.37%
(a) The investment manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until July 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment (that decreased the management fee by 0.04%), will not exceed 1.36% for Class A, 2.12% for Class B, 2.12% for Class C, 0.96% for Class I, 1.23% for Class R4 and 1.41% for Class W. - -------------------------------------------------------------------------------- 4 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT JAN. 31, 2008 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR INCEPTION Class A (inception 5/18/06) -10.78% -16.55% -5.84% Class B (inception 5/18/06) -11.19% -17.22% -6.58% Class C (inception 5/18/06) -11.19% -17.22% -6.61% Class I (inception 5/18/06) -10.58% -16.26% -5.53% Class R4 (inception 5/18/06) -10.53% -16.23% -5.60% Class W (inception 12/1/06) -10.87% -16.64% -10.99% WITH SALES CHARGE Class A (inception 5/18/06) -15.89% -21.33% -5.84% Class B (inception 5/18/06) -15.63% -21.36% -8.78% Class C (inception 5/18/06) -12.08% -18.05% -6.61%
AT DEC. 31, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR INCEPTION Class A (inception 5/18/06) -14.69% -10.20% -3.71% Class B (inception 5/18/06) -15.01% -10.86% -4.41% Class C (inception 5/18/06) -15.01% -10.86% -4.44% Class I (inception 5/18/06) -14.56% -9.90% -3.38% Class R4 (inception 5/18/06) -14.44% -9.86% -3.45% Class W (inception 12/1/06) -14.75% -10.27% -8.25% WITH SALES CHARGE Class A (inception 5/18/06) -19.63% -15.34% -3.71% Class B (inception 5/18/06) -19.25% -15.32% -6.77% Class C (inception 5/18/06) -15.86% -11.75% -4.44%
Class A share performance reflects the maximum sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R4 and Class W shares. Class I and Class R4 are available to institutional investors only. Class W shares are offered through qualifying discretionary accounts. * Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 5 QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT Below, Portfolio Managers Dimitris Bertsimas, Gina Mourtzinou and Steve Kokkotos discuss RiverSource Disciplined Small and Mid Cap Equity Fund's positioning and results for the six-month period ended Jan. 31, 2008. At Jan. 31, 2008, approximately 35% of the Fund's shares were owned in the aggregate by affiliated funds-of-funds managed by RiverSource Investments, LLC (RiverSource). As a result of asset allocation decisions by RiverSource, it is possible that RiverSource Disciplined Small and Mid Cap Equity Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds (see page 30, Class I capital share transactions for related activity during the most recent fiscal period). RiverSource seeks to minimize the impact of these transactions by structuring them over a reasonable period of time. RiverSource Disciplined Small and Mid Cap Equity Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds. For more information of the Fund's expenses, see the discussions beginning on pages 10 and 27. Q: How did RiverSource Disciplined Small and Mid Cap Equity Fund perform for the semiannual period? A: RiverSource Disciplined Small and Mid Cap Equity Fund's Class A shares (excluding sales charge) declined 10.78% for the six-month period ended Jan. 31, 2008. The Fund underperformed its benchmark, the Russell 2500(TM) Index (Russell Index), which fell 7.07%, as well as the Lipper Mid-Cap Core Funds Index, representing the Fund's peer group, which declined 6.48%, for the same period. NEITHER THE VALUE NOR THE MOMENTUM QUANTITATIVE INVESTMENT MODEL MANAGED TO OVERCOME THE PERIOD'S UNUSUALLY VOLATILE CONDITIONS, UNDERPERFORMING THE RUSSELL INDEX DURING THE SIX MONTHS. Q: What factors most significantly affected the Fund's performance? A: The Fund's performance resulted from the quantitative investment models we employ in selecting stocks for the Fund's portfolio. Early in the period, we decided that the quality-adjusted value model would not be able to manage the extremely volatile market conditions caused by subprime mortgage market upheaval, surging oil prices, credit market troubles and recessionary fears that dominated the equity market during these months, especially within the small- - -------------------------------------------------------------------------------- 6 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT QUESTIONS & ANSWERS and mid-cap segments of the market. Thus, we eliminated the Fund's use of the quality-adjusted value model, which had been designed to select undervalued securities by adjusting the valuations of stocks to take into account each stock's historical earnings stability and debt load. We correspondingly increased the Fund's weighting allotted to the value model, which selects undervalued stocks based on proprietary estimates of future corporate earnings. We also continued to use the momentum model, which singles out groups of companies that appear to be having improving prospects based on the pattern of stock returns observed over history. Under the Fund's investment process, the models choose the small- and mid-cap stocks for the portfolio. We then weight the models and determine the exposure to sectors and industries. Neither the value nor the momentum quantitative investment model managed to overcome the period's unusually volatile conditions, underperforming the Russell Index during the six months. The value model performed worse than the momentum model for the semiannual period overall, though this reversed in January 2008, supporting our research indicating that the style diversification provided by the very different quantitative models is a significant investment advantage over the long term, even though the Fund may experience underperformance in the short term. It is important to remember that we do not make sector or industry bets based on our outlook for the economy or the equity markets. That said, during the period, the Fund's quantitative models led to a bias toward small-cap stocks and toward value-oriented stocks, which detracted from results. Most of the small-cap value-oriented stocks were financials, a group that struggled during the period, most especially during August and September. From a sector allocation perspective, the Fund's greater-than-Russell Index allocations to energy and materials contributed positively to its results as did a lesser-than-Russell Index position in information technology. Conversely, a sizable exposure to consumer discretionary and more modest allocations to financials, health care and utilities detracted. Because of our investment process, most of the Fund's underperformance was the result of stock selection. Stock selection actually helped performance in the materials and health care sectors. However, these positives were not enough to offset our selections within financials, energy and industrials. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 7 QUESTIONS & ANSWERS Among individual holdings, the stocks that detracted most from the Fund's results were two financials companies, each selected by the value model - namely PMI Group and Radian Group. Other poor performers during the period included oil company Western Refining (selected by the momentum and value models), food products company Seaboard (momentum and value models), and road and rail company YRC Worldwide (value model). On the positive side, stocks that contributed favorably to the Fund's return included chemicals company Terra Inds (selected by the value and momentum models), metals and mining company Cleveland-Cliffs (momentum and value models), telecommunications services company Golden Telecom (momentum and value models), consumer discretionary firm NVR (value model), and information technology company Western Digital (value and momentum models). At the end of January 2008, the Fund's largest individual stock holdings included Western Digital, NVR, financials company Axis Capital Holdings (selected by the value model), materials company CF Inds Holdings (momentum and value models), and energy company Frontier Oil (momentum and value models). Q: What changes did you make to the Fund's portfolio during the period? A: As mentioned, the biggest change we made during the period was the elimination of our use of the quality-adjusted value model and the increased Fund weighting to the value model. Also, as a result of quantitative models- driven stock selection during the period, the portfolio's sector allocations changed somewhat. For example, the Fund's exposure to industrials relative to the Russell Index increased. Conversely, the Fund's relative position in utilities and telecommunications decreased. In managing risk associated with small- and mid-cap investing, we use a proprietary risk management system that allows us to manage the Fund's exposure to several key factors, including industry, sector, market capitalization and portfolio turnover. During the period, we used these and other techniques to avoid large deviations in exposure from the Index. Q: How do you intend to manage the Fund in the coming months? A: We believe our use of multiple investment disciplines serves the Fund well in all investment environments over the long term, and the diversified portfolio is - -------------------------------------------------------------------------------- 8 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT QUESTIONS & ANSWERS well positioned for most potential market conditions. Whether there is a surge in small- and mid-cap stocks or a downturn, the combination of models should, in our view, help us deliver value relative to the Russell Index over extended periods of time. We are convinced of the merit of our multifaceted, disciplined approach to managing risk in the portfolio. We believe this combination of style diversification and rigorous risk management will allow us to maintain the high quality of the Fund's portfolio in whatever market conditions lie ahead. Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of RiverSource Investments, LLC (RiverSource) or any subadviser to the Fund or any other person in the RiverSource or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and RiverSource disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a RiverSource Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any RiverSource Fund. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 9 FUND EXPENSES EXAMPLE (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the acquired funds expense ratio as of the most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended Jan. 31, 2008. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 10 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED AUG. 1, 2007 JAN. 31, 2008 THE PERIOD(A) EXPENSE RATIO Class A Actual(b) $1,000 $ 892.20 $ 5.96 1.25% Hypothetical (5% return before expenses) $1,000 $1,018.90 $ 6.36 1.25% Class B Actual(b) $1,000 $ 888.10 $ 9.61 2.02% Hypothetical (5% return before expenses) $1,000 $1,015.02 $10.26 2.02% Class C Actual(b) $1,000 $ 888.10 $ 9.57 2.01% Hypothetical (5% return before expenses) $1,000 $1,015.07 $10.21 2.01% Class I Actual(b) $1,000 $ 894.20 $ 4.20 .88% Hypothetical (5% return before expenses) $1,000 $1,020.77 $ 4.48 .88% Class R4 Actual(b) $1,000 $ 894.70 $ 5.49 1.15% Hypothetical (5% return before expenses) $1,000 $1,019.41 $ 5.85 1.15% Class W Actual(b) $1,000 $ 891.30 $ 6.29 1.32% Hypothetical (5% return before expenses) $1,000 $1,018.55 $ 6.72 1.32%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended Jan. 31, 2008: -10.78% for Class A, -11.19% for Class B, -11.19% for Class C, -10.58% for Class I, -10.53% for Class R4 and -10.87% for Class W. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 11 PORTFOLIO OF INVESTMENTS JAN. 31, 2008 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (99.7%) ISSUER SHARES VALUE(A) AEROSPACE & DEFENSE (0.9%) BE Aerospace 3,661(b) $141,351 Ceradyne 1,610(b) 77,522 Taser Intl 7,619(b) 87,542 Teledyne Technologies 958(b) 49,462 --------------- Total 355,877 - ----------------------------------------------------------------------------------- AIR FREIGHT & LOGISTICS (0.2%) Park-Ohio Holdings 2,855(b) 63,838 - ----------------------------------------------------------------------------------- AIRLINES (3.7%) Alaska Air Group 11,296(b) 285,789 Continental Airlines Cl B 12,329(b) 335,472 Pinnacle Airlines 6,248(b) 83,973 SkyWest 5,564 144,775 UAL 11,061 419,765 US Airways Group 12,841(b) 177,334 --------------- Total 1,447,108 - ----------------------------------------------------------------------------------- AUTO COMPONENTS (2.5%) Aftermarket Technology 2,847(b) 72,342 Amerigon 4,633(b) 79,317 ArvinMeritor 4,159 56,479 BorgWarner 1,743 88,213 Cooper Tire & Rubber 5,969 101,891 Goodyear Tire & Rubber 4,076(b,d) 102,593 Lear 2,665(b) 78,244 Modine Mfg 5,490 84,766 Tenneco 3,143(b) 83,195 TRW Automotive Holdings 7,790(b) 178,625 Visteon 15,289(b) 61,156 --------------- Total 986,821 - ----------------------------------------------------------------------------------- BEVERAGES (0.6%) Central European Distribution 925(b) 48,627 Hansen Natural 3,095(b) 119,343 PepsiAmericas 2,650 65,296 --------------- Total 233,266 - -----------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) BIOTECHNOLOGY (1.4%) BioMarin Pharmaceutical 3,354(b) $124,299 Cepheid 4,237(b) 129,399 LifeCell 3,031(b) 119,755 Myriad Genetics 2,738(b) 117,761 Onyx Pharmaceuticals 1,008(b) 47,910 --------------- Total 539,124 - ----------------------------------------------------------------------------------- BUILDING PRODUCTS (1.0%) Armstrong World Inds 1,224(b) 44,933 Owens Corning 8,370(b) 181,964 Universal Forest Products 862 31,204 USG 3,756(b) 137,470 --------------- Total 395,571 - ----------------------------------------------------------------------------------- CAPITAL MARKETS (0.7%) Knight Capital Group Cl A 3,343(b) 55,995 optionsXpress Holdings 1,759 47,704 SWS Group 6,798 104,349 Waddell & Reed Financial Cl A 1,503 49,870 --------------- Total 257,918 - ----------------------------------------------------------------------------------- CHEMICALS (6.2%) Ashland 8,440 384,272 Calgon Carbon 8,989(b) 138,251 Celanese Series A 4,826 179,431 CF Inds Holdings 4,407(d) 471,240 Eastman Chemical 3,315 219,022 Flotek Inds 4,834(b) 98,469 Koppers Holdings 1,400 46,844 LSB Inds 3,868(b) 106,641 NewMarket 905 48,761 Olin 5,175 106,036 PolyOne 7,060(b) 43,490 ShengdaTech 8,830(b,c) 108,962 Terra Inds 5,131(b) 231,254 Westlake Chemical 3,216 64,642
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- 12 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) CHEMICALS (CONT.) WR Grace & Co 4,848(b) $109,662 Zoltek Companies 2,465(b) 89,973 --------------- Total 2,446,950 - ----------------------------------------------------------------------------------- COMMERCIAL BANKS (0.9%) First BanCorp 6,493(c) 62,073 First Citizens BancShares Cl A 437 59,581 Oriental Financial Group 2,471(c) 39,462 UMB Financial 3,617 152,383 Whitney Holding 1,378 36,986 --------------- Total 350,485 - ----------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES (1.9%) CBIZ 7,846(b) 73,831 Copart 1,206(b) 49,301 FTI Consulting 1,361(b) 75,277 GeoEye 2,980(b) 104,181 IHS Cl A 1,342(b) 83,123 Layne Christensen 2,064(b) 76,162 Stericycle 2,212(b) 131,083 TEAM 3,145(b) 94,507 TrueBlue 3,843(b) 54,840 --------------- Total 742,305 - ----------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT (0.7%) Ciena 3,940(b) 106,892 CommScope 1,196(b) 53,043 EMS Technologies 1,776(b) 48,804 InterDigital 3,270(b) 66,087 --------------- Total 274,826 - ----------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS (3.0%) Immersion 8,418(b) 82,496 Lexmark Intl Cl A 6,862(b) 248,473 Novatel Wireless 5,259(b) 84,144 Stratasys 2,090(b) 46,189 Synaptics 5,606(b) 148,559 Western Digital 21,512(b,d) 568,993 --------------- Total 1,178,854 - ----------------------------------------------------------------------------------- CONSTRUCTION & ENGINEERING (1.2%) Jacobs Engineering Group 2,798(b) 213,879 Michael Baker 3,765(b) 128,876
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) CONSTRUCTION & ENGINEERING (CONT.) Perini 1,777(b) $62,106 Shaw Group 1,185(b) 66,953 --------------- Total 471,814 - ----------------------------------------------------------------------------------- CONSUMER FINANCE (0.4%) First Marblehead 10,275 168,921 - ----------------------------------------------------------------------------------- CONTAINERS & PACKAGING (0.9%) Owens-Illinois 6,668(b) 336,067 - ----------------------------------------------------------------------------------- DISTRIBUTORS (0.2%) LKQ 4,448(b) 79,575 - ----------------------------------------------------------------------------------- DIVERSIFIED CONSUMER SERVICES (0.5%) Career Education 2,218(b) 48,219 ITT Educational Services 710(b) 64,859 Strayer Education 498 85,945 --------------- Total 199,023 - ----------------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (0.3%) Ampal-American Israel Cl A 9,152(b,c) 67,633 NASDAQ Stock Market 877(b) 40,579 --------------- Total 108,212 - ----------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES (0.3%) NTELOS Holdings 2,848 60,605 Shenandoah Telecommunications 2,839 51,869 --------------- Total 112,474 - ----------------------------------------------------------------------------------- ELECTRIC UTILITIES (0.4%) Central Vermont Public Service 4,957 144,397 - ----------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT (1.8%) American Superconductor 4,901(b) 99,245 Encore Wire 2,277 37,980 General Cable 5,359(b) 310,876 GrafTech Intl 4,696(b) 70,675 SunPower Cl A 2,436(b) 168,303 --------------- Total 687,079 - ----------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS (3.3%) Arrow Electronics 6,521(b) 223,148 Avnet 5,756(b) 204,971 Benchmark Electronics 9,918(b) 176,045 FLIR Systems 3,690(b) 111,733 Ingram Micro Cl A 11,625(b) 206,693
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 13
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) ELECTRONIC EQUIPMENT & INSTRUMENTS (CONT.) Itron 1,383(b) $113,959 Plexus 5,898(b) 133,236 SYNNEX 2,326(b) 49,544 Trimble Navigation 3,067(b) 81,122 --------------- Total 1,300,451 - ----------------------------------------------------------------------------------- ENERGY EQUIPMENT & SERVICES (5.1%) Global Inds 5,822(b) 102,817 Grey Wolf 18,999(b) 113,234 Helmerich & Payne 10,294(d) 403,730 Oil States Intl 5,879(b) 206,118 Patterson-UTI Energy 16,129 315,806 SEACOR Holdings 2,219(b) 195,716 Tidewater 6,173 326,922 Unit 4,769(b) 239,022 Willbros Group 2,716(b,c) 90,497 --------------- Total 1,993,862 - ----------------------------------------------------------------------------------- FOOD & STAPLES RETAILING (1.0%) BJ's Wholesale Club 1,900(b) 61,636 Great Atlantic & Pacific Tea 3,757(b) 112,222 PriceSmart 1,617 46,020 Rite Aid 35,713(b) 105,710 Winn-Dixie Stores 2,718(b) 48,163 --------------- Total 373,751 - ----------------------------------------------------------------------------------- FOOD PRODUCTS (2.0%) Cal-Maine Foods 3,180 91,679 Darling Intl 16,258(b) 188,593 Fresh Del Monte Produce 4,883(b,c) 156,451 Green Mountain Coffee Roasters 2,080(b) 80,122 Imperial Sugar 2,454 53,939 Sanderson Farms 3,016 101,368 Seaboard 75 96,394 --------------- Total 768,546 - ----------------------------------------------------------------------------------- GAS UTILITIES (1.1%) Atmos Energy 3,015 86,591 New Jersey Resources 1,972 92,467 Nicor 6,062 248,542 --------------- Total 427,600 - ----------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES (2.3%) DENTSPLY Intl 1,978 81,711 IDEXX Laboratories 770(b) 43,405 Intuitive Surgical 1,573(b,d) 399,541
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) HEALTH CARE EQUIPMENT & SUPPLIES (CONT.) Meridian Bioscience 6,387 $200,616 NuVasive 2,185(b) 86,111 Regeneration Technologies 6,369(b) 50,952 Wright Medical Group 1,742(b) 47,557 --------------- Total 909,893 - ----------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES (2.2%) Air Methods 2,858(b) 131,125 AMERIGROUP 932(b) 34,969 HealthSpring 2,921(b) 60,435 Healthways 710(b) 39,973 HMS Holdings 2,841(b) 89,776 Kindred Healthcare 4,044(b) 111,372 Magellan Health Services 652(b) 28,518 Molina Healthcare 4,676(b) 159,498 ResCare 2,130(b) 47,648 WellCare Health Plans 3,532(b) 165,969 --------------- Total 869,283 - ----------------------------------------------------------------------------------- HEALTH CARE TECHNOLOGY (0.3%) Emageon 14,621(b) 42,108 Phase Forward 3,779(b) 65,188 --------------- Total 107,296 - ----------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE (0.5%) Bally Technologies 2,127(b) 101,330 Penn Natl Gaming 909(b) 47,404 Premier Exhibitions 5,770(b) 35,082 --------------- Total 183,816 - ----------------------------------------------------------------------------------- HOUSEHOLD DURABLES (3.3%) Avatar Holdings 2,476(b) 106,220 Beazer Homes USA 9,284 80,956 Champion Enterprises 4,924(b) 48,107 KB Home 3,170 87,175 MDC Holdings 2,452 113,454 Meritage Homes 4,426(b) 71,037 NVR 819(b,d) 517,200 Ryland Group 5,137 173,169 Toll Brothers 3,687(b) 85,833 --------------- Total 1,283,151 - ----------------------------------------------------------------------------------- INSURANCE (8.5%) Allied World Assurance Holdings 2,690(c) 128,125 American Financial Group 7,044 195,330 Arch Capital Group 4,051(b,c) 285,433
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- 14 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) INSURANCE (CONT.) Aspen Insurance Holdings 7,497(c) $211,565 Axis Capital Holdings 13,078(c) 523,643 Conseco 11,847(b) 142,638 Fidelity Natl Financial Cl A 20,795 409,454 First American 7,946 346,048 Odyssey Re Holdings 1,754 66,617 Old Republic Intl 9,389 140,178 PartnerRe 4,832(c) 383,081 RenaissanceRe Holdings 6,147(c) 350,318 Transatlantic Holdings 2,448 166,954 --------------- Total 3,349,384 - ----------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL (1.1%) 1-800-FLOWERS.com Cl A 10,598(b) 82,770 Blue Nile 1,735(b) 95,859 Gaiam Cl A 2,079(b) 50,665 Priceline.com 1,725(b) 187,197 --------------- Total 416,491 - ----------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES (1.3%) Chordiant Software 6,782(b) 59,139 CMGI 5,938(b) 76,600 DealerTrack Holdings 2,639(b) 71,147 EarthLink 5,044(b) 34,350 RealNetworks 7,279(b) 42,437 Sohu.com 2,546(b,c) 118,465 Vocus 3,252(b) 95,674 --------------- Total 497,812 - ----------------------------------------------------------------------------------- IT SERVICES (1.1%) Iron Mountain 1,447(b) 49,762 SAIC 20,574(b,d) 388,849 --------------- Total 438,611 - ----------------------------------------------------------------------------------- LEISURE EQUIPMENT & PRODUCTS (1.0%) Brunswick 14,232 270,266 JAKKS Pacific 5,484(b) 129,203 --------------- Total 399,469 - ----------------------------------------------------------------------------------- LIFE SCIENCES TOOLS & SERVICES (1.6%) Bio-Rad Laboratories Cl A 538(b) 51,223 Covance 956(b) 79,501 eResearch Technology 9,189(b) 89,317 Illumina 1,394(b) 88,798 Invitrogen 931(b) 79,759
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) LIFE SCIENCES TOOLS & SERVICES (CONT.) Luminex 4,815(b) $72,081 PAREXEL Intl 3,265(b) 177,648 --------------- Total 638,327 - ----------------------------------------------------------------------------------- MACHINERY (5.8%) AGCO 4,167(b) 250,938 Barnes Group 1,657 44,159 Bucyrus Intl Cl A 1,025 95,028 Dynamic Materials 2,230 119,483 Flowserve 2,367 194,378 FreightCar America 3,790 142,921 Hardinge 3,481 59,351 Harsco 2,287 130,176 Hurco Companies 2,024(b) 74,018 Kennametal 1,118 34,244 LB Foster Cl A 3,563(b) 164,005 Lindsay 812 49,548 Manitowoc 6,226 237,335 Mueller Inds 5,155 144,340 NACCO Inds Cl A 640 64,038 Robbins & Myers 770 51,036 Sun Hydraulics 3,284 75,532 Tennant 1,372 45,262 Timken 5,049 152,631 Valmont Inds 1,603 134,171 --------------- Total 2,262,594 - ----------------------------------------------------------------------------------- MARINE (0.7%) Genco Shipping & Trading 2,700 133,164 TBS Intl Series A 3,775(b,c) 125,745 --------------- Total 258,909 - ----------------------------------------------------------------------------------- MEDIA (0.5%) Discovery Holding Cl A 2,444(b) 56,750 Gemstar-TV Guide Intl 20,068(b) 86,493 TiVo 7,060(b) 61,916 --------------- Total 205,159 - ----------------------------------------------------------------------------------- METALS & MINING (3.1%) AK Steel Holding 2,433(b) 116,249 Century Aluminum 834(b) 43,360 Cleveland-Cliffs 2,558 260,507 Commercial Metals 12,252 347,344 General Moly 5,002(b) 50,420 Kaiser Aluminum 517 33,067 Metal Management 1,944 96,578 Quanex 3,110 162,995
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 15
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) METALS & MINING (CONT.) Schnitzer Steel Inds Cl A 1,404 $79,551 Worthington Inds 2,378 38,975 --------------- Total 1,229,046 - ----------------------------------------------------------------------------------- MULTILINE RETAIL (0.8%) Dillard's Cl A 15,928 315,852 - ----------------------------------------------------------------------------------- MULTI-UTILITIES (0.4%) Integrys Energy Group 3,473 168,857 - ----------------------------------------------------------------------------------- OIL, GAS & CONSUMABLE FUELS (4.9%) Cimarex Energy 7,219(d) 294,607 Forest Oil 2,672(b) 120,828 Frontier Oil 11,895(d) 419,537 Frontline 6,924(c) 294,755 Holly 1,997 96,695 Overseas Shipholding Group 3,046 198,660 St. Mary Land & Exploration 4,384 154,448 Stone Energy 2,320(b,d) 95,120 Swift Energy 3,072(b) 132,557 Whiting Petroleum 2,238(b) 120,270 --------------- Total 1,927,477 - ----------------------------------------------------------------------------------- PAPER & FOREST PRODUCTS (0.2%) Louisiana-Pacific 4,573 69,830 - ----------------------------------------------------------------------------------- PHARMACEUTICALS (1.8%) Auxilium Pharmaceuticals 1,691(b) 57,832 Durect 9,354(b) 47,612 King Pharmaceuticals 24,950(b) 261,726 Perrigo 2,694 83,083 ViroPharma 10,447(b) 92,560 XenoPort 2,800(b) 171,808 --------------- Total 714,621 - ----------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS (REITS) (0.8%) Annaly Capital Management 5,784 114,060 Digital Realty Trust 2,212 79,035 MFA Mtge Investments 10,145 103,479 --------------- Total 296,574 - ----------------------------------------------------------------------------------- ROAD & RAIL (3.5%) Arkansas Best 6,828 210,234 Avis Budget Group 3,605(b) 48,127 Con-way 8,915 434,071 Ryder System 5,598 291,432
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) ROAD & RAIL (CONT.) Werner Enterprises 6,633 $135,114 YRC Worldwide 14,525(b) 265,953 --------------- Total 1,384,931 - ----------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.6%) Advanced Analogic Technologies 10,701(b) 72,125 Amkor Technology 11,032(b) 84,284 ANADIGICS 7,783(b) 77,752 Cree 1,358(b) 40,129 Cypress Semiconductor 2,317(b) 49,236 Monolithic Power Systems 3,751(b) 58,666 NetLogic Microsystems 1,810(b) 47,060 OmniVision Technologies 9,915(b) 140,396 Pericom Semiconductor 3,467(b) 47,013 --------------- Total 616,661 - ----------------------------------------------------------------------------------- SOFTWARE (1.7%) ANSYS 2,247(b) 78,443 Concur Technologies 6,306(b) 221,088 NAVTEQ 1,871(b) 138,267 Nuance Communications 6,200(b) 98,518 Taleo Cl A 3,143(b) 66,412 VASCO Data Security Intl 3,061(b) 58,067 --------------- Total 660,795 - ----------------------------------------------------------------------------------- SPECIALTY RETAIL (5.4%) Asbury Automotive Group 7,026 99,629 AutoNation 13,765(b) 224,094 Barnes & Noble 9,010 305,890 Blockbuster Cl A 52,068(b,d) 162,452 Borders Group 5,589 62,932 Cato Cl A 8,358 136,820 Conn's 4,280(b) 82,604 Foot Locker 13,960 191,112 GameStop Cl A 2,974(b) 153,845 Group 1 Automotive 2,962 78,315 RadioShack 9,662 167,636 Rent-A-Center 7,914(b) 135,329 Sonic Automotive Cl A 8,936 179,167 Stage Stores 9,845 117,845 --------------- Total 2,097,670 - ----------------------------------------------------------------------------------- TEXTILES, APPAREL & LUXURY GOODS (1.3%) crocs 2,080(b) 72,363 Deckers Outdoor 1,373(b) 166,463
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- 16 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) TEXTILES, APPAREL & LUXURY GOODS (CONT.) Hanesbrands 3,887(b) $99,546 Jones Apparel Group 10,812 181,641 --------------- Total 520,013 - ----------------------------------------------------------------------------------- THRIFTS & MORTGAGE FINANCE (1.1%) Corus Bankshares 15,736 200,161 PMI Group 18,405 174,848 Radian Group 4,578 41,843 --------------- Total 416,852 - ----------------------------------------------------------------------------------- TRADING COMPANIES & DISTRIBUTORS (0.7%) Kaman 1,415 41,799 Rush Enterprises Cl A 3,239(b) 54,350 United Rentals 4,384(b) 80,008 WESCO Intl 2,142(b) 90,479 --------------- Total 266,636 - ----------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $45,435,436) $38,950,725 - -----------------------------------------------------------------------------------
MONEY MARKET FUND (3.3%) SHARES VALUE(A) RiverSource Short-Term Cash Fund 1,298,754(e) $1,298,754 - ----------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $1,298,754) $1,298,754 - ----------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $46,734,190)(f) $40,249,479 ===================================================================================
INVESTMENTS IN DERIVATIVES FUTURES CONTRACTS OUTSTANDING AT JAN. 31, 2008
NUMBER OF UNREALIZED CONTRACTS NOTIONAL EXPIRATION APPRECIATION/ CONTRACT DESCRIPTION LONG/(SHORT) MARKET VALUE DATE (DEPRECIATION) - --------------------------------------------------------------------------------------------------- E-Mini S&P MidCap 400 Index 1 $80,640 March 2008 $(93) Mini Russell 2000 Index 1 71,500 March 2008 6,696 - --------------------------------------------------------------------------------------------------- Total $6,603 - ---------------------------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (a) Securities are valued by using procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At Jan. 31, 2008, the value of foreign securities represented 7.5% of net assets. (d) At Jan. 31, 2008, investments in securities included securities valued at $3,173,980 that were partially pledged as collateral to cover initial margin deposits on open stock index futures contracts. (e) Affiliated Money Market Fund - See Note 5 to the financial statements. (f) At Jan. 31, 2008, the cost of securities for federal income tax purposes was approximately $46,734,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $1,839,000 Unrealized depreciation (8,324,000) - ------------------------------------------------------------------------------ Net unrealized depreciation $(6,485,000) - ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 17 NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at riversource.com/funds. - -------------------------------------------------------------------------------- 18 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES JAN. 31, 2008 (UNAUDITED) ASSETS Investments in securities, at value Unaffiliated issuers (identified cost $45,435,436) $ 38,950,725 Affiliated money market fund (identified cost $1,298,754) 1,298,754 - ---------------------------------------------------------------------------- Total investments in securities (identified cost $46,734,190) 40,249,479 Cash 8,968 Capital shares receivable 117,494 Dividends receivable 11,521 Receivable for investment securities sold 1,892,533 Variation margin receivable 6,780 - ---------------------------------------------------------------------------- Total assets 42,286,775 - ---------------------------------------------------------------------------- LIABILITIES Capital shares payable 312,372 Payable for investment securities purchased 2,836,561 Accrued investment management services fee 727 Accrued distribution fee 196 Accrued transfer agency fee 60 Accrued administrative services fee 62 Other accrued expenses 49,826 - ---------------------------------------------------------------------------- Total liabilities 3,199,804 - ---------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 39,086,971 ============================================================================
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 19 STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) JAN. 31, 2008 (UNAUDITED) REPRESENTED BY Capital stock -- $.01 par value $ 46,013 Additional paid-in capital 59,262,665 Excess of distributions over net investment income (24,064) Accumulated net realized gain (loss) (13,719,535) Unrealized appreciation (depreciation) on investments (6,478,108) - ---------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 39,086,971 ============================================================================
Net assets applicable to outstanding shares: Class A $ 17,446,963 Class B $ 1,178,648 Class C $ 157,607 Class I $ 13,641,429 Class R4 $ 10,245 Class W $ 6,652,079 Net asset value per share of outstanding Class A capital stock: shares(1) 2,053,022 $ 8.50 Class B shares 140,103 $ 8.41 Class C shares 18,731 $ 8.41 Class I shares 1,603,375 $ 8.51 Class R4 shares 1,204 $ 8.51 Class W shares 784,815 $ 8.48 - -------------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $9.02. 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 AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT STATEMENT OF OPERATIONS SIX MONTHS ENDED JAN. 31, 2008 (UNAUDITED) INVESTMENT INCOME Income: Dividends $ 567,113 Income distributions from affiliated money market fund 106,517 Less foreign taxes withheld (1,267) - ---------------------------------------------------------------------------- Total income 672,363 - ---------------------------------------------------------------------------- Expenses: Investment management services fee 272,157 Distribution fee Class A 23,127 Class B 6,656 Class C 853 Class W 45,679 Transfer agency fee Class A 11,832 Class B 952 Class C 118 Class R4 3 Class W 36,544 Administrative services fee 26,373 Plan administration services fee -- Class R4 16 Compensation of board members 717 Custodian fees 36,140 Printing and postage 21,014 Registration fees 23,034 Professional fees 10,800 Other 1,772 - ---------------------------------------------------------------------------- Total expenses 517,787 Expenses waived/reimbursed by the Investment Manager and its affiliates (7,367) - ---------------------------------------------------------------------------- 510,420 Earnings and bank fee credits on cash balances (70) - ---------------------------------------------------------------------------- Total net expenses 510,350 - ---------------------------------------------------------------------------- Investment income (loss) -- net 162,013 - ---------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions (13,290,997) Futures contracts (351,686) - ---------------------------------------------------------------------------- Net realized gain (loss) on investments (13,642,683) Net change in unrealized appreciation (depreciation) on investments 1,225,495 - ---------------------------------------------------------------------------- Net gain (loss) on investments (12,417,188) - ---------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(12,255,175) ============================================================================
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 21 STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2008 JULY 31, 2007 (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 162,013 $ 236,927 Net realized gain (loss) on investments (13,642,683) 1,725 Net change in unrealized appreciation (depreciation) on investments 1,225,495 (6,728,788) - ----------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (12,255,175) (6,490,136) - ----------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (44,544) (51,227) Class B -- (1,714) Class C -- (180) Class I (147,613) (86,805) Class R4 (58) (57) Class W (82,725) (25) - ----------------------------------------------------------------------------------------- Total distributions (274,940) (140,008) - ----------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares 3,596,044 9,526,024 Class B shares 260,392 1,559,049 Class C shares 43,891 186,778 Class I shares 2,037,108 41,657,381 Class R4 shares -- 4,169 Class W shares 34,259,574 74,596,249 Reinvestment of distributions at net asset value Class A shares 23,307 12,334 Class B shares -- 1,637 Class C shares -- 133 Class I shares 147,564 86,753 Class R4 shares 14 12 Class W shares 82,712 -- Payments for redemptions Class A shares (2,363,708) (602,001) Class B shares (287,412) (163,893) Class C shares (50,373) (1,577) Class I shares (23,433,857) (1,367,934) Class R4 shares (3,611) -- Class W shares (78,479,438) (12,494,015) - ----------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (64,167,793) 113,001,099 - ----------------------------------------------------------------------------------------- Total increase (decrease) in net assets (76,697,908) 106,370,955 Net assets at beginning of period 115,784,879 9,413,924 - ----------------------------------------------------------------------------------------- Net assets at end of period $ 39,086,971 $115,784,879 ========================================================================================= Undistributed (excess of distributions over) net investment income $ (24,064) $ 88,863 - -----------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 22 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT NOTES TO FINANCIAL STATEMENTS (Unaudited as to Jan. 31, 2008) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RiverSource Disciplined Small and Mid Cap Equity Fund (the Fund) is a series of RiverSource Dimensions Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Dimensions Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board of Directors (the Board). The Fund invests primarily in equity securities of companies with 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 sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I and Class R4 shares are sold without a front-end sales charge or CDSC and are offered to qualifying institutional investors. - - Class W shares are sold without a front-end sales charge or CDSC and are offered through qualifying discretionary accounts. At Jan. 31, 2008, RiverSource Investments, LLC (the Investment Manager) and the affiliated funds-of-funds owned 100% of Class I shares. At Jan. 31, 2008, the Investment Manager and the affiliated funds-of-funds owned approximately 35% of the total outstanding Fund shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g. distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 23 VALUATION OF SECURITIES All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. OPTION TRANSACTIONS To produce incremental earnings, protect gains, and facilitate buying and selling of securities for investments, the Fund may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. Cash collateral may be collected by the Fund to secure certain over-the-counter options trades. Cash collateral held by the Fund for such option trades must be returned to the counterparty upon closure, exercise or expiration of the contract. The Fund also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the - -------------------------------------------------------------------------------- 24 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. During the six months ended Jan. 31, 2008, the Fund had no outstanding option contracts. FUTURES TRANSACTIONS To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Futures are valued daily based upon the last sale price at the close of market on the principal exchange on which they are traded. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Fund may enter into forward foreign currency contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 25 U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the other party will not complete its contract obligations. At Jan. 31, 2008, the Fund had no outstanding forward foreign currency contracts. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund's contracts with its service providers contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income to shareholders. No provision for income or excise taxes is thus required. The Fund has adopted Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," which is effective for fiscal periods beginning after Dec. 15, 2006. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a tax position taken or expected to be taken in a tax return. The first step is to determine whether a tax position has met the more-likely-than-not recognition threshold and the second step is to measure a tax position that meets the threshold to determine the amount of benefit to recognize. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally the tax authorities can examine all the tax returns filed for the last three years. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of - -------------------------------------------------------------------------------- 26 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. RECENT ACCOUNTING PRONOUNCEMENT On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a hierarchy for measuring fair value, and requires additional disclosures about the inputs used to develop the measurements of fair value and the effect of certain measurements reported in the Statement of operations for a fiscal period. The application of SFAS 157 will be effective for the Fund's fiscal year beginning Aug. 1, 2008. The adoption of SFAS 157 is not anticipated to have a material impact on the Fund's financial statements. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 2. EXPENSES AND SALES CHARGES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets that declines from 0.70% to 0.475% annually as the Fund's assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment determined monthly by measuring the percentage difference over a rolling 12-month period between the performance of one Class A share of the Fund and the change in 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 fee by $35,528 for the six months ended Jan. 31, 2008. The management fee for the six months ended Jan. 31, 2008 was 0.62% of the Fund's average daily net assets, including as adjustment under the terms of the performance incentive arrangement. Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 27 average daily net assets that declines from 0.06% to 0.03% annually as the Fund's assets increase. The fee for the six months ended Jan. 31, 2008 was 0.06% of the Fund's average daily net assets. 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 Funds and the Board. For the six months ended Jan. 31, 2008, other expenses paid to this company were $399. Compensation of Board members includes, for a former Board Chair, compensation as well as retirement benefits. Certain other aspects of a former Board Chair's compensation, including health benefits and payment of certain other expenses, are included under other expenses. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual fee per shareholder account for this service as follows: - - Class A $19.50 - - Class B $20.50 - - Class C $20.00 The Fund 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 12 months from the date the account becomes inactive. These fees are included in the transfer agency fees on the Statement of operations. 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. The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor) for distribution and shareholder services. Prior to Oct. 1, 2007, Ameriprise Financial Services, Inc. also served as a principal underwriter and distributor to the Fund. - -------------------------------------------------------------------------------- 28 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 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. Sales charges received by the Distributor for distributing Fund shares were $16,122 for Class A, $1,019 for Class B and $11 for Class C for the six months ended Jan. 31, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. For the six months ended Jan. 31, 2008, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds) were 1.25% for Class A, 2.02% for Class B, 2.01% for Class C, 0.88% for Class I, 0.90% for Class R4 and 1.32% for Class W. Of these waived/reimbursed fees and expenses, the transfer agency fee at the class level was $2 for Class R4, the plan administration services fee at the class level was $16 for Class R4 and the management fees at the Fund level were $7,349. In addition, the Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.36% for Class A, 2.12% for Class B, 2.12% for Class C, 0.96% for Class I, 1.23% for Class R4 and 1.41% for Class W of the Fund's average daily net assets until July 31, 2008, unless sooner terminated at the discretion of the Board. During the six months ended Jan. 31, 2008, the Fund's transfer agency fees were reduced by $70 as a result of bank fee credits from overnight cash balances. The Fund pays custodian fees to Ameriprise Trust Company, a subsidiary of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $18,272,697 and $78,603,533, respectively, for the six months ended Jan. 31, 2008. Realized gains and losses are determined on an identified cost basis. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 29 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED JAN. 31, 2008 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------------------- Class A 393,826 2,670 (267,873) 128,623 Class B 28,854 -- (32,942) (4,088) Class C 4,971 -- (5,647) (676) Class I 221,097 16,884 (2,686,024) (2,448,043) Class R4 -- 2 (384) (382) Class W 3,690,324 9,475 (8,894,403) (5,194,604) - ----------------------------------------------------------------------------------------------
YEAR ENDED JULY 31, 2007 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ---------------------------------------------------------------------------------------------- Class A 943,472 1,246 (59,415) 885,303 Class B 155,478 166 (15,613) 140,031 Class C 18,543 14 (150) 18,407 Class I 4,167,297 8,763 (131,451) 4,044,609 Class R4 421 1 -- 422 Class W* 7,145,709 -- (1,166,290) 5,979,419 - ----------------------------------------------------------------------------------------------
* For the period from Dec. 1, 2006 (inception date) to July 31, 2007. 5. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. The cost of the Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term Cash Fund aggregated $34,422,396 and $34,883,429, respectively, for the six months ended Jan. 31, 2008. 6. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks headed by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 18, 2007, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other RiverSource funds, severally and not jointly, permits collective borrowings up to $500 million. Interest is charged to - -------------------------------------------------------------------------------- 30 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.30%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. Under the prior credit facility, a Fund paid interest on its outstanding borrowings at a rate equal to either the higher of the federal funds effective rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. The Fund had no borrowings during the six months ended Jan. 31, 2008. 7. CAPITAL LOSS CARRY-OVER AND POST-OCTOBER LOSS For federal income tax purposes, the Fund had a capital loss carry-over of $115,029 at July 31, 2007, that if not offset by capital gains will expire as follows:
2014 2015 $93,125 $21,904
The Fund also had a post-October loss of $6,598 at July 31, 2007. 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. 8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals on August 8, 2007. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 31 censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the RiverSource Funds' Boards of Directors/ Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. - -------------------------------------------------------------------------------- 32 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 9. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results. CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(K) 2007 2006(B) Net asset value, beginning of period $9.55 $8.95 $9.48 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(c) .05(c) -- Net gains (losses) (both realized and unrealized) (1.04) .59 (.53) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.03) .64 (.53) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) (.04) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.50 $9.55 $8.95 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $17 $18 $9 - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.30%(f) 1.67% 5.83%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.25%(f) 1.29% 1.26%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) .23%(f) .52% .01%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 22% 84% 14% - ----------------------------------------------------------------------------------------------------------- Total return(i) (10.78%)(j) 7.12% (5.59%)(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from May 18, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Jan. 31, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 33 CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(K) 2007 2006(B) Net asset value, beginning of period $9.47 $8.93 $9.48 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.02)(c) (.04)(c) (.01) Net gains (losses) (both realized and unrealized) (1.04) .62 (.54) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.06) .58 (.55) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- (.04) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.41 $9.47 $8.93 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.07%(f) 2.12% 6.64%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 2.02%(f) 2.06% 2.07%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) (.54%)(f) (.41%) (.37%)(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 22% 84% 14% - ----------------------------------------------------------------------------------------------------------- Total return(i) (11.19%)(j) 6.43% (5.80%)(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from May 18, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Jan. 31, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- 34 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007 2006(B) Net asset value, beginning of period $9.47 $8.93 $9.48 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.02)(c) (.04)(c) (.01) Net gains (losses) (both realized and unrealized) (1.04) .61 (.54) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.06) .57 (.55) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- (.03) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.41 $9.47 $8.93 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.07%(f) 2.16% 6.61%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 2.01%(f) 2.06% 2.04%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) (.55%)(f) (.40%) (.78%)(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 22% 84% 14% - ----------------------------------------------------------------------------------------------------------- Total return(i) (11.19%)(j) 6.37% (5.80%)(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from May 18, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Jan. 31, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 35 CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED JULY 31, 2008(K) 2007 2006(B) Net asset value, beginning of period $9.57 $8.95 $9.48 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03(c) .08(c) -- Net gains (losses) (both realized and unrealized) (1.04) .59 (.53) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.01) .67 (.53) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.05) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.51 $9.57 $8.95 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $14 $39 $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) .89%(f) .95% 5.58%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) .88%(f) .95% 1.01%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) .67%(f) .80% .19%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 22% 84% 14% - ----------------------------------------------------------------------------------------------------------- Total return(i) (10.58%)(j) 7.48% (5.59%)(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from May 18, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Jan. 31, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- 36 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(A) FISCAL PERIOD ENDED JULY 31, 2008(K) 2007 2006(B) Net asset value, beginning of period $9.56 $8.95 $9.48 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03(c) .07(c) -- Net gains (losses) (both realized and unrealized) (1.04) .58 (.53) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.01) .65 (.53) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) (.04) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.51 $9.56 $8.95 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.21%(f) 1.68% 5.69%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) .90%(f) 1.15% 1.12%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) .59%(f) .71% .21%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 22% 84% 14% - ----------------------------------------------------------------------------------------------------------- Total return(i) (10.53%)(j) 7.30% (5.59%)(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from May 18, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Jan. 31, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 37 CLASS W
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(K) 2007(B) Net asset value, beginning of period $9.54 $9.79 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .01 -- Net gains (losses) (both realized and unrealized) (1.05) (.20) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.04) (.20) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) (.05) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.48 $9.54 - ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $7 $57 - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.32%(f) 1.60%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e),(g),(h) 1.32%(f) 1.32%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) .22%(f) .03%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 22% 84% - ----------------------------------------------------------------------------------------------------------- Total return(i) (10.87%)(j) (2.06%)(j) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 1, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. Earnings and bank fee credits for the year ended Jan. 31, 2008 were less than 0.01% of average net assets. (i) Total return does not reflect payment of a sales charge. (j) Not annualized. (k) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- 38 RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT PROXY VOTING The policy of the Board is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling RiverSource Funds at (888) 791-3380; contacting your financial institution; visiting riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL AND MID CAP EQUITY FUND -- 2008 SEMIANNUAL REPORT 39 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 mutual funds are distributed by RiverSource Distributors, Inc., Member FINRA, and managed by RiverSource Investments, LLC. These companies are part of Ameriprise Financial, Inc. (RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6516 C 3/08
Semiannual Report (RIVERSOURCE INVESTMENTS LOGO) RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND SEMIANNUAL REPORT FOR THE PERIOD ENDED JANUARY 31, 2008 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. (SINGLE STRATEGY FUNDS ICON) TABLE OF CONTENTS Fund Snapshot....................... 2 Performance Summary................. 4 Questions & Answers with Portfolio Management........ 6 Fund Expenses Example............... 10 Portfolio of Investments............ 12 Financial Statements................ 19 Notes to Financial Statements....... 25 Proxy Voting........................ 43
(DALBAR LOGO) The RiverSource mutual fund shareholder reports have been awarded the Communications Seal from Dalbar Inc., an independent financial services research firm. The Seal recognizes communications demonstrating a level of excellence in the industry. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 1 FUND SNAPSHOT AT JAN. 31, 2008 (UNAUDITED) FUND OBJECTIVE RiverSource Disciplined Small Cap Value Fund seeks to provide shareholders with long-term capital growth. SECTOR BREAKDOWN* Percentage of portfolio assets (PIE CHART) Financials 26.1% Industrials 19.6% Consumer Discretionary 12.2% Information Technology 9.6% Energy 9.3% Materials 8.6% Other(1) 14.6%
* 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. (1) Includes Consumer Staples 4.7%, Health Care 4.7%, Utilities 2.2%, Telecommunication Services 2.1% and Cash & Cash Equivalents 0.9%. TOP TEN HOLDINGS Percentage of portfolio assets Aspen Insurance Holdings 1.9% SkyWest 1.1% Oil States Intl 1.0% Platinum Underwriters Holdings 1.0% CF Inds Holdings 0.9% Selective Insurance Group 0.9% Zenith Natl Insurance 0.9% Commerce Group 0.9% Swift Energy 0.9% IPC Holdings 0.9%
For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. Investments in small- and mid-capitalization companies often involve greater risks and potential volatility than investments in larger, more established companies. - -------------------------------------------------------------------------------- 2 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT FUND SNAPSHOT AT JAN. 31, 2008 (UNAUDITED) STYLE MATRIX
STYLE VALUE BLEND GROWTH LARGE MEDIUM SIZE X SMALL
Shading within the style matrix indicates areas in which the Fund generally invests. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and serves as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. PORTFOLIO MANAGERS
YEARS IN INDUSTRY Dimitris Bertsimas, 15 Ph.D. Gina Mourtzinou, Ph.D. 12 Steve Kokkotos, Ph.D. 10
FUND FACTS
TICKER SYMBOL INCEPTION DATE Class A RDVAX 02/16/06 Class B -- 02/16/06 Class C RDVCX 02/16/06 Class I RCVIX 02/16/06 Class R2 -- 12/11/06 Class R3 -- 12/11/06 Class R4 RSDVX 02/16/06 Class R5 -- 12/11/06 Total net assets $38.0 million Number of holdings 351
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 3 PERFORMANCE SUMMARY PERFORMANCE COMPARISON For the six-month period ended Jan. 31, 2008 (BAR CHART) RiverSource Disciplined Small Cap Value Fund Class A (excluding sales charge) -10.80% Russell 2000 Value Index(1) (unmanaged) -8.89% Lipper Small-Cap Value Funds Index(2) -10.15%
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial institution or visiting riversource.com/funds. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the bar chart. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in expenses. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. (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. ANNUAL OPERATING EXPENSE RATIO (AS OF THE CURRENT PROSPECTUS)
TOTAL NET EXPENSES(A) Class A 1.73% 1.35% Class B 2.38% 2.11% Class C 2.47% 2.10% Class I 1.19% 0.97% Class R2 1.85% 1.77% Class R3 1.60% 1.52% Class R4 1.90% 1.27% Class R5 1.10% 1.02%
(a) The Investment Manager and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until July 31, 2008, unless sooner terminated at the discretion of the Fund's Board. Any amounts waived will not be reimbursed by the Fund. Under this agreement, net fund expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment (that decreased the management fee by 0.05%) will not exceed 1.40% for Class A, 2.16% for Class B, 2.15% for Class C, 1.02% for Class I, 1.82% for Class R2, 1.57% for Class R3, 1.32% for Class R4 and 1.07% for Class R5. - -------------------------------------------------------------------------------- 4 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS
AT JAN. 31, 2008 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR INCEPTION Class A (inception 2/16/06) -10.80% -18.76% -5.78% Class B (inception 2/16/06) -11.09% -19.39% -6.54% Class C (inception 2/16/06) -11.15% -19.37% -6.52% Class I (inception 2/16/06) -10.59% -18.48% -5.47% Class R2 (inception 12/11/06) -10.84% -18.96% -15.41% Class R3 (inception 12/11/06) -10.68% -18.81% -15.19% Class R4 (inception 2/16/06) -10.61% -18.58% -5.61% Class R5 (inception 12/11/06) -10.63% -18.52% -14.92% WITH SALES CHARGE Class A (inception 2/16/06) -15.93% -23.42% -8.57% Class B (inception 2/16/06) -15.43% -23.33% -8.39% Class C (inception 2/16/06) -12.02% -20.15% -6.52%
AT DEC. 31, 2007 SINCE WITHOUT SALES CHARGE 6 MONTHS* 1 YEAR INCEPTION Class A (inception 2/16/06) -16.51% -14.81% -4.42% Class B (inception 2/16/06) -16.75% -15.43% -5.15% Class C (inception 2/16/06) -16.80% -15.41% -5.14% Class I (inception 2/16/06) -16.30% -14.52% -4.10% Class R2 (inception 12/11/06) -16.48% -15.01% -13.89% Class R3 (inception 12/11/06) -16.41% -14.87% -13.75% Class R4 (inception 2/16/06) -16.24% -14.53% -4.19% Class R5 (inception 12/11/06) -16.34% -14.56% -13.45% WITH SALES CHARGE Class A (inception 2/16/06) -21.29% -19.71% -7.38% Class B (inception 2/16/06) -20.81% -19.56% -7.12% Class C (inception 2/16/06) -17.61% -16.23% -5.14%
Class A share performance reflects the maximum sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second and third years 4%; fourth year 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R2, Class R3, Class R4 and Class R5 shares. Class I, Class R2, Class R3, Class R4 and Class R5 are available to institutional investors only. * Not annualized. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 5 QUESTIONS & ANSWERS WITH PORTFOLIO MANAGEMENT Below, Portfolio Managers Dimitris Bertsimas, Gina Mourtzinou and Steve Kokkotos discuss RiverSource Disciplined Small Cap Value Fund's positioning and results for the six-month period ended Jan. 31, 2008. At Jan. 31, 2008, approximately 66% of the Fund's shares were owned in the aggregate by affiliated funds-of-funds managed by RiverSource Investments, LLC (RiverSource). As a result of asset allocation decisions by RiverSource, it is possible that RiverSource Disciplined Small Cap Value Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds (see page 32, Class I capital share transactions for related activity during the most recent fiscal period). RiverSource seeks to minimize the impact of these transactions by structuring them over a reasonable period of time. RiverSource Disciplined Small Cap Value Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds. For more information of the Fund's expenses, see the discussions beginning on pages 10 and 29. Q: How did RiverSource Disciplined Small Cap Value Fund perform for the semiannual period? A: RiverSource Disciplined Small Cap Value Fund's Class A shares (excluding sales charge) declined 10.80% for the six-month period ended Jan. 31, 2008. The Fund underperformed its benchmark, the unmanaged Russell 2000 Value Index (Russell Index), which fell 8.89%, as well as the Lipper Small-Cap Value Funds Index, representing the Fund's peer group, which declined 10.15%, for the same period. DURING THE REPORTING PERIOD, ALL THREE QUANTITATIVE INVESTMENT MODELS UNDERPERFORMED THE RUSSELL INDEX. Q: What factors most significantly affected the Fund's performance? A: The Fund's performance resulted from the three quantitative investment models - momentum, value and quality--we employ in selecting stocks for the Fund's portfolio. The momentum model identifies stocks that we believe will experience improving investor sentiment over the next six to nine months. The value model uses a proprietary earnings estimate and selects stocks with low price-to-predicted-earnings ratios. The quality model selects companies that we feel possess strong and stable fundamentals, adjusted for value. Under the Fund's investment process, the three models choose the small-cap value stocks - -------------------------------------------------------------------------------- 6 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT QUESTIONS & ANSWERS for the portfolio. We then weight the models and determine the exposure to sectors and industries. During the reporting period, all three quantitative investment models underperformed the Russell Index. The momentum model performed worst, followed by quality and value. However, in January 2008, the value and quality models outperformed the Russell Index, supporting our research indicating that the style diversification provided by the very different quantitative models is a significant investment advantage over the long term, even though the Fund may experience underperformance in the short term. It is important to remember that we do not make sector or industry bets based on our outlook for the economy or the equity markets. That said, during the period, the Fund's quantitative models led to a bias toward smaller-cap stocks within the Russell Index and toward the cheapest price/earnings stocks. The tilt toward the smaller companies detracted from performance, as the larger companies within the Russell Index performed better than the smaller ones. However, the value tilt helped results a bit. From a sector allocation perspective, the Fund's greater-than-Russell Index allocations to materials and energy contributed positively to its results as did a lesser-than-Russell Index position in information technology. These positives, however, were not enough to offset the detracting effects of sizable positions in industrials and consumer discretionary and more modest allocations to utilities, health care and financials. Stock selection overall helped the Fund's results relative to the Russell Index. Stock selection was particularly effective in the telecommunication services, health care, information technology and consumer staples sectors. Detracting somewhat from performance was stock selection in materials, energy and utilities. Some stocks that contributed favorably to the Fund's return included telecommunication services company Golden Telecom (selected by all three models), financials company Aspen Insurance Holdings (all three models), consumer staples company Cal-Maine Foods (momentum and value models), financials company Commerce Group (value and quality models), and financials company Annaly Capital Management (a value model pick at the time of its purchase but no longer a model selection). - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 7 QUESTIONS & ANSWERS Among individual holdings, the stocks that detracted most from the Fund's results were financials company LandAmerica Financial Group (selected by all three models), consumer discretionary firm Standard-Pacific (quality and value models), energy company USEC (all three models), financials company Thornburg Mtge (a value model pick at the time of its purchase but no longer a model selection), and consumer discretionary firm ArvinMeritor (value and quality models). At the end of January, the Fund's largest individual stock holdings included three financials companies: Aspen Insurance Holdings (selected by all three models), Zenith Natl Insurance (value and quality models) and Platinum Underwriters Holdings (value and quality models). Other top holdings at the end of the period were airline company SkyWest (value and quality models) and energy company Oil States Intl (momentum and value models). Q: What changes did you make to the Fund's portfolio during the period? A: As a result of quantitative models-driven stock selection during the period, the portfolio's sector allocations changed somewhat. For example, the Fund's exposure to energy and telecommunications relative to the Russell Index increased, while its position in consumer discretionary decreased. In managing risk associated with small-cap investing, we use a proprietary risk management system that allows us to manage the Fund's exposure to several key factors, including industry, sector, market capitalization and portfolio turnover. During the period, we used these and other techniques to avoid large deviations in exposure from the Russell Index. - -------------------------------------------------------------------------------- 8 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT QUESTIONS & ANSWERS Q: How do you intend to manage the Fund in the coming months? A: We believe our use of multiple investment disciplines serves the Fund well in all investment environments over the long term, and the portfolio is well positioned for most potential market conditions. Whether there is a surge in small-cap stocks or a downturn, the combination of models should, in our view, help us deliver value relative to the Russell Index over extended periods of time. We are convinced that our multifaceted, disciplined approach may assist in managing risk in the portfolio. We believe this combination of style diversification and rigorous risk management will allow us to maintain the high quality of the Fund's portfolio in whatever market conditions lie ahead. Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of RiverSource Investments, LLC (RiverSource) or any subadviser to the Fund or any other person in the RiverSource or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and RiverSource disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a RiverSource Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any RiverSource Fund. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 9 FUND EXPENSES EXAMPLE (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the cumulative expenses charged by the acquired funds using the acquired funds expense ratio as of the most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended Jan. 31, 2008. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- 10 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED AUG. 1, 2007 JAN. 31, 2008 THE PERIOD(A) EXPENSE RATIO Class A Actual(b) $1,000 $ 892.00 $ 5.91 1.24% Hypothetical (5% return before expenses) $1,000 $1,018.95 $ 6.31 1.24% Class B Actual(b) $1,000 $ 889.10 $ 9.52 2.00% Hypothetical (5% return before expenses) $1,000 $1,015.12 $10.16 2.00% Class C Actual(b) $1,000 $ 888.50 $ 9.52 2.00% Hypothetical (5% return before expenses) $1,000 $1,015.12 $10.16 2.00% Class I Actual(b) $1,000 $ 894.10 $ 4.44 .93% Hypothetical (5% return before expenses) $1,000 $1,020.52 $ 4.74 .93% Class R2 Actual(b) $1,000 $ 891.60 $ 8.20 1.72% Hypothetical (5% return before expenses) $1,000 $1,016.53 $ 8.74 1.72% Class R3 Actual(b) $1,000 $ 893.20 $ 7.01 1.47% Hypothetical (5% return before expenses) $1,000 $1,017.80 $ 7.48 1.47% Class R4 Actual(b) $1,000 $ 893.90 $ 5.82 1.22% Hypothetical (5% return before expenses) $1,000 $1,019.06 $ 6.21 1.22% Class R5 Actual(b) $1,000 $ 893.70 $ 4.68 .98% Hypothetical (5% return before expenses) $1,000 $1,020.27 $ 4.99 .98%
(a) Expenses are equal to the Fund's annualized expense ratio as indicated above, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended Jan. 31, 2008: -10.80% for Class A, -11.09% for Class B, -11.15% for Class C, -10.59% for Class I, -10.84% for Class R2, -10.68% for Class R3, -10.61% for Class R4 and -10.63% for Class R5. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 11 PORTFOLIO OF INVESTMENTS JAN. 31, 2008 (UNAUDITED) (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (99.7%) ISSUER SHARES VALUE(A) AEROSPACE & DEFENSE (2.4%) Ceradyne 2,982(b) $143,583 Cubic 2,189 58,797 Curtiss-Wright 3,968 165,466 Esterline Technologies 2,175(b) 101,333 Ladish 2,607(b) 92,522 Orbital Sciences 4,949(b) 115,312 Teledyne Technologies 2,238(b) 115,548 Triumph Group 2,041 110,214 --------------- Total 902,775 - ------------------------------------------------------------------------------------ AIR FREIGHT & LOGISTICS (0.5%) ABX Air 14,386(b) 51,070 Atlas Air Worldwide Holdings 1,137(b) 56,782 Park-Ohio Holdings 3,076(b) 68,779 --------------- Total 176,631 - ------------------------------------------------------------------------------------ AIRLINES (2.0%) Alaska Air Group 12,301(b) 311,215 ExpressJet Holdings 13,333(b) 36,532 SkyWest 15,933 414,577 --------------- Total 762,324 - ------------------------------------------------------------------------------------ AUTO COMPONENTS (2.1%) Aftermarket Technology 4,046(b) 102,809 American Axle & Mfg Holdings 2,970 64,598 ArvinMeritor 8,786 119,314 Cooper Tire & Rubber 3,693 63,040 Exide Technologies 3,662(b) 30,285 Lear 2,854(b) 83,793 Modine Mfg 8,428 130,127 Standard Motor Products 7,371 60,884 Superior Inds Intl 1,858 33,853 Tenneco 3,150(b) 83,381 Visteon 7,633(b) 30,532 --------------- Total 802,616 - ------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) BEVERAGES (0.8%) Boston Beer Cl A 3,919(b) $139,281 Central European Distribution 3,155(b) 165,859 --------------- Total 305,140 - ------------------------------------------------------------------------------------ BIOTECHNOLOGY (0.3%) Isis Pharmaceuticals 7,598(b) 118,529 - ------------------------------------------------------------------------------------ BUILDING PRODUCTS (1.1%) American Woodmark 2,700 56,646 Ameron Intl 2,024 181,857 Gibraltar Inds 3,490 46,068 Insteel Inds 1,811 18,599 Universal Forest Products 3,172 114,826 --------------- Total 417,996 - ------------------------------------------------------------------------------------ CAPITAL MARKETS (2.1%) Apollo Investment 9,882 150,009 Cowen Group 3,993(b) 39,890 Evercore Partners Cl A 1,442 26,244 Knight Capital Group Cl A 7,928(b) 132,794 MCG Capital 7,447 98,151 MVC Capital 2,993 45,853 Piper Jaffray Companies 1,123(b) 53,208 SWS Group 9,559 146,731 Waddell & Reed Financial Cl A 2,617 86,832 --------------- Total 779,712 - ------------------------------------------------------------------------------------ CHEMICALS (4.9%) Arch Chemicals 2,837 95,522 Calgon Carbon 11,313(b,d) 173,994 CF Inds Holdings 3,383 361,743 Georgia Gulf 5,337(d) 41,629 Innospec 5,052(c) 79,670 Koppers Holdings 5,007 167,534 NewMarket 2,115 113,956 Olin 14,946 306,244 OM Group 1,520(b) 87,218 PolyOne 20,728(b) 127,684
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- 12 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) CHEMICALS (CONT.) Rockwood Holdings 3,810(b) $111,862 Tronox Cl B 3,361 24,603 WR Grace & Co 6,970(b) 157,661 --------------- Total 1,849,320 - ------------------------------------------------------------------------------------ COMMERCIAL BANKS (7.8%) 1st Source 943 18,389 BancFirst 4,048 182,281 Banner 788 20,354 Capital Corp of the West 1,011 20,089 Capitol Bancorp 7,257 151,091 Chemical Financial 6,654 184,183 City Bank 1,166 25,535 City Holding 528 20,286 Community Bancorp 1,053(b) 17,585 Community Bank System 1,043 22,758 Community Trust Bancorp 5,882 170,049 Farmers Capital Bank 3,336 89,405 First BanCorp 29,681(c) 283,749 First Regional Bancorp 862(b) 17,473 First State Bancorporation 6,808 85,508 Glacier Bancorp 3,678 68,448 Hanmi Financial 1,980 17,028 Heritage Commerce 1,067 20,198 Independent Bank 1,986 27,645 MainSource Financial Group 11,339 175,414 Omega Financial 750 22,853 Preferred Bank 1,065 23,462 Renasant 951 19,942 Royal Bancshares Cl A 2,913 42,472 Security Bank 12,265 91,620 Simmons First Natl Cl A 3,875 109,856 Southwest Bancorp 1,058 18,610 Sterling Financial 10,888 168,220 Taylor Capital Group 7,426 145,475 Trustmark 7,144(d) 164,383 UMB Financial 4,305 181,370 Umpqua Holdings 9,459 155,128 Union Bankshares 917 17,707 Univest Corp of Pennsylvania 852 22,152 W Holding 86,156(c) 124,926 West Coast Bancorp 951 14,455 Wilshire Bancorp 2,037 16,052 --------------- Total 2,956,151 - ------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) COMMERCIAL SERVICES & SUPPLIES (3.0%) ABM Inds 2,236 $46,330 AMREP 766 34,562 CBIZ 12,053(b) 113,419 CDI 930 18,089 Exponent 6,489(b) 199,861 GeoEye 5,097(b) 178,191 Heidrick & Struggles Intl 1,858 51,058 Kelly Services Cl A 3,901 67,175 Kimball Intl Cl B 2,935 36,335 PHH 3,814(b) 71,665 Spherion 6,173(b) 41,236 Standard Parking 4,709(b) 91,213 Tetra Tech 6,580(b) 129,560 Volt Information Sciences 2,388(b) 44,584 --------------- Total 1,123,278 - ------------------------------------------------------------------------------------ COMMUNICATIONS EQUIPMENT (1.1%) ARRIS Group 13,724(b) 120,634 Dycom Inds 2,219(b) 52,413 EMS Technologies 5,139(b) 141,219 Extreme Networks 8,243(b) 28,438 Foundry Networks 2,987(b) 41,221 Loral Space & Communications 1,769(b) 47,020 --------------- Total 430,945 - ------------------------------------------------------------------------------------ COMPUTERS & PERIPHERALS (1.1%) Adaptec 22,417(b) 69,941 Imation 4,278 110,843 Immersion 12,545(b) 122,942 Palm 9,720 52,682 Quantum 32,127(b) 73,892 --------------- Total 430,300 - ------------------------------------------------------------------------------------ CONSTRUCTION & ENGINEERING (0.4%) EMCOR Group 4,510(b) 98,904 Perini 2,050(b) 71,648 --------------- Total 170,552 - ------------------------------------------------------------------------------------ CONSTRUCTION MATERIALS (0.4%) Headwaters 10,089(b) 113,703 U.S. Concrete 11,336(b) 42,397 --------------- Total 156,100 - ------------------------------------------------------------------------------------ CONSUMER FINANCE (0.3%) Cash America Intl 3,489 113,427 - ------------------------------------------------------------------------------------
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 13
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) CONTAINERS & PACKAGING (0.1%) Silgan Holdings 524 $24,817 - ------------------------------------------------------------------------------------ DISTRIBUTORS (0.2%) Building Materials Holding 10,447 71,144 - ------------------------------------------------------------------------------------ DIVERSIFIED CONSUMER SERVICES (0.2%) INVESTools 6,105(b) 83,394 - ------------------------------------------------------------------------------------ DIVERSIFIED FINANCIAL SERVICES (0.6%) Ampal-American Israel Cl A 23,329(b,c) 172,401 Primus Guaranty 10,274(b,c) 51,884 --------------- Total 224,285 - ------------------------------------------------------------------------------------ DIVERSIFIED TELECOMMUNICATION SERVICES (1.8%) Alaska Communications Systems Group 6,477 90,937 Atlantic Tele-Network 3,550 111,790 Golden Telecom 3,114(c) 319,839 Shenandoah Telecommunications 7,905 144,424 --------------- Total 666,990 - ------------------------------------------------------------------------------------ ELECTRIC UTILITIES (0.9%) Central Vermont Public Service 4,796 139,706 Portland General Electric 4,379 107,899 UIL Holdings 1,817 62,051 Westar Energy 1,916 46,674 --------------- Total 356,330 - ------------------------------------------------------------------------------------ ELECTRICAL EQUIPMENT (1.0%) Encore Wire 7,767 129,554 GrafTech Intl 10,250(b) 154,262 Superior Essex 4,114(b) 98,942 --------------- Total 382,758 - ------------------------------------------------------------------------------------ ELECTRONIC EQUIPMENT & INSTRUMENTS (3.2%) Agilysys 1,452 22,099 Anixter Intl 2,603(b) 182,366 Benchmark Electronics 13,097(b) 232,471 Brightpoint 7,770(b) 98,834 Insight Enterprises 5,122(b) 88,457 Methode Electronics 2,508 30,397 Plexus 7,528(b) 170,058
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) ELECTRONIC EQUIPMENT & INSTRUMENTS (CONT.) Rofin-Sinar Technologies 4,619(b) $196,354 SYNNEX 3,552(b) 75,658 Technitrol 6,006 136,096 --------------- Total 1,232,790 - ------------------------------------------------------------------------------------ ENERGY EQUIPMENT & SERVICES (5.0%) BASiC Energy Services 2,870(b) 51,344 Bristow Group 2,853(b) 143,649 Bronco Drilling 6,667(b) 104,405 Dawson Geophysical 2,485(b) 142,341 Exterran Holdings 1,439(b) 93,880 Grey Wolf 51,744(b) 308,394 GulfMark Offshore 3,516(b) 147,039 Hornbeck Offshore Services 966(b) 37,365 Oil States Intl 10,532(b) 369,252 Parker Drilling 12,843(b) 89,259 Pioneer Drilling 13,982(b) 145,553 T-3 Energy Services 3,712(b) 167,003 Trico Marine Services 1,703(b) 54,649 Union Drilling 3,347(b) 51,477 --------------- Total 1,905,610 - ------------------------------------------------------------------------------------ FOOD & STAPLES RETAILING (2.4%) Andersons 3,883 176,872 Great Atlantic & Pacific Tea 5,729(b) 171,125 Nash Finch 1,413 50,416 PriceSmart 5,192 147,764 Ruddick 3,902 132,980 Spartan Stores 2,378 41,805 Village Super Market Cl A 806 41,098 Weis Markets 1,162 43,447 Winn-Dixie Stores 4,977(b) 88,192 --------------- Total 893,699 - ------------------------------------------------------------------------------------ FOOD PRODUCTS (1.4%) Cal-Maine Foods 7,535 217,234 Chiquita Brands Intl 1,712(b) 31,980 Fresh Del Monte Produce 1,859(b,c) 59,562 Imperial Sugar 3,311 72,776 Seaboard 128 164,512 --------------- Total 546,064 - ------------------------------------------------------------------------------------
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- 14 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) GAS UTILITIES (0.9%) EnergySouth 2,807 $162,581 Nicor 1,840 75,440 South Jersey Inds 1,324 46,380 WGL Holdings 1,241 40,010 --------------- Total 324,411 - ------------------------------------------------------------------------------------ HEALTH CARE EQUIPMENT & SUPPLIES (0.4%) Inverness Medical Innovations 2,958(b) 133,258 - ------------------------------------------------------------------------------------ HEALTH CARE PROVIDERS & SERVICES (3.2%) Alliance Imaging 12,397(b) 131,780 Amedisys 1,923(b) 81,977 AMERIGROUP 5,347(b) 200,620 Chemed 996 51,025 HealthSpring 2,331(b) 48,228 Kindred Healthcare 9,294(b) 255,958 Magellan Health Services 1,585(b) 69,328 Molina Healthcare 4,437(b) 151,346 RehabCare Group 3,865(b) 81,126 ResCare 6,119(b) 136,882 --------------- Total 1,208,270 - ------------------------------------------------------------------------------------ HOTELS, RESTAURANTS & LEISURE (0.6%) Bob Evans Farms 3,264 97,072 Jack in the Box 2,318(b) 67,755 O'Charley's 4,974 68,989 --------------- Total 233,816 - ------------------------------------------------------------------------------------ HOUSEHOLD DURABLES (2.0%) Avatar Holdings 1,620(b) 69,498 Beazer Homes USA 11,104 96,827 Brookfield Homes 1,581 26,798 CSS Inds 778 22,702 Furniture Brands Intl 9,020 86,141 Hooker Furniture 1,456 31,945 Hovnanian Enterprises Cl A 5,816(b) 57,520 M/I Homes 1,703 25,409 Meritage Homes 6,503(b) 104,373 Standard-Pacific 16,361 62,335 Tupperware Brands 4,784 177,008 --------------- Total 760,556 - ------------------------------------------------------------------------------------ INDUSTRIAL CONGLOMERATES (0.2%) Tredegar 6,617 91,712 - ------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) INSURANCE (11.3%) American Physicians Capital 804 $33,221 Aspen Insurance Holdings 25,050(c) 706,911 Commerce Group 9,581 346,353 Employers Holdings 3,508 61,250 Infinity Property & Casualty 1,708 68,098 IPC Holdings 13,077(c) 336,471 LandAmerica Financial Group 4,701 245,204 Max Capital Group 11,612(c) 329,665 Montpelier Re Holdings 17,133(c) 293,660 Natl Western Life Insurance Cl A 369 69,295 Odyssey Re Holdings 5,893 223,816 Platinum Underwriters Holdings 10,769(c) 363,454 Presidential Life 6,153 112,846 Safety Insurance Group 4,931 192,408 Selective Insurance Group 15,073 360,395 Stewart Information Services 4,469 152,974 Zenith Natl Insurance 9,004 358,539 --------------- Total 4,254,560 - ------------------------------------------------------------------------------------ INTERNET & CATALOG RETAIL (0.5%) Gaiam Cl A 5,941(b) 144,782 Systemax 4,497 62,149 --------------- Total 206,931 - ------------------------------------------------------------------------------------ INTERNET SOFTWARE & SERVICES (1.3%) CMGI 10,309(b) 132,985 EarthLink 9,389(b) 63,939 InfoSpace 480 4,565 RealNetworks 19,066(b) 111,155 S1 15,033(b) 85,087 SonicWALL 9,737(b) 85,491 --------------- Total 483,222 - ------------------------------------------------------------------------------------ IT SERVICES (1.3%) Perot Systems Cl A 6,208(b) 75,365 SAIC 17,772(b) 335,891 Wright Express 3,131(b) 93,742 --------------- Total 504,998 - ------------------------------------------------------------------------------------
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 15
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) LEISURE EQUIPMENT & PRODUCTS (0.7%) Arctic Cat 3,338 $30,877 JAKKS Pacific 8,259(b) 194,582 MarineMax 3,266(b) 50,525 --------------- Total 275,984 - ------------------------------------------------------------------------------------ LIFE SCIENCES TOOLS & SERVICES (0.4%) Bio-Rad Laboratories Cl A 1,559(b) 148,432 - ------------------------------------------------------------------------------------ MACHINERY (5.2%) Ampco-Pittsburgh 2,315 89,753 Badger Meter 2,216 83,765 Barnes Group 5,567 148,361 Blount Intl 1,113(b) 12,900 Briggs & Stratton 1,096 22,852 Cascade 1,121 57,866 CIRCOR Intl 4,130 175,236 Columbus McKinnon 471(b) 12,043 Commercial Vehicle Group 4,917(b) 49,170 FreightCar America 3,494 131,759 Hardinge 7,787 132,768 Kaydon 2,557 111,715 LB Foster Cl A 3,904(b) 179,700 Lindsay 1,454 88,723 Miller Inds 8,759(b) 116,495 Mueller Inds 4,815(d) 134,820 NACCO Inds Cl A 1,077 107,765 Robbins & Myers 2,664 176,569 Tennant 3,861 127,374 Wabash Natl 829 7,619 --------------- Total 1,967,253 - ------------------------------------------------------------------------------------ MARINE (1.4%) Eagle Bulk Shipping 3,634 89,832 Genco Shipping & Trading 4,941 243,690 TBS Intl Series A 6,167(b,c) 205,423 --------------- Total 538,945 - ------------------------------------------------------------------------------------ MEDIA (1.0%) DG FastChannel 8,421(b) 178,272 Gemstar-TV Guide Intl 24,061(b) 103,703 Knology 9,979(b) 113,262 --------------- Total 395,237 - ------------------------------------------------------------------------------------ METALS & MINING (3.0%) AM Castle & Co 3,318 70,275 AMCOL Intl 4,738 116,176 Century Aluminum 2,827(b) 146,976
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) METALS & MINING (CONT.) Compass Minerals Intl 1,413 $59,939 Metal Management 3,492 173,483 Olympic Steel 2,106 71,162 Quanex 5,187 271,850 Schnitzer Steel Inds Cl A 2,691 152,472 Worthington Inds 5,230 85,720 --------------- Total 1,148,053 - ------------------------------------------------------------------------------------ MULTILINE RETAIL (0.2%) Fred's Cl A 8,050 75,912 - ------------------------------------------------------------------------------------ MULTI-UTILITIES (0.3%) NorthWestern 2,756 79,648 PNM Resources 1,300 25,116 --------------- Total 104,764 - ------------------------------------------------------------------------------------ OIL, GAS & CONSUMABLE FUELS (4.3%) Berry Petroleum Cl A 2,328 87,230 Brigham Exploration 7,653(b) 53,112 Callon Petroleum 4,357(b) 67,141 General Maritime 3,791 94,168 Golar LNG 8,619(c) 177,982 Meridian Resource 20,127(b) 33,612 Petrohawk Energy 9,320(b) 146,790 Stone Energy 4,221(b) 173,061 Swift Energy 7,819(b) 337,391 USEC 20,945(b) 169,026 Whiting Petroleum 5,706(b) 306,641 --------------- Total 1,646,154 - ------------------------------------------------------------------------------------ PAPER & FOREST PRODUCTS (0.3%) Buckeye Technologies 3,973(b) 52,245 Schweitzer-Mauduit Intl 1,944 46,345 --------------- Total 98,590 - ------------------------------------------------------------------------------------ PHARMACEUTICALS (0.4%) Perrigo 5,498 169,558 - ------------------------------------------------------------------------------------ REAL ESTATE INVESTMENT TRUSTS (REITS) (3.4%) Annaly Capital Management 8,709 171,741 BRT Realty Trust 3,773 59,500 Capital Trust Cl A 2,651 76,057 Crystal River Capital 4,784 67,072 Deerfield Capital 15,717 125,579 FelCor Lodging Trust 7,900 106,729 Kite Realty Group Trust 5,156 67,853 Medical Properties Trust 5,082 64,236
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- 16 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) REAL ESTATE INVESTMENT TRUSTS (REITS) (CONT.) MFA Mtge Investments 16,759 $170,942 Nationwide Health Properties 3,968 125,230 Redwood Trust 2,266 94,062 Senior Housing Properties Trust 3,794 84,948 Thornburg Mtge 6,109 68,421 --------------- Total 1,282,370 - ------------------------------------------------------------------------------------ ROAD & RAIL (1.2%) Arkansas Best 6,552 201,736 Saia 3,835(b) 54,112 Werner Enterprises 9,500 193,515 --------------- Total 449,363 - ------------------------------------------------------------------------------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (1.3%) MKS Instruments 9,771(b) 181,740 OmniVision Technologies 11,988(b) 169,750 Pericom Semiconductor 5,828(b) 79,028 Silicon Storage Technology 9,903(b) 28,125 Zoran 2,214(b) 26,125 --------------- Total 484,768 - ------------------------------------------------------------------------------------ SOFTWARE (0.2%) Pegasystems 9,622 94,392 - ------------------------------------------------------------------------------------ SPECIALTY RETAIL (4.3%) Asbury Automotive Group 10,056 142,594 Blockbuster Cl A 42,737(b) 133,339 Books-A-Million 1,585 16,912 Borders Group 5,556 62,561 Charming Shoppes 28,788(b) 185,682 Collective Brands 2,187(b) 38,535 Conn's 6,515(b) 125,740 Finish Line Cl A 13,512 30,267 Gander Mountain 130(b) 627 Group 1 Automotive 4,545 120,170 Haverty Furniture Companies 4,131 42,260 Hot Topic 4,901(b) 27,201 Lithia Motors Cl A 3,831 58,576 Rent-A-Center 13,027(b) 222,761 Shoe Carnival 2,763(b) 40,837 Sonic Automotive Cl A 8,562 171,668
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(A) SPECIALTY RETAIL (CONT.) Stage Stores 8,134 $97,364 Stein Mart 3,582 22,889 Talbots 416 4,023 Zale 6,388(b) 104,763 --------------- Total 1,648,769 - ------------------------------------------------------------------------------------ TEXTILES, APPAREL & LUXURY GOODS (0.3%) Kellwood 1,203 24,036 Perry Ellis Intl 3,306(b) 58,020 Warnaco Group 1,125(b) 40,376 --------------- Total 122,432 - ------------------------------------------------------------------------------------ THRIFTS & MORTGAGE FINANCE (1.0%) BankUnited Financial Cl A 4,149 24,604 Corus Bankshares 12,404 157,778 Downey Financial 1,885 65,033 Fremont General 10,264 33,871 Imperial Capital Bancorp 1,061 21,496 K-Fed Bancorp 384 4,005 Ocwen Financial 6,989(b) 43,611 Triad Guaranty 4,020(b) 28,100 --------------- Total 378,498 - ------------------------------------------------------------------------------------ TOBACCO (0.1%) Universal 967 48,166 - ------------------------------------------------------------------------------------ TRADING COMPANIES & DISTRIBUTORS (1.4%) Kaman 5,899 174,256 Rush Enterprises Cl A 8,743(b) 146,708 UAP Holding 5,117 196,186 --------------- Total 517,150 - ------------------------------------------------------------------------------------ WATER UTILITIES (0.2%) SJW 2,245 67,866 - ------------------------------------------------------------------------------------ WIRELESS TELECOMMUNICATION SERVICES (0.3%) Rural Cellular Cl A 1,798(b) 79,382 USA Mobility 3,106(b) 37,303 --------------- Total 116,685 - ------------------------------------------------------------------------------------ TOTAL COMMON STOCKS (Cost: $44,119,179) $37,864,752 - ------------------------------------------------------------------------------------
See accompanying notes to portfolio of investments. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 17
MONEY MARKET FUND (0.9%) SHARES VALUE(A) RiverSource Short-Term Cash Fund 343,953(e) $343,953 - ------------------------------------------------------------------------------------ TOTAL MONEY MARKET FUND (Cost: $343,953) $343,953 - ------------------------------------------------------------------------------------ TOTAL INVESTMENTS IN SECURITIES (Cost: $44,463,132)(f) $38,208,705 ====================================================================================
INVESTMENTS IN DERIVATIVES FUTURES CONTRACTS OUTSTANDING AT JAN. 31, 2008
NUMBER OF UNREALIZED CONTRACTS NOTIONAL EXPIRATION APPRECIATION/ CONTRACT DESCRIPTION LONG/(SHORT) MARKET VALUE DATE (DEPRECIATION) - -------------------------------------------------------------------------------------------------- Mini Russell 2000 Index 2 $143,000 March 2008 $4,753
NOTES TO PORTFOLIO OF INVESTMENTS (a) Securities are valued by using procedures described in Note 1 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. At Jan. 31, 2008, the value of foreign securities represented 9.2% of net assets. (d) At Jan. 31, 2008, investments in securities included securities valued at $162,613 that were partially pledged as collateral to cover initial margin deposits on open stock index futures contracts. (e) Affiliated Money Market Fund - See Note 5 to the financial statements (f) At Jan. 31, 2008, the cost of securities for federal income tax purposes was approximately $44,463,000 and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $1,626,000 Unrealized depreciation (7,880,000) - ------------------------------------------------------------------------------ Net unrealized depreciation $(6,254,000) - ------------------------------------------------------------------------------
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iv) The Fund's complete schedule of portfolio holdings, as disclosed in its annual and semiannual shareholder reports and in its filings on Form N-Q, can be found at riversource.com/funds. - -------------------------------------------------------------------------------- 18 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES JAN. 31, 2008 (UNAUDITED) ASSETS Investments in securities, at value Unaffiliated issuers (identified cost $44,119,179) $37,864,752 Affiliated money market fund (identified cost $343,953) 343,953 - --------------------------------------------------------------------------- Total investments in securities (identified cost $44,463,132) 38,208,705 Cash 4,343 Capital shares receivable 634 Dividends receivable 13,562 Receivable for investment securities sold 1,835,749 Variation margin receivable 6,900 - --------------------------------------------------------------------------- Total assets 40,069,893 - --------------------------------------------------------------------------- LIABILITIES Capital shares payable 40,922 Payable for investment securities purchased 2,014,743 Accrued investment management services fee 854 Accrued distribution fee 95 Accrued transfer agency fee 24 Accrued administrative services fee 80 Other accrued expenses 32,911 - --------------------------------------------------------------------------- Total liabilities 2,089,629 - --------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $37,980,264 ===========================================================================
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 19 STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) JAN. 31, 2008 (UNAUDITED) REPRESENTED BY Capital stock - $.01 par value $ 43,833 Additional paid-in capital 45,711,797 Undistributed net investment income 236,418 Accumulated net realized gain (loss) (1,762,110) Unrealized appreciation (depreciation) on investments (6,249,674) - --------------------------------------------------------------------------- Total - representing net assets applicable to outstanding capital stock $37,980,264 ===========================================================================
Net assets applicable to outstanding shares: Class A $12,540,196 Class B $ 403,122 Class C $ 49,323 Class I $24,967,141 Class R2 $ 3,940 Class R3 $ 3,940 Class R4 $ 8,663 Class R5 $ 3,939 Net asset value per share of outstanding capital stock: Class A shares(1) 1,448,075 $ 8.66 Class B shares 46,919 $ 8.59 Class C shares 5,741 $ 8.59 Class I shares 2,880,232 $ 8.67 Class R2 shares 455 $ 8.66 Class R3 shares 455 $ 8.66 Class R4 shares 1,000 $ 8.66 Class R5 shares 455 $ 8.66 - -------------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $9.19. 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 -- 2008 SEMIANNUAL REPORT STATEMENT OF OPERATIONS SIX MONTHS ENDED JAN. 31, 2008 (UNAUDITED) INVESTMENT INCOME Income: Dividends $ 423,082 Income distributions from affiliated money market fund 22,983 Less foreign taxes withheld (1,310) - --------------------------------------------------------------------------- Total income 444,755 - --------------------------------------------------------------------------- Expenses: Investment management services fee 151,467 Distribution fee Class A 16,319 Class B 2,298 Class C 293 Class R2 11 Class R3 5 Transfer agency fee Class A 4,232 Class B 174 Class C 21 Class R2 2 Class R3 2 Class R4 2 Class R5 2 Administrative services fee 15,991 Plan administration services fee Class R2 5 Class R3 5 Class R4 12 Compensation of board members 377 Custodian fees 19,720 Printing and postage 2,760 Registration fees 40,957 Professional fees 9,725 Other 673 - --------------------------------------------------------------------------- Total expenses 265,053 Expenses waived/reimbursed by the Investment Manager and its affiliates (56,732) - --------------------------------------------------------------------------- Total net expenses 208,321 - --------------------------------------------------------------------------- Investment income (loss) - net 236,434 - ---------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 21 STATEMENT OF OPERATIONS (CONTINUED) SIX MONTHS ENDED JAN. 31, 2008 (UNAUDITED) REALIZED AND UNREALIZED GAIN (LOSS) - NET Net realized gain (loss) on: Security transactions $(1,731,369) Futures contracts (19,972) - --------------------------------------------------------------------------- Net realized gain (loss) on investments (1,751,341) Net change in unrealized appreciation (depreciation) on investments (2,933,804) - --------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies (4,685,145) - --------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(4,448,711) ===========================================================================
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 22 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2008 JULY 31, 2007 (UNAUDITED) OPERATIONS AND DISTRIBUTIONS Investment income (loss) - net $ 236,434 $ 346,396 Net realized gain (loss) on investments (1,751,341) 943,233 Net change in unrealized appreciation (depreciation) on investments (2,933,804) (2,467,303) - ----------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (4,448,711) (1,177,674) - ----------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (83,613) (22,789) Class C (16) -- Class I (249,572) (22,690) Class R2 (12) (17) Class R3 (23) (17) Class R4 (77) (58) Class R5 (38) (18) Net realized gain Class A (316,596) (234,913) Class B (9,723) (7,684) Class C (1,289) (463) Class I (625,909) (106,528) Class R2 (99) (84) Class R3 (99) (84) Class R4 (216) (337) Class R5 (99) (84) - ----------------------------------------------------------------------------------------- Total distributions (1,287,381) (395,766) - -----------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 23 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SIX MONTHS ENDED YEAR ENDED JAN. 31, 2008 JULY 31, 2007 (UNAUDITED) CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 1,805,452 $ 3,183,242 Class B shares 96,140 600,360 Class C shares 19,964 23,355 Class I shares 4,374,478 23,678,701 Class R2 shares -- 5,000 Class R3 shares -- 5,000 Class R4 shares -- 8,003 Class R5 shares -- 5,000 Reinvestment of distributions at net asset value Class A shares 127,449 55,291 Class B shares 9,506 7,499 Class C shares 1,086 278 Class I shares 875,178 128,993 Class R4 shares -- 178 Payments for redemptions Class A shares (1,130,645) (1,077,624) Class B shares (189,722) (269,435) Class C shares (9,739) (4,930) Class I shares (1,669,285) (115,893) Class R4 shares -- (9,200) - ----------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 4,309,862 26,223,818 - ----------------------------------------------------------------------------------------- Total increase (decrease) in net assets (1,426,230) 24,650,378 Net assets at beginning of period 39,406,494 14,756,116 - ----------------------------------------------------------------------------------------- Net assets at end of period $37,980,264 $39,406,494 ========================================================================================= Undistributed net investment income $ 236,418 $ 333,335 - -----------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. - -------------------------------------------------------------------------------- 24 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT NOTES TO FINANCIAL STATEMENTS (Unaudited as to Jan. 31, 2008) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES RiverSource Disciplined Small Cap Value Fund (the Fund) is a series of RiverSource Dimensions Series, Inc. and is registered under the Investment Company Act of 1940 (as amended) as a diversified, open-end management investment company. RiverSource Dimensions Series, Inc. has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Board of Directors (the Board). The Fund invests primarily in 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 sold with a front-end sales charge. - - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares during the ninth year of ownership. - - Class C shares may be subject to a CDSC. - - Class I, Class R2, Class R3, Class R4 and Class R5 shares are sold without a front-end sales charge or CDSC and are offered to qualifying institutional investors. At Jan. 31, 2008, RiverSource Investments, LLC (the Investment Manager), and the affiliated funds-of-funds owned 100% of Class I shares, and the Investment Manager owned 100% of Class R2, Class R3, Class R4 and Class R5 shares. At Jan. 31, 2008, the Investment Manager and the affiliated funds-of-funds owned approximately 88% of the total outstanding Fund shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. The Fund's significant accounting policies are summarized below: USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 25 VALUATION OF SECURITIES All securities are valued at the close of each business day. Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price. Debt securities are generally traded in the over-the-counter market and are valued at a price that reflects fair value as quoted by dealers in these securities or by an independent pricing service. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. OPTION TRANSACTIONS To produce incremental earnings, protect gains, and facilitate buying and selling of securities for investments, the Fund may buy and write options traded on any U.S. or foreign exchange or in the over-the-counter market where completing the obligation depends upon the credit standing of the other party. Cash collateral may be collected by the Fund to secure certain over-the-counter options trades. Cash collateral held by the Fund for such option trades must be returned to the counterparty upon closure, exercise or expiration of the contract. The Fund also may buy and sell put and call options and write covered call options on portfolio securities as well as write cash-secured put options. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a - -------------------------------------------------------------------------------- 26 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction if a liquid secondary market does not exist. Option contracts are valued daily at the closing prices on their primary exchanges and unrealized appreciation or depreciation is recorded. The Fund will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of premium received or paid. During the six months ended Jan. 31, 2008, the Fund had no outstanding option contracts. FUTURES TRANSACTIONS To gain exposure to or protect itself from market changes, the Fund may buy and sell financial futures contracts traded on any U.S. or foreign exchange. The Fund also may buy and write put and call options on these futures contracts. Risks of entering into futures contracts and related options include the possibility of an illiquid market and that a change in the value of the contract or option may not correlate with changes in the value of the underlying securities. Futures are valued daily based upon the last sale price at the close of market on the principal exchange on which they are traded. Upon entering into a futures contract, the Fund is required to deposit either cash or securities in an amount (initial margin) equal to a certain percentage of the contract value. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily changes in the contract value and are recorded as unrealized gains and losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. The Fund may enter into forward foreign currency contracts for operational purposes and to protect against adverse exchange rate fluctuation. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the Fund and the resulting unrealized appreciation or depreciation are determined - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 27 using foreign currency exchange rates from an independent pricing service. The Fund is subject to the credit risk that the other party will not complete its contract obligations. At Jan. 31, 2008, the Fund had no outstanding forward foreign currency contracts. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund's contracts with its service providers contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income to shareholders. No provision for income or excise taxes is thus required. The Fund has adopted Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48), "Accounting for Uncertainty in Income Taxes," which is effective for fiscal periods beginning after Dec. 15, 2006. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement 109, "Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize and measure a tax position taken or expected to be taken in a tax return. The first step is to determine whether a tax position has met the more-likely-than-not recognition threshold and the second step is to measure a tax position that meets the threshold to determine the amount of benefit to recognize. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all the tax returns filed for the last three years. Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of deferred losses on certain futures contracts, the recognition of certain foreign currency gains (losses) as ordinary income (loss) for tax purposes, and losses deferred due to "wash sale" transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains (losses) were recorded by the Fund. - -------------------------------------------------------------------------------- 28 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT RECENT ACCOUNTING PRONOUNCEMENT On Sept. 20, 2006, the (FASB) released Statement of Financial Accounting Standards No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an authoritative definition of fair value, sets out a hierarchy for measuring fair value, and requires additional disclosures about the inputs used to develop the measurements of fair value and the effect of certain measurements reported in the Statement of operations for a fiscal period. The application of SFAS 157 will be effective for the Fund's fiscal year beginning Aug. 1, 2008. The adoption of SFAS 157 is not anticipated to have a material impact on the Fund's financial statements. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date and interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 2. EXPENSES AND SALES CHARGES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is a percentage of the Fund's average daily net assets that declines from 0.85% to 0.725% annually as the Fund's assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment determined monthly by measuring the percentage difference over a rolling 12-month period between the performance of one Class A share of the Fund and the change in 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 fee by $18,439 for the six months ended Jan. 31, 2008. The management fee for the six months ended Jan. 31, 2008 was 0.76% of the Fund's average daily net assets, including an adjustment under the terms of the performance incentive arrangement. Under an Administrative Services Agreement, the Fund pays Ameriprise Financial a fee for administration and accounting services at a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% annually as the Fund's assets increase. The fee for the six months ended Jan. 31, 2008 was 0.08% of the Fund's average daily net assets. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 29 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, 2008, other expenses paid to this company were $126. Compensation of Board members includes, for a former Board Chair, compensation as well as retirement benefits. Certain other aspects of a former Board Chair's compensation, including health benefits and payment of certain other expenses, are included under other expenses. Under a Deferred Compensation Plan (the Plan), non-interested board members may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or other RiverSource funds. The Fund's liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan. Under a Transfer Agency Agreement, RiverSource Service Corporation (the Transfer Agent) maintains shareholder accounts and records. The Fund pays the Transfer Agent an annual fee per shareholder account for this service as follows: - - Class A $19.50 - - Class B $20.50 - - Class C $20.00 The Fund pays the Transfer Agent an annual asset-based fee at a rate of 0.05% of the Fund's average daily net assets attributable to Class R2, Class R3, Class R4 and Class R5 shares. The Transfer Agent charges an annual fee of $5 per inactive account, charged on a pro rata basis for 12 months from the date the account becomes inactive. These fees are included in the transfer agency fees on the Statement of operations. 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. The Fund has an agreement with RiverSource Distributors, Inc. (the Distributor) for distribution and shareholder services. Prior to Oct. 1, 2007, Ameriprise Financial Services, Inc. also served as a principal underwriter and distributor to the Fund. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A 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 - -------------------------------------------------------------------------------- 30 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 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. Sales charges received by the Distributor for distributing Fund shares were $2,284 for Class A and $542 for Class B for the six months ended Jan. 31, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. For the six months ended Jan. 31, 2008, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds) were 1.24% for Class A, 2.00% for Class B, 2.00% for Class C, 0.93% for Class I, 1.47% for Class R2, 1.22% for Class R3, 0.97% for Class R4 and 0.98% for Class R5. Of these waived/reimbursed fees and expenses, the transfer agency fee at the class level was $1 for Class R3, the plan administration services fees at the class level were $5, $5 and $12 for Class R2, Class R3 and Class R4, respectively, and the management fees at the Fund level were $56,709. In addition, the Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses until July 31, 2008, such that net expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.40% for Class A, 2.16% for Class B, 2.15% for Class C, 1.02% for Class I, 1.82% for Class R2, 1.57% for Class R3, 1.32% for Class R4 and 1.07% for Class R5 of the Fund's average daily net assets, unless sooner terminated at the discretion of the Board. The Fund pays custodian fees to Ameriprise Trust Company, a subsidiary of Ameriprise Financial. 3. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $17,524,344 and $14,249,523, respectively, for the six months ended Jan. 31, 2008. Realized gains and losses are determined on an identified cost basis. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 31 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated are as follows:
SIX MONTHS ENDED JAN. 31, 2008 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - ------------------------------------------------------------------------------------- Class A 196,116 14,450 (124,120) 86,446 Class B 10,412 1,085 (20,257) (8,760) Class C 2,058 124 (1,098) 1,084 Class I 456,840 99,227 (185,626) 370,441 Class R2 -- -- -- -- Class R3 -- -- -- -- Class R4 -- -- -- -- Class R5 -- -- -- -- - -------------------------------------------------------------------------------------
YEAR ENDED JULY 31, 2007 ISSUED FOR REINVESTED NET SOLD DISTRIBUTIONS REDEEMED INCREASE (DECREASE) - -------------------------------------------------------------------------------------- Class A 299,874 5,134 (99,517) 205,491 Class B 56,474 700 (25,366) 31,808 Class C 2,131 26 (466) 1,691 Class I 2,182,119 11,966 (10,620) 2,183,465 Class R2* 455 -- -- 455 Class R3* 455 -- -- 455 Class R4 822 17 (839) -- Class R5* 455 -- -- 455 - --------------------------------------------------------------------------------------
* For the period from Dec. 11, 2006 (inception date) to July 31, 2007. 5. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund, a money market fund established for the exclusive use of the RiverSource funds and other institutional clients of RiverSource Investments. The cost of the Fund's purchases and proceeds from sales of shares of the RiverSource Short-Term Cash Fund aggregated $6,880,551 and $8,042,850, respectively, for the six months ended Jan. 31, 2008. 6. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks headed by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 18, 2007, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other RiverSource funds, severally and - -------------------------------------------------------------------------------- 32 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT not jointly, permits collective borrowings up to $500 million. Interest is charged to each Fund based on its borrowings at a rate equal to the federal funds rate plus 0.30%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.06% per annum. Under the prior credit facility, a Fund paid interest on its outstanding borrowings at a rate equal to either the higher of the federal funds effective rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. The Fund had no borrowings during the six months ended Jan. 31, 2008. 7. CONCENTRATION OF RISK SECTOR RISK If a fund emphasizes one or more economic sectors, it may be more susceptible to the financial, market or economic events affecting the particular issuers and industries in which it invests than funds that do not emphasize particular sectors. The more a fund diversifies, the more it spreads risk and potentially reduces the risks of loss and volatility. 8. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota. In response to defendants' motion to dismiss the complaint, the Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals on August 8, 2007. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 33 violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the RiverSource Funds' Boards of Directors/ Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. - -------------------------------------------------------------------------------- 34 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 9. FINANCIAL HIGHLIGHTS The tables below show certain important financial information for evaluating the Fund's results. CLASS A
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007 2006(B) Net asset value, beginning of period $10.00 $9.77 $10.22 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .05(c) .14(c) .02 Net gains (losses) (both realized and unrealized) (1.12) .29 (.47) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.07) .43 (.45) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.01) -- Distributions from realized gains (.22) (.19) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.27) (.20) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.66 $10.00 $9.77 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $13 $14 $11 - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.52%(f) 1.73% 3.27%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) 1.24%(f) 1.35% 1.40%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) .98%(f) 1.30% .55%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 37% 127% 40% - ----------------------------------------------------------------------------------------------------------- Total return(h) (10.80%)(i) 4.29% (4.40%)(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 35 CLASS B
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007 2006(B) Net asset value, beginning of period $9.90 $9.73 $10.22 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(c) .05(c) -- Net gains (losses) (both realized and unrealized) (1.10) .31 (.49) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.09) .36 (.49) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Distributions from realized gains (.22) (.19) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.59 $9.90 $9.73 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $1 $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.27%(f) 2.38% 4.05%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) 2.00%(f) 2.11% 2.18%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) .20%(f) .49% (.17%)(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 37% 127% 40% - ----------------------------------------------------------------------------------------------------------- Total return(h) (11.09%)(i) 3.51% (4.79%)(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- 36 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT CLASS C
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007 2006(B) Net asset value, beginning of period $9.90 $9.73 $10.22 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01(c) .05(c) -- Net gains (losses) (both realized and unrealized) (1.10) .31 (.49) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.09) .36 (.49) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Distributions from realized gains (.22) (.19) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.59 $9.90 $9.73 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.27%(f) 2.47% 4.05%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) 2.00%(f) 2.11% 2.18%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) .24%(f) .43% (.22%)(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 37% 127% 40% - ----------------------------------------------------------------------------------------------------------- Total return(h) (11.15%)(i) 3.51% (4.79%)(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 37 CLASS I
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007 2006(B) Net asset value, beginning of period $10.03 $9.78 $10.22 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .06(c) .15(c) .03 Net gains (losses) (both realized and unrealized) (1.12) .32 (.47) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.06) .47 (.44) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) (.03) -- Distributions from realized gains (.22) (.19) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.30) (.22) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.67 $10.03 $9.78 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $25 $25 $3 - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.21%(f) 1.19% 3.00%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) .93%(f) 1.05% 1.13%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.30%(f) 1.43% .91%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 37% 127% 40% - ----------------------------------------------------------------------------------------------------------- Total return(h) (10.59%)(i) 4.69% (4.31%)(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- 38 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT CLASS R2
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007(B) Net asset value, beginning of period $9.97 $10.99 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .04 .06 Net gains (losses) (both realized and unrealized) (1.11) (.86) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.07) (.80) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.02) (.03) Distributions from realized gains (.22) (.19) - ----------------------------------------------------------------------------------------------------------- Total distributions (.24) (.22) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.66 $9.97 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 2.02%(f) 1.85%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) 1.47%(f) 1.80%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) .75%(f) .77%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 37% 127% - ----------------------------------------------------------------------------------------------------------- Total return(h) (10.84%)(i) (7.40%)(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment.. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 39 CLASS R3
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007(B) Net asset value, beginning of period $9.99 $10.99 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .06 .07 Net gains (losses) (both realized and unrealized) (1.12) (.85) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.06) (.78) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.03) Distributions from realized gains (.22) (.19) - ----------------------------------------------------------------------------------------------------------- Total distributions (.27) (.22) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.66 $9.99 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.77%(f) 1.58%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) 1.22%(f) 1.55%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.00%(f) 1.02%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 37% 127% - ----------------------------------------------------------------------------------------------------------- Total return(h) (10.68%)(i) (7.21%)(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- 40 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT CLASS R4
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007 2006(B) Net asset value, beginning of period $10.00 $9.77 $10.22 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .07(c) .17(c) .02 Net gains (losses) (both realized and unrealized) (1.12) .28 (.47) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.05) .45 (.45) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.07) (.03) -- Distributions from realized gains (.22) (.19) -- - ----------------------------------------------------------------------------------------------------------- Total distributions (.29) (.22) -- - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.66 $10.00 $9.77 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.49%(f) 1.83% 3.12%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) .97%(f) 1.26% 1.25%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.26%(f) 1.60% .69%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 37% 127% 40% - ----------------------------------------------------------------------------------------------------------- Total return(h) (10.61%)(i) 4.42% (4.40%)(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Feb. 16, 2006 (when shares became publicly available) to July 31, 2006. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 41 CLASS R5
PER SHARE INCOME AND CAPITAL CHANGES(a) FISCAL PERIOD ENDED JULY 31, 2008(J) 2007(B) Net asset value, beginning of period $10.02 $10.99 - ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(c) .06 .11 Net gains (losses) (both realized and unrealized) (1.12) (.86) - ----------------------------------------------------------------------------------------------------------- Total from investment operations (1.06) (.75) - ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) (.03) Distributions from realized gains (.22) (.19) - ----------------------------------------------------------------------------------------------------------- Total distributions (.30) (.22) - ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.66 $10.02 - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- - ----------------------------------------------------------------------------------------------------------- Gross expenses prior to expense waiver/reimbursement(d),(e) 1.27%(f) 1.09%(f) - ----------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(d),(e),(g) .98%(f) 1.05%(f) - ----------------------------------------------------------------------------------------------------------- Net investment income (loss) 1.25%(f) 1.53%(f) - ----------------------------------------------------------------------------------------------------------- Portfolio turnover rate 37% 127% - ----------------------------------------------------------------------------------------------------------- Total return(h) (10.63%)(i) (6.93%)(i) - -----------------------------------------------------------------------------------------------------------
(a) For a share outstanding throughout the period. Rounded to the nearest cent. (b) For the period from Dec. 11, 2006 (inception date) to July 31, 2007. (c) Per share amounts have been calculated using the average shares outstanding method. (d) Includes the impact of a performance incentive adjustment fee, if any. Expense ratio is before reduction of earnings and bank fee credits on cash balances. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the above reported expense ratios. (f) Adjusted to an annual basis. (g) The Investment Manager and its affiliates have agreed to waive certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) Total return does not reflect payment of a sales charge. (i) Not annualized. (j) Six months ended Jan. 31, 2008 (Unaudited). - -------------------------------------------------------------------------------- 42 RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT PROXY VOTING The policy of the Board is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling RiverSource Funds at (888) 791-3380; contacting your financial institution; visiting riversource.com/funds; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting riversource.com/funds; or searching the website of the SEC at www.sec.gov. - -------------------------------------------------------------------------------- RIVERSOURCE DISCIPLINED SMALL CAP VALUE FUND -- 2008 SEMIANNUAL REPORT 43 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 mutual funds are distributed by RiverSource Distributors, Inc., Member FINRA, and managed by RiverSource Investments, LLC. These companies are part of Ameriprise Financial, Inc. (RIVERSOURCE INVESTMENTS LOGO) (C) 2008 RiverSource Distributors, Inc. S-6509 C (3/08)
Item 2. Code of Ethics. Not applicable for semi-annual reports. Item 3. Audit Committee Financial Expert. Not applicable for semi-annual reports. Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual reports. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. The complete schedule of investments is included in Item 1 of this Form N-CSR. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of matters to a vote of security holders. Not applicable. Item 11. Controls and Procedures. (a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's Principal Financial Officer and Principal Executive Officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal controls over financial reporting that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a)(1) Not applicable for semi-annual reports. (a)(2) Separate certification for the Registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached as EX.99.CERT. (a)(3) Not applicable. (b) A certification by the Registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment Company Act of 1940, is attached as EX.99.906 CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) RiverSource Dimensions Series, Inc. By /s/ Patrick T. Bannigan ---------------------------------- Patrick T. Bannigan President and Principal Executive Officer Date April 3, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By /s/ Patrick T. Bannigan ---------------------------------- Patrick T. Bannigan President and Principal Executive Officer Date April 3, 2008 By /s/ Jeffrey P. Fox ---------------------------------- Jeffrey P. Fox Treasurer and Principal Financial Officer Date April 3, 2008 EX-99.CERT 2 c24143exv99wcert.txt CERTIFICATION Certification Pursuant to 270.30a-2 of the Investment Company Act of 1940 I, Patrick T. Bannigan, certify that: 1. I have reviewed this report on Form N-CSR of RiverSource Dimensions Series, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 25, 2008 /s/ Patrick T. Bannigan - ------------------------------------- Name: Patrick T. Bannigan Title: President and Principal Executive Officer Certification Pursuant to 270.30a-2 of the Investment Company Act of 1940 I, Jeffrey P. Fox, certify that: 1. I have reviewed this report on Form N-CSR of RiverSource Dimensions Series, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation; d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 25, 2008 /s/ Jeffrey P. Fox - ------------------------------------- Name: Jeffrey P. Fox Title: Treasurer and Principal Financial Officer EX-99.906CERT 3 c24143exv99w906cert.txt 906 CERTIFICATION CERTIFICATION RIVERSOURCE DIMENSIONS SERIES, INC. (the Registrant) Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Each of the undersigned below certifies that 1. This report on Form N-CSR of the Registrant (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: March 25, 2008 /s/ Patrick T. Bannigan ---------------------------------------- Patrick T. Bannigan President and Principal Executive Officer Date: March 25, 2008 /s/ Jeffrey P. Fox ---------------------------------------- Jeffrey P. Fox Treasurer and Principal Financial Officer A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, OR OTHER DOCUMENT AUTHENTICATING, ACKNOWLEDGING, OR OTHERWISE ADOPTING THE SIGNATURE THAT APPEARS IN TYPED FORM WITHIN ELECTRONIC VERSION OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906, HAS BEEN PROVIDED TO THE REGISTRANT AND WILL BE RETAINED BY THE REGISTRANT AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Form N-CSR filed with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----