RiverSource Precious Metals and Mining Fund

Transcription

1 Annual Repor t and Prospectus RiverSource Precious Metals and Mining Fund Annual Report for the Period Ended March 31, 2010 (Prospectus also enclosed) * RiverSource Precious Metals and Mining Fund seeks to provide shareholders with longterm growth of capital. This annual report includes a prospectus that describes in detail the Fund s objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money.

2 Letter to Shareholders Dear Fellow Shareholders, On April 30, 2010, Ameriprise Financial, Inc., the parent company of RiverSource Investments, LLC, acquired the long-term asset management business of Columbia Management Group, LLC, bringing together the fund families of Columbia Management and RiverSource Investments. This transaction combines two leading asset management firms and creates one entity that, as of March 31, 2010 data (Source: ICI), is the eighth largest manager of long-term mutual fund assets in the U.S. The investment manager for our funds, RiverSource Investments, LLC, will remain the same, but its name has changed to Columbia Management Investment Advisers, LLC. You will soon begin to see re-branding take effect on communications and statements as the integration of RiverSource and Columbia gets underway. I want you, as a valued shareholder, to know that our goals as Directors of the Fund are to ensure a smooth transition and to provide you and all our fellow shareholders with the highest quality products and services. The Board of your Fund will work closely with Columbia Management in this effort, and we will keep you informed as the integration of these two great firms progresses and key decisions are made. Throughout the transition, we will all seek to build on best practices from both legacy organizations with enhancements to productivity, quality and the delivery of world-class customer experiences. The new President of our funds is J. Kevin Connaughton. Kevin was a managing director and head of mutual funds for Columbia Management, responsible for the day-to-day delivery of mutual fund products and services. We are pleased to have Kevin continue in this role for the new combined organization. THIS PAGE IS NOT PART OF THE ANNUAL REPORT

3 Letter to Shareholders The combined organization offers a comprehensive choice of investment products managed by a diverse group of dedicated investment teams. They share a passion for investing and a commitment to delivering a consistent investment experience. Their approach is distinguished by a singular focus on fund shareholders. The Directors of your Fund look forward to working with them as they continue to support your investment needs. Stephen R. Lewis, Jr. Chairman of the Boards Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. For a free prospectus, which contains this and other important information about the funds, call Read the prospectus carefully before investing. RiverSource@, Seligman@ and Threadneedle@ mutual funds are distributed by Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.), member FINRA and managed by Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC). Threadneedle mutual funds are subadvised by Threadneedle International Limited, an affiliate of Columbia Management. Seligman is an offering brand of Columbia Management Columbia Management Investment Advisers, LLC. All rights reserved. For more information about any of the Funds, go online to riversource.com (for RiverSource and Threadneedle funds) or seligman.com (for Seligman funds); or call Customer Service Representatives are available to answer your questions Monday through Friday from 7 a.m. to 6 p.m. Central time. THIS PAGE IS NOT PART OF THE ANNUAL REPORT

4 Table of Contents Your Fund at a Glance Manager Commentary....6 The Fund s Long-term Performance Fund Expenses Example Portfolio of Investments Statement of Assets and Liabilities Statement of Operations Statements of Changes in Net Assets...20 Financial Highlights Notes to Financial Statements Report of Independent Registered Public Accounting Firm Federal Income Tax Information Board Members and Officers Proxy Voting RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

5 Your Fund at a Glance FUND SUMMARY H RiverSource Precious Metals and Mining Fund (the Fund) Class A shares increased 37.95% (excluding sales charge) for the fiscal year ended March 31, H The Fund outperformed its benchmark, the Philadelphia Stock Exchange Gold & Silver Index, which increased 23.62% for the annual period. H The Fund underperformed its peer group, as represented by the Lipper Precious Metals Funds Index (formerly the Lipper Gold Funds Index), which increased 43.91% during the same time frame. ANNUALIZED TOTAL RETURNS (for period ended March 31, 2010) 1 year 3 years 5 years 10 years RiverSource Precious Metals and Mining Fund Class A (excluding sales charge) % +8.86% % % Philadelphia Stock Exchange Gold & Silver Index (unmanaged) % +7.32% % % Lipper Precious Metals Funds Index % +9.78% % % (See The Fund s Long-term Performance for Index descriptions) The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting riversource.com/funds or calling The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in fees and expenses. The Fund s returns reflect the effect of fee waivers/ expense reimbursements, if any. Without such waivers/reimbursements, the Fund s returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 3

6 Your Fund at a Glance (continued) AVERAGE ANNUAL TOTAL RETURNS at March 31, 2010 Without sales charge 1 year 3 years 5 years 10 years Since inception* Class A (inception 4/22/85) % +8.86% % % N/A Class B (inception 3/20/95) % +8.01% % % N/A Class C (inception 6/26/00) % +8.03% % N/A % Class I (inception 7/15/04) % +9.35% % N/A % Class R4 (inception 3/20/95) % +9.19% % % N/A With sales charge Class A (inception 4/22/85) % +6.73% % % N/A Class B (inception 3/20/95) % +7.28% % % N/A Class C (inception 6/26/00) % +8.03% % N/A % Class A share performance reflects the maximum initial sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I and Class R4 shares. Class I and Class R4 shares are available to qualifying institutional investors only. * For classes with less than 10 years performance. 4 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

7 STYLE MATRIX STYLE VALUE BLEND GROWTH SIZE LARGE MEDIUM SMALL Shading within the style matrix approximates areas in which the Fund is designed to generally invest. The style matrix can be a valuable tool for constructing and monitoring your portfolio. It provides a frame of reference for distinguishing the types of stocks or bonds owned by a mutual fund, and may serve as a guideline for helping you build a portfolio. Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. The RiverSource Precious Metals and Mining Fund is a narrowly-focused sector fund and it may exhibit higher volatility than funds with broader investment objectives. See the Fund s prospectus for specific risks associated with the Fund. International investing involves increased risk and volatility due to potential political and economic instability, currency fluctuations, and differences in financial reporting and accounting standards and oversight. Risks are particularly significant in emerging markets. Investments in small- and mid-capitalization companies involve greater risks and volatility than investments in larger, more established companies. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 5

8 Manager Commentary On May 1, 2010, Ameriprise Financial, Inc., the parent company of RiverSource Investments, LLC, the Fund s investment manager, announced the closing of its acquisition of the long-term asset management business of Columbia Management Group, LLC and certain of its affiliated companies from Bank of America. In connection with the closing, the investment manager, which is now known as Columbia Management Investment Advisers, LLC, has determined that the Fund s portfolio manager primarily responsible for overseeing the Fund s investments, effective upon closing, will be Michael E. Hoover. Dear Shareholder, RiverSource Precious Metals and Mining Fund (the Fund) Class A shares gained 37.95% (excluding sales charge) for the 12 months ended March 31, The Fund outperformed its benchmark, the Philadelphia Stock Exchange Gold & Silver Index (Philadelphia Index), which advanced 23.62% for the same time period. The Fund underperformed its peer group, as represented by the Lipper Precious Metals Funds Index (formerly the Lipper Gold Funds Index), which advanced 43.91% during that time frame Significant performance factors The beginning of the Fund s fiscal year in April 2009 generally coincided with a turning point for most securities markets including global equities, real estate securities and commodities. Since then, we have seen a very strong rebound across multiple markets, including commodities and other hard assets. The Fund outperformed its benchmark, the Philadelphia Index, due to a greater emphasis on small-cap gold companies, which are not represented SECTOR BREAKDOWN (1) (at March 31, 2010) Gold mining 80.7% Platinum mining 3.3% Other metals & mining 9.4% Silver mining 6.5% Other (2) 0.1% (1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund s composition is subject to change. (2) Cash & Cash Equivalents. 6 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

9 in the benchmark. At the start of the fiscal year, the portfolio included 30 stocks, a smaller number than we have typically held. During the difficult market of 2008 and early 2009, we had pared back the Fund s holdings in an effort to mitigate the risk of underperforming the benchmark. We believe, however, that this more conservative approach is why the Fund underperformed its peer group. As the market environment improved and financial risk appeared to lessen, we broadened the portfolio s holdings, adding a number of small-cap gold companies that we had avoided during the global credit difficulties. These stocks performed very well in the rebound and holding them enabled the Fund to outperform its benchmark. TOP TEN HOLDINGS (1) (at March 31, 2010) Freeport-McMoRan Copper & Gold, Inc. (United States) 9.0% Goldcorp, Inc. (Canada) 6.8% Kinross Gold Corp. (Canada) 5.5% Gold Fields Ltd., ADR (South Africa) 4.8% AngloGold Ashanti Ltd., ADR (South Africa) 4.3% Yamana Gold, Inc. (Canada) 4.2% Randgold Resources Ltd., ADR (South Africa) 4.1% Compania de Minas Buenaventura SA, ADR (Peru) 4.1% Eldorado Gold Corp. (Canada) 4.0% Agnico-Eagle Mines Ltd. (Canada) 3.5% (1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). For further detail about these holdings, please refer to the section entitled Portfolio of Investments. Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. TOP FIVE COUNTRIES (1) (at March 31, 2010) Canada 58.2% United States 19.7% South Africa 15.3% Peru 4.1% United Kingdom 1.1% (1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 7

10 Manager Commentary (continued) Individual contributors to relative performance included Allied Nevada Gold, Centamin Egypt, Eastern Platinum, Detour Gold, First Quantum Minerals, IAMGOLD, New Gold, Red Back Mining and Silver Wheaton. The portfolio also had a position in a steel company, Steel Dynamics, which was a notable contributor. The only significant disappointment was a large weighting in Freeport- McMoRan Copper & Gold. While the portfolio was underweight in this stock relative to the benchmark, it still had a large position. People had viewed the company as an opportunity to tap into China s growth, but concerns about the company cutting its copper production led investors to take profits, reducing their positions. Consequently, the stock lagged other small- and mid-cap companies that had considerably stronger performance. During the robust recovery, we kept the portfolio s cash position as low as we thought prudent, so as to participate as fully as possible in the rebound. Changes to the Fund s portfolio Though we increased the portfolio s exposure to small-cap gold companies during the fiscal year, we decreased the portfolio s overall gold weighting. We added several platinum holdings because demand for platinum has typically increased in expanding economies, which, we believe, should drive strong relative performance for platinum stocks. We also slightly increased holdings of silver companies. We maintained the Fund s exposure to diversified mining stocks and agriculture companies, which we initially held because we thought they would better weather the economic storm. One of the biggest changes during the fiscal year was a substantial decrease in the portfolio turnover rate. The rate was unusually high in the last fiscal year as we restructured the portfolio to reduce risk in the midst of abnormal market volatility. This year, we made a conscious decision to hold stocks longer, hoping to capitalize on their upward movement. It appears likely that the price of gold will remain in a trading range for at least the next several months until there s some clarity on the inflation outlook. Governments have added a great deal of liquidity to the money supply and now that it appears a recovery has begun, many are looking to 8 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

11 reduce the level of monetary and fiscal stimulus. There will probably be much scrutiny of inflation data and we could see gold prices go higher in the second half of 2010 if inflation becomes more of a concern. Clay Hoes Portfolio Manager The Fund outperformed its benchmark, the Philadelphia Index, due to a greater emphasis on smallcap gold companies, which are not represented in the benchmark. 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 (the Investment Manager)* or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund. * Effective May 1, 2010, RiverSource Investments, LLC is known as Columbia Management Investment Advisers, LLC. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 9

12 The Fund s Long-term Performance The chart on the facing page illustrates the total value of an assumed $10,000 investment in RiverSource Precious Metals and Mining Fund Class A shares (from 4/1/00 to 3/31/10) as compared to the performance of the Philadelphia Stock Exchange Gold & Silver Index and the Lipper Precious Metals Funds Index. In comparing the Fund s Class A shares to these indices, you should take into account the fact that the Fund s performance reflects the maximum initial sales charge of 5.75%, while such charges are not reflected in the performance of the indices. Returns for the Fund include the reinvestment of any distributions paid during each period. The performance information shown represents past performance and is not a guarantee of future results. The table below and the chart on the facing page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary or visiting riversource.com/funds. Also see Past Performance in the Fund s current prospectus. COMPARATIVE RESULTS Results at March 31, year 3 years 5 years 10 years RiverSource Precious Metals and Mining Fund (includes sales charge) Class A Cumulative value of $10,000 $13,001 $12,158 $21,738 $49,621 Average annual total return % +6.73% % % Philadelphia Stock Exchange Gold & Silver Index (1) Cumulative value of $10,000 $12,362 $12,361 $18,522 $33,300 Average annual total return % +7.32% % % Lipper Precious Metals Funds Index (2) Cumulative value of $10,000 $14,391 $13,230 $25,175 $66,898 Average annual total return % +9.78% % % Results for other share classes can be found on page RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

13 VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN RIVERSOURCE PRECIOUS METALS AND MINING FUND $80,000 $65,000 $66,898 $50,000 $49,621 $35,000 $33,300 $20,000 $5,000 4/1/00 3/01 3/02 3/03 3/04 3/05 3/06 RiverSource Precious Metals and Mining Fund Class A (includes sales charge) ($49,621) Philadelphia Stock Exchange Gold & Silver Index (1) ($33,300) Lipper Precious Metals Funds Index (2) ($66,898) 3/07 3/08 3/09 3/10 (1) The Philadelphia Stock Exchange Gold & Silver Index is an unmanaged capitalization-weighted index which includes the leading companies involved in the mining of gold and silver. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Precious Metals Funds Index (formerly known as Lipper Gold Funds Index) includes the 10 largest precious metals funds tracked by Lipper Inc. The index s returns include net reinvested dividends. The Fund s performance is currently measured against this index for purposes of determining the performance incentive adjustment. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 11

14 Fund Expenses Example (Unaudited) As a shareholder of the Fund, you incur two types of costs: (i) transaction costs, including sales charges (loads) on purchase payments; and (ii) ongoing costs, which may include management fees; distribution and service (12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund s shareholders indirectly bear the ongoing expenses of any funds in which the Fund invests (also referred to as acquired funds ), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund s indirect expense from investing in the acquired funds is based on the Fund s pro rata portion of the ongoing expenses charged by acquired funds using the expense ratio of each of the acquired funds as of the acquired fund s most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six months ended March 31, 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. 12 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

15 Beginning account value Oct. 1, 2009 Ending account value March 31, 2010 Expenses paid during the period (a) Annualized expense ratio Class A Actual (b) $1,000 $1, $ % Hypothetical (5% return before expenses) $1,000 $1, $ % Class B Actual (b) $1,000 $1, $ % Hypothetical (5% return before expenses) $1,000 $1, $ % Class C Actual (b) $1,000 $1, $ % Hypothetical (5% return before expenses) $1,000 $1, $ % Class I Actual (b) $1,000 $1, $ % Hypothetical (5% return before expenses) $1,000 $1, $ % Class R4 Actual (b) $1,000 $1, $ % Hypothetical (5% return before expenses) $1,000 $1, $ % (a) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended March 31, 2010: +6.95% for Class A, +6.55% for Class B, +6.62% for Class C, +7.15% for Class I and +7.00% for Class R4. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 13

16 Portfolio of Investments March 31, 2010 (Percentages represent value of investments compared to net assets) Investments in Securities Common Stocks (100.0%)(c) Issuer Shares Value(a) Australia (1.0%) Centamin Egypt Ltd. 375,165(b) $790,599 Equinox Minerals Ltd. 204,478(b) 771,197 Total 1,561,796 Canada (58.2%) Agnico-Eagle Mines Ltd. 94,848 5,280,188 Agrium, Inc. 25,726 1,817,027 Alamos Gold, Inc. 182,757(b) 2,442,159 Barrick Gold Corp. 136,617 5,237,896 Clifton Star Resources, Inc. 116,120(b) 675,794 Detour Gold Corp. 196,606(b) 3,672,689 Eastern Platinum Ltd. 1,243,724(b,d) 1,812,616 Eldorado Gold Corp. 499,440(b) 6,064,102 Endeavour Silver Corp. 300,462(b) 955,679 European Goldfields Ltd. 226,026(b) 1,555,807 First Quantum Minerals Ltd. 27,879(d) 2,294,287 Gammon Gold, Inc. 274,864(b) 1,967,761 Goldcorp, Inc. 276,681 10,298,066 Greystar Resources Ltd. 215,876(b) 1,392,406 IAMGOLD Corp. 203,612 2,706,807 Ivanhoe Mines Ltd. 99,432(b) 1,731,111 Kinross Gold Corp. 487,018 8,323,137 New Gold, Inc. 934,491(b) 4,074,381 Northgate Minerals Corp. 246,315(b) 739,794 PAN American Silver Corp. 95,192 2,203,695 Potash Corp of Saskatchewan, Inc. 14,045 1,676,271 Red Back Mining, Inc. 239,627(b) 4,896,367 SEMAFO, Inc. 279,009(b) 1,555,087 Silver Standard Resources, Inc. 96,652(b,d) 1,719,439 Silver Wheaton Corp. 321,451(b) 5,048,886 Common Stocks (continued) Issuer Shares Value(a) Canada (cont.) Teck Resources Ltd., Class B 40,187(b) $1,751,132 Yamana Gold, Inc. 645,336 6,356,559 Total 88,249,143 Chile (0.6%) Sociedad Quimica y Minera de Chile SA, ADR 24, ,028 Peru (4.1%) Compania de Minas Buenaventura SA, ADR 198,841 6,158,106 South Africa (15.3%) AngloGold Ashanti Ltd., ADR 172,719 6,554,686 Aquarius Platinum Ltd. 244,664 1,599,092 Gold Fields Ltd., ADR 572,614 7,226,389 Impala Platinum Holdings Ltd. 56,089 1,648,136 Randgold Resources Ltd., ADR 81,156(d) 6,235,215 Total 23,263,518 United Kingdom (1.1%) Lonmin PLC 55,126(b) 1,704,861 United States (19.7%) Allied Nevada Gold Corp. 146,736(b) 2,427,538 Alpha Natural Resources, Inc. 20,284(b,d) 1,011,969 Cliffs Natural Resources, Inc. 14,942 1,060,135 Freeport-McMoRan Copper & Gold, Inc. 163,357(d) 13,646,844 Jaguar Mining, Inc. 145,171(b,d) 1,336,631 Massey Energy Co. 32,405 1,694,457 Newmont Mining Corp. 85,752 4,367,349 See accompanying Notes to Portfolio of Investments. 14 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

17 Common Stocks (continued) Issuer Shares Value(a) United States (cont.) Peabody Energy Corp. 18,770 $857,789 The Mosaic Co. 56,512 3,434,234 Total 29,836,946 Total Common Stocks (Cost: $109,220,101) $151,695,398 Money Market Fund (0.1%) Shares Value(a) RiverSource Short-Term Cash Fund, 0.18% 111,689(e) $111,689 Total Money Market Fund (Cost: $111,689) $111,689 Investments of Cash Collateral Received for Securities on Loan (10.3%) Shares Value(a) Cash Collateral Reinvestment Fund JPMorgan Prime Money Market Fund 15,610,979 $15,610,979 Total Investments of Cash Collateral Received for Securities on Loan (Cost: $15,610,979) $15,610,979 Total Investments in Securities (Cost: $124,942,769)(f) $167,418,066 Notes to Portfolio of Investments ADR American Depositary Receipt (a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. (d) At March 31, 2010, security was partially or fully on loan. See Note 7 to the financial statements. (e) Affiliated Money Market Fund See Note 8 to the financial statements. The rate shown is the seven-day current annualized yield at March 31, (f) At March 31, 2010, the cost of securities for federal income tax purposes was $136,518,728 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $31,345,518 Unrealized depreciation (446,180) Net unrealized appreciation $30,899,338 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 15

18 Portfolio of Investments (continued) Fair Value Measurements Generally accepted accounting principles (GAAP) require disclosure regarding the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. The Fund categorizes its fair value measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund s assumptions about the information market participants would use in pricing an investment. An investment s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset or liability s fair value measurement. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. Fair value inputs are summarized in the three broad levels listed below: Level 1 Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. Level 2 Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). Level 3 Valuations based on significant unobservable inputs (including the Fund s own assumptions and judgment in determining the fair value of investments). Inputs that are used in determining fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Fund Administrator, along with any other relevant factors in the calculation of an investment s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy. Non-U.S. equity securities actively traded in foreign markets may be reflected in Level 2 despite the availability of closing prices, because the Fund evaluates and determines whether those closing prices reflect fair value at the close of the New York Stock Exchange (NYSE) or require adjustment, as described in Note 2 to the financial statements Valuation of securities. Investments falling into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as 16 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

19 Fair Value Measurements (continued) Level 3 investments due to lack of market transparency and corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in a valuation model may include, but are not limited to, financial statement analysis, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund s investments as of March 31, 2010: Description Level 1 quoted prices in active markets for identical assets Fair value at March 31, 2010 Level 2 other significant observable inputs Level 3 significant unobservable inputs Total Equity Securities Common Stocks(a) $151,695,398 $ $ $151,695,398 Total Equity Securities 151,695, ,695,398 Other Affiliated Money Market Fund(b) 111, ,689 Investments of Cash Collateral Received for Securities on Loan(c) 15,610,979 15,610,979 Total Other 15,722,668 15,722,668 Total $167,418,066 $ $ $167,418,066 (a) Country classifications are identified in the Portfolio of Investments. (b) Money market fund that is a sweep investment for cash balances in the Fund at March 31, (c) Asset categories for Investment of Cash Collateral are identified in the Portfolio of Investments. 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 (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 800.SEC.0330); and (iv) The Fund s complete schedule of portfolio holdings, as filed on Form N-Q, can be obtained without charge, upon request, by calling RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 17

20 Statement of Assets and Liabilities March 31, 2010 Assets Investments in securities, at value Unaffiliated issuers* (identified cost $109,220,101) $151,695,398 Affiliated money market fund (identified cost $111,689) 111,689 Investments of cash collateral received for securities on loan (identified cost $15,610,979) 15,610,979 Total investments in securities (identified cost $124,942,769) 167,418,066 Cash 18,263 Foreign currency holdings (identified cost $4,840) 4,931 Capital shares receivable 164,896 Dividends and accrued interest receivable 12,047 Total assets 167,618,203 Liabilities Capital shares payable 171,174 Payable upon return of securities loaned 15,610,979 Accrued investment management services fees 3,297 Accrued distribution fees 63,451 Accrued transfer agency fees 866 Accrued administrative services fees 247 Accrued plan administration services fees 75 Other accrued expenses 76,520 Total liabilities 15,926,609 Net assets applicable to outstanding capital stock $151,691,594 Represented by Capital stock $.01 par value $ 125,706 Additional paid-in capital 132,467,755 Excess of distributions over net investment income (5,698,521) Accumulated net realized gain (loss) (17,678,734) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 42,475,388 Total representing net assets applicable to outstanding capital stock $151,691,594 *Value of securities on loan $ 14,996,264 Net asset value per share Net assets Shares outstanding Net asset value per share Class A $133,459,266 10,925,790 $12.22 (1) Class B $ 13,809,631 1,240,361 $11.13 Class C $ 4,233, ,141 $10.88 Class I $ 12, $12.40 Class R4 $ 177,328 14,319 $12.38 (1) The maximum offering price per share for Class A is $ 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. 18 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

21 Statement of Operations Year ended March 31, 2010 Investment income Income: Dividends $1,307,364 Interest 61,336 Income distributions from affiliated money market fund 3,532 Income from securities lending net 62,013 Less foreign taxes withheld (60,612) Total income 1,373,633 Expenses: Investment management services fees 1,112,166 Distribution fees Class A 303,284 Class B 137,925 Class C 31,060 Transfer agency fees Class A 257,158 Class B 31,259 Class C 6,747 Class R4 73 Administrative services fees 83,021 Plan administration services fees Class R4 364 Compensation of board members 4,196 Printing and postage 48,230 Registration fees 61,665 Professional fees 28,167 Other 2,417 Total expenses 2,107,732 Investment income (loss) net (734,099) Realized and unrealized gain (loss) net Net realized gain (loss) on: Security transactions 20,140,381 Foreign currency transactions (1,485) Net realized gain (loss) on investments 20,138,896 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 21,626,556 Net gain (loss) on investments and foreign currencies 41,765,452 Net increase (decrease) in net assets resulting from operations $41,031,353 The accompanying Notes to Financial Statements are an integral part of this statement. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 19

22 Statements of Changes in Net Assets Year ended March 31, Operations and distributions Investment income (loss) net $ (734,099) $ (305,680) Net realized gain (loss) on investments 20,138,896 (33,846,149) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 21,626,556 6,355,314 Net increase (decrease) in net assets resulting from operations 41,031,353 (27,796,515) Distributions to shareholders from: Net investment income Class A (2,729,572) (603,039) Class B (201,942) Class C (63,307) (4,887) Class I (287) (107) Class R4 (4,832) (1,984) Net realized gain Class A (3,658,156) Class B (564,325) Class C (105,960) Class I (379) Class R4 (6,884) Total distributions (2,999,940) (4,945,721) Capital share transactions Proceeds from sales Class A shares 40,671,647 31,449,647 Class B shares 2,963,447 4,619,653 Class C shares 2,278,316 1,343,939 Class R4 shares 178,202 88,045 Reinvestment of distributions at net asset value Class A shares 2,661,548 4,185,524 Class B shares 193, ,857 Class C shares 54,908 97,734 Class R4 shares 4,796 8,796 Conversions from Class B to Class A Class A shares 2,272,439 2,577,775 Class B shares (2,272,439) (2,577,775) Payments for redemptions Class A shares (39,595,226) (30,408,934) Class B shares (3,859,395) (5,044,341) Class C shares (1,158,136) (949,992) Class R4 shares (115,135) (149,718) Increase (decrease) in net assets from capital share transactions 4,278,355 5,792,210 Total increase (decrease) in net assets 42,309,768 (26,950,026) Net assets at beginning of year 109,381, ,331,852 Net assets at end of year $151,691,594 $109,381,826 Excess of distributions over net investment income $ (5,698,521) $ (980,306) Certain line items from the prior year have been renamed to conform to the current year presentation. The accompanying Notes to Financial Statements are an integral part of this statement. 20 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

23 Financial Highlights The following tables are intended to help you understand the Fund s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. For periods ended 2008 and after, per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year. Class A Year ended March 31, Per share data Net asset value, beginning of period $9.04 $11.92 $14.08 $14.73 $8.98 Income from investment operations: Net investment income (loss) (.05) (.02) (.05) (.07) (.04) Net gains (losses) (both realized and unrealized) 3.47 (2.41) Total from investment operations 3.42 (2.43) Less distributions: Dividends from net investment income (.24) (.07) (1.01) (1.08) Distributions from realized gains (.38) (3.08) (.87) Total distributions (.24) (.45) (4.09) (1.95) Net asset value, end of period $12.22 $9.04 $11.92 $14.08 $14.73 Total return 37.95% (19.71%) 16.44% 9.00% 64.03% Ratios to average net assets (a) Total expenses 1.43% 1.52% 1.34% 1.40% 1.46% Net investment income (loss) (.44%) (.18%) (.34%) (.52%) (.32%) Supplemental data Net assets, end of period (in millions) $133 $94 $115 $98 $87 Portfolio turnover rate 72% 340% 241% 114% 111% See accompanying Notes to Financial Highlights. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 21

24 Financial Highlights (continued) Class B Year ended March 31, Per share data Net asset value, beginning of period $8.26 $10.93 $13.21 $13.93 $8.56 Income from investment operations: Net investment income (loss) (.12) (.08) (.15) (.17) (.12) Net gains (losses) (both realized and unrealized) 3.15 (2.21) Total from investment operations 3.03 (2.29) Less distributions: Dividends from net investment income (.16) (.89) (.96) Distributions from realized gains (.38) (3.08) (.87) Total distributions (.16) (.38) (3.97) (1.83) Net asset value, end of period $11.13 $8.26 $10.93 $13.21 $13.93 Total return 36.73% (20.27%) 15.59% 8.13% 62.73% Ratios to average net assets (a) Total expenses 2.20% 2.27% 2.11% 2.15% 2.22% Net investment income (loss) (1.17%) (.93%) (1.11%) (1.28%) (1.10%) Supplemental data Net assets, end of period (in millions) $14 $13 $19 $18 $20 Portfolio turnover rate 72% 340% 241% 114% 111% See accompanying Notes to Financial Highlights. 22 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

25 Class C Year ended March 31, Per share data Net asset value, beginning of period $8.09 $10.75 $13.08 $13.81 $8.48 Income from investment operations: Net investment income (loss) (.12) (.08) (.14) (.17) (.12) Net gains (losses) (both realized and unrealized) 3.10 (2.18) Total from investment operations 2.98 (2.26) Less distributions: Dividends from net investment income (.19) (.02) (.92) (.96) Distributions from realized gains (.38) (3.08) (.87) Total distributions (.19) (.40) (4.00) (1.83) Net asset value, end of period $10.88 $8.09 $10.75 $13.08 $13.81 Total return 36.93% (20.33%) 15.56% 8.14% 62.85% Ratios to average net assets (a) Total expenses 2.18% 2.29% 2.09% 2.15% 2.20% Net investment income (loss) (1.23%) (.96%) (1.06%) (1.28%) (1.11%) Supplemental data Net assets, end of period (in millions) $4 $2 $2 $2 $2 Portfolio turnover rate 72% 340% 241% 114% 111% See accompanying Notes to Financial Highlights. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 23

26 Financial Highlights (continued) Class I Year ended March 31, Per share data Net asset value, beginning of period $9.17 $12.08 $14.22 $14.86 $9.02 Income from investment operations: Net investment income (loss).00 (b) (.02).02 Net gains (losses) (both realized and unrealized) 3.52 (2.45) Total from investment operations 3.52 (2.42) Less distributions: Dividends from net investment income (.29) (.11) (1.07) (1.14) Distributions from realized gains (.38) (3.08) (.87) Total distributions (.29) (.49) (4.15) (2.01) Net asset value, end of period $12.40 $9.17 $12.08 $14.22 $14.86 Total return 38.47% (19.25%) 16.93% 9.39% 64.75% Ratios to average net assets (a) Total expenses.97% 1.05%.94%.97% 1.00% Net investment income (loss).02%.31%.06% (.11%).16% Supplemental data Net assets, end of period (in millions) $ $ $ $ $ Portfolio turnover rate 72% 340% 241% 114% 111% See accompanying Notes to Financial Highlights. 24 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

27 Class R4 Year ended March 31, Per share data Net asset value, beginning of period $9.17 $12.09 $14.22 $14.86 $9.04 Income from investment operations: Net investment income (loss) (.04) (b) (.05) (.01) Net gains (losses) (both realized and unrealized) 3.52 (2.44) Total from investment operations 3.48 (2.43) Less distributions: Dividends from net investment income (.27) (.11) (1.05) (1.11) Distributions from realized gains (.38) (3.08) (.87) Total distributions (.27) (.49) (4.13) (1.98) Net asset value, end of period $12.38 $9.17 $12.09 $14.22 $14.86 Total return 38.04% (19.30%) 16.86% 9.18% 64.38% Ratios to average net assets (a) Gross expenses prior to expense waiver/ reimbursement 1.24% 1.40% 1.24% 1.24% 1.28% Net expenses after expense waiver/reimbursement (c) 1.24% 1.10% 1.00% 1.23% 1.28% Net investment income (loss) (.33%).13% (.01%) (.36%) (.12%) Supplemental data Net assets, end of period (in millions) $ $ $ $ $ Portfolio turnover rate 72% 340% 241% 114% 111% Notes to Financial Highlights (a) Expense ratios include the impact of a performance incentive adjustment, if any. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (b) Rounds to zero. (c) The Investment Manager and its affiliates have agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. The accompanying Notes to Financial Statements are an integral part of this statement. RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 25

28 Notes to Financial Statements 1. ORGANIZATION RiverSource Precious Metals and Mining Fund (the Fund) is a series of RiverSource Selected Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act) as a nondiversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation s Board of Directors (the Board). The Fund invests primarily in securities of companies in precious metals industries or in mining industries (including precious metals, non-precious metals and special minerals). The Fund offers Class A, Class B, Class C, Class I and Class R4 shares. Class A shares are offered with a front-end sales charge, which may be waived under certain circumstances. Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. Class C shares may be subject to a CDSC. Class I and Class R4 shares are offered without a front-end sales charge or CDSC to qualifying institutional investors. At March 31, 2010, RiverSource Investments, LLC* (RiverSource Investments or the Investment Manager) and affiliated funds-of-funds owned 100% of Class I shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. * Effective May 1, 2010, RiverSource Investments, LLC is known as Columbia Management Investment Advisers, LLC. 26 RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT

29 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Adoption of new accounting standard In June 2009, the Financial Accounting Standards Board (FASB) established the FASB Accounting Standards Codification TM (Codification) as the single source of authoritative accounting principles recognized by the FASB in the preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP). The Codification supersedes existing non-grandfathered, non- SEC accounting and reporting standards. The Codification did not change GAAP but, rather, organized it into a hierarchy where all guidance within the Codification carries an equal level of authority. The Codification became effective for financial statements issued for interim and annual periods ending after Sept. 15, The Codification did not have an effect on the Fund s financial statements. Use of estimates Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. Valuation of securities All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the NYSE and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before RIVERSOURCE PRECIOUS METALS AND MINING FUND 2010 ANNUAL REPORT 27